The Best is Yet to Come 2021 Annual Report
17 18 19 20 21 17 18 19 20 21 1 25 1 17 1 39 14 0 9 9 12 5 17 18 19 20 21 1 86 17 18 19 20 21 126 2 76 6 70 2 68 7 104 3 375 9 329 4 274 1 258 1 268 0 In Millions Adjusted Diluted Earnings Per Share 3 00 Adjusted Return on Equity 30 Adjusted Consolidated EBITDA In Millions 9 7 Total Revenue Total Return 2012 2021 YTD December Total Return includes stock price appreciation and dividend reinvestment Carriage Services CSV 1268 Service Corporation Int SCI 789 Russell 3000 Index RAY 453 1268 789 453 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
In the best selling iconic book Good To Great E LP ROOLQV LQ HDFK RI WKH HOHYHQ Good To Great FRPSDQLHV UHVHDUFKHG E LP DQG KLV WHDP KDG D 7UDQVLWLRQ DWH DIWHU ZKLFK WKHLU VKDUH SULFH JURZWK EHJDQ WR FRPSRXQG DW PXFK KLJKHU ORQJ WHUP UDWHV FRPSDUHG WR WKHLU JRRG VHFWRU SHHUV V SUHYLRXVO H SODLQHG LQ P 6KDUHKROGHU HWWHU WKDW WUDQVLWLRQ GDWH IRU DUULDJH ZDV 1RYHPEHU DIWHU ZKLFK ZH ODXQFKHG RQ DQXDU WKH LUVW LYH
FDQ VHH PDQ VLPLODULWLHV RI DUULDJH WRGD WR HUNVKLUH DWKDZD PD EH WKLUW WR IRUW HDUV DJR DQG even now while there are also distinct differences as well since we are restricted to the funeral and cemetery LQGXVWU DQG KDYH DOO RI WKH VXSSRUW IXQFWLRQV DQG SHUVRQQHO DW RXU RXVWRQ 6XSSRUW HQWHU IRU DOO WKH LQGLYLGXDO EXVLQHVVHV LQ RXU SRUWIROLR WKH KDYH SHRSOH DQG QR VXSSRUW SHUVRQQHO XW RQH VLPLODULW VWDQGV WDOO DERYH DOO WKH UHVW DQG LV ZRUWK PHQWLRQLQJ LQ WKLV LQWURGXFWLRQ WR RXU 6KDUHKROGHU HWWHU Q KLV DXWKRUL HG autobiography by Alice Schroeder The Snowball Warren Buffett and the Business of Life DUUHQ LV TXRWHG DV GHVFULELQJ KLV MRE DW HUNVKLUH DWKDZD DV IROORZV I feel like I m on my back and there s the Sistine Chapel and I m painting away I like it when people say Gee that s a pretty good looking painting But it s my painting and when somebody says Why don t you use more red instead of blue Good bye And I don t care what they sell it IRU 7KH SDLQWLQJ LWVHOI ZLOO QHYHU EH QLVKHG 7KDW V RQH RI WKH JUHDW WKLQJV DERXW LW DUUHQ V RXQGHU V YLHZ RI HUNVKLUH DWKDZD SHUIHFWO FDSWXUHV P WKLQNLQJ DERXW DUULDJH ZKLFK LV why we say internally that our Mission Vision of Being The Best means that we can always get better and therefore we are on a Good To Great Journey WKDW QHYHU HQGV KDYH KDG WR VD RRG E H WR PDQ RSHUDWLRQDO QDQFLDO DQG RWKHU H HFXWLYHV DQG RDUG 0HPEHUV RYHU WKH ODVW WKLUW HDUV LQFOXGLQJ P WKUHH FR IRXQGHUV EHFDXVH WKH HLWKHU GLGQ W OLNH WKH ZD ZDQWHG WR SDLQW WKH DUULDJH 6LVWLQH KDSHO RU HYHQ XQGHUVWDQG WKH LGHDV DQG FRQFHSWV UHODWHG WR WKH SDLQWLQJ 7KH ZDQWHG WR XVH GLIIHUHQW FRORUV DQG VKDSHV WKDW RIWHQ ZHUH WKH RSSRVLWH RI ZKHUH P YLVLRQ RI WKH SDLQWLQJ ZDV JRLQJ I have often wondered whether I could have somehow sped up or short cut the almost twenty years of HYROXWLRQDU FKDQJH ZLWKLQ DOO DUHDV RI DUULDJH DIWHU UVW LQWURGXFLQJ WKH LGHD RI D XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO LQ XJXVW KDYH FRQFOXGHG HDFK WLPH XSRQ UH HFWLRQ WKDW WKH SURFHVV RI H SHULPHQWDWLRQ and adaptation while agonizingly slow in hindsight was absolutely critical to the process of painting the DUULDJH 6LVWLQH KDSHO DV LW H LVWV WRGD KDYH RIWHQ VDLG WKDW WKH HYROXWLRQDU OHDUQLQJ MRXUQH UHODWHG WR RXU 6WDQGDUGV 2SHUDWLQJ 0RGHO LQYROYHG DSSOLFDWLRQ RI WKH VFLHQWL F PHWKRG RI H SHULPHQWDWLRQ DQG REVHUYDWLRQ and went completely against the grain of how most people think and behave after achieving success VRPHZKHUH HOVH 2Q 3DJH RI P 6KDUHKROGHU HWWHU UHIHUHQFHG UHDGLQJ WKH ERRN Harnessing Complexity with the subtitle 2UJDQL DWLRQDO PSOLFDWLRQV RI D 6FLHQWL F URQWLHU FR DXWKRUHG E 5REHUW HOURG DQG 0LFKDHO RKHQ LQ KHQ UHDG WKLV ERRN DIWHU D UHIHUHQFH RQ WKH ZRUN RI 5REHUW HOURG E 0DUN HRQDUG LQ KLV RQVWHOODWLRQ 6RIWZDUH 6KDUHKROGHU HWWHU ZDV HQFRXUDJHG DQG HYHQ H FLWHG WKDW VRPH RI WKH FRUH LGHDV DQG FRQFHSWV RI DUULDJH V 6WDQGDUGV 2SHUDWLQJ 0RGHO 3DUWQHUVKLS 2UJDQL DWLRQDO 6WUXFWXUH 5DGLFDO HFHQWUDOL DWLRQ RI HFLVLRQ 0DNLQJ HDGHU 2ZQHUVKLS 0LQGVHW DQG QFHQWLYHV HWF ZHUH VR FORVHO DOLJQHG ZLWK WKH VFLHQWL F QGLQJV LQ WKLV ERRN After the High Performance Transformation WKDW RXU OHDGHUVKLS WHDPV KDYH H HFXWHG DW DUULDJH VLQFH KDYH FRQFOXGHG WKDW ZH KDYH HYROYHG LQWR D UDWKHU DGYDQFHG VWDWH RI KDUQHVVLQJ WKH KLJK SHUIRUPDQFH FRPSOH LW RI VXFFHVVIXOO RSHUDWLQJ DQG FRQVROLGDWLQJ WKH KLJKO IUDJPHQWHG IXQHUDO DQG FHPHWHU LQGXVWU IRU WKH KXJH EHQH W RYHU WLPH RI DOO RXU OHDGHU RZQHUV DQG HPSOR HHV ORQJ WHUP VKDUHKROGHUV bondholders banks suppliers and especially the client families and communities that we are privileged and KRQRUHG WR VHUYH 7KLV SURFHVV LV EHDXWLIXOO GHSLFWHG RQ WKH IURQW FRYHU RI WKLV QQXDO 5HSRUW LQ WKH IRUP RI our Carriage Flywheel 6LVWLQH KDSHO EHLQJ SDLQWHG E D 0DVWHU 3DLQWHU 1HYHU LQ RXU KLVWRU FRXOG KDYH LPDJLQHG WKDW DUULDJH ZRXOG EH DV IXOO DV LW LV WRGD RI 3OD HU HDGHUV DW DOO OHYHOV DQG LQ DOO IXQFWLRQV ZLWK WKH OHDGHUVKLS DOLJQPHQW DQG SDLQWLQJ VNLOOV WR FRQWLQXH WKH KLJK SHUIRUPDQFH JURZWK DQG VXVWDLQDELOLW RI DUULDJH DV DQ 2SHUDWLQJ RQVROLGDWLRQ DQG 9DOXH UHDWLRQ 3ODWIRUP IRU WKH IXQHUDO DQG FHPHWHU LQGXVWULHV 7KH EHVW QHZV RI DOO LV WKDW WKH 0DVWHU 3DLQWHU RQ WKH IURQW FRYHU RI DUULDJH V 6KDUHKROGHU HWWHU QQXDO 5HSRUW LV QR ORQJHU VROHO PH EXW UHSUHVHQWV DOO RI WKH OHDGHUV ZLWKLQ DUULDJH WKDW have AN UNBREAKABLE UNION OF BELIEF that THE BEST IS YET TO COME Page 2 CARRIAGE SERVICES 2021 Annual Report
2021 Shareholder Letter XOO
VLQFH KDG WR RQFH DJDLQ VWHS EDFN LQWR WKH UROH RI KLHI 2SHUDWLQJ 2I FHU LQ 6HSWHPEHU 7KLV IXOO HDU HDUQLQJV UHOHDVH ZLOO DOVR IRU WKH UVW WLPH UHSUHVHQW RXU 6KDUHKROGHU HWWHU FRYHULQJ WKH UHPDUNDEOH High Performance Transformation in our cemetery portfolio funeral portfolio realignment of short and long WHUP LQFHQWLYHV ZLWK VXVWDLQHG KLJK RSHUDWLQJ DQG QDQFLDO SHUIRUPDQFH VWDQGDUGV DV ZHOO DV WUDQVIRUPDWLRQ DQG FXOWXUDO DOLJQPHQW RI RXU RXVWRQ 6XSSRUW HQWHU HSDUWPHQWV DQG 7HDPV IURP WR ZLOO EHJLQ E VKDULQJ WKH KLJKOLJKWV RI RXU HDU DQG UHFRUG SHUIRUPDQFH LQ DOO DUHDV RI RXU FRPSDQ 7KH JUHDWHVW VWUDWHJLF DFKLHYHPHQW RI WKLV SDVW HDU ZDV WKDW IRUPDOO HVWDEOLVKHG RQ XQH D VXFFHVVLRQ SODQ IRUPDW IRU WKH IXWXUH HFXWLYH HDGHUV RI DUULDJH ZKHQ DP QR ORQJHU KHUH DOWKRXJK KDYH QR SODQV RU KHDOWK UHDVRQV WR QRW EH KHUH VHUYLQJ DV KDLUPDQ DQG 2 RYHU WKH QH W YH WR WHQ HDUV RI RSWLPXP YDOXH FUHDWLRQ 2Q XQH H WHQVLYH SUHVV UHOHDVH RQ WKHLU LQGLYLGXDO EDFNJURXQGV DQG TXDOL FDWLRQV SURPRWHG DUORV 4XH DGD WR HFXWLYH 9LFH 3UHVLGHQW DQG KLHI 2SHUDWLQJ 2I FHU 6WHYH 0HW JHU WR HFXWLYH 9LFH 3UHVLGHQW DQG KLHI GPLQLVWUDWLYH 2I FHU DQG HQ ULQN WR HFXWLYH 9LFH 3UHVLGHQW DQG 3ULQFLSDO LQDQFLDO 2I FHU LQ DGGLWLRQ WR WKHLU RWKHU UHVSRQVLELOLWLHV DQG UROHV DQG WR PHPEHUVKLS LQ RXU QHZ 6WUDWHJLF 9LVLRQ DQG 3ULQFLSOHV URXS 693 FKDLUHG E PH DVHG RQ KLV DPD LQJ DFKLHYHPHQWV DQG FRQWULEXWLRQV WKDW DUORV KDV PDGH WR DUULDJH VLQFH MRLQLQJ RXU Good To Great Journey RQ XQH DP YHU KRQRUHG WR DQQRXQFH WKDW KH KDV DOVR EHHQ SURPRWHG WR 3UHVLGHQW DQG KLHI 2SHUDWLQJ 2I FHU HIIHFWLYH WRGD JRW WKH ELJJHVW SURPRWLRQ ZLWK WKHVH VXFFHVVLRQ SODQ PRYHV DV FDQ QRZ DOORFDWH P WLPH WR LWV KLJKHVW DQG EHVW XVH ZKLFK YLHZ DV GHYHORSLQJ DUORV 6WHYH DQG HQ WR EH WKH IXWXUH HFXWLYH HDGHUV RI DUULDJH DV ZHOO DV PHQWRULQJ WKHP RQ RSWLPL LQJ ORQJ WHUP VKDUHKROGHU YDOXH FUHDWLRQ WKURXJK ZLVH VDYY H LEOH DQG KLJKO GLVFLSOLQHG DSLWDO OORFDWLRQ DV covered so brilliantly in the 2012 book The Outsiders E LOO 7KRUQGLNH IWHU FR IRXQGLQJ DUULDJH DW HDUV RXQJ RQ XQH WKH FRPSDQ KDV QDOO HYROYHG DIWHU PRUH than thirty years into a Being The Best Mission Vision Company LQ RXU LQGXVWU
HDUV ZKLFK LV LQWHQGHG DORQJ ZLWK WDNHDZD LQVLJKWV E 693 PHPEHUV WR SURYLGH D JUHDWHU XQGHUVWDQGLQJ RI RXU SDVW SUHVHQW DQG OLNHO IXWXUH SHUIRUPDQFH But more profoundly important and rare in this Shareholder Letter is that we will also present total consolidated performance ranges of what our High Performance Transformation LV H SHFWHG WR ORRN OLNH RYHU WKH QH W WKUHH HDUV XQGHU D OLNHO DSLWDO OORFDWLRQ 6FHQDULR DQG IRU WKH UVW WLPH ZKDW RXU VKDUHV FRXOG SRWHQWLDOO EH ZRUWK HDFK HDU ZLWK FRQWLQXHG RXWVWDQGLQJ H HFXWLRQ RI RXU WKUHH FRUH PRGHOV 7KH 7DEOH RI RQWHQWV IRU WKLV 6KDUHKROGHU HWWHU LV VKRZQ EHORZ VHTXHQWLDOO LQ VHFWLRQV FRYHUHG E HDFK 693 PHPEHU TABLE OF CONTENTS Mel Payne Pages RXUWK 4XDUWHU DQG XOO
FOURTH QUARTER AND FULL YEAR COMPARATIVE PERFORMANCE HIGHLIGHTS RXUWK 4XDUWHU RPSDUDWLYH 3HUIRUPDQFH LJKOLJKWV 7RWDO 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 3 XQHUDO 2SHUDWLQJ QFRPH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 3 XQHUDO 2SHUDWLQJ QFRPH 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV 3 HPHWHU 2SHUDWLQJ QFRPH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 3 HPHWHU 2SHUDWLQJ QFRPH 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV 3 1HW QFRPH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 3 1HW QFRPH 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV 3 LOXWHG 36 RI DQ LQFUHDVH RI RU 3 1HW DVK 3URYLGHG E 2SHUDWLQJ FWLYLWLHV RI PLOOLRQ D GHFUHDVH RI DQG 3 1HW DVK 3URYLGHG E 2SHUDWLQJ FWLYLWLHV DV D SHUFHQWDJH RI 7RWDO 5HYHQXH RI D GHFUHDVH RI EDVLV SRLQWV 6DPH 6WRUH XQHUDO 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU FTXLVLWLRQ XQHUDO 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 6DPH 6WRUH HPHWHU 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU FTXLVLWLRQ HPHWHU 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG LQDQFLDO 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 7RWDO LHOG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 7RWDO LHOG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV GMXVWHG RQVROLGDWHG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG GMXVWHG RQVROLGDWHG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV GMXVWHG LOXWHG 36 RI DQ LQFUHDVH RI RU GMXVWHG UHH DVK ORZ RI PLOOLRQ D GHFUHDVH RI PLOOLRQ RU DQG GMXVWHG UHH DVK ORZ 0DUJLQ RI D GHFUHDVH RI EDVLV SRLQWV XOO
6DPH 6WRUH HPHWHU LHOG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV FTXLVLWLRQ HPHWHU 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU FTXLVLWLRQ HPHWHU LHOG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG FTXLVLWLRQ HPHWHU LHOG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV LQDQFLDO 5HYHQXH RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU LQDQFLDO LHOG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG LQDQFLDO LHOG 7 0DUJLQ RI D GHFUHDVH RI EDVLV SRLQWV 7RWDO LHOG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU 7RWDO LHOG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV GMXVWHG RQVROLGDWHG 7 RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG GMXVWHG RQVROLGDWHG 7 0DUJLQ RI DQ LQFUHDVH RI EDVLV SRLQWV GMXVWHG LOXWHG 36 RI DQ LQFUHDVH RI RU GMXVWHG UHH DVK ORZ RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU GMXVWHG UHH DVK ORZ 0DUJLQ RI D GHFUHDVH RI EDVLV SRLQWV GMXVWHG 3URIRUPD UHH DVK ORZ RI PLOOLRQ DQ LQFUHDVH RI PLOOLRQ RU DQG GMXVWHG 3URIRUPD UHH DVK ORZ 0DUJLQ RI WKH VDPH DV 7RWDO HEW 2XWVWDQGLQJ WR GMXVWHG RQVROLGDWHG 7 5DWLR RI WLPHV DW WLPHV DW HEUXDU 7RWDO 5HYHQXH LV FRPSULVHG RI 6DPH 6WRUH XQHUDO 5HYHQXH FTXLVLWLRQ XQHUDO 5HYHQXH 6DPH 6WRUH HPHWHU 5HYHQXH FTXLVLWLRQ HPHWHU 5HYHQXH LYHVWHG 5HYHQXH QFLOODU 5HYHQXH DQG LQDQFLDO 5HYHQXH 7KH PRVW FRPSDUDEOH 3 PHDVXUHV WR WKH 1RQ 3 PHDVXUHV SUHVHQWHG LQ WKLV WDEOH FDQ EH IRXQG LQ WKH 5HFRQFLOLDWLRQ RI 1RQ 3 LQDQFLDO 0HDVXUHV VHFWLRQ RI WKLV SUHVV UHOHDVH IWHU QDYLJDWLQJ WKURXJK WKH XQFHUWDLQW IHDU DQG H WUDRUGLQDU FKDOOHQJHV RI WKH UVW HDU RI WKH 29 3DQGHPLF LQ WR D UHFRUG SHUIRUPDQFH RXU 2SHUDWLQJ DQG LHOG 6XSSRUW 7HDPV WRJHWKHU ZLWK RXU Managing Partners Sales Managers and their Being The Best PSOR HH 7HDPV VXSSRUWHG DV DOZD V E RXU RXVWRQ 6XSSRUW HQWHU 7HDPV FRPH KHOO RU KLJK ZDWHU DGDSWHG DQG WKULYHG WKURXJK VXEVHTXHQW 29 9DULDQWV DQG GHOLYHUHG D VHFRQG UHFRUG SHUIRUPDQFH GXULQJ LQ DOO YH LHOG 5HSRUWLQJ 6HJPHQWV 2XU UHYHQXH DQG SUR W PRPHQWXP IURP RXU WKLUG TXDUWHU RI FDUULHG WKURXJK WKH HQG RI WKH HDU DQG DFWXDOO DFFHOHUDWHG LQ HFHPEHU DQG LQWR DQXDU DJDLQVW ZKDW ZH H SHFWHG ZRXOG EH DOPRVW LPSRVVLEO KLJK SHUIRUPDQFH FRPSDULVRQV WR HFHPEHU DQG DQXDU ZKLFK ZLOO EH FRYHUHG LQ GHWDLO ODWHU LQ WKLV UHOHDVH TWO MAJOR STRATEGIC ACHIEVEMENTS PUBLIC DEATHCARE SECTOR 2022 VERSUS 1990 S 7KHUH ZHUH WZR PDMRU VWUDWHJLF DFKLHYHPHQWV LQ WKDW SRVLWLRQ DUULDJH IRU FRQWLQXHG HYHQ H WUDRUGLQDU VXFFHVV RYHU WKH QH W VHYHQ HDUV DV D VXSHULRU RSHUDWLQJ FRQVROLGDWLRQ DQG HVSHFLDOO VKDUHKROGHU YDOXH FUHDWLRQ SODWIRUP LQ WKH KLJKO IUDJPHQWHG IXQHUDO DQG FHPHWHU LQGXVWU 7KH UVW PDMRU VWUDWHJLF DFKLHYHPHQW ZDV WKH IRUPDWLRQ RI 693 RQ XQH DV P RXQGHU V 9LVLRQ VXFFHVVLRQ SODQ 7KH VHFRQG PDMRU VWUDWHJLF DFKLHYHPHQW ZDV FRPSOHWLRQ RI D UH QDQFLQJ RQ 0D RI PLOOLRQ RI HLJKW HDU VHQLRU QRWHV GXH ZLWK D QHZ PLOOLRQ RI HLJKW HDU VHQLRU QRWHV GXH 0D ZKLFK DORQJ ZLWK RXU DPHQGHG DQG UHVWDWHG PLOOLRQ YH HDU EDQN UHYROYLQJ FUHGLW IDFLOLW SURYLGHV DUULDJH ZLWK D ORQJ WHUP ORZ UDWH FDSLWDO VWUXFWXUH WKDW ZDV WKH ODVW SLHFH RI D FRPSOHWH WUDQVIRUPDWLRQ RI DUULDJH LQWR D Free Cash Flow Machine CARRIAGE SERVICES 2021 Annual Report Page 7
