Good morning, everyone, and thank you for joining us to discuss our second quarter results for 2026. In addition to myself, on the call this morning from management are Carlos Quezada, Chief Executive Officer and Vice Chairman of the Board of Directors; Steve Metzger, President and Chief Operating Officer; and John Enwright, Chief Financial Officer.

On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and includes supplemental financial information, including the reconciliation of differences between GAAP and non-GAAP financial measures.

Today's call will begin with formal remarks from Carlos and John and will be followed by a question and answer period. Before we begin, I'd like to remind everyone that during this call, we'll make some forward-looking statements, including comments about our business, projections, and plans.

Forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today. These risks and uncertainties include, but are not limited to, factors identified in our earnings release as well as those in our SEC filings, all of which can be found on our website.

Thank you all for joining us this morning. Now, I'd like to turn the call over to Carlos.

Thank you, Sam. Welcome to everyone joining today's second quarter earnings call.

Before discussing our financial performance, I want to begin by thanking the Carriage team. Every day, they serve families during some of the most difficult moments in their lives with compassion, professionalism, and genuine care.

Their commitment to delivering premier experiences is what defines Carriage, and the results we are sharing today are the direct reflection of their dedication and execution. This morning, I will discuss our second quarter performance, provide some perspective on the operating environment we experienced during the quarter and first half of this year, share an update on a couple of strategic priorities, and then turn the call over to John, who will review our financial results in greater detail.

Regarding the operating environment, the second quarter unfolded differently than we anticipated at the beginning of the year. Beginning in January, mortality trends softened across much of the country and remained below our historical expectations throughout the first half of the year.

During the second quarter, comparable funeral volume declined by 3.5%, and for the first six months ending June 30th, by 4.7%, both compared to last year. As everyone on this call understands, mortality is a primary demand driver for our funeral business, and it is also one of the few variables we simply cannot control.

What we can control is how we operate our business. I am proud of the way our teams responded.

Rather than allowing lower funeral volume to dictate our performance, our field leaders and the support center teams remained focused on execution, operating discipline, and serving families exceptionally well. The improvements we made over the last three years in our operations, systems, processes, and leadership capability allowed us to offset much of the volume pressure through stronger execution.

For example, funeral home comparable average revenue per contract grew by 3.7% compared to the same period last year, while consolidated average price per preneed interment right grew by 17.3%. Another example is a 21.1% increase in consolidated insurance-funded preneed funeral contracts sold during the quarter compared to last year.

In many ways, the second quarter became a real test of the organization we have been building. I believe our teams demonstrated that Carriage today is a more disciplined, more resilient, and better-operated company than ever before.

Turning to our financial results. Total revenue for the second quarter was $102.9 million, an increase of $800,000 or 0.8% over the prior year quarter.

Funeral comparable revenue was $55.7 million compared to $57 million last year, a decrease of 2.4%. As expected, lower funeral volume was driven by reduced mortality rates, creating pressure on revenue during the quarter.

While call volume declined year over year, our teams remained focused on serving every family with excellence, while continuing to improve operational efficiency across the business, partially offsetting the volume decline. Cemetery comparable revenue was $33.2 million, essentially flat compared to $33.3 million last year.

Our consolidated preneed cemetery sales production grew by 5% over the previous year's quarter. The timing of preneed cemetery revenue recognition will push a portion of this production to future periods.

Consolidated average price per preneed interment right sold increased by an impressive 17.3% over the same period last year, highlighting our ability to improve performance despite lower volume that also affected the at-need side of our cemetery business. Financial revenue was $9.3 million, or 14% greater than the previous year's quarter, reflecting the continued contribution of our insurance-funded preneed strategy and the ongoing efforts of our sales organization to help more families plan ahead.

Moving to profitability. Despite the revenue headwinds created by lower funeral volume, profitability continued to trend in a positive direction.

