1. Important disclosures appear on the last page of this report.
The Henry Fund
Henry B. Tippie School of Management
Benjamin Martin [Benjamin‐martin@uiowa.edu]
Carriage Services, Inc. (CSV) March 31, 2016
Consumer Discretionary – Deathcare Services Stock Rating HOLD
Investment Thesis Target Price $33 ‐ $39
The Henry Fund recommends a Hold rating for Carriage Services. While they
appear to be slightly undervalued, the discount is not enough to counter the
risks inherent in their business. A summary of the primary points of this thesis
are as follows:
Drivers of Thesis
 High reliance on debt to grow – After losing 95% of their market value in
the early 2000’s and 87% during the financial crisis, investors are wary of
their stock. This has afforded them little access to equity capital and made
debt their primary source of acquisition financing.
 Risky business model – A significant portion of Carriage’s business relies
on preneed funeral/cemetery sales, which are economically sensitive and
cash flow negative at the outset. Given the reliance on debt, this has led to
financial pressure and margin compression during economic downturns.
 Recent management turnover – Management turnover is expected
following a significant loss of market value. However, Carriage has had
trouble keeping top managers, even in recent years. For example, the
company has had four different CFOs since 2011.
 Growth in cremations – Cremations are quickly replacing burials as the
preferred method of disposition. This is important because Carriage
generates about 1/3 the revenue per cremation contract vs burial.
Risks to Thesis
 If the cremation rate increases less than expected or if Carriage is more
successful than they have been in the past at cross selling additional
services, they may be able to outperform expectations and grow their top
line at a faster rate.
 Carriage is able to regain access to equity capital and reduce their debt
burden. This would help make them more resilient to economic
downturns.
Henry Fund DCF $39.54
Relative P/S $26.87
Relative P/FCF $25.53
Price Data
Current Price $22.50
52wk Range $19.03 – 25.96
Consensus 1yr Target $27.67
Key Statistics
Market Cap (B) $358.1
Shares Outstanding (M) $16.63
Institutional Ownership 73.7%
Five Year Beta 0.85
Dividend Yield 0.44%
Est. 5yr Growth 5.3%
Price/Earnings (TTM) 19.4x
Price/Earnings (FY1) 18.5x
Price/Sales (TTM) 1.6x
Price/Book (mrq) 2.3x
Profitability
Operating Margin 20.1%
Profit Margin 8.6%
Return on Assets (TTM) 8.6%
Return on Equity (TTM) 12.4%
Earnings Estimates
Year 2013 2014 2015 2016E 2017E 2018E
EPS $0.83 $0.84 $1.16 $1.22 $1.32 $1.41
growth 29.7% 1.2% 38.1% 5.0% 8.6% 6.5%
12 Month Performance Company Description
Carriage Services is a leading provider of
deathcare services in the United States. The
company owns and operates 167 funeral homes
and 32 cemeteries in 11 states. Funeral services
include both traditional burial and cremation
services. Cemetery operations include interment
rights and various products (caskets, urns, etc.).
Carriage markets their services on both an “at‐
need” (time of death) and “preneed” (planned
prior to death) basis.
19.4
12.4 11.1
21.7
18.3
10.0
20.6
25.5
11.4
0
5
10
15
20
25
30
P/E ROE EV/EBITDA
CSV SCI Other Consumer Services
Source: FactSet
‐20%
‐15%
‐10%
‐5%
0%
5%
10%
A M J J A S O N D J F M
CSV S&P 500
Source: FactSet

2.
Page 2
EXECUTIVE SUMMARY
After their IPO in 1996, Carriage Services gained a name
for themselves as one of the few consolidators in the
deathcare industry. However, aggressive, debt‐fueled
expansion led to a near bankruptcy and a 95% loss in
market value following the market crash in early 2000.
Carriage then spent the better part of the next decade
struggling to regain their focus and rebuild the trust of
shareholders.
Following the implementation of new operating standards
and a framework for selective acquisitions, Carriage
appears to have found their footing. However, this does
not mean that they are without risk. As a result of their
early missteps, the company has had very little access to
equity markets as a source of capital. Thus, future growth
relies primarily on debt to finance acquisitions. This risk is
compounded by their reliance on preneed
funeral/cemetery sales, which are sensitive to economic
fluctuations. Also, the company has experienced some
significant management turnover in recent years, which
does not inspire confidence in their ability to execute.
Finally, while the company appears to be undervalued, we
feel our lack of trust in the management team warrants a
Hold rating.
COMPANY DESCRIPTION
Carriage Services is a leading provider of deathcare
products and services on both an at‐need (time of death)
and preneed (planned prior to death) basis. Underlying
demand is driven by total deaths in the United States,
which typically grow at about 1% annually. Additional
growth is generated through the acquisition of funeral
homes and cemeteries. Carriage typically takes a hands‐of
approach to the operation of their funeral homes and
cemeteries, which allows them to capitalize on the
reputation of the acquired businesses and provide them
with the benefits of scale (better price on products, access
to capital, etc).
Segment Revenue
Carriage Services’ total revenue can be broken down as
follows:
As we can see, the majority of Carriage’s revenue comes
from their funeral home operations. Additionally, financial
revenue (trust earnings, commission revenue, and finance
charges) has historically been about 8% of the total.
Funeral Home Operations
Carriage Services’ largest segment owns and operates 167
funeral homes in 27 states throughout the United States.
This segment provides both traditional burial and
cremation funeral services and sells funeral merchandise
(urns, caskets, flowers, etc.). Some of the key factors
affecting segment profitability include the demographic
trends in key operating regions (eastern states typically
have higher cremation rates), the reputation of acquired
funeral homes, and the ability to successfully raise prices.
Funeral
Operating
Revenues
73%
Cemetery
Operating
Revenue
19%
Funeral
Financial
Revenue
4%
Cemetery
Financial
Revenue
4%
CSV 2015 Revenue Breakdown
Source: CSV 2015 10‐k