DUULDJH QRZ KDV WKH UHH DVK ORZ VXVWDLQDEOH HDUQLQJV SRZHU IRUHFDVW WR EH DERXW PLOOLRQ WR PLOOLRQ LQ WR VHOI QDQFH D PHDQLQJIXO KLJKO VHOHFWLYH DFTXLVLWLRQ JURZWK VWUDWHJ ZLWKRXW EHFRPLQJ over leveraged as we have proven since the beginning of 2020 that we can deleverage our balance sheet UDSLGO HYHQ LQ DGYHUVH HQYLURQPHQWV NQRZ RI QR RWKHU VHFWRU FDQ W WKLQN RI DQ EXW FXULRXV WR NQRZ D VHFWRU DQG FRPSDQ QDPH ZKHUH RYHU WKH ODVW WZHQW HDUV WKH QXPEHU RI GRPHVWLF SXEOLF GHDWKFDUH FRQVROLGDWLRQ FRPSDQLHV KDYH VKUXQN IURP YH WR WZR 6 DQG 69 DQG ERWK RI XV KDYH PDWHULDOO VKUXQN RXU RXWVWDQGLQJ VKDUH FRXQW 6 E RYHU 69 E ZKLOH JURZLQJ VWHDGLO DQG VRPHWLPHV LQ VSXUWV QDQFHG PRVWO E UHH DVK ORZ 6 FRQVROLGDWHG OGHUZRRGV LQ H VWRQH LQ DQG 6WHZDUW QWHUSULVHV LQ DUULDJH PDGH IRXU ODUJH VWUDWHJLF WUDQVIRUPDWLYH DFTXLVLWLRQV DW WKH HQG RI 2XU FUHGLW SUR OHV KDYH VXEVWDQWLDOO LPSURYHG WKURXJKRXW WKLV WLPHIUDPH DQG DUH VHFRQG WR QRQH LQ WKH KLJK LHOG FDWHJRU XQN ODEHO LV D RNH as the last time an investor lost money on deathcare debt because of a payment default was when Loewen URXS RXW RI DQDGD OHG IRU EDQNUXSWF LQ XQH RWK 6 DQG DUULDJH KDYH EHFRPH H FHOOHQW UHH DVK ORZ RSHUDWRUV DQG FRQVROLGDWRUV RYHU WKH ODVW twenty years at a time when all those revenue elements not under our control such as death rates cremation EXULDO PL FKDQJHV FUHPDWLRQ PDUNHW VKDUH HDVLHU WR WDNH IURP FRPSHWLWLRQ FXVWRPHU YDOXH SHUFHSWLRQ RI funeral ritual and of preplanning funeral and cemetery details value perception of cremations with personalized VHUYLFHV HWF KDYH VZLWFKHG IURP EHLQJ VHFXODU UHYHQXH ZLQGV LQ RXU IDFH DQG WXUQHG GHFLGHGO WR UHYHQXH WUHQGV WKDW DUH LQ RXU IDYRU RQVHTXHQWO WKH RXWORRN IRU ORQJ WHUP RUJDQLF UHYHQXH JURZWK IRU DUULDJH ERWK LQ RXU IXQHUDO DQG FHPHWHU SRUWIROLR KDV QHYHU EHHQ EHWWHU RU KLJKHU KHQ 6WHZDUW QWHUSULVHV ZDV DFTXLUHG E 6 IRU ELOOLRQ SHU VKDUH SOXV DVVXPSWLRQ RI GHEW LQ LW KDG DERXW PLOOLRQ IXOO GLOXWHG VKDUHV RXWVWDQGLQJ PLOOLRQ LQ 5HYHQXH DQG PLOOLRQ LQ GMXVWHG RQVROLGDWHG 7 HTXDO WR DQ GMXVWHG RQVROLGDWHG 7 0DUJLQ RI IWHU UHSXUFKDVLQJ DSSUR LPDWHO PLOOLRQ VKDUHV LQ DUULDJH FXUUHQWO KDV PLOOLRQ IXOO GLOXWHG 3 VKDUHV RXWVWDQGLQJ 7RWDO 5HYHQXH RI DERXW PLOOLRQ LQ GMXVWHG RQVROLGDWHG 7 RI PLOOLRQ GMXVWHG RQVROLGDWHG 7 0DUJLQ RI DQG 3URIRUPD UHH DVK ORZ RI PLOOLRQ 2XU 3URIRUPD UHH DVK ORZ 0DUJLQ RI LQ ZDV DOPRVW HTXDO WR WKH GMXVWHG RQVROLGDWHG 7 0DUJLQ RI 6WHZDUW QWHUSULVHV ZKHQ LW VROG WR 6 LQ 1RZ WKDW V WKH GH QLWLRQ of a Carriage Free Cash Flow Machine XULQJ WKH V DOO YH GRPHVWLF GHDWKFDUH FRQVROLGDWLRQ FRPSDQLHV QHHGHG ORWV RI H WHUQDO EDQN GHEW DQG VHFRQGDU HTXLW RIIHULQJV 1R UHH DVK ORZ RU 1RERG W 1R 7LPH WR H HFXWH DQ DJJUHVVLYH JURZWK E DFTXLVLWLRQ FRQVROLGDWLRQ PDQLD WKDW FUDVKHG LQ HDUO 1R DSLWDO RU 1RERG W 1R 7LPH DUULDJH QRZ SURGXFHV HDFK HDU IURP UHH DVK ORZ WKH HTXLYDOHQW RI DQ PLOOLRQ SOXV VHFRQGDU HTXLW RIIHULQJ WKH DVK DSLWDO 3URFHHGV RI ZKLFK DUH DOORFDWHG WR RSWLPL H QWULQVLF 9DOXH 3HU 6KDUH KHUHDV WKH ODVW VHFRQGDU FRPPRQ HTXLW RIIHULQJ LQ RXU GRPHVWLF VHFWRU ZDV E 6WHZDUW QWHUSULVHV LQ HEUXDU ZKHQ WKH LVVXHG PLOOLRQ DW DERXW SHU VKDUH PLOOLRQ VKDUHV WR VDYH WKH FRPSDQ IURP EDQNUXSWF Q RWKHU ZRUGV 6WHZDUW QWHUSULVHV LVVXHG DOPRVW DV PDQ VKDUHV LQ RQH RIIHULQJ IRU GHVSHUDWLRQ GHIHQVH WKDQ ZH FXUUHQWO KDYH RXWVWDQGLQJ IWHU WKH PLOHVWRQH KLJK SHUIRUPDQFH DFKLHYHPHQWV RI WKH ODVW WKUHH HDUV DUULDJH IRU WKH UVW WLPH LQ RXU HDU KLVWRU LV LQ D Value Creation Sweetspot ZLWK DQ DFFHOHUDWLQJ RIIHQVH IURP UHH DVK ORZ DQG D DSLWDO OORFDWLRQ 6WUDWHJ WKDW SURGXFHV EDODQFHG DQG KLJKO SUR WDEOH UHYHQXH JURZWK RYHU D EDVH RI IHZHU FRPPRQ VKDUHV RXWVWDQGLQJ ZKLFK LQ WXUQ VKRXOG FUHDWH KLJKHU FRPSRXQGHG UDWHV RI JURZWK LQ QWULQVLF 9DOXH 3HU 6KDUH IRU PDQ HDUV LQWR WKH IXWXUH 1RZ WKDW V WKH GH QLWLRQ RI D Carriage High Performance Value Creation Transformation Page 8 CARRIAGE SERVICES 2021 Annual Report
THREE YEAR ROUGHLY RIGHT RANGES PERFORMANCE SCENARIO 2020 2022 COMPARED TO 2022 2024 IWHU SDUWLDOO WXUQLQJ DURXQG SHUIRUPDQFH WUHQGV LQ RXU IXQHUDO SRUWIROLR GXULQJ ZH PDGH IRXU ODUJH VWUDWHJLF DFTXLVLWLRQV DW WKH HQG RI DQG EHJLQQLQJ RI WKUHH RI ZKLFK ZHUH ODUJH IXQHUDO FHPHWHU FRPELQDWLRQ EXVLQHVVHV Q RXU HDU HQG HDUQLQJV UHOHDVH RQ HEUXDU PDGH WKH IROORZLQJ VWDWHPHQWV VKRZQ EHORZ 5H HFWLQJ EDFN RQ DUULDJH V SHUIRUPDQFH GHFOLQH LQ WKH SHUIRUPDQFH WXUQDURXQG ZH have already achieved and the performance milestones we will achieve over the next three years our company will have executed what we believe in hindsight will be viewed as a complete Carriage Leadership Portfolio High Performance Balance Sheet Earnings and Free Cash Flow Transformation as a Value Creation Platform 6KRZQ EHORZ LV DQ H SDQGHG 0LOHVWRQH 7KUHH
6KRZQ EHORZ LV RXU QHZ 7KUHH
SHARE PRICE VALUATION METHODOLOGIES POTENTIAL SHARE PRICE RANGES 5 Year Enterprise Valuation Methodologies Potential Performance at Valuation Multiples 2020 2021 Three Year Scenario 2022 2023 2024 CAGR 9 7 0XOWLSOH 9 7 0XOWLSOH 9 7 0XOWLSOH 9 7 0XOWLSOH 9 7 0XOWLSOH 5 Year P E Valuation Matrix Potential Performance at Valuation Multiples 2020 2023 2024 CAGR 3 0XOWLSOH 3 0XOWLSOH 3 0XOWLSOH 5 Year FCF Valuation Matrix 2021 Three Year Scenario Potential Performance at Valuation Multiples 2022 Three Year Scenario 2020 2021 2022 2023 2024 CAGR UHH DVK ORZ TXLW
2I FRXUVH ZH FDQQRW SUHGLFW ZKDW H WHUQDO IDFWRUV PLJKW LPSDFW GRPHVWLF DQG LQWHUQDWLRQDO HTXLW DQG GHEW PDUNHWV LQFOXGLQJ YDOXDWLRQ PXOWLSOHV JLYHQ WKH FRQWLQXLQJ HFRQRPLF XQFHUWDLQW UHODWLQJ WR WKH 29 3DQGHPLF UDSLGO ULVLQJ LQ DWLRQ DQG LQWHUHVW UDWHV JHRSROLWLFDO PLQH HOGV 5XVVLD DQG 8NUDLQH KLQD DQG 7DLZDQ HWF WKDW VHHP WR EH SRSSLQJ XS DFURVV WKH ZRUOG QHZ ODFN 6ZDQ YHQWV RQ W RRN 8S HWF XW VSHDNLQJ DV D RZQHU RI DUULDJH ZLWK P ZLIH DQG WZR DGXOW FKLOGUHQ DUULDJH LV ORRNLQJ GRZQULJKW RUJHRXV RZHYHU LI 0U 0DUNHW DVVLJQV D VXEVWDQWLDOO GLVFRXQWHG SULFH WR RXU RSLQLRQ RI QWULQVLF 9DOXH 3HU 6KDUH UHODWLYH WR VHFWRU EHQFKPDUN SHHUV IRU H WHUQDO UHDVRQV WKDW DUHQ W OLQNHG WR DQG WKHUHIRUH GRQ W PDWHULDOO impact the upward trend and sustainability of the Roughly Right Ranges of Performance Metrics in our 7KUHH
right seats at the right time on the Good To Great Journey Bus
7KH HDU HQG VSLNH LQ DUULDJH SULFH EHKDYLRU ZDV EULH H FLWLQJ IRU WKRVH RI XV LQ DUULDJH SULPDULO EHFDXVH LW UHSUHVHQWHG UHFRJQLWLRQ IURP WKRVH RXWVLGH RI DUULDJH WKDW RXU QREOH ZRUN DQG XQLTXH KLJK SHUIRUPDQFH LGHDV DQG FRQFHSWV IRU RXU LQGXVWU KDG EHJXQ WR KDYH KLJK HTXLW YDOXH WR LQYHVWRUV DV ZHOO
FIVE QUARTER OPERATING AND FINANCIAL TREND REPORT HIGHLIGHTS 000 s except for volume averages margins 4TH QTR 2020 1ST QTR 2021 2ND QTR 2021 3RD QTR 2021 4TH QTR 2021 XQHUDO 6DPH 6WRUH RQWUDFWV YHUDJH 5HYHQXH 3HU RQWUDFW XQHUDO 6DPH 6WRUH XULDO RQWUDFWV XQHUDO 6DPH 6WRUH XULDO 5DWH YHUDJH 5HYHQXH 3HU XULDO RQWUDFW XQHUDO 6DPH 6WRUH UHPDWLRQ RQWUDFWV XQHUDO 6DPH 6WRUH UHPDWLRQ 5DWH YHUDJH 5HYHQXH 3HU UHPDWLRQ RQWUDFW XQHUDO 6DPH 6WRUH 5HYHQXH XQHUDO 6DPH 6WRUH LHOG 7 XQHUDO 6DPH 6WRUH LHOG 7 0DUJLQ XQHUDO FTXLVLWLRQ 5HYHQXH XQHUDO FTXLVLWLRQ LHOG 7 XQHUDO FTXLVLWLRQ LHOG 7 0DUJLQ HPHWHU 6DPH 6WRUH 3UHQHHG 3URSHUW RQWUDFWV 6ROG HPHWHU 6DPH 6WRUH 3UHQHHG 6DOHV Revenue HPHWHU 6DPH 6WRUH 5HYHQXH HPHWHU 6DPH 6WRUH LHOG 7 HPHWHU 6DPH 6WRUH LHOG 7 0DUJLQ HPHWHU FTXLVLWLRQ 3UHQHHG 3URSHUW RQWUDFWV 6ROG HPHWHU FTXLVLWLRQ 3UHQHHG 6DOHV Revenue HPHWHU FTXLVLWLRQ 5HYHQXH HPHWHU FTXLVLWLRQ LHOG 7 HPHWHU FTXLVLWLRQ LHOG 7 0DUJLQ 7RWDO LQDQFLDO 5HYHQXH 7RWDO LQDQFLDO LHOG 7 7RWDO LQDQFLDO LHOG 7 0DUJLQ 7RWDO 5HYHQXH 7RWDO LHOG 7 7RWDO LHOG 7 0DUJLQ GMXVWHG RQVROLGDWHG 7 GMXVWHG RQVROLGDWHG 7 0DUJLQ GMXVWHG LOXWHG 36 GMXVWHG UHH DVK ORZ GMXVWHG UHH DVK ORZ 0DUJLQ 3 1HW QFRPH RVV 3 1HW QFRPH RVV 0DUJLQ 3 LOXWHG DUQLQJV RVV 3HU 6KDUH FOXGHV 3UHQHHG XQHUDO LQWHUHVW HDUQLQJV UH HFWHG LQ 7RWDO LQDQFLDO 5HYHQXH 7KH PRVW FRPSDUDEOH 3 PHDVXUHV WR WKH 1RQ 3 PHDVXUHV SUHVHQWHG LQ WKLV WDEOH FDQ EH IRXQG LQ WKH 5HFRQFLOLDWLRQ RI 1RQ 3 LQDQFLDO 0HDVXUHV VHFWLRQ RI WKH SUHVV UHOHDVH GDWHG HEUXDU CARRIAGE SERVICES 2021 Annual Report Page 15
As shown on the previous page we have had consistent High Performance LQ HDFK RI WKH YH UHYHQXH VHJPHQWV RYHU WKH ODVW YH TXDUWHUV ZLWK D YH TXDUWHU DYHUDJH RI PLOOLRQ DQG WKH ODVW WZR TXDUWHUV RI DERYH PLOOLRQ 2XU DOO WLPH TXDUWHUO UHYHQXH KLJK ZDV WKH UVW TXDUWHU RI DW PLOOLRQ ZLWK DQXDU EHLQJ WKH PDLQ GULYHU IRU WKLV UHVXOW GXH WR D 29 VSLNH FHQWHUHG LQ RXU ODUJH DOLIRUQLD SRUWIROLR 2XU VHFRQG TXDUWHU UHYHQXH RI PLOOLRQ ZDV WKH ORZHVW UHYHQXH TXDUWHU EXW ZH ZHUH VWLOO DEOH WR SURGXFH D LHOG 7 0DUJLQ RI DOVR WKH ORZHVW RI WKH ODVW YH TXDUWHUV 7KH FRQVLVWHQF LQ TXDUWHUO UHYHQXH IURP HYHU VHJPHQW DOVR FRQYHUWHG LQWR FRQVLVWHQF LQ KLJK 7RWDO LHOG 7 0DUJLQV UDQJLQJ IURP WR RYHU WKH YH TXDUWHUV 7KH KLJK OHYHO RI FRQVLVWHQF LQ 7RWDO LHOG 7 0DUJLQV LV UH HFWLYH RI WKH FDVK HDUQLQJ SRZHU LQ RXU YH UHSRUWLQJ VHJPHQWV WKDW KDV HPHUJHG since the beginning of our portfolio performance transformation in 2018 as previously the all time high Field 7 0DUJLQ IRU D IXOO HDU ZDV LQ 2XU SRVLWLYH RXWORRN LV EDVHG RQ ZKDW ZH NQRZ LV KDSSHQLQJ DW DUULDJH KLOH RWKHU FRPSDQLHV LQVLGH DQG RXWVLGH RXU VHFWRU DUH FRQFHUQHG DERXW WKH SRVW 29 HIIHFW SXOO IRUZDUG ZH FDQQRW SUHGLFW ZKDW WKH QHZ QRUPDOL HG GHDWK UDWH ZLOO EH SRVW 29 DV 29 FRXOG EHFRPH HQGHPLF DQG WKHUH LV WRR PXFK QRLVH DQG XQUHOLDEOH LQIRUPDWLRQ IRU XV WR HYHQ WU WR SUHGLFW SUHFLVHO ZKDW WKH LPSDFW ZLOO EH LQ WKH IXWXUH QVWHDG ZH think long term and focus on what we can control and what we do best pursuing our Being The Best Mission and Vision YHQ XQGHU D SDQGHPLF HQYLURQPHQW ZLWK UHVWULFWLRQ PDQGDWHV VRFLDO GLVWDQFH UHPRWH ZRUN RYHUZRUNHG KHURHV DQG DQ RWKHU XQFHUWDLQW RU VSHFXODWLRQ DERXW WKH IXWXUH QR FU VWDO EDOO DW 69 ZH ZLOO always strive to be the best we can be a byproduct of which is that we say yes when other competitors say QR H VD ZH FDQ ZKHQ RWKHUV VD ZH FDQ W 7KH UHVLOLHQF FUHDWLYLW LQQRYDWLRQ DQG SDVVLRQ IRU VHUYLFH H FHOOHQFH RI RXU DPD LQJ 0DQDJLQJ 3DUWQHUV DQG WKHLU EHVW LQ FODVV WHDPV RI HPSOR HHV KDYH EXLOW EUDQG OR DOW DQG WRS RI PLQG UHSXWDWLRQ LQ WKHLU UHVSHFWLYH FRPPXQLWLHV 0RVW LPSRUWDQWO RXU FXVWRPHUV KDYH UHVSRQGHG E PDNLQJ KXJH GHSRVLWV LQ WKH Goodwill Value Creation EDQN RI RXU PRVW FULWLFDO DVVHW WKH TRUST RI WKH IDPLOLHV ZH VHUYH 0RUHRYHU ZKHQHYHU DQG ZKDWHYHU WKH QRUPDOL HG GHDWK UDWH SHUFHQWDJH WXUQV RXW WR EH RXU Best of the Best WHDP RI WHDPV VWDQG UHDG WR FDSWXUH WKH ELJJHVW VKDUH RI WKH ORFDO GHDWK UDWH DFURVV RXU SRUWIROLR RI EXVLQHVVHV Page 16 CARRIAGE SERVICES 2021 Annual Report
SAME STORE FUNERAL REVENUE MONTHLY TRENDS AND DRIVERS SEVEN MONTHS ENDING JANUARY 2022 2021 2020 000 s except for volume averages Same Store Funeral 2022 2021 JUL AUG SEP OCT NOV DEC RQWUDFWV YROXPH DQXDU RQWUDFWV YROXPH DQXDU Volume Variance YHUDJH 5HYHQXH 3HU RQWUDFW 487 JAN 82 437 867 594 206 73 367 47 96 78 155 DQXDU YHUDJH 5HYHQXH 3HU RQWUDFW DQXDU Average Revenue Per Contract Variance 205 119 2SHUDWLQJ 5HYHQXH DQXDU 2SHUDWLQJ 5HYHQXH DQXDU Operating Revenue Variance 728 2 079 4 830 2 843 1 571 1 744 1HW 5HYHQXH 9ROXPH 9DULDQFH 1HW 5HYHQXH YHUDJH 9DULDQFH 728 2 079 4 830 2 843 1 571 1 744 115 Net Revenue Variance 115 FOXGHV 3UHQHHG XQHUDO LQWHUHVW HDUQLQJV UH HFWHG LQ 7RWDO LQDQFLDO 5HYHQXH H FDQ REVHUYH WKDW ZLWK WKH H FHSWLRQ RI D KLJK FRPSDUDEOH LQ HFHPEHU RI DW WKH VSLNH RI 29 ZKLFK 6WHYH ZLOO FRYHU LQ PRUH GHWDLO ODWHU LQ WKLV UHOHDVH RXU 6DPH 6WRUH XQHUDO 7UHQGV LQ WKH WDEOH DERYH UH HFW WKDW HFHPEHU RI ZDV WKH RQO PRQWK ZLWK D QHJDWLYH 2SHUDWLQJ 5HYHQXH 9DULDQFH 7KH ODUJH QHJDWLYH 2SHUDWLQJ 5HYHQXH 9DULDQFH UHODWHG WR YROXPHV EHLQJ GRZQ LQ HFHPEHU ZDV SDUWLDOO RIIVHW E DERXW E D SRVLWLYH YDULDQFH IURP RXU KLJKHU 53 QHWWLQJ WKH PLOOLRQ QHJDWLYH 1HW 5HYHQXH 9DULDQFH YHU PRQWK ZLWK WKDW H FHSWLRQ LQ WKLV VHYHQ PRQWK WUHQG VKRZV D SRVLWLYH 2SHUDWLQJ 5HYHQXH 9DULDQFH ZLWK DQXDU RI DV RXU DOO WLPH KLJK UHYHQXH PRQWK ZLWK PLOOLRQ QRZ WKH VHFRQG SODFH WR DQXDU RI ZKLFK HQGHG DW PLOOLRQ DQG KLJKHU E WKRXVDQG YHQ PRUH UHOHYDQW LV WKDW IURP WKH EHJLQQLQJ RI 29 LQ HEUXDU DQG WKURXJK DQXDU RI WKH RQO WZR DGGLWLRQDO PRQWKV ZLWK D QHJDWLYH 1HW 5HYHQXH 9DULDQFH ZHUH 0DUFK DQG SULO RI DW WKH EHJLQQLQJ RI WKH KDUVK ORFNGRZQV DQG VRFLDO JDWKHULQJ PDQGDWHV UH HFWLYH RI WKH DELOLW RI RXU HQWUHSUHQHXULDO 0DQDJLQJ 3DUWQHUV DQG WKHLU WHDPV RI HPSOR HHV WR SLYRW DQG DGDSW WR D QHZ DQG XQNQRZQ DW WKH WLPH SDQGHPLF HQYLURQPHQW 2XU YHUDJH 5HYHQXH 3HU RQWUDFW 53 LV FRQVLVWHQWO UDQJLQJ EHWZHHQ DQG ZLWK D SRVLWLYH YDULDQFH RI GROODUV EHWZHHQ WKH KLJKHVW DQG ORZHVW RYHU WKH VHYHQ PRQWK WUHQG HQGLQJ DQXDU RI FRQ UPLQJ WKDW RXU 0DQDJLQJ 3DUWQHUV DQG WKHLU WHDPV DUH RIIHULQJ DOO RI WKH RSWLRQV WR DOO RI WKH IDPLOLHV DOO RI WKH WLPH CARRIAGE SERVICES 2021 Annual Report Page 17
FIVE YEAR SAME STORE CEMETERY DETAILED TREND REPORT AND SUMMARY CEMETERY ACQUISITION DATA FIVE YEAR CEMETERY SAME STORE TREND REPORT 000 s except for volume averages margins 2017 2018 2019 2020 2021 2018 2021 Variance 3UHQHHG QWHUPHQWV 6ROG 3UHQHHG 7RWDO 6DOHV 3URGXFWLRQ 3UHQHHG 5HFRJQL HG 5HYHQXH 3UHQHHG 0DUJLQ 3UHQHHG 0DUJLQ 1 ES WQHHG 5HYHQXH WQHHG 0DUJLQ WQHHG 0DUJLQ 1 ES 7RWDO 2SHUDWLQJ 5HYHQXH 7RWDO 3UHQHHG WQHHG 0DUJLQ 7RWDO 3UHQHHG WQHHG 0DUJLQ 1 ES 7RWDO RQWUROODEOH RVWV RI 5HYHQXH 1 ES 7RWDO 1RQ FRQWUROODEOH RVWV 1 ES 7RWDO 2SHUDWLQJ 0DUJLQ 7RWDO 2SHUDWLQJ 0DUJLQ 1 ES 2WKHU GGEDFNV UHQW DQG RWKHU LWHPV HPHWHU LHOG 7 0DUJLQ 1 ES 7RWDO LQDQFLDO 5HYHQXH 7RWDO 2SHUDWLQJ DQG LQDQFLDO 5HYHQXH HPHWHU LHOG LQDQFLDO 7 1 ES 3UHQHHG 7RWDO 6DOHV YHUDJH WQHHG DQG 3UHQHHG 0DWXUHG QWHUPHQWV 7RWDO RQWUROODEOH RVWV RI 5HYHQXH 7RWDO 1RQ FRQWUROODEOH RVWV HPHWHU LHOG 7 HPHWHU LHOG LQDQFLDO 7 0DUJLQ Page 18 CARRIAGE SERVICES 2021 Annual Report 2018 2021 Variance