Adjusted consolidated EBITDA was $33.3 million, a growth of 3.1%, representing an adjusted consolidated EBITDA margin of 32.3%, an increase of 70 basis points when compared to the same period last year. Adjusted diluted EPS for the second quarter ended at 78 cents compared to 74 cents last year, an increase of 4 cents per share or 5.4%.

Perhaps more important than the absolute numbers, the quarter demonstrated the operating leverage we have been building into the business. Our teams remained disciplined in managing labor, controlling discretionary spending, improving productivity, and executing consistently across the organization.

Those efforts allowed us to mitigate a meaningful portion of the volume decline while continuing to invest in the business's long-term capabilities and performance. Simply put, when external conditions became temporarily more challenging, our operating performance improved.

As volume trends return to a positive position, we believe our focus on operating performance will help drive an even more significant growth story in the quarters and years ahead. That is exactly what we would expect from a stronger operating company.

John will walk you through the financials in greater detail, but I want to recognize the outstanding work performed by both our field leaders and our support center teams throughout the quarter. Looking ahead, as we entered the third quarter, we were encouraged to see funeral volume return to positive growth during the month of July.

While one month certainly does not establish a long-term trend, it is an encouraging indicator after a softer first half of the year. Our strategy has never depended on perfectly favorable market conditions.

It depends on consistently operating better today than we did yesterday. That philosophy remains unchanged.

Operationally, we continue to make meaningful progress across several initiatives that will strengthen Carriage over the long term. Our Core Line for urns and caskets as well as our package offerings are also strategies that continue to gain traction.

By simplifying merchandise selections while enhancing quality and consistency, we are improving both the family experience and the economics of our business. These initiatives represent much more than procurement programs.

They are examples of how disciplined operating systems can simultaneously improve service and financial performance. We also continue expanding our Passion for Service program, which will become an important part of how we recognize and reinforce the behaviors that differentiate Carriage.

Creating premier experiences is not simply an objective, it is the way we serve families and one another across the organization. Finally, we continue to evaluate opportunities to deploy capital in ways that create long-term shareholder value.

Our balance sheet remains healthy, our strategic acquisition pipeline remains busy and active, and we will continue applying the same disciplined approach to capital allocation that has guided us over the past several years. As I reflect on the quarter, one takeaway stands out.

External conditions have tested our business, but they also validated the progress we have made. We cannot influence mortality trends.

We cannot dictate macroeconomic conditions. We can control our culture, our operating discipline, our capital allocation, and the consistency with which we execute.

This quarter demonstrated the value of those capabilities. When those capabilities combine with a return of positive volume trends, it truly allows us to optimize the creation of value for our shareholders.

Over the past three years, we have worked intentionally to build a stronger company, not just one capable of delivering positive results when conditions are favorable, but one capable of performing through changing environments. While there is still work to do and plenty of opportunities in front of us, I believe the foundation we have built is stronger than ever and drives our focus on being an elite operating company supported by consistent performance.

I remain confident in the direction of Carriage, confident in our leadership team, and most importantly, confident in the remarkable people across our organization who continue to serve families with compassion and excellence every single day. To our employees, thank you for your commitment.

To our shareholders, thank you for your continued trust and support. With that, I will turn the call over to John.

Thank you, Carlos, and good morning, everyone. We are pleased with our second quarter results and the continued progress we have made during the first half of 2026, despite the challenging funeral volume declines.

Our performance reflects disciplined execution of our strategy, a focus on what we can control, and the dedication of our field and support teams. I would like to thank all of our employees for the continued commitment to serving families with excellence while staying focused on operational execution and disciplined capital allocation.

Today, I will focus primarily on second quarter 2026 performance compared to second quarter of 2025, followed by an update of our outlook for the rest of 2026. We reported consolidated adjusted EBITDA of $33.3 million or 32.3% of revenue compared to $32.3 million or 31.6% of revenue in the second quarter of 2025.

The year-over-year change was primarily driven by financial income, including funeral trust income and commissions from prearranged funeral contracts, along with disciplined cost management. Together, these items contributed approximately $2.1 million of EBITDA improvement.