2SWLPL DWLRQ RI HPHWHU 6DPH 6WRUH 3RUWIROLR 2XU 6DPH 6WRUH 3RUWIROLR RI ERWK IXQHUDO KRPHV DQG FHPHWHULHV KDYH EHHQ RZQHG IXOO LQWHJUDWHG LQWR our Standards Operating Model DQG RSHUDWHG IRU DW OHDVW YH IXOO HDUV FRPSDUHG WR RQO RQH HDU IRU RWKHU PXOWL VWRUH FRPSDQLHV LQ PRVW LQGXVWULHV HFDXVH RI WKH XQLTXHQHVV RI RXU 6WDQGDUGV 2SHUDWLQJ 0RGHO IRU ERWK IXQHUDO KRPHV DQG FHPHWHULHV LW RIWHQ WDNHV VHYHUDO HDUV DIWHU D EXVLQHVV MRLQV RXU SRUWIROLR IRU IXOO LQWHJUDWLRQ DQG RSWLPL DWLRQ RI WKH SHUIRUPDQFH WR EH DFKLHYHG DQG VXVWDLQHG W LV DOVR QR FRLQFLGHQFH why our Good To Great LQFHQWLYH WULS LV D YH HDU UHZDUG SURJUDP HDUQHG EDVHG RQ FRQVLVWHQF LQ Standards Achievement RYHU WKH YH HDUV 6WHYH ZLOO DOVR FRYHU RXU UHZDUGV SURJUDPV LQ PRUH GHWDLO including our Being The Best one year and Good To Great YH HDU SUR W VKDULQJ LQFHQWLYHV KLOH RXU HQWLUH FRPSDQ KDV EHHQ WKURXJK D High Performance Transformation since September 2018 as GHWDLOHG LQ RXU 6KDUHKROGHU HWWHU WKH PRVW SURIRXQG WUDQVIRUPDWLRQ KDV EHHQ LQ RXU FHPHWHU SRUWIROLR Q RXU FHPHWHU SRUWIROLR ZDV RQO RI WRWDO FRPSDQ UHYHQXH H KDG QRW VXFFHVVIXOO EXLOW D High Performance Sales Organization that could broadly grow our Same Store preneed property sales over WKH PRVWO HG RSHUDWLQJ FRVWV WKURXJKRXW RXU GLYHUVH SRUWIROLR RI FHPHWHULHV LQ VL H DQG JHRJUDSK WR RSWLPL H WKH LQKHUHQW RSHUDWLQJ OHYHUDJH LQ HDFK EXVLQHVV RZHYHU RXU 7RWDO 2SHUDWLQJ 0DUJLQ HPHWHU 6DPH 6WRUH 7UHQG 5HSRUW LQDQFLDO 5HYHQXH EURNHQ RXW VHSDUDWHO VKRZV WKDW LV DV PXFK DV EDVLV SRLQWV KLJKHU WKDQ WKH LQ 7KLV SRVW WUDQVIRUPDWLRQ UHVXOWHG LQ RXU FHPHWHU SRUWIROLR GHOLYHULQJ RI WRWDO FRPSDQ UHYHQXH LQ 7KH HYHQ EHWWHU Good To Great news is that since the initiation of our High Performance Sales Plan which EHJDQ LQ XO RI DQG FRQWLQXHV WR EH H HFXWHG LQ SKDVHV DFURVV RXU FHPHWHU SRUWIROLR RXU RSSRUWXQLW WR RSWLPL H RXU HPHWHU 6DPH 6WRUH 3RUWIROLR UHPDLQV XQGHU EOXH VNLHV 3UHQHHG 5HFRJQL HG 5HYHQXH QLVKHG DW PLOOLRQ IRU WKH IXOO HDU RI KLJKHU E PLOOLRQ RU ZKHQ FRPSDUHG WR WKH EHJLQQLQJ RI RXU WUDQVIRUPDWLRQ ZKLOH RXU WQHHG 5HYHQXH HQGHG DW PLOOLRQ DQG KLJKHU WKDQ E PLOOLRQ RU 2XU 7RWDO RQWUROODEOH RVW RI 5HYHQXH GHFUHDVHG WR LQ IURP LQ DQG 7RWDO 1RQ FRQWUROODEOH RVWV GHFUHDVHG E EDVLV SRLQWV IURP LQ WR LQ UH HFWLYH RI WKH SRZHUIXO RSHUDWLQJ OHYHUDJH WKDW FDQ EH D KXJH FLYWHEEL EFFECT ACCELERATOR of earnings when preneed property sales are growing over time at a 5 WKDW FDQ EH VXVWDLQHG IRU YH WR WHQ HDUV LQWR WKH IXWXUH 2XU HPHWHU 6DPH 6WRUH LHOG 7 0DUJLQ RI LQ ZDV DQ DOO WLPH UHFRUG KLJK DQG EDVLV SRLQWV KLJKHU WKDQ WKH LQ DQG QRZ RQ SDU ZLWK RXU XQHUDO LHOG 7 0DUJLQV LQ WKH ORZ UDQJH 7KH JURZWK RI RXU FHPHWHU WUXVW IXQGV GXH WR RXU High Performance preneed sales led to an DGGLWLRQDO PLOOLRQ RU ZKHQ FRPSDUHG WR 2XU FRPELQHG HPHWHU LHOG LQDQFLDO 7 QLVKHG DW PLOOLRQ KLJKHU E PLOOLRQ RU WKDQ 2XU HPHWHU 6DPH 6WRUH Portfolio of businesses have never looked as attractive as they look today and the transformation of our HPHWHU SRUWIROLR WR RSWLPXP VXVWDLQDEOH SHUIRUPDQFH LV QRW FRPSOHWH Q ZH ZLOO FRQWLQXH WR LPSOHPHQW RWKHU SKDVHV RI RXU SODQ WR RSWLPL H RXU 6DPH 6WRUH SRUWIROLR SHUIRUPDQFH E PD LPL LQJ HYHU RSSRUWXQLW ZLWK HYHU IDPLO HYHU WLPH CARRIAGE SERVICES 2021 Annual Report Page 19
CEMETERY ACQUISITION SUMMARY 000 s except for margins 2019 2020 2021 2021 2020 Variance 2021 2020 Variance 7RWDO 2SHUDWLQJ 1HW 5HYHQXH 2SHUDWLQJ 0DUJLQ FOXGHV 5HQW 1 ES 2WKHU GGEDFNV DQG RWKHU LWHPV HPHWHU LHOG 7 1 ES 7RWDO LQDQFLDO 5HYHQXH 7RWDO 2SHUDWLQJ LQDQFLDO 5HYHQXH 1 ES 2SHUDWLQJ 0DUJLQ HPHWHU LHOG 7 0DUJLQ HPHWHU LHOG LQDQFLDO 7 0DUJLQ 2XU WKUHH HPHWHU FTXLVLWLRQV FRQWLQXHG WKHLU LQWHJUDWLRQ MRXUQH LQWR RXU Standards Operating Model in 2021 with an acceleration of High Performance DV FTXLVLWLRQ HPHWHU 5HYHQXH ZDV PLOOLRQ KLJKHU WKDQ E PLOOLRQ RU FTXLVLWLRQ HPHWHU LHOG 7 JUHZ WR PLOOLRQ KLJKHU WKDQ E PLOOLRQ RU ERRVWHG E FTXLVLWLRQ LHOG 7 0DUJLQ RI KLJKHU WKDQ E EDVLV SRLQWV 2XU FTXLVLWLRQ HPHWHU 3RUWIROLR IXWXUH LV YHU EULJKW DW DOO WKUHH EXVLQHVVHV EXW H FHHGLQJO VR DW DLUID 0HPRULDO 3DUN DQG XQHUDO RPH VLQFH WKH DUULYDO RI 9LFWRU ROODQG DV WKH QHZ 0DQDJLQJ 3DUWQHU 9LFWRU ZLOO EULQJ WR DLUID WKH Right Who factor because of his 4E Leadership FKDUDFWHULVWLFV DQG RSHUDWLRQDO H SHULHQFH LQ KLJK YROXPH KLJK SRWHQWLDO IXQHUDO KRPHV DQG FHPHWHULHV HOFRPH WR WKH DUULDJH DPLO 9LFWRU ORGANIZATION STRUCTURE TALENT AND CONCEPTUAL VISION UPDATE 2XU Good To Great High Performance Flywheel VKRZQ RQ WKH QH W SDJH LV D GHSHFWLRQ RI RXU High Performance Culture Framework included in our Value Creation Financial Dynamics 7KH High Performance Flywheel focuses on our three core Being The Best operator Being The Best consolidator and Being The Best YDOXH FUHDWRU YLVLRQ FRPSDQ WKDW KDSSHQV WR EH LQ WKH GHDWKFDUH LQGXVWU 7KH ZKHHO KHOSV GH QH ZKR ZH DUH ZKDW ZH GR DQG KRZ ZH GR LW 7KH LQQRYDWLYH LGHDV DQG VRSKLVWLFDWHG FRQFHSWV DUH WKH IRXQGDWLRQ DW DUULDJH DQG ZLOO QHYHU FKDQJH KRZHYHU RXU Good To Great Journey that never ends and our Being The Best Vision GHPDQGV WKDW HYHU RQH DW DUULDJH SXW WKHLU KHDUW DQG PLQG WR FRQWLQXRXV LPSURYHPHQW HYHU GD DQG LQ HYHU WKLQJ ZH GR LWK WKDW WKRXJKW LQ PLQG ZH DUH YHU H FLWHG WR VKDUH WKH IROORZLQJ RSHUDWLRQV XSGDWH Page 20 CARRIAGE SERVICES 2021 Annual Report
CAREdge Forum Sales 2Q DQXDU ZH KDG RXU UVW 9 5 CAREdge Forum for our High Performance HPHWHU 6DOHV 0DQDJHU HDGHUV DQG WKHLU 0DQDJLQJ 3DUWQHUV DW 7KH OL D DQH KRWHO LQ 1HZ 2UOHDQV 2XU CAREdge Forum LV D WZR IXOO GD H SRVXUH WR KLJK HQHUJ KLJK H SHFWDWLRQV DQG FUHDWLYH DQG LQQRYDWLYH LGHDV WKDW OHDG WR D MRXUQH RI GLVFRYHU RI ZKDW LV SRVVLEOH LQ WKH ZRUOG RI SUHQHHG VDOHV W LV DOVR DQ opportunity to meet fantastic talent from our cemetery portfolio across the country and share thoughts DQG VXFFHVV LGHDV 2YHU WKHVH WZR GD V RI WKH PHHWLQJ RI WKH PLQGV WKH WHDP OHDUQHG DERXW RXU UHFHQWO ODXQFKHG 0LFURVRIW QDPLFV 50 ZKLFK ZH FDOO SalesEdge H EHOLHYH WKDW WKLV IDQWDVWLF WRRO SURYLGHV RXU VDOHV WHDPV ZLWK WKH HGJH WKH QHHG WR SURYLGH D KLJKHU OHYHO RI VHUYLFH H FHOOHQFH DQG FXVWRPHU H SHULHQFH WR WKH IDPLOLHV WKDW ZH VHUYH ZKLOH GHOLYHULQJ High Performance Sales IRU HDUV WR FRPH 7KH attendees to our CAREdge Forum DOVR OHDUQHG DERXW RXU KLJK HQG SHUVRQDOL DWLRQ DQG H FOXVLYH 3ULYDWH Memorials offerings among other tools and sales skills that will enhance how we engage with families PRYLQJ IRUZDUG Sales and Marketing IIHFWLYH HEUXDU 6KDQH 3XGHQ ZDV SURPRWHG WR 9LFH 3UHVLGHQW RI 6DOHV DQG 0DUNHWLQJ 6KDQH ZKR MRLQHG DUULDJH DV LUHFWRU RI 6DOHV 6XSSRUW RQ 2FWREHU KDV FROODERUDWHG DQG EXLOW UHODWLRQVKLSV RI WUXVW ZLWK PDQ RI RXU 0DQDJLQJ 3DUWQHUV 6DOHV 0DQDJHUV 6DOHV RXQVHORUV DQG RXVWRQ 6XSSRUW HQWHU 7HDPV H KDV FRQWULEXWHG VLJQL FDQWO WR RXU VDOHV VXFFHVV HVSHFLDOO LQ WKH JURZWK RI FHPHWHU SUHQHHG VDOHV LV OHDGHUVKLS VW OH VWUDWHJLF DSSURDFK DQG H SHULHQFH KDYH OHG WR High Performance Sales OHYHOV QHYHU H SHULHQFHG EHIRUH LQ KLV SRUWIROLR RI EXVLQHVVHV LQFOXGLQJ RXU PRVW SURPLQHQW EXVLQHVV DLUID 0HPRULDO 3DUN DQG XQHUDO RPH Q KLV QHZ OHDGHUVKLS UROH 6KDQH ZLOO H SDQG WKH SDWK IRU RXU Carriage High Performance Culture Bus ZLWKLQ RXU VDOHV RUJDQL DWLRQ E EULQJLQJ PRUH RI WKH ULJKW SHRSOH LQWR WKH ULJKW VHDWV DW WKH ULJKW WLPH DUULDJH V Good To Great Journey KDV EOXH VNLHV RQ WKH KRUL RQ LWK D VXSHUFKDUJHG High Performance Sales Bus KLWWLQJ RQ DOO F OLQGHUV 6KDQH ZLOO FRQWLQXH WKH DFFHOHUDWLRQ RI RXU HPHWHU 3UHQHHG 6DOHV LQ ERWK RXU 6DPH 6WRUH HPHWHU DQG FTXLVLWLRQ HPHWHU 3RUWIROLR RI EXVLQHVVHV DW HYHQ IDVWHU VSHHGV DQG in complete alignment with our Being The Best Vision and Mission H ZLVK KLP LQFUHGLEOH VXFFHVV LQ KLV QHZ OHDGHUVKLS UROH CARRIAGE SERVICES 2021 Annual Report Page 21
DUULDJH QHYHU KDG D IRUPDO PDUNHWLQJ WHDP DV SDUW RI RXU RXVWRQ 6XSSRUW HQWHU IRU WKLV UHDVRQ DQG WR OHDG RXU PDUNHWLQJ VWUDWHJ RQ DQXDU UG ZH UHFUXLWHG D QHZ LUHFWRU RI 0DUNHWLQJ OIUHG KLWH ZKR FRPHV WR DUULDJH ZLWK D SURIHVVLRQDO EDFNJURXQG LQ GLJLWDO PDUNHWLQJ WUDQVIRUPDWLRQ IRU GHFHQWUDOL HG RUJDQL DWLRQV He will help us reshape and enhance our digital marketing efforts and be the support for all Managing Partners DQG WKHLU EXVLQHVVHV DV WKH SRVLWLRQ WKHLU EUDQG H SDQG PDUNHW UHDFK JURZ RXU FXVWRPHU OR DOW H SDQG VRFLDO PHGLD SODWIRUP SUHVHQFH JDLQ PDUNHW VKDUH DQG GHOLYHU KLJKHU RSHUDWLQJ DQG QDQFLDO SHUIRUPDQFH WKDQ HYHU EHIRUH H ZHOFRPH OIUHG WR WKH DUULDJH 6HUYLFHV IDPLO Regional Portfolio of Business Changes H KDYH UHGLVWULEXWHG WKH IXQHUDO DQG FHPHWHU RSHUDWLRQV LQ RXU DVW DQG HQWUDO 5HJLRQV WR EDODQFH WKH QXPEHU DQG UHYHQXH VL H WKDW HDFK RI RXU WKUHH 5HJLRQDO 3DUWQHUV VXSSRUWV 7KLV QHZ GLVWULEXWLRQ ZLOO KHOS strengthen the partnership with all our Managing Partners optimize market share gains and thereby solidify RXU RSHUDWLQJ OHYHUDJH ZLWK KLJKHU DQG VXVWDLQDEOH UHYHQXH JURZWK 6KDZQ 3KLOOLSV 6HQLRU 9LFH 3UHVLGHQW DQG 5HJLRQDO 3DUWQHU RI RXU HQWUDO 5HJLRQ ZLOO QRZ KDYH RQH RI WKH WZR 1RUWKHDVW VXE UHJLRQV ZKHUH KLV YDVW H SHULHQFH ZLOO DFFHOHUDWH VXFFHVV LQ Standards Achievement LQ KLV H SDQGHG SRUWIROLR DUULDJH LJK 3HUIRUPDQFH XOWXUH DQG FRQWLQXRXV HYROXWLRQ LQ WKH SXUVXLW RI Being The Best Vision could EH GHVFULEHG DV D DUZLQLDQ 0HULWRFUDF ZKHUH RQO WKH Best of Best WKULYH DQG FRQTXHU RQVHTXHQWO we are now seeking the Right Who DUULDJH 6HQLRU 9LFH 3UHVLGHQW DQG 5HJLRQDO 3DUWQHU RI RXU DVW 5HJLRQ who will take a leadership seat on the Carriage High Performance Bus and bring this portfolio of businesses WR UHDFK WKHLU IXOO SRWHQWLDO Digital Transformation Five Year Plan 7KH KLJKO WUDGLWLRQDO VR FDOOHG GHDWKFDUH LQGXVWU UHPDLQV SULPH IRU GLVUXSWLRQ HVSHFLDOO LQ LQQRYDWLRQ WKURXJK QHZ WHFKQRORJ H UHFRJQL H WKDW ZH ZLOO HLWKHU JHW GLVUXSWHG RU EHFRPH GLVUXSWLYH RXUVHOYHV H FKRRVH WKH ODWWHU LWK WKLV JRDO LQ PLQG ZH DUH GHYHORSLQJ D WHQ HDU YLVLRQ D YH HDU VWUDWHJ DQG D RQH HDU SODQ IRU WKH WUDQVIRUPDWLRQ DQG LQQRYDWLRQ RI GHDWKFDUH WHFKQRORJ 6WDUWLQJ ZLWK WKH KLUH RI RXU QHZ KLHI QIRUPDWLRQ 2I FHU ZKR ZLOO EHJLQ ZLWK DUULDJH LQ SULO RI 2XU QHZ 2 ZKRVH QDPH ZLOO EH disclosed in mid March 2022 will be tasked with the holistic mission of creating a customer centric technology VROXWLRQ WKDW HOHYDWHV WKH VHUYLFH H FHOOHQFH MRXUQH IRU DOO WKH IDPLOLHV WKDW ZH VHUYH 7KLV LQQRYDWLYH DQG GLJLWDO WUDQVIRUPDWLRQ ZLOO LQFOXGH EXW QRW EH OLPLWHG WR LPSURYHG GLJLWDO LQ VLWX H SHULHQFH integration of celebrations of life through technology a seamless chain of custody fully integrating and DFFHOHUDWLQJ VXFFHVVIXO H HFXWLRQ RI WKH EDFN DQG IURQW RI FH V VWHPV DQG UVW LQ FODVV F EHU VHFXULW V VWHPV DQG SROLFLHV H DUH ORRNLQJ IRUZDUG WR DFFHOHUDWLQJ WKH VXFFHVVIXO LPSOHPHQWDWLRQ RI WKLV YH HDU FRPSOHWH LJLWDO 7UDQVIRUPDWLRQ SODQ ZKRVH FRUH PLVVLRQ LV WR GHOLYHU YDOXH FUHDWLRQ IRU WKH IDPLOLHV WKDW ZH VHUYH RXU WHDPV RI HOG DQG RXVWRQ 6XSSRUW HQWHU HPSOR HHV DQG RXU VKDUHKROGHUV Standards Council Update 2Q DQXDU ZH KDG RXU UVW 6WDQGDUGV RXQFLO PHHWLQJ VLQFH WKH 29 SDQGHPLF KLW WKH ZRUOG LQ HEUXDU 7KLV 6WDQGDUGV RXQFLO PHHWLQJ ZDV YHU VSHFLDO DV 0LFKDHO HOO 0DQDJLQJ 3DUWQHU RI 5HVWKDYHQ XQHUDO RPH DQG HPHWHU LQ 2NODKRPD LW 2 ZDV YRWHG LQ IRU PHPEHUVKLS RQ RXU Best of the Best 6WDQGDUGV RXQFLO 0LFKDHO EHJDQ KLV FDUHHU DW DUULDJH 6HUYLFHV LQ DV D 0DQDJLQJ 3DUWQHU DW 1RUWK UHYDUG XQHUDO RPH DQG 2DNODZQ 0HPRULDO 3DUN LQ 7LWXVYLOOH IHZ HDUV ODWHU KH EHFDPH D LUHFWRU RI 2SHUDWLRQV 6XSSRUW IRU WKH HQWUDO 5HJLRQ Q XQH 0LFKDHO IRXQG KLV SHUIHFW VHDW RQ RXU High Performance Bus as Managing Partner of Resthaven XQHUDO RPH DQG 0HPRU DUGHQV LQ 2NODKRPD LW 2 LWK KLV WLPH LQ WKHVH YDULRXV UROHV 0LFKDHO brings a wide array of knowledge and leadership in the funeral home and cemetery operations and will have WKH RSSRUWXQLW WR UHSUHVHQW WKH HQWUDO 5HJLRQ RQ WKH 6WDQGDUGV RXQFLO KLOH 0LFKDHO KDV RQO EHHQ DW 5HVWKDYHQ IRU WZR DQG RQH KDOI HDUV KH KDV WUDQVIRUPHG KLV EXVLQHVV LQWR RQH RI DUULDJH V WRS SHUIRUPLQJ EXVLQHVVHV RYHU WKLV SHULRG H ZHOFRPH 0LFKDHO DV WKH QHZHVW PHPEHU RI RXU 6WDQGDUGV RXQFLO Page 22 CARRIAGE SERVICES 2021 Annual Report
CAREdge Forum Operations 2Q 0DUFK WKURXJK 0DUFK RI LQ RXVWRQ 7 ZH ZLOO KDYH RXU QHZ YHUVLRQ RI WKH QQXDO 0DQDJLQJ Partner Meeting which will also be called CAREdge Forum RU WKLV QHZ UVW RSHUDWLRQV HGLWLRQ RI WKH IRUXP our sole focus will be Service and Guest Experience Transformation OO RI RXU 0DQDJLQJ 3DUWQHUV LJK 3RWHQWLDO OHDGHUV 2SHUDWLRQDO DQG 6DOHV RXVWRQ 6XSSRUW HQWHU 7HDPV DQG 6SHFLDO XHVWV ZLOO PHHW WR OLYH EUHDWKH DQG WKLQN HQKDQFHG SHUVRQDOL HG VHUYLFH H FHOOHQFH IRU WKH IDPLOLHV ZH VHUYH LQ ZD V ZH QHYHU KDG EHIRUH 1RW RQO ZLOO WKLV EH D IXQ DPD LQJ DQG XQLTXH HYHQW EXW PRVW LPSRUWDQWO LW ZLOO FKDOOHQJH HYHU RQH LQ attendance in thinking and reimagining ways to completely transform our Service and Guest Experience already one of our Funeral High Performance VWDQGDUGV ZHLJKWHG DW DIWHU RXU QHZ DQG LQFUHDVHG focus in service and attention to detail which will lead to increased market share growth throughout our SRUWIROLR RI EXVLQHVVHV HYHQ IXUWKHU 2XU 6WDQGDUGV RXQFLO ZLOO UHFRQYHQH DIWHU WKH CAREdge Forum to discuss a revamped Service and Guest Experience Standard and its relative weighting importance out of 6WDQGDUG FKLHYHPHQW Innovation and Creativity Committee 7KH KLJKO WUDGLWLRQDO GHDWKFDUH LQGXVWU KDV D XQLTXH RSSRUWXQLW WR WUDQVIRUP KRZ IDPLOLHV VD WKHLU ODVW JRRGE HV DQG H SHULHQFH IXQHUDO DQG FHPHWHU VHUYLFHV DQG SURGXFWV H KDYH PDQ 0DQDJLQJ 3DUWQHUV with teams of highly talented funeral professionals who through creativity and innovation provide a SHUVRQDOL HG H SHULHQFH WKDW HQDEOHV WKH UHPDLQLQJ IDPLO DQG IULHQGV WR UHPHPEHU DQG KRQRU WKH OLIH WKDW ZDV OLYHG ZKLOH FHOHEUDWLQJ WKDW ORYHG RQH V OLIH LQ WKH PRVW PHDQLQJIXO ZD V 0DQ IDPLOLHV KDYH H SUHVVHG WKHLU JUDWLWXGH WR RXU GHYRWHG DQG FDULQJ HPSOR HHV WKURXJK ZULWWHQ FDUGV HPDLOV WH WV DQG PDQ RWKHU ZD V WKDQNLQJ WKHP IRU FUHDWLQJ WKHVH PHPRUDEOH LIH 6WRULHV DQG KRQRULQJ WKHLU ORYHG RQHV ZLWK FDUH GLJQLW DQG VLJQL FDQFH H EHOLHYH WKDW WKLV QREOH SXUSRVH FDQ EH LPSURYHG E LQWHJUDWLQJ WHFKQRORJ DQG WKH DGDSWDWLRQ RI KRVSLWDOLW FRQFHSWV LQWR RXU VHUYLFH FKDLQ RU WKHVH UHDVRQV ZH DUH IRUPLQJ RXU UVW HYHU Innovation and Creativity Committee comprised of our very best and most creative and innovative mastermind Managing Partners whose mission will be to craft a FXVWRPHU MRXUQH DQG VHUYLFH FKDLQ WKDW HOHYDWHV RXU Service and Guest Experience Standard with every IDPLO HYHU WLPH H ORRN IRUZDUG WR VHHLQJ WKH DPD LQJ LQQRYDWLYH LGHDV DQG FUHDWLYH FRQFHSWV WKDW WKLV team will design as tools and make available to all of our Managing Partners and the families they serve FUHDWLQJ YDOXH WR WKHLU FRPPXQLWLHV WKHLU HPSOR HHV DQG DUULDJH VKDUHKROGHUV 2022 Carriage Theme YHU HDU DUULDJH KDV KDG D High Performance theme that aligns with the innovative ideas and sophisticated FRQFHSWV RI RXU FRPSDQ 2XU 2020 Theme Transformative High Performance was the catalyst to the FRPSOHWH WUDQVIRUPDWLRQ RI DUULDJH WKDW EHJDQ DW WKH HQG RI 0HO HODERUDWHG RQ KLV H FLWHPHQW DQG HQWKXVLDVP IRU WKH IXWXUH RI DUULDJH E VWDWLQJ Our company is positioned like never before in our history to have a breakout high SHUIRUPDQFH LQ WKDW ZLOO NLFN VWDUW DQRWKHU LYH
LWK WKLV EDFNJURXQG DV FRQWH W DQG RXU UNBREAKABLE UNION OF BELIEF FRPPLWPHQW WR RXU Being The Best Mission and Vision it is a natural transition to our 2022 Theme High Performance Value Creation Culture YHU RQH DW DUULDJH KDV WKH RSSRUWXQLW WR EH D 9DOXH UHDWRU LQ RXU High Performance Culture Bus DQG FRQVLVWHQW ZLWK LP ROOLQV TXRWH IURP KLV Good To Great ERRN Greatness is not a function of circumstance Greatness it turns out is largely a matter of FRQVFLRXV FKRLFH 2XU 2022 Theme High Performance Value Creation Culture is an open and standing invitation to all DUULDJH HPSOR HHV YHQGRUV SDUWQHUV DQG FRQWULEXWRUV WR CHOOSE GREATNESS and never settle for DQ WKLQJ OHVV DQG UHDVRQ ZK FRQWLQXH WR VD LW LV D JUHDW WLPH WR EH DW DUULDJH DQG WKH EHVW LV HW WR FRPH FRQFOXGHG 0U 4XH DGD UPDATE ON STRATEGIC ACQUISITION ACTIVITY GROWTH OUTLOOK 6WHYH 0HW JHU HFXWLYH 9LFH 3UHVLGHQW KLHI GPLQLVWUDWLYH 2I FHU DQG HQHUDO RXQVHO VWDWHG H continue to be encouraged by the number of acquisition opportunities that have been presented by brokers RU PRUH IUHTXHQWO DQG SUHIHUDEO E RZQHUV WKHPVHOYHV EDVHG RQ ORQJVWDQGLQJ UHODWLRQVKLSV H UHPDLQ in advanced discussions with a number of top quality business owners and we are also in the early stages of OHDUQLQJ PRUH DERXW VHYHUDO RWKHU EXVLQHVVHV KLOH ZH GR QRW FXUUHQWO KDYH DQ WUDQVDFWLRQV WR DQQRXQFH ZH UHPDLQ H FLWHG E WKH OHYHO RI VXFFHVVLRQ SODQQLQJ DFWLYLW DQG DERXW WKH SURVSHFW RI JURZWK E DFTXLVLWLRQ LQ EHJLQQLQJ QR ODWHU WKDQ WKH WKLUG TXDUWHU LI QRW EHIRUH KLOH ZH DUH IRFXVHG RQ RXU JURZWK WKURXJK DFTXLVLWLRQ RXWORRN RXU DSSURDFK WR DFTXLVLWLRQV ZLOO UHPDLQ KLJKO VHOHFWLYH H UHFRJQL H WKH LPSRUWDQFH RI DYRLGLQJ GRLQJ VWXSLG VWXII VXFK DV WKH DJJUHVVLYH JURZWK WKURXJK KLJK PXOWLSOH DFTXLVLWLRQV WKDW GH QHG WKH V LQ RXU LQGXVWU ZKLFK 0HO GHVFULEHG HDUOLHU H DUH GLVFLSOLQHG LQ RXU UHYLHZ RI D EXVLQHVV WKH PDUNHW DQG GHPRJUDSKLFV JURZWK SURVSHFWV DQG YDOXDWLRQ H ZLOO QRW JURZ VLPSO IRU WKH VDNH RI JHWWLQJ ELJJHU EXW ZLOO LQVWHDG UHPDLQ IRFXVHG RQ LGHQWLI LQJ WKRVH FDQGLGDWHV WKDW W RXU VWUDWHJLF FULWHULD DW D YDOXDWLRQ WKDW PDNHV VHQVH IRU ERWK SDUWLHV H KDYH H WHQGHG WKH RIIHU WR YLVLW XV LQ RXVWRQ WR PDQ DFTXLVLWLRQ FDQGLGDWHV DQG FRQWLQXH WR LQYLWH WKRVH LQWHUHVWHG LQ JHWWLQJ WR NQRZ DUULDJH EHWWHU WR UHDFK RXW WR QRW MXVW DQ HFXWLYH 7HDP PHPEHU RU XVLQHVV HYHORSPHQW UHSUHVHQWDWLYH EXW IRUPHU RZQHUV 0DQDJLQJ 3DUWQHUV 6XSSRUW HQWHU OHDGHUV 6WDQGDUGV RXQFLO 0HPEHUV DQG HYHQ RDUG PHPEHUV OO RI WKH LQGLYLGXDO PHPEHUV RI WKHVH JURXSV DUH DYDLODEOH WR VKDUH WKHLU XQLTXH SHUVSHFWLYH RI WKH DUULDJH VWRU DV ZH ORRN IRU QHZ DFTXLVLWLRQ FDQGLGDWHV WR MRLQ RXU WHDP DQG EHFRPH RXU SDUWQHU ZLWKLQ WKH ODUJHU IDPLO RI SDUWQHUV ZKR FRPSULVH RXU SRUWIROLR RI EXVLQHVVHV W LV GLI FXOW WR SUHGLFW ZKHQ WKH ULJKW EXVLQHVV RU EXVLQHVVHV ZLOO EH UHDG IRU D VXFFHVVLRQ planning option but when they are we will be ready to share our story and present a customized solution IUDPHZRUN WR MRLQ WKH DUULDJH DPLO As the second longest tenured company in the industry with a more than 30 year history a strong capital VWUXFWXUH DELOLW WR VHOI QDQFH JURZWK IURP UHH DVK ORZ D XQLTXH RZQHU RSHUDWRU EXVLQHVV PRGHO EHVW LQ FODVV LQFHQWLYH SODQV DQG EHVW LQ LQGXVWU 6XSSRUW HQWHU 7HDPV RXU IXWXUH IRU JURZWK KDV QHYHU EHHQ EULJKWHU H DUH FRQ GHQW WKDW DQ RZQHU LQ QHHG RI D VXFFHVVLRQ SODQ ZKR WDNHV WKH WLPH WR OHDUQ PRUH DERXW WKH DUULDJH 6WRU DQG ZKHUH ZH DUH KHDGHG DQG PRVW LPSRUWDQWO WR PHHW WKH SHRSOH ZKR PDNH XS WKH DUULDJH 7HDP ZLOO FRQFOXGH WKDW WKHUH LV RQO RQH VXFFHVVLRQ SODQ FKRLFH IRU WKH EHVW UHPDLQLQJ IXQHUDO KRPH DQG FHPHWHU RZQHUV FIVE YEAR SAME STORE FUNERAL PERFORMANCE INCENTIVE COMPENSATION AND RECOGNITION ALIGNMENT TRENDS Q SULRU UHOHDVHV ZH GLVFXVVHG DW JUHDW OHQJWK WKH WUDQVIRUPDWLRQ WDNLQJ SODFH ZLWKLQ DUULDJH EHJLQQLQJ LQ 6HSWHPEHU W FDQ DW WLPHV EH GLI FXOW WR FRQYH WKH VLJQL FDQFH RI WKDW WUDQVIRUPDWLRQ WR WKRVH ZKR DUH QRW HPEHGGHG LQ WKH ZRUN DQG FRQWULEXWLQJ WR WKH HYROXWLRQ ZLWKLQ WKH FRPSDQ HDFK GD LWK WKDW VDLG ZH DUH QRZ IDU HQRXJK DORQJ WKLV MRXUQH WR KDYH DFFXPXODWHG PHDQLQJIXO GDWD WR VKDUH LQ VXSSRUW RI WHOOLQJ WKLV VWRU WR RXU VKDUHKROGHUV Page 24 CARRIAGE SERVICES 2021 Annual Report
7KH LVFRYHU 3URFHVV GHQWLI LQJ D DFN RI RUUHODWLRQ 2QH RI WKH XQGHUO LQJ GULYHUV IRU WKLV WUDQVIRUPDWLRQ ZDV WKH DZDUHQHVV LQ WKDW WKHUH ZDV D ODFN RI FRUUHODWLRQ EHWZHHQ XQHUDO 6WDQGDUGV FKLHYHPHQW DQG QDQFLDO SHUIRUPDQFH 6LQFH DSSUR LPDWHO of our total revenue is currently generated by our funeral homes it is helpful to pause and look more closely DW WKH YH HDU 6DPH 6WRUH XQHUDO SHUIRUPDQFH WUHQGV FRYHULQJ WKH SHULRG RI 7KLV WLPHIUDPH FDSWXUHV WKH WZR HDUV DQG SULRU WR WKH VLJQL FDQW UHDOLJQPHQW HIIRUWV WKDW ZHUH LPSOHPHQWHG DW WKH HQG RI DV ZHOO DV WKH WKUHH HDUV DQG GXULQJ ZKLFK WKH LPSDFW RI WKHVH FKDQJHV EHFDPH FRQWLQXRXVO PRUH PDWHULDO DQG HYLGHQW V DUORV GHVFULEHG HDUOLHU RXU 6DPH 6WRUH XQHUDO SRUWIROLR LQFOXGHV DOO IXQHUDO KRPHV WKDW KDYH EHHQ D SDUW RI DUULDJH IRU DW OHDVW YH HDUV Q RUGHU WR IXOO DSSUHFLDWH WKH QHHG IRU D UHDOLJQPHQW RI XQHUDO LJK 3HUIRUPDQFH 6WDQGDUGV ZLWK KLJK DQG VXVWDLQDEOH IXQHUDO RSHUDWLQJ DQG QDQFLDO SHUIRUPDQFH DQG WKHQ WKH LPSDFW RI WKLV UHDOLJQPHQW LW LV LPSRUWDQW WR UVW XQGHUVWDQG WKH NH FKDQJHV WKDW ZHUH LGHQWL HG DQG LPSOHPHQWHG EHJLQQLQJ DQXDU 7KHVH XQHUDO LJK 3HUIRUPDQFH 6WDQGDUGV FKDQJHV KDYH VLQFH EHHQ FULWLFDO LQ FUHDWLQJ WKH QRZ incredibly strong correlation between our Funeral Portfolio Standards Achievement Financial Performance DQG QFHQWLYH RPSHQVDWLRQ DUULDJH V XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO KDV DOZD V EHHQ WKH XQLTXH IUDPHZRUN WKDW SURYLGHV WKH RSHUDWLRQDO IRXQGDWLRQ IRU KLJK SHUIRUPDQFH W LV WKH YHKLFOH WKDW DOORZV RXU 0DQDJLQJ 3DUWQHUV WR OHDG WKHLU UHVSHFWLYH EXVLQHVVHV DV RZQHUV LQ D FXVWRPL HG PDQQHU WKDW PDNHV VHQVH IRU WKHLU VSHFL F PDUNHWV DQG FRPPXQLWLHV RZHYHU WKH XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO LV RQO DV HIIHFWLYH DV WKH WDOHQW UHVSRQVLEOH IRU DSSO LQJ WKH PRGHO DQG WKH VSHFL F VWDQGDUGV ZHLJKWLQJV WKDW PDNH XS WKH PRGHO 2Q WKH WDOHQW VLGH ZH UHFRJQL HG WKDW ZH VLPSO QHHGHG WR JHW EHWWHU VR RXU 5HJLRQDO 3DUWQHUV DQG 7DOHQW FTXLVLWLRQ 7HDP ZHQW WR ZRUN DQG KDYH GRQH D IDQWDVWLF MRE RI WRS JUDGLQJ RXU HOG OHDGHUVKLS VLQFH 6HSWHPEHU V D UHVXOW ZH KDYH UHFUXLWHG DQG DGGHG QHZ 0DQDJLQJ 3DUWQHUV WR WKH DUULDJH 7HDP GXULQJ WKDW SHULRG ZKLFK UHSUHVHQWV MXVW XQGHU RI DOO RI RXU 0DQDJLQJ 3DUWQHUV V DUORV PHQWLRQHG the Darwinian Meritocracy that drives High Performance DW DUULDJH LV H FLWLQJ HQHUJL LQJ DQG UHZDUGLQJ IRU top performers and it does not support the subsidization of the performance of those who may not be up to WKH FKDOOHQJH Q IXUWKHU VXSSRUW RI WKLV DSSURDFK ZH KDYH DOVR VLJQL FDQWO HOHYDWHG WKH TXDOLW RI OHDGHUVKLS WDOHQW ZLWKLQ RXU HLJKW LUHFWRUV RI 2SHUDWLRQDO 6XSSRUW IRU WKUHH UHJLRQV E DGGLQJ YH QHZ OHDGHUV WR WKLV JURXS VLQFH 6HSWHPEHU H DOVR EXLOW RXU FXUUHQW WHDP RI WKUHH LUHFWRUV RI 6DOHV 6XSSRUW GXULQJ WKLV VDPH WLPH SHULRG 6R RQ WKH WDOHQW VLGH ZH KDYH EHHQ IRFXVHG DQG DJJUHVVLYHO DGYDQFLQJ WKH KLJK SHUIRUPDQFH FXOWXUH FRQFHSW RI First Who Then What GXULQJ WKH SDVW WKUHH DQG D KDOI HDUV V LW UHODWHG WR WKH VSHFL F SHUIRUPDQFH VWDQGDUGV WKDW PDNH XS WKH XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO ZH recognized in 2018 that there was no longer a clear correlation between Funeral Standards Achievement the IRUPXOD XVHG WR PHDVXUH D 0DQDJLQJ 3DUWQHU V VXFFHVV DQG QDQFLDO SHUIRUPDQFH V ZH KDYH GLVFXVVHG before a broad group of leaders gathered together in late 2018 to study the lack of correlation and following WKH UHYLHZ RI FRQVLGHUDEOH GDWD DQG H WHQVLYH GLVFXVVLRQV RXU 6WDQGDUGV RXQFLO UHYDPSHG WKH XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO WR SODFH D VLJQL FDQW IRFXV RQ 7KUHH
6LJQL FDQW KDQJHV HDG WR 6LJQL FDQW PSDFWV 7KHVH FKDQJHV LQFHQWLYL HG RXU 0DQDJLQJ 3DUWQHUV WR QR ORQJHU IRFXV SULPDULO RQ KLJK DYHUDJH UHYHQXH contracts but to instead work to secure every call and serve as many families as possible regardless of WKH UHYHQXH DPRXQW RI WKH FRQWUDFW ZKLOH DOZD V SURYLGLQJ KLJK YDOXH SHUVRQDO VHUYLFHV WR RXU IDPLOLHV 7KH FRQWULEXWLRQ RI WKHVH FKDQJHV WR SHUIRUPDQFH FDQ EH VHHQ LQ WKH WDEOH UH HFWHG EHORZ DV LW RXWOLQHV D FRQVLVWHQW LQFUHDVH LQ 7RWDO 6DPH 6WRUH XQHUDO FRQWUDFWV HDFK HDU VLQFH WKHVH FKDQJHV WR WKH XQHUDO Being The Best 6WDQGDUGV H KDYH DFKLHYHG DQ LQFUHGLEOH LQFUHDVH RI FRQWUDFWV RU PRUH WKDQ additional Same Store Funeral contracts at year end 2021 when compared to year end 2018 the year before WKHVH 6WDQGDUGV ZHUH FKDQJHG 7KH HYROXWLRQ RI WKH XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO FRQWLQXHG LQ HEUXDU ZKHQ ZH DGGHG D UHPDWLRQ YHUDJH 5HYHQXH 6WDQGDUG EXW ZHLJKWHG LW DW RQO 7KH ULVH LQ FUHPDWLRQV KDV EHHQ DURXQG IRU decades and while cremation as a form of disposition may cost less than a traditional burial the opportunity WR SURYLGH UVW FODVV VHUYLFH DQG HGXFDWH RXU FUHPDWLRQ IDPLOLHV RQ WKH PDQ RSWLRQV DYDLODEOH WR FHOHEUDWH DQG PHPRULDOL H WKHLU ORYHG RQHV LV MXVW DV VLJQL FDQW DV LW LV ZLWK D EXULDO LQWURGXFLQJ WKH UHPDWLRQ Average Revenue Standard and more importantly placing greater emphasis on the services and memorialization options available to families who choose cremation our Managing Partners and their teams are now LQFHQWLYL HG WR SODFH JUHDWHU IRFXV RQ WKLV RSSRUWXQLW ZLWK HDFK FUHPDWLRQ FRQWUDFW 7KH LPSDFW RI WKLV FKDQJH LV VHHQ LQ WKH WDEOH EHORZ WKURXJK WKH LQFUHDVH LQ WKH YHUDJH 5HYHQXH 3HU RQWUDFW IURP HDU HQG WR HDU HQG GHVSLWH WKH LQFUHDVH LQ FUHPDWLRQ UDWH IURP WR GXULQJ WKDW VDPH WLPH SHULRG 7KHVH QXPEHUV VXSSRUW D FOHDU LPSURYHPHQW LQ RXU IRFXV RQ DQG DELOLW WR VHUYH FUHPDWLRQ RSSRUWXQLWLHV DQG LW LV D IRFXV WKDW ZH DUH H FLWHG DERXW FRQWLQXLQJ WR EXLOG XSRQ PRYLQJ IRUZDUG 7KH UHPDWLRQ 0L 7UHQG DQG 5HYHQXH YHUDJH LV D ODVV DOI XOO DQG DORQJ ZLWK PDUNHW VKDUH RQH RI RXU JUHDWHVW RUJDQLF UHYHQXH JURZWK RSSRUWXQLWLHV LQ WKH IXWXUH FIVE YEAR SAME STORE FUNERAL TREND REPORT in thousands except for contracts and average revenue per contract 2017 2018 2019 2020 2021 2019 2021 Variance RQWUDFWV YHUDJH 5HYHQXH 3HU RQWUDFW 1HW 5HYHQXH 1 LHOG 7 LHOG 7 0DUJLQ ES 3UHQHHG 0DWXULW 5DWLR 1 UHPDWLRQ 5DWH 1 QFOXGHV 3UHQHHG XQHUDO LQWHUHVW HDUQLQJV UH HFWHG LQ 7RWDO LQDQFLDO 5HYHQXH Page 26 CARRIAGE SERVICES 2021 Annual Report