Preneed cemetery sales production grew 5% on a 17.3% increase in the average interment right sold. However, the growth resulted in relatively flat revenue and EBITDA compared to the prior year quarter due to timing of revenue recognition.

These gains were partially offset by volume impact of our comparable funeral locations, which contributed approximately $1.4 million less in the second quarter of 2026 compared to the prior year quarter. For the second quarter of 2026, adjusted diluted EPS was 78 cents compared to 74 cents in the second quarter of 2025, representing a year-over-year growth of 5.4%.

Adjusted diluted EPS increased primarily due to the stronger operating results discussed earlier, partially offset by higher depreciation and amortization expense compared to the second quarter of 2025. Moving on to cash from operating activities, we generated $22.5 million during the first half of 2026 compared to $21.9 million in the first half of 2025, an increase of $600,000 or 2.7%.

The improvement was primarily driven by working capital benefits, as growth in preneed cemetery sales does not immediately impact operating cash flow because payments are collected over the life of the contract. These sales generate stable long-term cash flow and build a strong backlog of future revenue.

Our adjusted free cash flow for the first half of the year totaled $13.8 million compared to $20.3 million in the prior year. The year-over-year change primarily reflects $3.2 million in incremental planned capital expenditures, as we continue investing in our cemeteries and funeral homes to support future growth.

Our disciplined capital allocation strategy continues to strengthen the balance sheet. At quarter end, our bank leverage ratio remained at 4.0 times compared to 4.2 times at the end of the second quarter of 2025.

Maintaining a lower leverage ratio helped reduce borrowing costs, resulting in interest expense that was approximately $350,000 lower than the prior year quarter. Our average borrowing rate under the credit facility was approximately 80 basis points lower than in the second quarter of 2025.

Capital expenditures for the quarter totaled $5.3 million compared to $2.8 million in the second quarter of 2025. Of the total capital expenditures, maintenance capital represented $2.1 million, growth capital represented $3.2 million.

The year-over-year increase was primarily driven by cemetery development, which supports continued cemetery preneed growth, as well as previously deferred maintenance projects. Overhead expenses totaled $12.1 million or 11.8% of revenue compared to $12.5 million or 12.5% of revenue in the second quarter of 2025.

The year-over-year change primarily reflects incentive compensation adjustments and a heightened focus on cost management across the organization. We remain committed to disciplined expense management while continuing to invest appropriately in the people, technology, and infrastructure necessary to support our long-term growth strategy.

Turning to our outlook for the remainder of 2026. We are updating our outlook to reflect changes in external demand assumptions, including the lower-than-anticipated trends in the first half of the year and the revised timing of expected acquisitions.

Our outlook now anticipates revenue between $435 and $445 million, adjusted consolidated EBITDA between $135 and $140 million, adjusted EBITDA margin between 31% and 31.5%, adjusted diluted EPS between $3.35 and $3.55, overhead expenses between 13.5% and 14% of revenue, adjusted free cash flow between $40 and $50 million, ending leverage ratio between 3.9 and 4.0 times. Overall, we are pleased with our first half performance and remain focused on executing the strategic initiatives that we believe will create long-term shareholder value.

We continue to invest in our people, strengthen our operations, maintain disciplined capital allocation, and position the company for sustainable growth. That concludes our prepared remarks.

I will now turn it back over to the operator to open the line for questions.

Thank you. Good morning, Carlos, John, Steve.

How are you today?

Good morning, Liam. We're doing great.

Thank you for asking.

Super. In the funeral home area, we're seeing a stability between cremation and traditional burials, and there's always been a tradeoff.

The cremation was more profitable with a lower ticket, while traditional burials were the opposite, larger ticket, lower margin. Looking at your results in the quarter, average price per contract was up 4%, margins were down.

Is that any kind of function of the mix between cremation and traditional burial?

The mix is stabilizing as well, Liam. It is a great question.

To give an example, our cremation rate for the quarter was 60.6% this year compared to the same quarter last year of 61.2%. Actually, it dropped 60 basis points from a mix perspective.