6ROYLQJ WKH LJK 3HUIRUPDQFH OLJQPHQW TXDWLRQ Q DGGLWLRQ WR WKH FKDQJHV UHODWHG WR RXU XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO ZH DOVR WRRN D IUHVK ORRN DW KRZ RXU DQQXDO DQG YH HDU LQFHQWLYH SODQV IRU RXU 0DQDJLQJ 3DUWQHUV DQG WKHLU WHDPV ZHUH LPSDFWLQJ DOLJQPHQW ZLWK SHUIRUPDQFH IWHU WRR PDQ RI RXU XQHUDO RPH 0DQDJLQJ 3DUWQHUV GXULQJ ZHUH LQ WKH PRQH ZLWK 6WDQGDUGV FKLHYHPHQW DERYH WKH 0LQLPXP 6WDQGDUG HW GLG QRW DFKLHYH WKHLU Being The Best 7 LHOG 7 0DUJLQ 5DQJH 0HO ZURWH KLV IDPRXV 7DOH RI 7ZR RPSDQLHV 7KHPH HWWHU WR DOO RXU HOG DQG RXVWRQ 6XSSRUW HQWHU HDGHUVKLS RQ HEUXDU Q LW KH PDGH WKH FRPSHOOLQJ DQDORJ RI RXU ORZ SHUIRUPLQJ IXQHUDO KRPHV ORZ 7 0DUJLQ LQ 3DULV EHLQJ VXEVLGL HG E RXU KLJK UHYHQXH DQG 7 0DUJLQ SHUIRUPLQJ IXQHUDO KRPHV LQ RQGRQ GXULQJ WKH WLPHIUDPH RI A Tale of Two Cities W RXU HEUXDU 6WDQGDUGV RXQFLO 0HHWLQJ WKH WHQ 6WDQGDUGV RXQFLO PHPEHUV GHFLGHG WKDW LI D EXVLQHVV GLG QRW DFKLHYH LWV LHOG 7 0DUJLQ 5DQJH IXQHUDO KRPHV RU 2SHUDWLQJ 0DUJLQ 5DQJH FHPHWHULHV DQ DQQXDO Being The Best LQFHQWLYH HDUQHG ZRXOG EH UHGXFHG E 7KH WDEOH RQ WKH QH W SDJH KLJKOLJKWV WKH LPSDFW WKLV FKDQJH KDV KDG RQ RXU XQHUDO DQG HPHWHU LHOG 7 0DUJLQV DV LHOG 7 0DUJLQ KDV LQFUHDVHG IURP LQ WR LQ DQ LQFUHDVH RI EDVLV SRLQWV LQ RQO WZR HDUV GXULQJ ZKLFK WKLV PXFK KLJKHU OHYHO RI SUR WDELOLW ZDV EHLQJ DSSOLHG WR DQ LQFUHDVH RI RYHU PLOOLRQ LQ 7RWDO 5HYHQXH 2XU YH HDU Good To Great 7 SHUIRUPDQFH LQFHQWLYH DZDUG SURJUDP ZDV FUHDWHG LQ DQG IRFXVHV RQ D Good To Great Five Year Class RI 0DQDJLQJ 3DUWQHUV ZKR DUH DOO HOLJLEOH GXULQJ WKH HDU LQ ZKLFK WKH MRLQ DUULDJH 6LQFH ZDV RXU LQDXJXUDO FODVV LW LQFOXGHV WKH 0DQDJLQJ 3DUWQHUV ZKR ZHUH ZLWK DUULDJH DW WKDW WLPH DQG DV D UHVXOW LW UHPDLQV E IDU RXU ODUJHVW FODVV DV FDQ EH VHHQ LQ WKH WDEOH RQ WKH QH W SDJH 7KLV DZDUG LV SDLG KDOI LQ FDVK DQG KDOI LQ DSSUHFLDWHG DUULDJH VWRFN 7KH HTXLW FRPSRQHQW RI WKLV DZDUG LV important and consistent with our efforts to drive an ownership mindset throughout our team but particularly DPRQJ RXU 0DQDJLQJ 3DUWQHUV ZKR VHUYH DV RZQHU RSHUDWRUV RI WKHLU UHVSHFWLYH EXVLQHVVHV LWK UHJDUG WR WKLV FULWLFDO ORQJ WHUP SHUIRUPDQFH LQFHQWLYH ZH UHFRJQL HG WKDW JURZLQJ UHYHQXHV DW DQ YH HDU FRPSRXQGHG OHYHO DERYH HUR VKRXOG OHDG WR KLJKHU UDWHV RI FRPSRXQGHG JURZWK LQ LHOG 7 EHFDXVH RI D JUDGXDO H SDQVLRQ RI LHOG 7 0DUJLQV GXH WR WKH LQKHUHQW QDWXUH RI RSHUDWLQJ OHYHUDJH So the initial level of eligibility for this incentive was changed from a minimum annual growth rate of 2 to an DQQXDO JURZWK UDWH RI DW OHDVW 7KLV FKDQJH ZDV DLPHG DW HVWDEOLVKLQJ DQ DWWDLQDEOH DQG PRWLYDWLQJ ORQJ WHUP UHYHQXH JURZWK VWDQGDUG IRU WKH ODUJH PDMRULW RI RXU 0DQDJLQJ 3DUWQHUV WR EXLOG DQG VXVWDLQ FRQVLVWHQW UHYHQXH JURZWK ZLWKLQ D 6WDQGDUGV 5DQJH RI LHOG 7 0DUJLQV IRXU SRLQW UDQJHV SODLQLQJ WKH HYROXWLRQ RI WKH XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO DQG UHYLVLWLQJ RXU DQQXDO DQG YH HDU performance incentives tells a large part of our realignment and Transformative High Performance VWRU RZHYHU WKH DFWXDO XQHUDO 6WDQGDUGV FKLHYHPHQW DQG FRUUHVSRQGLQJ LQFHQWLYH SD PHQWV WR RXU 0DQDJLQJ 3DUWQHUV DQG WKHLU LJK 3HUIRUPDQFH 7HDPV WHOOV WKH UHVW RI WKH VWRU KDW VWDQGV RXW LQ WKH WDEOH RQ WKH QH W SDJH LV WKH VLJQL FDQWO LPSURYHG 6WDQGDUGV FKLHYHPHQW LQ DQG WKH UVW WZR IXOO HDUV WR LQFOXGH WKH QHZ RPSRXQGHG 1HW 5HYHQXH 6WDQGDUG DV ZHOO DV WKH XSGDWHG Being The Best and Good To Great LQFHQWLYHV DOLJQLQJ ZLWK RXWVWDQGLQJ SHUIRUPDQFH JURZWK LQ 7RWDO RQWUDFWV 1HW 5HYHQXH LHOG 7 DQG LHOG 7 0DUJLQ SHUFHQWDJH V D UHVXOW ZH UHZDUGHG RXU HOG OHDGHUV ZLWK WZLFH DV PXFK LQ DQQXDO LQFHQWLYHV IRU WKHLU SHUIRUPDQFH YHUVXV SHUIRUPDQFH and Standards Achievement reached an all time high with nearly 80 Funeral Standards Achievement by RXU VDPH VWRUH EXVLQHVVHV LQ YHUVXV MXVW XQGHU XQHUDO 6WDQGDUGV FKLHYHPHQW E WKLV JURXS RI EXVLQHVVHV LQ CARRIAGE SERVICES 2021 Annual Report Page 27
PERFORMANCE ALIGNMENT Five Year Same Store Funeral Standards Achievement and Incentive Compensation Trends GROODUV LQ WKRXVDQGV 2017 2018 2019 2020 2021 6WDQGDUGV FKLHYHPHQW 3RWHQWLDO 3LQQDFOH LQQHUV 3LQQDFOH LQQHUV RI 3LQQDFOH LQQHUV 7 RQXVHV 7 RQXVHV DV D RI LHOG 7 7 ODVV QXPEHU RI 03 V 7 LQQHUV QXPEHU RI 03 V RI 7 LQQHUV 7 RQXVHV 7 RQXVHV DV D RI LHOG 7 1HW 5HYHQXH LHOG 7 LHOG 7 0DUJLQ 7RWDO LHOG QFHQWLYHV 7RWDO LHOG QFHQWLYHV DV D RI LHOG 7 Page 28 QFOXGHV 3UHQHHG XQHUDO LQWHUHVW HDUQLQJV UH HFWHG LQ 7RWDO LQDQFLDO 5HYHQXH CARRIAGE SERVICES 2021 Annual Report 1 1 1
KHQ FRPELQHG ZLWK RXU YH HDU Good To Great LQFHQWLYH ZH PRUH WKDQ GRXEOHG RXU WRWDO HOG LQFHQWLYH SD PHQWV LQ IURP MXVW RYHU PLOOLRQ SDLG IRU SHUIRUPDQFH WR PRUH WKDQ PLOOLRQ SDLG WR RXU XQHUDO RPH 0DQDJLQJ 3DUWQHUV IRU WKHLU LQFUHGLEOH SHUIRUPDQFH 7KHVH 0DQDJLQJ 3DUWQHUV KHOSHG GHOLYHU PRUH WKDQ PLOOLRQ LQ GMXVWHG 7 IRU EXW DGGHG PLOOLRQ WR WKDW QXPEHU LQ UHVXOWLQJ LQ PRUH WKDQ PLOOLRQ LQ 6DPH 6WRUH XQHUDO LHOG 7 LQ V IXUWKHU FRQ UPDWLRQ RI WKLV SHUIRUPDQFH DOLJQPHQW ZH ZHUH WKULOOHG WR VHH D JUHDWHU WKDQ LQFUHDVH LQ WKH QXPEHU RI 3LQQDFOH ZLQQHUV LQ 3LQQDFOH LV RXU H FOXVLYH JURXS RI LJK 3HUIRUPDQFH 0DQDJLQJ Partners who have achieved an average of at least 70 of Standards for the prior three years or achieved RI 6WDQGDUGV IRU WKH FXUUHQW HDU H JDWKHU WRJHWKHU HDFK HDU WR FHOHEUDWH WKLV JURXS RI ZLQQHUV ZLWK D UVW FODVV WULS IRU WKHP DQG WKHLU VLJQL FDQW RWKHUV DQG ZH FRXOG QRW EH PRUH H FLWHG WR ZDWFK WKLV HOLWH FOXE FRQWLQXH WR LQFUHDVH LWV PHPEHUVKLS KLOH RXU ZRQGHUIXO 0DQDJLQJ 3DUWQHUV DQG WKHLU UVW FODVV WHDPV ZHUH JHQHURXVO UHZDUGHG IRU WKHLU RXWVWDQGLQJ HIIRUWV RXU 6KDUHKROGHUV ZHUH DOVR ELJ ZLQQHUV LQ WKLV LJK 3HUIRUPDQFH OLJQPHQW TXDWLRQ DV WKHVH UHYLVHG 6WDQGDUGV DQG DQ XSGDWHG DSSURDFK WR RXU DQQXDO DQG YH HDU LQFHQWLYH DZDUGV KHOSHG GULYH DQ DGGLWLRQDO PLOOLRQ LQ GMXVWHG RQVROLGDWHG 7 MXVW IURP RXU 6DPH 6WRUH XQHUDO SHUIRUPHUV ZKHQ ZH ORRN DW ODVW HDU V SHUIRUPDQFH YHUVXV WKH HDU EHIRUH DOO RI WKHVH FROOHFWLYH FKDQJHV DQG XSGDWHV ZHUH LPSOHPHQWHG 7KLV LV H DFWO KRZ D SD IRU SHUIRUPDQFH DSSURDFK VKRXOG ZRUN DV WKH HPSOR HHV VKDUHKROGHUV DQG WKH FRPSDQ DOO EHQH W 7KH GULYHU IRU DOO RI WKHVH UHYLHZV DQG FKDQJHV FDQ EH VXPPHG XS LQ RQH ZRUG DOLJQPHQW 7KHUH PXVW DOZD V EH D FOHDU DOLJQPHQW EHWZHHQ RXU SHUIRUPDQFH DQG LQFHQWLYHV 1RZ WKDW ZH KDYH WKH EHQH W RI VHYHUDO years of data since the changes discussed above were introduced we are able to see the development of WKH QHFHVVDU FRQQHFWLRQV RZHYHU VLPSO JHWWLQJ WR WKLV SRLQW RI DOLJQPHQW LV QRW HQRXJK KDW ZH KDYH OHDUQHG DORQJ WKH ZD LV WKDW DOO OHDGHUV ZLWKLQ DUULDJH PXVW FRQVWDQWO IRFXV RQ WKH QXPEHUV WR HQVXUH WKH correlation between performance and incentives remains strong and if the numbers begin to tell a different story we will be quick to diagnose the changing circumstances and identify updates to ensure continued alignment and evolution of our models and approach to optimize future performance within the dynamically FKDQJLQJ PDUNHWV LQ ZKLFK ZH RSHUDWH V DFN HOFK RQFH VDLG DOZD V EH SUHSDUHG WR FKDQJH EHIRUH RX KDYH WR 7KH DUULDJH 0DUNHW 6KDUH URZWK 6WRU 6RPH PD ORRN DW WKH DERYH GDWD DQG LQIRUPDWLRQ DQG VSHFXODWH WKDW WKH 29 3DQGHPLF EHJLQQLQJ LQ 2020 is as important a driver for this performance incentive alignment as are the changes to the Funeral 6WDQGDUGV 2SHUDWLQJ 0RGHO DQG DQQXDO DQG YH HDU LQFHQWLYH DZDUGV 8QWLO UHFHQWO ZH VLPSO GLG QRW KDYH HQRXJK PHDQLQJIXO SDQGHPLF UHODWHG GDWD WR KHOS DGGUHVV WKDW TXHVWLRQ KDW ZH GR NQRZ LV WKDW GXULQJ WKH UVW HDU RI WKH SDQGHPLF QRERG NQHZ H DFWO KRZ LW ZRXOG HYROYH RU DIIHFW WKH ZRUOG OHW DORQH KRZ LW ZRXOG LPSDFW GLIIHUHQW LQGXVWULHV DQG VSHFL F EXVLQHVVHV V ZH DSSURDFK WZR HDUV RI OLYLQJ ZLWK WKH YDULRXV LPSDFWV FDXVHG E WKLV SDQGHPLF ZH QRZ KDYH WKH EHQH W RI EHWWHU GDWD ZKLFK DOORZV XV WR LGHQWLI FHUWDLQ WUHQGV KLOH PXFK RI WKH 29 UHODWHG GDWD LQYROYHV VRPH XQFHUWDLQWLHV SDUWLFXODUO DV ZH OHDUQ PRUH DERXW LWV impact as time goes on there is now enough data to give us a roughly right idea of some of its impact on our EXVLQHVVHV RU H DPSOH LQ HFHPEHU RXU EXVLQHVVHV EHJDQ WR IRUPDOO LQGLFDWH ZKHWKHU D GHDWK ZDV UHODWHG WR 29 ZKHQ WKH HQWHUHG FRQWUDFWV LQWR RXU FRQWUDFW PDQDJHPHQW V VWHP 7KHVH LQGLFDWLRQV KDYH EHHQ VXSSRUWHG E GHDWK FHUWL FDWHV OLVWLQJ WKH FDXVH RI GHDWK DV EHLQJ 29 UHODWHG LWK WKDW VDLG ZH DOVR NQRZ WKDW ZKHQ D GHDWK FHUWL FDWH LQGLFDWHV 29 DV WKH FDXVH RI GHDWK WKHUH PD KDYH DFWXDOO EHHQ RWKHU QRQ 29 UHODWHG FLUFXPVWDQFHV WKDW XOWLPDWHO FDXVHG WKH GHDWK CARRIAGE SERVICES 2021 Annual Report Page 29
KHQ ZH ORRN DW WRWDO FDOOV IURP WKH ODVW IXOO HDU SULRU WR WKH SDQGHPLF WR WKH UVW IXOO HDU ZKHQ UHSRUWHG 29 UHODWHG GHDWKV ZHUH FDSWXUHG RQ RXU FRQWUDFWV DPRQJ RXU VDPH VWRUH IXQHUDO KRPH SRUWIROLR WKH GDWD WHOOV D FOHDU VWRU RI PDUNHW VKDUH JURZWK PRQJ DOO RI RXU IXQHUDO KRPHV LQ WKH VDPH VWRUH SRUWIROLR ZH KDYH VHHQ JURZWK LQ WRWDO QXPEHU RI FDOOV RI IURP WR 2I WKDW DSSUR LPDWHO LV UHODWHG WR UHSRUWHG 29 UHODWHG GHDWKV PHDQLQJ RI WKH WRWDO JURZWK LV QRW UHODWHG WR 29 PRQJ RXU VDPH VWRUH IXQHUDO SRUWIROLR RI EXVLQHVVHV DSSUR LPDWHO RI WKRVH EXVLQHVVHV VKRZ JURZWK EH RQG 29 RI PRUH WKDQ ZKHQ ORRNLQJ DW FDOOV YHUVXV FDOOV 7KLV VWURQJ JURZWK EH RQG 29 VXSSRUWV D PDUNHW VKDUH JURZWK VWRU LQ OLQH ZLWK WKH SHUIRUPDQFH DQG LQFHQWLYH DOLJQPHQW GLVFXVVHG DERYH 0RUHRYHU ZKHQ UHYLHZLQJ WKH HQWHU IRU LVHDVH RQWURO DQG 3UHYHQWLRQ V GDWD RI 29 UHODWHG GHDWKV ZH QRWH WKHUH ZHUH MXVW RYHU RU IHZHU 29 UHODWHG GHDWKV LQ WKH 8QLWHG 6WDWHV LQ WKH IRXUWK TXDUWHU RI DV FRPSDUHG WR WKH IRXUWK TXDUWHU RI HVSLWH WKDW VLJQL FDQW HDU RYHU HDU GHFUHDVH LQ 29 UHODWHG GHDWKV LQ WKH 8QLWHG 6WDWHV RXU 6DPH 6WRUH XQHUDO EXVLQHVVHV VDZ DQ LQFUHDVH RI PRUH WKDQ FRQWUDFWV GXULQJ WKDW VDPH WLPH SHULRG V 0HO RIWHQ VD V WKH GDWD GRQ W OLH V ZH FRQWLQXHG WR DQDO H WKH GDWD ZH LGHQWL HG DQRWKHU VWURQJ WUHQG ZKLFK IXUWKHU VXSSRUWV DUULDJH V PDUNHW VKDUH JURZWK VWRU 3UHQHHG 0DWXULW GHVFULEHV WKH SURFHVV RI ZKHQ D SUHQHHG FRQWUDFW JRHV DWQHHG DQG LV VHUYHG KHQ WKH SUHQHHG PDWXULW UDWH JRHV GRZQ WKDW PHDQV ZH DUH VHUYLQJ PRUH SXUH ZDON LQ DWQHHG IDPLOLHV WKDQ ZH DUH VHUYLQJ SUHQHHG IDPLOLHV ZKRVH FRQWUDFWV JR DWQHHG I WKH SUHQHHG PDWXULW UDWH JRHV GRZQ DQG RXU WRWDO FRQWUDFW JURZWK UDWH JRHV XS LW LV KLJKO OLNHO ZH DUH JDLQLQJ PDUNHW VKDUH 7KH WDEOH RQ SDJH VKRZV WKH SUHQHHG PDWXULW UDWH IRU RXU VDPH VWRUH IXQHUDO JURXS VORZO GHFOLQLQJ IRU VHYHUDO HDUV LQFOXGLQJ D VLJQL FDQW GHFOLQH RI PRUH WKDQ LQ ZKHQ FRPSDUHG WR GHVSLWH WKH WRWDO QXPEHU RI FDOOV LQFUHDVLQJ E PRUH WKDQ GXULQJ WKDW VDPH RQH HDU SHULRG 7KH FRPELQDWLRQ RI WKHVH trends strongly supports the growth in market share story that our Managing Partners and Directors of Support KDYH EHHQ VKDULQJ ZLWK XV IRU WKH SDVW WZR HDUV KLOH ZH DFNQRZOHGJH 29 UHODWHG GDWD LV IDU IURP SHUIHFW ZH GR QRZ KDYH HQRXJK LQVLJKW LQWR UHSRUWHG GHDWKV DWWULEXWDEOH WR 29 WR PDNH VRPH URXJKO ULJKW LQIHUHQFHV SDUWLFXODUO ZKHQ WKDW GDWD LV VXSSRUWHG E RWKHU WUHQGV ZLWKLQ RXU VDPH VWRUH IXQHUDO SRUWIROLR KHQ ZH WDNH D FRPSUHKHQVLYH ORRN DW WKH QHZ DGGLWLRQ RI WDOHQW WR HOG OHDGHUVKLS WKH UHYDPSHG DSSURDFK WR LQFHQWLYH FRPSHQVDWLRQ SODFLQJ DQ HPSKDVLV RQ PDUJLQV DQG WKH NH XSGDWHV WR RXU XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO IRFXVLQJ RQ RPSRXQGHG 1HW 5HYHQXH ZH EHOLHYH WKH VWRU RYHU WKH SDVW WKUHH HDUV RI 7UDQVIRUPDWLYH KDQJH FDQ QRZ DOVR EH WROG DV D DUULDJH 0DUNHW 6KDUH URZWK 6WRU SUPPORT CENTER ORGANIZATION STRUCTURE TALENT AND CONCEPTUAL VISION UPDATE 0XFK OLNH WKH UHVW RI DUULDJH RXU RXVWRQ 6XSSRUW HQWHU 7HDPV KDYH VHHQ VLJQL FDQW FKDQJHV RYHU WKH SDVW three years aimed at strengthening leadership and building a positive high performance culture environment of FROODERUDWLRQ V D VHOI SURFODLPHG 3HRSOH LUVW FRPSDQ ZH KDYH ORRNHG IRU ZD V WR PDNH VXUH ZH DUH WUXH WR WKDW IRFXV First Who Then What 7KRVH ZKR KDYH IROORZHG DUULDJH RYHU WKH SDVW IHZ HDUV NQRZ WKDW ZH KDYH EHHQ DJJUHVVLYH LQ LGHQWLI LQJ DQG UHFUXLWLQJ WRS WDOHQW KLOH ZH DUH H FLWHG DERXW WKH OHDGHUVKLS ZH KDYH LQ SODFH ZH FRQWLQXH WR ZRUN WR LGHQWLI DUHDV ZKHUH ZH FDQ JHW HYHQ EHWWHU RU H DPSOH DUORV PHQWLRQHG RXU IRFXV RQ OHYHUDJLQJ WHFKQRORJ DQG UHFUXLWLQJ D KLHI QIRUPDWLRQ 2I FHU WR OHDG WKLV HIIRUW 7KLV LV DQ DUHD PXFK OLNH VDOHV ZKHQ DUORV MRLQHG WKDW SUHVHQWV LQFUHGLEOH RSSRUWXQLW DQG XSVLGH IRU RXU WHDP WKDW KDV HW WR EH UHDOL HG DUORV DOVR UHIHUHQFHG 6KDQH 3XGHQ OHDGLQJ RXU 6DOHV DQG 0DUNHWLQJ WHDP PRYLQJ IRUZDUG W LV LPSRUWDQW WR QRWH WKDW RXU IRFXV RQ PDUNHWLQJ ZLWK 6KDQH DQG OIUHG V OHDGHUVKLS LV QHZ IRU DUULDJH JDLQ DV ZLWK VDOHV DQG WHFKQRORJ D GHGLFDWHG IRFXV RQ PDUNHWLQJ RIIHUV XV D QHZ DQG H FLWLQJ RSSRUWXQLW IRU DFFHOHUDWHG JURZWK Page 30 CARRIAGE SERVICES 2021 Annual Report
LWKLQ WKH WHDPV WKDW KDYH WKH SULYLOHJH RI OHDGLQJ XPDQ 5HVRXUFHV HJDO 5LVN 0DQDJHPHQW DQG Business Development we have incredible internal talent who are Energized motivated and doing much more WKDQ MXVW RIIHULQJ WRS QRWFK VXSSRUW WR RXU EXVLQHVVHV 7KHVH OHDGHUV DUH DOVR LGHQWLI LQJ QHZ RSSRUWXQLWLHV WR KHOS GULYH RXU UHVXOWV IRUZDUG DQG WKH EURDGO SHUIRUP ZLWK D RZQHU V PLQGVHW VLPLODU WR ZKDW ZH VHH IURP RXU 0DQDJLQJ 3DUWQHUV W LV DQ KRQRU WR ZRUN ZLWK WKLV W SH RI WDOHQW DQG LW LV IXQ WR VHH WKH OHYHO RI SULGH DQG H FLWHPHQW WKH KDYH IRU DUULDJH DQG WKHLU IHOORZ WHDPPDWHV Right Who s in the Right Seats In addition to bringing in new talent to lead critical areas of our growth strategy we have also focused on LQYROYLQJ PRUH WDOHQWHG LQGLYLGXDOV LQ NH SURMHFWV DQG EUDLQVWRUPLQJ VHVVLRQV LQWHQGHG WR EXLOG FROODERUDWLRQ DQG SURYLGH D SODWIRUP IRU QHZ DQG LQQRYDWLYH LGHDV WR JDLQ WUDFWLRQ 7KLV SURFHVV KDV DOVR OHG WR DVNLQJ several leaders to take on new responsibilities sometimes outside of their background or comfort zone in an HIIRUW WR VWUHWFK GHYHORSPHQW DQG GULYH QHZ WKLQNLQJ LWKLQ VRPH WHDPV ZH KDYH FUHDWHG XQFRQYHQWLRQDO leadership structures and more broadly we have worked to involve leaders from different teams in strategic DUHDV ZLWK ZKLFK WKH PD QRW KDYH SUHYLRXVO EHHQ LQYROYHG 7KH JRDO KDV EHHQ DQG FRQWLQXHV WR EH WR LGHQWLI WDOHQW DQG SRVLWLRQ WKRVH LQGLYLGXDOV WR FRQWULEXWH EH RQG WKHLU FXUUHQW UHVSRQVLELOLWLHV Two of the 4E s of Leadership Energy Energize V SDUW RI DQ HIIRUW WR EXLOG D UVW FODVV HQYLURQPHQW WKDW ZLOO KHOS XV UHWDLQ DQG DWWUDFW WKH EHVW WDOHQW LQ DQG RXWVLGH RI WKH LQGXVWU WR KHOS VXSSRUW RXU FROOHDJXHV LQ WKH HOG ZH NQHZ WKDW JHWWLQJ WKH SHRSOH SDUW RI WKH HTXDWLRQ ULJKW ZDV QRW HQRXJK H DOVR QHHGHG WR PDNH VXUH WKDW WKHVH OHDGHUV KDG D ZRUN HQYLURQPHQW WKDW matched their level of Energy 7R WKDW HQG ODVW HDU ZH ZHUH H FLWHG WR ZHOFRPH RXU 6XSSRUW HQWHU 7HDPV EDFN WR DQ RI FH HQYLURQPHQW WKDW LV OLJKWHU EULJKWHU DQG OOHG ZLWK WKH OHDGHUVKLS EUDQGLQJ DQG DUULDJH KLVWRU WKDW ZH WDON DERXW VR IUHTXHQWO 2XU High Performance Culture LV RQ IXOO GLVSOD DV RX ZDON WKURXJK WKH KDOOV RI RXU RXVWRQ 6XSSRUW HQWHU 2Q RXU ZDOOV RX ZLOO VHH HYHU WKLQJ IURP TXRWHV IURP LP ROOLQV WR WKH QYHVWRU V XVLQHVV DLO 6HFUHWV WR 6XFFHVV WR WKH V RI HDGHUVKLS WR RXU LYH XLGLQJ 3ULQFLSOHV MXVW WR QDPH D IHZ 7KLV SHUVRQDOL DWLRQ RI RXU OHDGHUVKLS IRFXV DQG LQYHVWPHQW LQ WKH SHRSOH ZKR VXSSRUW RXU FROOHDJXHV LQ WKH HOG HYHU GD KDV OHG WR D QRWLFHDEOH GLIIHUHQFH LQ HQHUJ DQG GDLO EX DV ZH JR DERXW RXU EXVLQHVV Q IDFW D UHFHQW YLVLWRU VDLG WR PH I GLGQ W NQRZ ZDV DW DUULDJH ZRXOG WKLQN WKLV ZDV DQ RI FH IRU RRJOH RU SSOH H GH QLWHO WRRN WKDW FRPPHQW DV D FRPSOLPHQW XW GRQ W WDNH RXU ZRUG IRU LW ZH LQYLWH DQ RQH LQWHUHVWHG LQ OHDUQLQJ PRUH DERXW DUULDJH WR FRPH YLVLW RXU Energized RXVWRQ 6XSSRUW HQWHU DQG PHHW WKH WDOHQWHG SHRSOH ZKR PDNH XS WKH WHDPV WKDW SURYLGH DUULDJH ZLWK D FRPSHWLWLYH Edge LQ WKH DUHD RI FRPSUHKHQVLYH VXSSRUW V DUORV GHVFULEHG HDUOLHU RXU Good To Great High Performance Flywheel was put in place to serve as an overview of our unique High Performance Culture W ZDV DOVR LQWHQGHG WR EH D FDWDO VW IRU GLVFXVVLRQ E leaders with leaders as to how they can work together to drive higher performance through the various eight FRPSRQHQWV RI WKH ZKHHO XOWLPDWHO OHDGLQJ WR JUHDWHU DQG VXVWDLQHG SHUIRUPDQFH H DUH FRQ GHQW WKDW RXU 6XSSRUW HQWHU 7HDP RI 7HDPV LV FRPSULVHG RI VRPH RI WKH EHVW WDOHQW LQ WKH LQGXVWU DQG RXU IRFXV QRZ LV to make sure we continue to surround them with other top talent and provide them with an equally impressive environment for growth and achievement in which they can contribute to the continued acceleration of our Good To Great High Performance Flywheel PRYLQJ IRUZDUG FRQFOXGHG 0U 0HW JHU CARRIAGE SERVICES 2021 Annual Report Page 31
ADJUSTED FREE CASH FLOW AND LEVERAGE RATIO Years Ended December 31 2020 2021 1HW DVK 3URYLGHG E 2SHUDWLQJ FWLYLWLHV DVK XVHG IRU 0DLQWHQDQFH DSLWDO SHQGLWXUHV UHH DVK ORZ Plus Incremental Special Items HGHUDO 7D 5HIXQG 6HYHUDQFH DQG 6HSDUDWLRQ RVWV LWLJDWLRQ 5HVHUYH LVDVWHU 5HFRYHU DQG 3DQGHPLF RVWV 2WKHU 6SHFLDO WHPV GMXVWHG UHH DVK ORZ 3URIRUPD IRU XOO
KDW LV UHPDUNDEOH DERXW RXU RSHUDWLQJ SHUIRUPDQFH DQG FDSLWDO DOORFDWLRQ LQ LV WKDW ZH ZHUH DEOH WR UH QDQFH RXU FDSLWDO VWUXFWXUH WKDW LQFOXGHG D PLOOLRQ SUHSD PHQW SHQDOW RQ PLOOLRQ RI HLJKW HDU VHQLRU QRWHV WR UHGXFH LQWHUHVW FRVWV E PLOOLRQ DQQXDOO LQYHVW PLOOLRQ LQ KLJK UHWXUQ LQWHUQDO JURZWK SURMHFWV DQG UHSXUFKDVH RI RXU VKDUHV RXWVWDQGLQJ IRU DSSUR LPDWHO PLOOLRQ SHU VKDUH ZKLOH PDLQWDLQLQJ RXU OHYHUDJH UDWLR DSSUR LPDWHO DW FRPSDUHG WR HDU HQG 7KH WUDQVIRUPDWLRQ WKDW KDV RFFXUUHG LQ GHPRQVWUDWHV WKH DPRXQW RI QDQFLDO H LELOLW DUULDJH KDV ZLWK RXU LPSURYHG ORZ FRVW FDSLWDO VWUXFWXUH DQG RXU KLJK DPRXQW RI UHFXUULQJ DQG JURZLQJ GMXVWHG UHH DVK Flow aka A Free Cash Flow Machine H LQWHQG WR DOORFDWH FDSLWDO ZLWK UHWXUQ RQ LQYHVWHG FDSLWDO GLVFLSOLQH DQG VDYYLQHVV DV RXWOLQHG EHORZ ZKLOH EHLQJ DEOH WR PDLQWDLQ D 7RWDO HEW WR GMXVWHG RQVROLGDWHG 7 HYHUDJH 5DWLR ZLWKLQ D UDQJH RI WR WLPHV XS WR WLPHV EULH LI YDOXH FUHDWLRQ RSSRUWXQLW MXVWL HV ZLWK D VXVWDLQDEOH SROLF RI WLPHV RYHU WKH ORQJ WHUP CAPITAL ALLOCATION PRIORITY LWK RXU UHFRUG RSHUDWLQJ DQG QDQFLDO SHUIRUPDQFH FRPELQHG ZLWK WKH VXFFHVVIXO VHQLRU QRWH UH QDQFLQJ WUDQVDFWLRQ LQ 0D ZH EHOLHYH WKDW DUULDJH KDV HQWHUHG LQWR D ORQJ WHUP VZHHW VSRW IRU FDSLWDO DOORFDWLRQ DQG JURZWK RI QWULQVLF 9DOXH 3HU 6KDUH DV RXU UHFXUULQJ DQG JURZLQJ UHH DVK ORZ DOORZV XV WR VHOI QDQFH WKH PDMRULW RI RXU FDSLWDO DOORFDWLRQ RSSRUWXQLWLHV XULQJ WKH IRXUWK TXDUWHU ZH FRQWLQXHG WR VWUDWHJLFDOO DOORFDWH FDSLWDO SULPDULO WRZDUGV WKH H HFXWLRQ RI RXU VKDUH UHSXUFKDVH SURJUDP H believe that it remains important to update investors quarterly on our current capital allocation priorities as GHWDLOHG EHORZ Strategic Acquisitions H ZLOO KDYH PRUH RSSRUWXQLWLHV WR VHOHFWLYHO DOORFDWH FDSLWDO LQ DQG EH RQG WR KLJK TXDOLW DFTXLVLWLRQ FDQGLGDWHV LQ ODUJH VWUDWHJLF JURZWK PDUNHWV ZKHUH RXU FRQVHUYDWLYHO H SHFWHG UHWXUQ RQ LQYHVWHG FDSLWDO FDQ EH DSSUR LPDWHO LQ WKH HDUO HDUV SRVW LQWHJUDWLRQ WKHQ JURZLQJ KLJKHU RQFH IXOO RSWLPL HG DV SDUW RI RXU RSHUDWLQJ DQG VXSSRUW IUDPHZRUN 7KH DFTXLVLWLRQ ODQGVFDSH FRQWLQXHV WR ORRN KLJKO IDYRUDEOH IRU DUULDJH DV RZQHUV RI WKH EHVW UHPDLQLQJ LQGHSHQGHQW IXQHUDO KRPHV DQG FHPHWHULHV LQ PHULFD ORRN IRU D VXFFHVVLRQ SODQQLQJ VROXWLRQ VXFK DV DUULDJH WKDW KDV WKH ORQJ WHUP WUDFN UHFRUG DQG UHSXWDWLRQ DV WKH FRQVROLGDWRU RI FKRLFH LQ WKH LQGXVWU H EHOLHYH WKH LQGXVWU LV HQWHULQJ LQWR D SKDVH RI LQFUHDVHG FRQVROLGDWLRQ DV WKH 29 3DQGHPLF KDV FDXVHG PDQ KLJK TXDOLW EXVLQHVV RZQHUV WR DFFHOHUDWH WKHLU WLPHOLQH IRU VXFFHVVLRQ SODQQLQJ GHFLVLRQV Share Repurchases H ZLOO FRQWLQXH WR SULRULWL H RSHQ PDUNHW VKDUH UHSXUFKDVHV ZKHQ RXU VWRFN WUDGHV DW D GLVFRXQW RI RU PRUH FRPSDUHG WR WKH ORZHU HQG RI WKH SHU VKDUH 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH 3HU 6KDUH ZKLFK LQ RXU RSLQLRQ LV FXUUHQWO WR SHU VKDUH 7KHUHIRUH PRUH FDSLWDO ZLOO EH DOORFDWHG WR RXU VKDUH UHSXUFKDVH SURJUDP ZKHQ RXU VKDUHV WUDGH EHORZ SHU VKDUH XULQJ WKH IRXUWK TXDUWHU ZH UHSXUFKDVHG VKDUHV IRU PLOOLRQ ZLWK DQ DYHUDJH SXUFKDVH SULFH RI LWK WKH VKDUH UHSXUFKDVHV FRPSOHWHG LQ WKH IRXUWK TXDUWHU RXU WRWDO VKDUHV UHSXUFKDVHG IRU ZHUH IRU D WRWDO FRVW RI DSSUR LPDWHO PLOOLRQ WKDW HTXDOHG DQ DYHUDJH SXUFKDVH SULFH RI 7KLV VLJQL FDQW LQYHVWPHQW LQ RXU RZQ VKDUHV RYHU WKH VHFRQG KDOI RI LV LQGLFDWLYH RI RXU FRQ GHQFH LQ WKH IXWXUH RI DUULDJH DQG WKH YLHZ WKDW RXU VKDUHV UHPDLQ VLJQL FDQWO XQGHUYDOXHG FRPSDUHG WR WKH ORZ HQG RI WKH SUHYLRXV 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH RI SHU VKDUH DQG HYHQ PRUH VR ZKHQ FRPSDUHG WR WKH FXUUHQW 5RXJKO 5LJKW 5DQJH RI SHU VKDUH 7KH DYHUDJH SXUFKDVH SULFH IRU WKH VKDUHV UHSXUFKDVHG LQ RI LV D GLVFRXQW WR WKH PLG SRLQW RI RXU XSGDWHG 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH 7KH VKDUHV UHSXUFKDVHG LQ UHSUHVHQWV RI WKH VKDUHV RXWVWDQGLQJ SULRU WR WKH VWDUW RI RXU UHSXUFKDVH SURJUDP ZKLFK ZDV SULPDULO H HFXWHG RYHU WKH VHFRQG KDOI RI WKH HDU 7KH LPSDFW WR RXU UHGXFHG IXOO GLOXWHG 3 VKDUH FRXQW ZLOO EH DSSDUHQW DV ZH UHSRUW WKH UVW TXDUWHU UHVXOWV RI DV ZH H SHFW DVLF 6KDUHV 2XWVWDQGLQJ WR EH DSSUR LPDWHO PLOOLRQ DQG LOXWHG 6KDUHV 2XWVWDQGLQJ WR EH DSSUR LPDWHO PLOOLRQ DIWHU DFFRXQWLQJ IRU GLOXWLRQ IURP RI LQ WKH PRQH YHVWHG RSWLRQV DQG VKDUHV UHODWHG WR WKH YHVWLQJ RI WKH WKLUG WLHU RI RXU Good To Great II Shareholder Value Creation Plan 7KH VKDUHV UHODWHG WR WKH YHVWLQJ RI Good To Great II are RQO SD DEOH WR SDUWLFLSDQWV LQ WKH UVW SDUW RI DQG DUH FRQGLWLRQDO RQ HPSOR PHQW DW WKH HQG RI CARRIAGE SERVICES 2021 Annual Report Page 33
Since the Good To Great II Shareholder Value Creation Plan was approved on May 16 2020 seven senior SDUWLFLSDQWV KDYH OHIW WKH FRPSDQ DQG UHFHLYHG QR YDOXH LQ YHVWHG VKDUHV XSRQ WKHLU GHSDUWXUH 7KHVH VHYHQ SDUWLFLSDQWV ZRXOG KDYH EHHQ HOLJLEOH IRU VKDUHV DW WKH FXUUHQW YHVWLQJ RI WLHU WKUHH WKDW ZRXOG KDYH EHHQ HTXDO WR DSSUR LPDWHO RI WKH FXUUHQW WRWDO RI VKDUHV IRU WKH UHPDLQLQJ IRUW HLJKW SDUWLFLSDQWV H DUH SOHDVHG WR DQQRXQFH WKH DXWKRUL DWLRQ E RXU RDUG RI DQ DGGLWLRQDO PLOOLRQ WR RXU VKDUH repurchase program which along with previously approved and available amounts brings our total DYDLODELOLW WR DSSUR LPDWHO PLOOLRQ HTXDO WR DSSUR LPDWHO RI RXU FXUUHQW HTXLW PDUNHW FDSLWDOL DWLRQ H ZLOO FRQWLQXH WR EDODQFH RXU VKDUH UHSXUFKDVH SURJUDP YHUVXV DQ QHDU WHUP DFTXLVLWLRQ DFWLYLW DQG RXU LQWHQWLRQ WR PDLQWDLQ D PRGHUDWH 7RWDO HEW WR GMXVWHG RQVROLGDWHG 7 UDWLR Internal Growth Projects 7KH UVW SULRULW IRU RXU LQWHUQDO JURZWK FDSLWDO H SHQGLWXUHV LQ ZLOO EH WR accelerate the development of high quality cemetery inventory that will deliver high rates of return on LQYHVWHG FDSLWDO TXLFNO DIWHU FRPSOHWLRQ 6HFRQGDULO ZH ZLOO SULRULWL H RXU LQWHUQDO JURZWK FDSLWDO RQ WDUJHWHG IXQHUDO KRPH UHPRGHOV DQG H SDQVLRQV WR KHOS HQKDQFH RXU VHUYLFH DQG JXHVW H SHULHQFH WR DFFHOHUDWH JURZWK LQ ORFDO PDUNHW VKDUH H DOORFDWHG PLOOLRQ WRZDUGV FDSLWDO H SHQGLWXUHV LQ VSOLW EHWZHHQ PLOOLRQ RI PDLQWHQDQFH FDSLWDO H SHQGLWXUHV DQG PLOOLRQ RI JURZWK FDSLWDO H SHQGLWXUHV 7KH SULPDU GULYHUV RI LQFUHDVHG FDSLWDO H SHQGLWXUHV LQ FRPSDUHG WR ZHUH FHPHWHU SURSHUW GHYHORSPHQW IXQHUDO KRPH UHIUHVK DQG UHPRGHOV YHKLFOH HHW XSJUDGHV DQG LQIRUPDWLRQ WHFKQRORJ LQYHVWPHQWV H FXUUHQWO H SHFW FDSLWDO H SHQGLWXUHV LQ WR EH DSSUR LPDWHO PLOOLRQ DOORFDWHG HYHQO EHWZHHQ PDLQWHQDQFH DQG JURZWK FDSLWDO H SHQGLWXUHV Debt Repayment 7KH H HFXWLRQ RI RXU VKDUH UHSXUFKDVH SURJUDP LQ WKH IRXUWK TXDUWHU FDXVHG RXU WRWDO GHEW SRVLWLRQ WR LQFUHDVH PLOOLRQ DQG RXU 7RWDO HEW WR GMXVWHG RQVROLGDWHG 7 OHYHUDJH UDWLR WR LQFUHDVH WLPHV WR WLPHV DW HDU HQG FRPSDUHG WR WKH WKLUG TXDUWHU KLOH WKH WLPHV LV DW WKH upper end of our previously announced leverage ratio target range we believe the recurring and growing DPRXQW RI GMXVWHG UHH DVK ORZ LV KLJKO UHVLOLHQW WR VXGGHQ HFRQRPLF VKRFNV KLJK IUHH FDVK RZ FKDUDFWHULVWLFV RI WKLV LQGXVWU EXW HVSHFLDOO DUULDJH DQG SURYLGHV WKH QHFHVVDU QDQFLDO H LELOLW WR RSSRUWXQLVWLFDOO DOORFDWH FDSLWDO LQ DQ HQYLURQPHQW ZKLOH PDLQWDLQLQJ 7RWDO HEW WR GMXVWHG RQVROLGDWHG 7 HYHUDJH 5DWLR LQ D UDQJH RI WR WLPHV 2XU FXUUHQW 7RWDO HEW WR GMXVWHG RQVROLGDWHG 7 HYHUDJH 5DWLR LV WLPHV DV RI HEUXDU UG Dividends 2XU FXUUHQW DQQXDO GLYLGHQG LV HTXDO WR SHU VKDUH GLYLGHQG LHOG RI DERXW WRWDOLQJ DSSUR LPDWHO PLOOLRQ DQQXDOO HTXDO WR DOPRVW RI WKH PLOOLRQ PLG SRLQW RI WKH 5RXJKO 5LJKW 5DQJH RI GMXVWHG UHH DVK ORZ IRU H ZLOO UHHYDOXDWH RXU GLYLGHQG SROLF DQQXDOO DQG DW RWKHU UHOHYDQW SRLQWV LQ WLPH ZKLOH PDLQWDLQLQJ D GLYLGHQG SROLF WKDW ZLOO DSSUR LPDWH RI RXU GMXVWHG UHH DVK ORZ DQG D GLYLGHQG HTXLW LHOG TRUST FUND INVESTMENT PERFORMANCE 69 LVFUHWLRQDU 3RUWIROLR 6 3 1 6 4
2XU GLVFUHWLRQDU SUHQHHG WUXVW IXQG SRUWIROLR KDG DQRWKHU H WUDRUGLQDU HDU LQ ZLWK D WRWDO UHWXUQ RI YHUVXV IRU WKH 6 3 DQG IRU RXU
2QFH ZH VWXGLHG WKH WHUPV RI WKH 7 53 3URJUDP 0HO V FUHGLW EDFNJURXQG ZDV DW 3UXGHQWLDO DQG 7H DV RPPHUFH DQN QRZ SDUW RI 30RUJDQ KDVH ZH GHWHUPLQHG WKDW WKH ULVN RI QDWLRQDOL DWLRQ RI WKH EDQNLQJ V VWHP ZDV HVVHQWLDOO HUR DQG K VWHULFDOO RYHUEORZQ LQ WKH QDQFLDO PHGLD DV WKH FOHDU JRDO RI WKH SURJUDP ZDV 7R 5HVWRUH 7UXVW DQG RQ GHQFH LQ WKH LQDQFLDO 6 VWHP H TXLFNO UHFRJQL HG WKDW WKH QHZO LVVXHG SUHIHUUHG VWRFN E WKH 7RR LJ 7R DLO ODUJH EDQNV DQG LQVXUDQFH FRPSDQLHV WR WKH JRYHUQPHQW ZRXOG EH UDQNHG SDUL SDVVX HTXDO ZLWK WKH SHUSHWXDO SUHIHUUHG VWRFNV RI WKHVH EDQNV WKDW ZHUH DOUHDG RXWVWDQGLQJ Based on this analysis we began to rapidly increase our positions in the perpetual preferred stocks of large QDQFLDO LQVWLWXWLRQV DQN RI PHULFD HOOV DUJR LWLJURXS 31 ROGPDQ 6DFKV 6XQ7UXVW LEHUW 0XWXDO HWF DW SULFHV VLJQL FDQWO EHORZ SDU ORZHVW ZDV RQ WKH GROODU ZLWK WKH EHOLHI WKDW WKHVH QDQFLDO LQVWLWXWLRQV ZRXOG UHFRYHU VXI FLHQWO RYHU WLPH LQ RUGHU WR SD WKH IXOO SULQFLSDO DPRXQW ZKHQ GXH ZLWK WKH ability to earn a high amount of recurring interest income at double digit yields large double digit yields in QXPHURXV FDVHV H J DQN RI PHULFD V DW RQ WKH GROODU RQ FRVW ZKLOH ZH ZDLWHG 2XU LQYHVWPHQWV LQ 7RR LJ 7R DLO SHUSHWXDO SUHIHUUHG VHFXULWLHV GXULQJ WKH GHSWKV RI WKH UHGLW ULVLV DQG DV ODWH DV 0D GDWH RI UVW 6WUHVV 7HVW E HG RQ 7RR LJ 7R DLO QDQFLDO LQVWLWXWLRQV DIWHU ZKLFK ZH DFTXLUHG VHYHUDO PLOOLRQ RI HOOV DUJR SHUSHWXDO SUHIHUUHG DW RQ WKH GROODU DIWHU LW SDVVHG WKH 6WUHVV 7HVW LV DQ H DPSOH RI RXU ZLOOLQJQHVV WR EHW KHDYLO ZKHQ WKH RGGV DUH H WUHPHO IDYRUDEOH SDUWLFXODU H DPSOH RI WKLV SKLORVRSK LQ DFWLRQ GXULQJ WKLV SHULRG RQH RI 0HO V IDYRULWHV ZDV WKH SXUFKDVH RI PLOOLRQ LWLJURXS SHUSHWXDO SUHIHUUHG DW DQ DYHUDJH FRVW RI PLOOLRQ LQYHVWPHQW LQ ODWH HDUO LWLJURXS ZDV WKH RQO 7RR LJ 7R DLO EDQN WKDW VXEVHTXHQWO KDG WR EH EDLOHG RXW WZLFH VR DV SDUW RI LWV VHFRQG EDLO RXW WKH HGHUDO 5HVHUYH PDQGDWHG D SXQLWLYH FUDP GRZQ RU IRUFHG H FKDQJH RI RXU VHULHV RI SHUSHWXDO SUHIHUUHG VHFXULWLHV 2XU PLOOLRQ SDU DPRXQW RI SUHIHUUHG VHFXULWLHV ZHUH GLVFRXQWHG RQO IURP WKH IDFH DPRXQW ZLWK WKH EDODQFH RI FRQYHUWHG LQWR FRPPRQ VKDUHV DW WKH PDUNHW SULFH RI SHU VKDUH SURYLGLQJ XV QHZ FRPPRQ VKDUHV RI LWLJURXS ZLWK DQ DYHUDJH FRVW RI DVHG RQ RXU IXQGDPHQWDO DQDO VLV RI WKH WR HDU HDUQLQJV DQG YDOXDWLRQ RXWORRN IRU LWLJURXS ZH VROG RXU HQWLUH SRVLWLRQ LQ WKH IRXUWK TXDUWHU RI DW DQ DYHUDJH SULFH RI SHU VKDUH DIWHU WKH H FKDQJH IRU D WRWDO JDLQ RI PLOOLRQ RU DSSUR LPDWHO LQ DSSUR LPDWHO PRQWKV IWHU WKH 3XQLWLYH LWLJURXS UDPGRZQ WKDW UHVXOWHG LQ D KXJH ZLQGIDOO JDLQ IRU RXU WUXVW SRUWIROLR 0HO ZURWH RQH RI KLV ZLWW 0HWDSKRU 0HPR V UHODWLQJ WKH JRYHUQPHQW DFWLRQ WR WKH IDPRXV IDEOH DERXW UHU 5DEELW UHU R DQG WKH ULDU 3DWFK 3OHDVH 0U R RX FDQ HDW PH DQG GR DOO WKRVH RWKHU WHUULEOH WKLQJV WR PH EXW SOHDVH GRQ W WKURZ PH EDFN LQWR WKDW EULDU SDWFK 7KH SRLQW RI WKH IDEOH ZDV KRZ WR JHW UHFDOFLWUDQW LGLRWV WR GR ZKDW RX ZDQW WKHP WR GR 6R 0HO V PDQWUD EHFDPH 3OHDVH 0U HG P QH ZLWK ZKDWHYHU RX ZDQW WR GR ZLWK PH H FHSW SOHDVH GRQ W SXQLVK RXU LQQRFHQW WUXVW IXQGV E FUDPPLQJ GRZQ RXU SHUSHWXDO SUHIHUUHG VWRFNV LQ 7RR LJ 7R DLO QDQFLDO LQVWLWXWLRQV 3OHDVH GRQ W GR WKDW EHFDXVH WKH ZRXOGQ W EH SHUSHWXDO DQ PRUH DQG QR RQH ZRXOG HYHU WUXVW WKHP DJDLQ XULQJ HDFK RI WKH PDMRU PDUNHW PHOWGRZQV RYHU WKH ODVW WKLUWHHQ HDUV ZH DOZD V SLFN D KXPRURXV WKHPH RU WZR WKDW WV WKH FUD LQHVV DQG RU SDQLF LQ YDULRXV VHFWLRQV RI WKH PDUNHW DW WKDW WLPH 7KHVH PDUNHW PHOWGRZQV RYHU WKH SDVW WKLUWHHQ HDUV ZKHUH ZH KDYH WDNHQ DGYDQWDJH RI H WUHPH XQFHUWDLQW DQG IHDU LQ PDUNHWV WR H HFXWH VLJQL FDQW UHODWLYH YDOXH URWDWLRQV LQYROYLQJ VXEVWDQWLDO FDSLWDO GHSOR PHQWV LQFOXGH WKH GRZQJUDGH RI WKH 8 6 FUHGLW UDWLQJ E 6 3 LQ XJXVW ZKHQ RLO SULFHV FROODSVHG LQ ODWH HDUO DQG PRVW UHFHQWO GXULQJ WKH GHSWKV RI WKH RURQDYLUXV 0DUNHW ULVLV LQ 0DUFK DQG WKHUHDIWHU ORWV RI IDYRULWH SXUFKDVHV Q HDFK RI WKHVH LQVWDQFHV ZH KDYH SRVLWLRQHG WKH GLVFUHWLRQDU SUHQHHG WUXVW SRUWIROLR IRU higher amounts of recurring income and long term realized capital gains which has led to sustainably higher UHFRJQL HG LQDQFLDO 5HYHQXH DQG 7 IRU DUULDJH Page 36 CARRIAGE SERVICES 2021 Annual Report