For the full year, it's basically flat, 60.5% this year compared to 60.6%. It's really not a full influence of the cremation rate.

Honestly, it's just the effort we're doing on presenting families with our packages, with our urns, and all cremation-related items. We have a very specific program, it's one of our Core 4, which basically focuses on presenting direct cremation families options so they can walk away with something more than just direct cremation.

That's some of the impact that you see on that increase on the average revenue per contract. The margins that you're talking about is really pure impact of the volume we had.

You had negative volume and on a fixed cost business, that really gets a significant impact on your cost.

Great. Staying with the funeral home business, are there any properties that are not performing up to snuff, where you're going to have to decide, look, enough is enough, and it's time to divest them?

Could you repeat the question? I'm sorry.

Okay. Staying with funeral home, as you go through the properties, are there any underperforming ones that are dragging down profitability that you said, enough is enough, and I want to divest them?

Good morning, Liam. This is Steve.

We really over the past five years have identified those businesses that didn't really fit our long-term growth model. We're largely through that process.

There are always opportunities with a few businesses to pick that performance back up, but we don't anticipate any divestitures moving forward.

Great. Thanks, Steve.

Thanks, Carlos.

Thank you, Liam.

Morning, guys. Thanks for the opportunity to ask questions.

First question related to funeral homes. Obviously, not a lot you can do about the death rate.

You did note in the press release and in your prepared comments, Carlos, that July was encouraging. Does that mean April, May, and June, the months of April, May, and June were down year over year in volume?

Was there an improving trend before we saw the encouraging positive volume of July?

Yeah. We were negative on volume every month from January through June.

Now that it was a declining negative, right? Started on the high single digits, it started to really go down all the way through the end of June.

Then as we came into July, it really flipped now into growth on a year-over-year basis on volume and it is decent growth. It's encouraging that we see that declining of the negative down all the way through the end of the first half, and then now going into the positive as we start the second half.

Historically, it's been difficult to predict the death rate from quarter to quarter, but annually, it's a little bit more stable. Historically, the death rate had been around 100 basis points.

What are the national mortality rates looking like today? Up near

Just on on that note, we believe just like you that the full-year volume trend should be somewhat similar to last year. We believe that the second half should be much better than the first half has been, and and that's how we're planning for, as you have seen from our outlook.

We're feel pretty confident that we are going to be able to get there. From a mortality perspective, I think that the percentage the death rate remains about the same.

It's just the the amount, right? We haven't seen the the baby boomers starting to show up that's going to impact the the number of of people dying.

We, the CDC, as Alex, is quite behind on the reporting. It's difficult for us to try to guide to to even the first half with the data they put out.

They do some preliminary work, we look at that, we try to correlate what we see based on that reporting. What I can tell you is that we did some analysis on market share, and it's pretty pretty broad, is not super detailed, but it is enough to know that by state, what was our share of of the deaths within each one of the states last year compared to this year.

I can tell you that it's pretty much flat or maybe a few basis points above to what we did last year. That gives us confidence that it is not losing market share, but it is just a a number of deaths coming down.

Great. Then regarding your guidance, you basically reaffirmed all the profitability numbers.

You actually brought down capex a bit for the full year. The revision was really on revenue, and you attributed it to a couple of things.

I wonder if you can go over that with us again. One thing being the first half performance, and the other thing the timing of expected acquisitions, because as I recall, I think there was an assumption that you'd have a $5 to $10 million contribution from acquisitions made during 2026, and we've only made one acquisition so far.

That'll be my follow-up question. I want to talk a little bit about McCammon.

Hey Alex, this is John. I'll handle the outlook and then I'm sure Steve will talk about the acquisition.

From the outlook, yeah, you're right. We adjusted our revenue down $5 million, and that really is mostly attributable to basically the timing of acquisitions.

To Carlos's point he just made, we believe the death rate over the full year is going to come back to be a little bit more normalized, some of the volume that we missed in the first half, we're going to gain back in the second half. That gave us a little bit of confidence to say, okay, we're going to take it down about $5 million associated with the acquisition.

Before, we were $5 to $10, call it $0 to $5, obviously, we're going to have more than zero because we have an acquisition. From a profitability perspective, the first half of the year, we've been a little bit more profitable than where we were initially from a range perspective.

If you remember, we were 30.5% to 31.5% kind of EBITDA margin range. We've been above that in the first half of the year, we adjusted our guide to be 31 31% to 31.5%.

Our expectation is be closer to the last two years, which was 31.2% to 31.3%. Right now, we're doing a good job from an expense management perspective, both in the field as well as in the HSC.

We feel confident we can hit the mid of our EPS guidance.

As it relates to the acquisitions, Alex, it really is all around timing. The activity remains as active as I've seen during my time with Carriage.

A lot of the focus is on the valuations and bridging any gaps there might be on expectation and kind of where we think that valuation should land. Those conversations are ongoing right now.

We had mentioned in the last quarter's call that we really thought there'd be more activity that we'd be in a position to discuss in the back half of the year. We continue to think that's going to be the case, and so over the next five months, we believe that the conversations we're having are going to progress to a stage where we can provide some more detail.

Very bullish and excited about the opportunity. As you've been following us for a while, we're pretty selective and we want to remain disciplined.

When we're looking at valuations and we're looking at properties, we've got to make sure there's a path for us to help grow those with our leadership. We've got to make sure that the valuation makes sense not only for the seller, but also for Carriage and our shareholders.

Great. What can you tell us about the McCammon acquisition in late May?

It's in the greater Knoxville area, it's a new market, I believe, for Carriage Services. I'm trying to size it a little bit, either by number of calls per year, revenue, EBITDA, price paid.

I'm sure that'll be in the Q.

You bet. We're obviously really excited about McCammon, primarily because Knoxville is a growing market, and McCammon has been around for a long time, has a great reputation.

The opportunity that we just talked about with McCammon is we think with our leadership and some of the things that we can do to support that business, there's opportunity with pricing, there's opportunity on market share. Right now, it's just under 300 calls a year, and we think we can continue to drive that up as we get into the community a little bit more and present our value proposition.

Excited about that. Ultimately, we'd love to grow in Knoxville and throughout Tennessee.

We've got a really great presence over in Chattanooga, as and we'll continue to focus in that area.

Great. That's very helpful.

I appreciate the additional color. I'll get back in the queue.

Thank you, Alex.

Hi, good morning. I was just curious, on the funeral volume trend, were there any markets that were better or worse than your kind of average results, particularly focusing on some of your larger markets like California, Florida, Texas?

One that I could tell you stands out was Florida. Florida is highly cremation.

There's a lot of direct cremation businesses that are established in Florida and they continue to pop up more and more in that state. We haven't lost market share, but we do see as the most significant volume decline from a state perspective, Florida would be the one.

Okay. Then in the press release, you talked about disciplined cost management as a driver for your adjusted EBITDA performance in the quarter.

Just curious if you can provide more detail there. Were these pure cost cuts?

Was it just labor management, better cost management? Was this delaying some investments that maybe will just come back later in the year?

Just curious for more detail there.

Great question, Parker. If you go back to three years, we started with a plan, right?

Part of that plan, if you take a picture of Carriage back then and then compare a new picture of Carriage today, there's a lot of systems, process, talent that we have put in place that has led to now being able to have a much better operating leverage. It is not that we decided we're going to cut here, we're going to eliminate that and really compromise the service quality of the delivery of excellence we're trying to provide, not just to the families we serve, but also to the employees.

It is just the results of the systems and people and systems we have put in place and that it seems like it really starting to kick in. We have for a long time now held some pretty decent margins from an EBITDA perspective, and this quarter just really show up in a much better form than we were expecting, and it's great to see.

We believe, as John stated on his comments, that we should be able to sustain pretty nice range between 31 and 1/2 31% and 31.5%, for the remainder of the year.