Circle of Competence KDW DQ LQYHVWRU QHHGV LV WKH DELOLW WR FRUUHFWO HYDOXDWH VHOHFWHG EXVLQHVVHV 1RWH WKDW ZRUG VHOHFWHG
SULPDU UHDVRQ IRU RXU RXWSHUIRUPDQFH ZDV DQ HDUO VKLIW LQ RXU SRUWIROLR DW WKH HQG RI WR UDLVH FDVK IRU UHGHSOR PHQW DZD IURP D VPDOO FRQFHQWUDWLRQ RI KLJK JURZWK ELJ WHFK VWRFNV WRZDUG KLJKHU GLYLGHQG VWRFNV GXULQJ WKH 29 PDUNHW FUDVK HVSHFLDOO PDWHULDOV DQG HFRQRPLFDOO VHQVLWLYH VWRFNV ZLWK SULFLQJ SRZHU WR RIIVHW LQ DWLRQDU WUHQGV 7KH VDPH VKLIW E PDQ SURIHVVLRQDO PRQH PDQDJHUV VHHPLQJO DOO DW WKH VDPH WLPH KDV UHVXOWHG LQ D
7UHQG 5HSRUWV 2XU LQDQFLDO 5HSRUWLQJ DQG FFRXQWLQJ 7HDPV XQGHU WKH OHDGHUVKLS RI GHROD 2ODQL DQ DUH UHVSRQVLEOH IRU FRPSLODWLRQ DQG DFFXUDF RI RXU LQQRYDWLYH 2SHUDWLRQDO DQG LQDQFLDO 7UHQG 5HSRUWV WKDW DUH LQWHQGHG WR SURYLGH investors with a more transparent view of our results and what we view as the sustainable earnings power of DUULDJH 2YHU WKH HDUV WKH HYROXWLRQDU FKDQJH WKDW KDV RFFXUUHG KHUH DW DUULDJH KDV OHG WR H SHQVHV UHODWHG WR VHYHUDQFH JRRGZLOO ZULWH GRZQV JDLQ RU ORVV RQ GLYHVWLWXUHV ODUJH OHJDO VHWWOHPHQWV DQG QDQFLQJ FRVWV WKDW ZH KDYH DGGHG EDFN WR 3 HDUQLQJV DV 6SHFLDO WHPV VLQFH ZH GR QRW YLHZ WKHVH H SHQVHV DV FRUH WR RXU RSHUDWLRQV 0RUH UHFHQWO LQ DQG FRVWV UHODWHG WR WKH 29 3DQGHPLF KDYH DOVR EHHQ LQFOXGHG DV 6SHFLDO WHPV VLQFH ZH GRQ W YLHZ WKHP DV UHFXUULQJ H SHQVHV LQ WKH IXWXUH 2XU UHSRUWHG 1RQ 3 GMXVWHG LOXWHG DUQLQJV 3HU 6KDUH DQG GMXVWHG RQVROLGDWHG 7 ZLWKRXW WKH 6SHFLDO WHPV DV SUHVHQWHG LQ RXU 7UHQG 5HSRUWV UHSUHVHQW WKH WUXH HDUQLQJV SRZHU RI DUULDJH UHPHPEHU IRQGO RQH RI P UVW LQYHVWRU UHODWLRQV WULS ZLWK 0HO EDFN LQ XJXVW ZKHQ DQ DVWXWH LQYHVWRU FRPPHQWHG WKDW DUUHQ XIIHWW ZRXOG QRW ORRN IDYRUDEO RQ WKH QXPEHU DQG WKH W SH RI 1RQ 3 6SHFLDO WHPV ZH ZHUH DGGLQJ EDFN DW WKDW WLPH 0HO WRRN KLV FULWLFLVP DV DQ DUURZ WR KLV KHDUW YRZLQJ WKDW VRPHGD ZH ZRXOG HPHUJH IURP KLV KLHI 0LVWDNH 0DNHU SKDVH DV D KLJK SHUIRUPLQJ 3 RPSDQ 7KDW ZDV D PHVVDJH ZHOO UHFHLYHG DQG D JUHDW OHVVRQ IRU RXUV WUXO 6LQFH WKHQ ZH KDYH ZRUNHG WR EHWWHU GH QH RQH WLPH QRQ UHFXUULQJ H SHQVHV ZLWK WKH JRDO RYHU WLPH IRU 3 DQG 1RQ 3 WR PRUH FORVHO DOLJQ 2YHU WKLV VL HDU WLPH SHULRG WKH ODUJHVW GROODU DPRXQW RI 1RQ 3 6SHFLDO WHPV KDYH EHHQ UHODWHG WR WKH GHEW H WLQJXLVKPHQW DQG UH QDQFLQJ JDLQ RU ORVVHV RQ GLYHVWLWXUHV DQG ZULWH GRZQV RI RRGZLOO LWK WKH complete transformation that has occurred within our operating businesses the completion of the senior note UH QDQFLQJ WUDQVDFWLRQ LQ 0D DQG WKH FRQFOXVLRQ RI RXU GLYHVWLWXUH SURJUDP HDUO WKLV HDU ZH EHOLHYH ZH ZLOO KDYH OHVV RQH WLPH QRQ UHFXUULQJ H SHQVHV DQG WKDW 3 36 DQG 1RQ 3 GMXVWHG 36 ZLOO EH PRUH FORVHO DOLJQHG LQ WKH IXWXUH 7D 5DWH Q WKH UVW TXDUWHU RI RXU 3 HIIHFWLYH WD UDWH ZDV DQ HVWLPDWHG D SHUFHQWDJH WKDW ZH GHHPHG WRR KLJK EDVHG RQ DUH DQWLFLSDWHG SUH WD ERRN LQFRPH IRU WKH VWDWHV DQG MXULVGLFWLRQV LQ ZKLFK ZH RSHUDWH LQ DQG RWKHU FRPSDUDEOH SXEOLFO WUDGHG FRPSDQLHV 2XU 7D 7HDP XQGHU WKH OHDGHUVKLS RI DWULQD OXPH ZHQW WR ZRUN WR LGHQWLI VWUXFWXUDO RSSRUWXQLWLHV WR ORZHU RXU 3 HIIHFWLYH WD UDWH Q FROODERUDWLRQ ZLWK RXU HJDO FFRXQWLQJ DQG QIRUPDWLRQ 7HFKQRORJ 7HDPV RXU 7D 7HDP OHG WKH HIIRUW WR VLPSOLI RXU VWDWH OHJDO HQWLW VWUXFWXUH DQG LPSURYH VWDWH WD SURYLVLRQ SODQQLQJ WKDW UHVXOWHG LQ LPSURYHG H SHQVH DSSRUWLRQPHQW SDUWLFXODUO LQ KLJK WD MXULVGLFWLRQV V D UHVXOW RI WKHVH HIIRUWV RXU IXOO HDU 3 HIIHFWLYH WD UDWH H FOXGLQJ GLVFUHWH WD EHQH WV ZDV D IXOO EDVLV SRLQWV ORZHU WKDQ ZKHUH ZH VWDUWHG LQ WKH UVW TXDUWHU RI WKH HDU 7KLV VLJQL FDQW GHFUHDVH LQ RXU 3 HIIHFWLYH WD UDWH IURP FRQWLQXLQJ RSHUDWLRQV RYHU WKH FRXUVH RI FRQWULEXWHG DQ HVWLPDWHG RI HDUQLQJV SHU VKDUH PSRUWDQWO WKH LPSURYHPHQWV LPSOHPHQWHG ZLOO FRQWLQXH WR KDYH EHQH W WR ERWK RXU 3 HIIHFWLYH WD UDWH DQG FDVK WD HV SDLG JRLQJ IRUZDUG H EHOLHYH ZH KDYH DGGLWLRQDO RSSRUWXQLWLHV WR LQFUHPHQWDOO ORZHU WKH 3 HIIHFWLYH WD UDWH LQ DQG DUH KDUG DW ZRUN WR LPSOHPHQW WKHVH FKDQJHV LQ WKH UVW KDOI RI WKH HDU KLOH ZH GRQ W H SHFW XV WR UHGXFH RXU 3 HIIHFWLYH WD UDWH DQRWKHU EDVLV SRLQWV LQ ZH GR EHOLHYH WKDW ZH FDQ KDYH D VXVWDLQDEOH 3 HIIHFWLYH WD UDWH RYHU WKH ORQJ WHUP RI DSSUR LPDWHO DEVHQW DQ VLJQL FDQW FKDQJHV WR IHGHUDO FRUSRUDWH WD SROLF ZKLFK ZH EHOLHYH LV XQOLNHO DQ WLPH VRRQ INCREASED ROUGHLY RIGHT RANGE OF INTRINSIC VALUE PER SHARE DVHG RQ WKH FRQWLQXHG VWURQJ RSHUDWLQJ DQG QDQFLDO SHUIRUPDQFH DFURVV DUULDJH DQG WKH H HFXWLRQ RI RXU VKDUH UHSXUFKDVH SURJUDP LQ WKH IRXUWK TXDUWHU ZH DUH H FLWHG WR DJDLQ DQQRXQFH DQ LQFUHDVH LQ RXU RSLQLRQ RI WKH 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH 3HU 6KDUH WR SHU VKDUH EDVHG RQ WKH PHWKRGRORJ RXWOLQHG RQ WKH QH W SDJH H EHOLHYH LW LV LPSRUWDQW WR SURYLGH DQ XSGDWHG 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH 3HU 6KDUH DV LW DOORZV LQYHVWRUV WR KDYH LQVLJKW LQWR KRZ ZH LQWHQG WR PDNH FDSLWDO DOORFDWLRQ GHFLVLRQV LQ CARRIAGE SERVICES 2021 Annual Report Page 39
ERWK WKH VKRUW DQG ORQJ WHUP 7KH PLG SRLQW RI RXU 5RXJKO 5LJKW 5DQJH RI QWULQVLF 9DOXH 3HU 6KDUH RI LV SHU VKDUH RU KLJKHU WKDQ ZKHQ ZH UHSRUWHG DW WKH HQG RI WKH WKLUG TXDUWHU DQG SHU VKDUH RU IURP RXU RULJLQDO 5RXJKO 5LJKW 5DQJH RI WR SHU VKDUH WKDW ZH DQQRXQFHG RQ 0D WK LQ FRQMXQFWLRQ ZLWK FORVLQJ RI RXU VHQLRU QRWH UH QDQFLQJ H EHOLHYH WKDW D UHH DVK ORZ TXLW
FINAL OBSERVATIONS ABOUT THE PAST AND PRESENT 7R FRQFOXGH WKLV 6KDUHKROGHU HWWHU ZLOO VKDUH D FRXSOH RI HPDLOV IURP WZR RI RXU HOHYHQ 0DQDJLQJ 3DUWQHUV ZKR FRPSULVH RXU 6WDQGDUGV RXQFLO DQG WKHUHIRUH UHSUHVHQW WKH Best of the Best Managing Partners across RXU SRUWIROLR RI IXQHUDO KRPHV DQG FHPHWHULHV KLOH DUORV 6WHYH HQ DQG KDYH WULHG RXU EHVW WR GHVFULEH KRZ DUULDJH DFWXDOO ZRUNV EHQHDWK WKH FRYHUV RI D 1HZ
Email from Kristi Ah You Managing Partner Franklin Downs Funeral Homes Modesto CA From Kristi AhYou Sent Tuesday February 22 2022 7 06 PM To Mel Payne Subject Just a big thank you LHY 4LS 7H UL Z V RUV H SVUN PTL SVUN HNV 0 OHK KL LSVWLK H JHYLLY HZ H LW VYVULY HUK OHK ILLU WYVTV LK V OPLM LW VYVULY 0 HIZVS LS SV LK OL PU LZ PNH P L WYVJLZZ PKLU PM PUN OHYK JHZLZ YLZWVUKPUN V KP J S JHSSZ HUK PU LZ PNH PVUZ 0 OHK TVZ YLJLU S PKLU P LK H JVSK JHZL homicide victim from 1971 and had accomplished many amazing things at that point I was at the LUK VM UPZOPUN H 4HZ LYZ PU VYLUZPJZ OLU H ZLYPLZ VM OV NO Z ILNHU V VJJ Y V TL VU H YLN SHY basis I am topped out there is no challenge I actually want to work harder but no one around me has these same goals or expectations This is when I began to realize that I needed something more but I was not exactly sure what the more was I just knew that I had a drive to do more of something I knew I needed to be challenged beyond what I thought I was capable of doing I had heard of this quote then and have many times since mostly from you after reading the book Good To Great by Jim Collins a few times Greatness is not a matter of circumstance Greatness it turns out is a matter of conscious choice It is truly a matter of choosing to be more and then ILPUN PSSPUN V NV V OL LKNL HUK Q TW V 0 THKL OH JOVPJL OLU 0 KLJPKLK V HJJLW H WVZP PVU as a Managing Partner of a brand new acquisition with Carriage Services That I just happened to have worked at while attending Mortuary College You stated in your 2020 Shareholder Letter We have learned at Carriage that if you don t focus intensely 100 of the time on getting your people right who interact with families who have just SVZ H SV LK VUL V Y JSPLU MHTPSPLZ PSS UL LY JVTL YZ OLYL PZ UV Y LY Z H LTLU That s because you won t have the right people engaging your client families and learning about the life of their deceased loved one in order to recommend high value emotional ideas and options about how best to honor and memorialize the life of their loved one As you know I had my own unique experience serving as the Managing Partner and as a client family simultaneously My adult son passed away and I needed to make funeral arrangements This is when I knew that my focus of 100 getting the Right Who on board mattered I trusted everyone VU V Y LHT H YHURSPU V UZ V JHYL MVY T ZVU V Y MHTPS HUK TL OL HSS Q TWLK PU V HJ PVU by putting their own lives aside to ensure that my family the client family received every detail of what I needed to pay tribute to my combat veteran son This is because of you Mel as you have set H WH O MVY HSS V MVSSV HUK SL TL LSS V P TH LYZ HUK THKL H KP LYLUJL I am continually amazed of the truth in all of this Honesty integrity and quality in all that we do is a real thing that matters Hard work and shared success through employee ownership is actually a fact and proven through actions for example compensation being recognized and treated with respect by leadership Outstanding service and WYV HIPSP NV OHUK PU OHUK proven by numbers they do not lie Growth of the company is driven by decentralization and partnership the realization and understanding of this concept inspires and creates a drive to succeed and it is proven Page 42 CARRIAGE SERVICES 2021 Annual Report
Z H VVK V YLH 00 YLJPWPLU 0 T Z ZH OHUR V SV KS Where is there in the funeral industry that this would even be a possibility Then you and your SLHKLYZOPW LHT JYLH LK H L LHY WH MVY Z Z HPULK OPNO WLYMVYTHUJL PUJLU P L WSHU 0 OHK UV PKLH OLU SVVRPUN MVY H JOHSSLUNL OH 0 V SK UK HU VWWVY UP ZV HTHaPUN M S SSPUN HUK IL VUK my expectations Being a part of the achievement of a company whose Mission is Being The Best is truly inspirational and a driver to actually Be The Best Kristi Ah You Energy The passion and drive to get the job done Energize How a leader motivates and gets others excited Edge OL KL LYTPUH PVU V THRL KP J S KLJPZPVUZ Execute The ability to carry out the plan and deliver results The 4E s are simple to follow and carry out given the support of Houston Leadership Please share with them that they matter as I certainly appreciate all that they do to help us carry out the simple goal of caring for families Working for and with Carriage Services has been an amazing journey and I am blessed to be a part of this outstanding company Here s to at least 20 more years Kristi Ah You CARRIAGE SERVICES 2021 Annual Report Page 43
Acknowledgments 3ULRU WR VWDUWLQJ DUULDJH LQ DW DJH KDG DOUHDG OLYHG WKURXJK PDQ XQLTXHO LQWHUHVWLQJ DQG HGXFDWLRQDO FKDSWHUV LQ P OLIH DQG KDG EHHQ H SRVHG WR D QXPEHU RI LFRQLF EXVLQHVV OHDGHUV DQG HQWUHSUHQHXUV 7KHVH LQFOXGHG RZDUG 0DUVKDOO GHFHDVHG OEHUW OEHN GHFHDVHG DQG VVDP DUHV DOO RI whom I worked for none of which I have mentioned before but each of which had a decisive impact on P ZHDOWK RI H SHULHQFH WXUQLQJ DURXQG DQG QDQFLDOO UHVWUXFWXULQJ FRPSDQLHV IRU VRPHRQH HOVH DQG WKHUHIRUH P VXEVHTXHQW FDUHHU FKRLFHV LQFOXGLQJ WR VWDUW DQG EXLOG DUULDJH IURP VFUDWFK DVW HDU LQ P 6KDUHKROGHU HWWHU DFNQRZOHGJHG HQ RYH GHFHDVHG 3HWHU GH 6DYDU 5LFKDUG 5DLQZDWHU GHFHDVHG DQG U KLKLUR DQDJDZD DOO RI ZKRP KDG KXJHO SRVLWLYH LPSDFWV RQ P OHDGHUVKLS VW OH DQG WKLQNLQJ SULRU WR VWDUWLQJ DUULDJH 6R WKLV HDU ZLOO DFNQRZOHGJH RQO WKRVH ZKR KDYH KDG D PDMRU SRVLWLYH LPSDFW RQ P WKLQNLQJ DQG WKHUHIRUH P EHKDYLRU DV DQ HQWUHSUHQHXULDO OHDGHU DQG LQYHVWRU VLQFH VWDUWLQJ DUULDJH RYHU WKLUW HDUV DJR Bob Waltrip RXQGHU 3LRQHHULQJ 9LVLRQDU DQG KDLUPDQ PHULWXV RI 6 RE DQG GHYHORSHG D VSHFLDO DQG GHHS SHUVRQDO UHODWLRQVKLS RYHU WKH HDUV HVSHFLDOO DIWHU RXU VHFWRU FUDVKHG LQ IURP VHOI LQ LFWHG LQMXULHV VXUYLYRU ERQGLQJ KDYHQ W EHHQ DEOH WR YLVLW P GHDU IULHQG DJH IRU HDUO PRUQLQJ FRIIHH DQG OLYHO FRQYHUVDWLRQ VLQFH WKH 29 3DQGHPLF EHJDQ VR ZLOO VLPSO wish him good health and high spirits until that day when we can again get together to share our XQEHOLHYDEOH VWRULHV Alan Weber Tom Tryforos and Will Thorndike who each have contributed immensely to my education and knowledge about the critical importance of capital allocation to superior long term VKDUHKROGHU LQYHVWPHQW UHWXUQV ODQ DPD LQJO UVW IRXQG DUULDJH LQ WKH HDUO WR PLG V ZKHQ ZH ZHUH HPHUJLQJ IURP HDUV RI UHVWUXFWXULQJ DQG WXUQDURXQG ZRUN IURP WKH V FRQVROLGDWLRQ PDQLD DQG PDUNHW FUDVK LQ ODQ UVW ERXJKW RXU VKDUHV ZKHQ WKH ZHUH GHHS FKHDS EHFDXVH ZH KDUGO KDG DQ UHH DVK ORZ WR DOORFDWH Alan called me around 2013 and asked whether I had read the book The Outsiders E LOO 7KRUQGLNH VD LQJ