Okay. Thank you.

Hey, everyone. Thanks for taking my questions.

A few for you. First, can you be more specific about the volume growth that you saw in July?

I can't give you a specific number, but I would say strong low-single digit.

So That's helpful. Understood.

Then second question is with respect to your updated guide, it sounds like most of it has to do with that kind of reset expectation about M&A. I'm curious what's baked into your guide with respect to volume growth in the back half.

I don't know how specific you can be there, but just trying to better understand what needs to happen for this kind of catch up in volumes in the back half.

It would be kind of low-single digit growth in volume, right? That can be attributed, it would be calls, right?

Calls can go back to kind of low-single digits and we continue to see the benefit associated with the RPC that we've seen in the first half of the year.

How much of that is the preneed timing that you talk to? Maybe that's what you were just alluding to, but do you anticipate a lot of productivity that's been sold to kind of land because projects are getting completed or whatnot in the back half of the year?

Is that a big aspect?

No, I made that comment, George, and the reason why I made it is because you saw a growth of preneed production of 5%, but the revenue was flat. There's a variance between how you sell preneed and how you recognize the revenue, as you know.

I was just trying to make the point of pointing out that there will be a delay of some of that production into future periods.

I see. Then two last ones for me.

The first one is just on the current status of Trinity, the timing of the pilots and rollout, etc., if you can talk to that. Then the second question is, John, you mentioned in your prepared remarks that there was an incentive comp adjustment.

I'm just wondering how material that was and was it some kind of reversal that benefited the quarter or just if you could be more specific about that. That's all I had.

Thank you.

I'll start with Trinity. Trinity, we've rolled out to 15 more locations on July 1st, right now, we're in the pilot phase for 17 locations in total.

We're learning a lot through that phase as we've rolled out to more locations, we're going to assess the data that we get back and ultimately that may influence how we roll out to the rest of the network. In regards to the incentive compensation, there was a couple different plans that we based on performance and based on kind of how we're being measured that we took down a little bit of an accrual associated with that.

As we kind of factor in the full-year number, there's an opportunity for us to kind of bring that back, but based on the first half, and some of the measurement is based on EBITDA, some of the measurement is based on kind of where revenue is and ultimately we just need to make a little adjustment to our accrual.

Okay. Thank you.

Hi, I just had a quick follow-up. I forgot to ask about overhead.

Overhead was significantly below my expectations and I'm assuming that was because of lower variable costs associated with the lower revenue and disciplined cost management. That implies an increase in total overhead as a percentage of revenue in the third and fourth quarters.

Did you say 13.5% to 14%? Because I had down 13.5% to 14.5%.

Did you bring that down a little bit or was I mistaken previously?

No, you're right, Alex. Ultimately our initial guide was 13.5% to 14.5%.

We did take that down based on the first half results. In the second quarter, you're right.

It was about $400,000 if you look on an absolute term year-over-year savings, and some of that has to do with just good cost management, some of that has to do with some of the accrual that I just mentioned that we took a little bit down associated with that. Ultimately, and then some of it is some costs that will trail into the third and fourth quarter that we initially expected in the second quarter.

Okay. Then lastly, the $5 million reduction in revenue guidance midpoint to midpoint, will that affect Q3 or Q4 more than the other or kind of level-loaded?

We would expect Q4 to be a little bit to absorb some of that, higher end. Let me say it the right way.

As you look at kind of your model in third and fourth quarter, we would expect fourth quarter to have a little bit higher revenue, to to sustain some of that volume associated with maybe acquisitions.

More of that $5 million reduction is in the fourth quarter than in the third quarter?

We would expect that Q4 performs as all other Q4s have performed in the past, and so it should be better than Q3, therefore it would absorb more of that $5 million.

Gotcha. Thank you very much.

Thank you, Alex.

Thank you for joining us today. We remain focused on executing our strategy, serving families with excellence, and creating long-term shareholder value.

We appreciate your continued support and look forward to updating you on our progress next quarter. Thank you, everybody.