7KDQN RX ODQ 7RP DQG LOO DV RXU ZRUN DQG UHPDUNDEOH LQYHVWPHQW UHWXUQV RQ WKH ZLVGRP DQG value of capital allocation together with your generous friendship when needed most have made DQG ZLOO FRQWLQXH WR PDNH IRU PDQ HDUV D KXJH GLIIHUHQFH LQ WKH DSLWDO OORFDWLRQ 6WUDWHJ DQG 6KDUHKROGHU 9DOXH UHDWLRQ HFXWLRQ DW DUULDJH Dick Strong and Tony La Russa ZKR KDYH EHFRPH P GHDU IULHQGV DIWHU ZDV UVW LQYLWHG WR DWWHQG LFN V WK LUWKGD 3DUW LQ DV 9HJDV LQ 0D DQG WKHQ ODWHU LQYLWHG E KLP WR DWWHQG WKH 7RQ D 5XVVD HDGHUV DQG HJHQGV RQIHUHQFH LQ DV 9HJDV LQ 1RYHPEHU DFNQRZOHGJHG LFN LQ my 2016 Shareholder Letter for his personal encouragement to me beginning about twenty years ago DIWHU DUULDJH V VKDUHV DORQJ ZLWK WKRVH RI DOO WKH RWKHU SXEOLF GHDWKFDUH FRQVROLGDWRUV KDG FUDVKHG IURP WKH OHYHUDJHG DFTXLVLWLRQ PDQLD RI WKH V Dick Strong was the ONLY PDMRU LQVWLWXWLRQDO LQYHVWRU ZKR FDPH SHUVRQDOO WR YLVLW PH ZLWK ZRUGV RI HQFRXUDJHPHQW DQG ZLVGRP DIWHU RXU VKDUHV KDG ERWWRPHG DW SHU VKDUH LQ XJXVW DQG WKHQ PRYHG LQWR WKH EURNHQ FRPSDQLHV VKDUH SULFH QHLJKERUKRRG RI WR SHU VKDUH IRU WKH QH W WHQ HDUV H FHSW IRU EULHI SHULRGV RI WLPH 2Q HDFK YLVLW LFN ZRXOG DOZD V DVN RZ PDQ 3OD HUV GR RX KDYH QRZ KDW V IDVFLQDWLQJ DERXW LFN V TXHVWLRQ WKHQ DQG QRZ ZDV WKDW DIWHU GLWFKHG WKH FODVVLF SHUIRUPDQFH PDQDJHPHQW V VWHP RI D FHQWUDOL HG XGJHW DQG RQWURO 0RGHO LQ XJXVW DQG WKHQ LQQRYDWHG RXU XQHUDO 6WDQGDUGV 2SHUDWLQJ 0RGHO HIIHFWLYH DQXDU GLGQ W UHDOO NQRZ what the characteristics of an A Player were that could achieve a high level of Standards Achievement XQGHU WKLV UDGLFDOO GHFHQWUDOL HG EXVLQHVV PRGHO 6R ZDV VLPSO JXHVVLQJ DW WKH QXPEHU RI 3OD HU HDGHUV KDG ERWK LQ RXU SRUWIROLR RI EXVLQHVVHV DQG LQ RXU FRUSRUDWH OHDGHUVKLS WHDPV It took years of performance data and analysis along with updating and evolution of the Funeral LJK 3HUIRUPDQFH 6WDQGDUGV HPHWHU 6DOHV RQO UHFHQWO XQGHU DUORV OHDGHUVKLS WKHQ DGRSWLRQ LQ RI RXU HDGHUVKLS 0RGHO WR GHWHUPLQH WKDW RXU QHZ EXVLQHVV PRGHO ZDV EHVW H HFXWHG by entrepreneurial leaders committed to growing their market share and compounding long term UHYHQXH JURZWK ZLWK VXVWDLQDEO KLJK LHOG 7 0DUJLQV WKURXJK KLJK SHUIRUPDQFH WHDPV RI HPSOR HHV H MXVW QLVKHG D WKUHH GD 0DQDJLQJ 3DUWQHUV 0HHWLQJ 5 GJH RUXP LQ RXVWRQ ODVW ZHHN UVW LQ DOPRVW HDUV DQG FDQ QRZ WHOO LFN WKDW ZH KDYH D FRPSDQ IXOO RI 3OD HUV LQ DOO WKH FULWLFDO OHDGHUVKLS UROHV DFURVV DUULDJH DQG LQ RXU RXVWRQ 6XSSRUW HQWHU Q IDFW DUULDJH is receiving a lot of buzz in the industry as the company where A Player talent can make a difference with their contribution to our already high performance and get generously rewarded and recognized OLNH QRZKHUH HOVH LQ WKH KLVWRU RI RXU LQGXVWU 7RQ D 5XVVD DQG EHFDPH IULHQGV DW KLV FRQIHUHQFH LQ 1RYHPEHU KDG SDUWLFLSDWHG WKH SULRU GD RQ D SDQHO RI IRXU SXEOLF FRPSDQ 2 V ZKRVH PRGHUDWRU ZDV LFN 6WURQJ ZKR KDG EHHQ D ELJ KLVWRULFDO VXSSRUWHU RI 7RQ DQG KLV HDGHUV DQG HJHQGV RQIHUHQFH WKDW UDLVHG PRQH IRU WKH QLPDO 5HVFXH RXQGDWLRQ 5 IRXQGHG E 7RQ DQG KLV ZLIH ZKHQ KH ZDV 0DQDJHU RI WKH 2DNODQG V LQ WKH ODWH V Q UHVSRQVH WR D TXHVWLRQ E LFN DERXW WKH UVW WLPH RXU VKDUHV KLW SHU VKDUH LQ XJXVW PDGH DQ DQDORJ RI EXLOGLQJ D QHZ SHUIRUPDQFH IRXQGDWLRQ IRU DUULDJH E FUHDWLQJ D KDQGIXO RI KLJK SHUIRUPDQFH VWDQGDUGV IRU RXU IXQHUDO KRPHV LQ WKDW were equivalent to a language of high performance customized to attract the most entrepreneurial OHDGHUVKLS WDOHQW IRU HDFK EXVLQHVV ZKLFK FRPSDUHG WR WKH KDQGIXO RI GLVFLSOLQHG SUDFWLFHV DORQJ ZLWK D PLQGVHW WKDW 5LFN HQGHUVRQ KDG DUWLFXODWHG DV FULWLFDO WR KLV KLWWLQJ VXFFHVV WKH GD EHIRUH LQ D SDQHO GLVFXVVLRQ E WKUHH DOO RI DPH KLW SOD HUV CARRIAGE SERVICES 2021 Annual Report Page 45
2YHU WKH QH W VHYHQ HDUV 7RQ V FRQIHUHQFH LQ DV 9HJDV EHJDQ WR VKLIW IURP PRVWO EXVLQHVV HDGHUV DQG VSRUWV HJHQGV WR D EDODQFHG PL ZLWK 0LOLWDU HDGHUV DQG HURHV 0HGDO RI RQRU LQQHUV WHUULEO ZRXQGHG DQG LQVSLUDWLRQDO DUULRU 9HWHUDQV HWF DVWURQDXWV PRXQWDLQ FOLPEHUV DQG PDQ RWKHUV ZKRVH H WUDRUGLQDU OLIH DFKLHYHPHQWV VHW WKHP DSDUW DV LQVSLULQJ UROH models on how to live life to the fullest while giving back to others much more than the blessings their OLIH DQG FRXQWU KDG JLYHQ WKHP V D 9LHWQDP ZDU YHWHUDQ ZDV SDUWLFXODUO LPSDFWHG E DQG VXSSRUWLYH RI 7RQ V 3HWV DQG 9HWV SURJUDP WKDW ZDV ODXQFKHG LQ DV SDUW RI 5 D SURJUDP designed to match primarily rescued dogs which had been abused and abandoned to physically and or emotionally damaged veterans from the Iraq and Afghanistan wars so that they could ERQG DQG KHDO WRJHWKHU ZKRVH PLVVLRQ LV SHUIHFWO FDSWXUHG E 6DYLQJ OLYHV DW ERWK HQGV RI WKH OHDVK 7RQ KDG WKH EULOOLDQW LGHD RI FRPELQLQJ WKH PLVVLRQ RI KLV QLPDO 5HVFXH RXQGDWLRQ ZLWK WKH PLVVLRQ RI UHVFXLQJ RXU ZDU YHWHUDQV VXIIHULQJ SK VLFDOO DQG HPRWLRQDOO IURP ZDU LQMXULHV 376 7 HWF and a loss of so many soldiers with whom they bonded in Iraq and Afghanistan leading to an epidemic RI VXLFLGHV E WKRVH UHWXUQLQJ KRPH DQG IHHOLQJ ORVW ZLWKRXW D SXUSRVH LQ OLIH PDUU LQJ WKHVH WZR QREOH PLVVLRQV 7RQ JXUHG RXW KRZ WR QRW RQO JHW WR UVW EDVH EXW WR ZLQ WKH JDPH WKH VHDVRQ DQG WKH RUOG 6HULHV HDU DIWHU HDU DIWHU HDU ZKLOH EXLOGLQJ D OHJDF VHUYLQJ DQG VDYLQJ RXU 0LOLWDU 9HWHUDQV WKDW ZDV ELJJHU WKDQ KLPVHOI DV D DOO RI DPH DVHEDOO 0DQDJHU 7KDQN RX LFN IRU LQWURGXFLQJ PH WR DQG 7RQ IRU FUHDWLQJ DQG SURYLGLQJ WKH ZRQGHUIXO SODWIRUP RI 7RQ D 5XVVD V HDGHUV DQG HJHQGV RQIHUHQFH IRU PH WR VKDUH HDFK HDU ZLWK DUULDJH V PDQ HDGHUV DQG HJHQGV Page 46 CARRIAGE SERVICES 2021 Annual Report
CARRIAGE 2021 PINNACLE OF SERVICE AWARD WINNERS HIGH PERFORMANCE HEROES In alignment with our 2021 theme of Accelerating High Performance Flywheel Effect I am honored to UHFRJQL H EXVLQHVVHV IXQHUDO KRPHV DQG FHPHWHULHV WKDW HDUQHG 3LQQDFOH ZDUGV DQG Being The Best 6WDQGDUGV FKLHYHPHQW RQXVHV IRU WKH 0DQDJLQJ 3DUWQHUV DQG HPSOR HHV IRU HDFK EXVLQHVV 7KLV group of High Performance servant leaders and their teams of employees embody the innovative concepts DQG VRSKLVWLFDWHG LGHDV RI RXU DUULDJH High Performance Culture DQG RXU 0LVVLRQ DQG 9LVLRQ RI Being The Best LQ HYHU WKLQJ WKH GR IRU WKLV QREOH SXUSRVH RI KHOSLQJ IDPLOLHV LQ QHHG 7KH 3LQQDFOH ZDUG ZLQQHUV LQFOXGHG EXVLQHVVHV IXQHUDO KRPHV DQG FHPHWHULHV ZKLFK DYHUDJHG 6WDQGDUGV FKLHYHPHQW RYHU WKH HDUV RI WKHVH EXVLQHVVHV DOVR DFKLHYHG LQ XQGHU WKH XSGDWHG UHERRWHG 3HUIRUPDQFH 6WDQGDUGV DQG EXVLQHVVHV IXQHUDO KRPHV DQG FHPHWHULHV ZKLFK KDG 6WDQGDUGV FKLHYHPHQW LQ As an essential part of High Performance Culture tradition and language and our passionate conviction that RECOGNITION LV WKH KLJKHVW IRUP RI PRWLYDWLRQ OLVWHG EHORZ DUH DUULDJH V Being The Best Pinnacle of Service Award Winners IRU 2021 Being The Best Pinnacle Of Service Award Winners Tim Hauck Benjamin Friberg Ken Summers Alan Kerrick Loren Forastiere Cyndi Hoots Mike Conner John Appel Jenny Chen Ashley Vella Kevin Latham Brent Harrison Adam Mills Larry Davis David Salove Kim Mulkey Anthony Rodriguez Dorn Rademacher Jeff Seaman Linda Newsom Johnny Garcia John Bresnahan Joseph Waterwash Andrew Cumby Troy Knutson David DeRubeis Michael Relyea Bob Thomas David Feeney Cesar Gutierrez 4XDOL HG IRU XVLQHVVHV HH RXQW UHPDWLRQ 6HUYLFHV DUYH QJHOKDUGW XOOHU 0HW HULWDJH XQHUDO RPH DQG UHPDWRU 3 U 6RQV DNDQ XQHUDO KDSHO RUDVWLHUH URXS Schmidt Funeral Homes RQQHU HVWEXU XQHUDO RPH DUGHQ RI 0HPRULHV XQHUDO RPH UDQW 0LOOHU KDSHO HHJDQ XQHUDO KDSHOV 0DGGX XTXD LQWRQ XQHUDO RPHV UHVSR LUUHOV ODFLHU 0HPRULDO DUGHQV XQNHUV DQG RRGODZQ HPHWHULHV Bunkers Mortuaries ORYHUGDOH HPHWHULHV Sterling Funeral Homes Higgins Mortuary 5HO HD XQHUDO KDSHO ZD QH 5 6SHQFH XQHUDO RPHV DZWRQ 5LWWHU UD XQHUDO RPHV HEDOORV LD XQHUDO RPH HYDQQ RQGURQ XQHUDO RPH DLUG DVH RUGDQ DQQLQ XQHUDO RPH UHPDWLRQ HQWHU XPE DPLO XQHUDO RPHV XVWLQ XQHUDO RPH ROXPELD 0RUWXDU RG KLWH XQHUDO RPH RQUDG 7KRPSVRQ XQHUDO RPH Malone Funeral Home Feeney Funeral Home Heritage Dilday Memorial Services 6WDQGDUGV RXQFLO 0HPEHUV CARRIAGE SERVICES 2021 Annual Report Page 47
Being The Best Pinnacle Of Service Award 100 of Standards Award Jason Higginbotham James Terry Steven Mora James Bass Robert Maclary Justin Luyben Courtney Charvet Brian Binion Jason Cox Trent Nielsen Nicholas Welzenbach Kristi Ah You Matthew Simpson Kim Borselli Christine Amittone Andy Shemwell Betty Cundiff Curtis Ottinger Chad Woody 4XDOL HG IRU XVLQHVVHV Lakeland Funeral Home DPHV 7HUU XQHUDO RPH RQHMR 0RXQWDLQ XQHUDO RPH PHUDOG RDVW 0F DXJKOLQ 0RUWXDU 0F DXJKOLQ 7ZLQ LWLHV XQHUDO RPH DQG UHPDWRU HQW RUHVW DZQ XQHUDO RPH YDQV URZQ 0RUWXDULHV UHPDWRU 1RUWK UHYDUG XQHUDO RPH Steen Funeral Homes DQH XQHUDO RPH 6RXWK UHVW KDSHO HQQHVVH 9DOOH XQHUDO RPH UHPDWRU RV DWRV 0HPRULDO 3DUN UDQNOLQ RZQV XQHUDO RPHV U 0HPRULDO KDSHO XOOHU XQHUDO RPH UHPDWLRQ 6HUYLFH UHHU 0RUWXDU 1HDO 7DUSOH 3DUFKPDQ XQHUDO RPH Lotz Funeral Home Heritage Funeral Home 5LFKPRQG RXQW 0HPRULDO 3DUN 6WDQGDUGV RXQFLO 0HPEHUV Being The Best Pinnacle 100 of Standards Award Buddy Ewing Michael Kelly Tripp Carter Geneva Gullion Chitty Rick Garofola Steven Mora David Salove Brad Shemwell Courtney Charvet Robert Coleman 4XDOL HG IRU XVLQHVVHV Page 48 CARRIAGE SERVICES Seaside Funeral Homes Rose Hill Memorial Park 6HDVLGH HPHWHULHV Resthaven Funeral Home 5HVWKDYHQ 0HPRU DUGHQV UDGVKDZ DUWHU 0HPRULDO XQHUDO 6HUYLFHV DUOLQJ LVFKHU DUGHQ KDSHO DJQDVFR DOFDWHUUD XQHUDO RPHV RQHMR 0RXQWDLQ 0HPRULDO 3DUN ORYHUGDOH XQHUDO RPH LOOFUHVW 0HPRULDO DUGHQV Latham Funeral Home 2DNODZQ 0HPRULDO DUGHQV 0DXVROHXP 6XOOLYDQ HPHWHULHV 6WDQGDUGV RXQFLO 0HPEHUV 2021 Annual Report
CARRIAGE 2021 GOOD TO GREAT AWARD WINNERS 2XU YH HDU LQFHQWLYH DZDUG FDOOHG WKH Good To Great Award is directly linked to our annual Being The Best Pinnacle Award ZKLFK LWVHOI LV OLQNHG WR LJK XQHUDO 6WDQGDUGV FKLHYHPHQW RYHU D IXOO HDU L H RXU Good To Great Awards require high and sustained Being The Best Standards Achievement RYHU D IXOO YH HDUV H KDYH KDG PDQ ZRQGHUIXO SHUIRUPDQFHV VLQFH WKH VWDUW RI RXU Good To Great Journey in 2017 E LJK 3HUIRUPDQFH HUR XQHUDO DQG HPHWHU 0DQDJLQJ 3DUWQHUV DQG 6DOHV 0DQDJHUV DQG WKHLU WHDPV RI ZLQQLQJ HPSOR HHV VR DP PRUH WKDQ KRQRUHG WR DQQRXQFH RXU IWK JURXS RI Good To Great Award Winners that sustained a high level of Standards Achievement and Financial Performance while compounding UHYHQXH DW IRU WKH YH HDU WLPHIUDPH WKDW EHJDQ LQ DQG HQGHG DW HDU HQG DV OLVWHG EHORZ Tim Hauck Dorn Rademacher Kristi Ah You Jim Pitts Justin Luyben Steven Mora Courtney Charvet Ken Summers John Bresnahan Ashley Vella Kim Mulkey Jason Higginbotham Jason Cox Betty Cundiff Robert Maclary Brad Shemwell Chuck Williamson Michael Relyea James Bass Michael Bell David Williams Joseph Waterwash Jeff Seaman Linda Newsom Chad Woody Bob Thomas Cesar Gutierrez Wayne Lovelace David Feeney David DeRubeis Brian Binion Joseph Newkirk Michele Wegner 4XDOL HG IRU XVLQHVVHV HH RXQW UHPDWLRQ 6HUYLFHV DUYH QJHOKDUGW XOOHU 0HW 5HO HD XQHUDO KDSHO UDQNOLQ RZQV XQHUDO RPHV Buck Ashcraft San Benito Funeral Home YDQV URZQ 0RUWXDULHV UHPDWRU RQHMR 0RXQWDLQ XQHUDO RPH 1RUWK UHYDUG XQHUDO RPH 3 U 6RQV HYDQQ RQGURQ XQHUDO RPH HHJDQ XQHUDO KDSHOV Sterling Funeral Homes Lakeland Funeral Home DQH XQHUDO RPH 6RXWK UHVW KDSHO Lotz Funeral Home HQW RUHVW DZQ XQHUDO RPH Latham Funeral Home LOOLDPVRQ 6RQV XQHUDO RPH RQUDG 7KRPSVRQ XQHUDO RPH PHUDOG RDVW 0F DXJKOLQ 0RUWXDU UHPDWLRQ 6RFLHW RI GDKR Rader Funeral Home DLUG DVH RUGDQ DQQLQ XQHUDO RPH UHPDWLRQ HQWHU ZD QH 5 6SHQFH XQHUDO RPHV DZWRQ 5LWWHU UD XQHUDO RPHV DWVRQ LQJ XQHUDO RPHV Malone Funeral Home Heritage Dilday Memorial Services RW XQHUDO RPH 9LQWRQ 9 Feeney Funeral Home RG KLWH XQHUDO RPH Steen Funeral Homes LYLF HQWHU KDSHO XFNOHU RKQVWRQ YHU XQHUDO RPHV 6WDQGDUGV RXQFLO 0HPEHUV CARRIAGE SERVICES 2021 Annual Report Page 49
An Unbreakable Union of Belief
Corporate Information Carriage Services is a leading provider of funeral and cemetery services and merchandise in the United States As of December 31 2021 Carriage operated 170 funeral homes in 26 states and 31 cemeteries in 11 states Board of Directors Executive Leadership Team Melvin C Payne Melvin C Payne Chief Executive Of cer and Chairman of the Board Chief Executive Of cer and Chairman of the Board Bryan D Leibman Carlos Quezada President and Chief Executive Of cer Frosch Travel President and Chief Operating Of cer Barry K Fingerhut Executive Vice President Chief Financial Of cer and Treasurer Chief Executive Of cer Certi cation Partners LLC Douglas B Meehan Deputy Chief Investment Of cer van Biema Value Partners LLC Dr Achille Messac Former Dean of Engineering at Howard University and Mississippi State University C Benjamin Brink Steven D Metzger Executive Vice President Chief Administrative Of cer General Counsel and Secretary Paul D Elliott Senior Vice President and Regional Partner Shawn R Phillips Senior Vice President and Regional Partner Donald D Patteson Jr Shane T Pudenz Former Chief Executive Of cer and Chairman of the Board Sovereign Business Forms Inc Vice President of Sales and Marketing Advisor to the Board of Directors Peggy Schappaugh Vice President of Operations and Acquisitions Analysis Member Strategic Vision and Principles Group Gregory R Brudnicki Mayor of Panama City Florida Transfer Agent Registrar Grant Thornton LLP Houston Texas American Stock Transfer Trust Company LLC 6201 15th Avenue Brooklyn New York 11219 800 937 5449 www amstock com Form 10 K Availability Houston Support Of ce The Company s Annual Report on Form 10 K for the year ended December 31 2021 may be obtained by writing to Investor Relations Carriage Services Inc 3040 Post Oak Boulevard Suite 300 Houston Texas 77056 via the Company s website www carriageservices com or via the SEC s website www sec gov Carriage Services Inc 3040 Post Oak Boulevard Suite 300 Houston Texas 77056 713 332 8400 www carriageservices com Independent Public Accountants Common Stock Carriage Services Inc s common stock is traded on the New York Stock Exchange under the symbol CSV Forward Looking Statements Statements made in this Annual Report that are not historical facts are intended to be forward looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 These statements are based on assumptions that the Company believes are reasonable however many important factors including factors not in our control or as discussed under Forward Looking Statments in the Company s Form 10 K for the year ended December 31 2021 could cause the Company s results to differ materially from the forward looking statements made herein and in any other documents or presentations made by or on behalf of the Company
CARRIAGE SERVICES INC 3040 Post Oak Boulevard Suite 300 Houston Texas 77056 713 332 8400 www carriageservices com