3.
Page 3
The majority of funeral contracts are sold on an at‐need
basis. However, 19% of contracts are sold on prior to the
time of need. When these sales are made, one of two
things happens. Proceeds are either recorded as deferred
revenue or, more commonly, they are deposited into a
trust fund that is invested in a diversified portfolio of fixed
income, equities, and cash that is intended to offset any
inflation in funeral costs. Revenue is not recognized until
funeral services are provided and funds are withdrawn.
Carriage earns a management fee on these assets and is
allowed to withdraw a small percentage of trust earnings
prior to providing the funeral but this depends on the
regulations in the states where the contract was sold. In
addition to depositing funds in trusts, Carriage generates a
small portion of revenue by funding future funeral
expenses with life insurance contracts on which they earn
a commission.
The chart above shows the trend in Carriage’s cremation
contract sales. Cremations are projected to reach 70% by
2025, slightly ahead of the overall projections for the
industry give Carriage’s exposure to funeral homes on the
East Coast, which typically have higher rates of cremation.
Average revenue for a burial contract has grown at
approximately 2.3% per year since 2006. Going forward,
average revenue is projected to grow in line with the CBO’s
inflation projections12
. Over the last 5 years, Carriage is has
grown average revenue per cremation at approximately
0.8%. We expect this low growth will continue going
forward given that Carriage has largely been unsuccessful
reducing the number of direct cremations (just cremation,
no service or viewing) and that cost is the primary
motivator for consumers who choose this as an option9
.
Preneed
contracts
19%
Atneed
contracts
81%
2015 Funeral Contract
Distribution
Source: CSV 2015 10‐k
20%
30%
40%
50%
60%
70%
80%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
2021E
2022E
2023E
2024E
2025E
Total cremation rate 2006 ‐ 2025
Source: CSV 2015 10‐k
Historical
Projected
7% CAGR
ProjectedHistorical
Source: CSV 2015 10‐k
Source: CSV 2015 10‐k

4.
Page 4
Cemetery Operations
Carriage Services’ cemetery segment currently owns 32
cemeteries throughout the US. As businesses, cemeteries
primarily sell interment rights for grave sites and
mausoleum spaces and related merchandise (markers,
etc.). Cemeteries are sales driven businesses so the size
and success of Carriage’s sales force is a key aspect to their
success.
Sales of cemetery interment rights are split pretty evenly
between at‐need and preneed rights. Preneed rights are
typically sold on an installment basis and revenue allowed
to be recognized once 10% of the contract amount has
been collected. Carriage earns a small amount of revenue
from servicing these installment contracts. Proceeds from
preneed sales are also deposited in a trust, just like
preneed funeral sales. Finally, 10% of cemetery receipts
are required to be deposited in a perpetual care trust fund.
Income from the fund is used for maintenance and upkeep
of cemetery facilities.
Similar to the average revenue per burial contract, the
average revenue per interment has increased about 2%
per year for the last 5 years. Future increases have been
pegged to the CBO’s projected inflation.
Key Risks
Key risks to Carriage Services are as follows:
 The deathcare business is based on trust and
reputation. As a result, success is largely dependent
on just a few individuals.
 The company is highly leveraged. With approximately
80% debt‐to‐total capital, any contraction in their
business puts them at risk for default. This happened
in the early 2000’s and nearly happened again during
the most recent recession.
 Growth depends on the ability of management to
identify and correctly value acquisition targets.
 Financial revenue is highly dependent on current
financial market conditions.
 Gains in market share are largely dependent on
preneed sales. However, because Carriage incurs
costs when making these sales but is required to
deposit proceeds in a trust fund, cash flow may be
affected if preneed sales grow too quickly.
 Increases in the rate of cremation will affect Carriage
Service’s top line as these contracts only generate
about one third the revenue of a traditional burial.
Atneed
Interment
Rights
50%
Preneed
Interment
Rights
51%
2015 Cemetery Interment Rights
Distribution
Source: CSV 2015 10‐k
Source: CSV 2015 10‐k
ProjectedHistorical
2.3% CAGR

5.
Page 5
Management
Over the last 10 years one of the only consistent members
of the executive team at Carriage Services has been their
CEO and founder Melvin Payne. While the company has
undergone some understandable management turnover
in the past (near bankruptcy in 1999/2000), it is the recent
turnover that is most concerning. Since 2011, Carriage has
gone through four Chief Financial Officers: Terry Sanford
(2011), Cliff Haigler (2012), William Heiligbrodt
(2013/2014), and Viki Blinderman/Carl Brink (Co‐CFOs
named in 2015). This is a troublesome trend given that this
is a highly leveraged company and their success depends
largely on their ability to manage their debt. A lack of
consistency with their top financial managers does not
garner much confidence in their ability to do so.
RECENT DEVELOPMENTS
FY 2015 Earnings
Full year 2015 sales and earnings both came up short of
expectations, although just barely. Revenue of $242.5 M
came up about $1 M short of consensus and earnings
missed by $0.04. However, the reason for the miss was the
larger than expected incentive compensation paid out to
top funeral home directors, a positive performance
indicator. Additionally, revenue and earnings guidance of
$251M and $1.71/share was in‐line with expectations
(although below our model) and the stock rallied 1.7% on
the news. On their earnings call, questions from analysts
were relatively limited as Carriage no longer answers
questions regarding quarterly performance in an attempt
to draw the attention of investors to the long‐term
performance of the business13
.
INDUSTRY TRENDS
The deathcare industry in the United States is an industry
that is steeped in tradition. Underlying demand is driven
by total deaths, which are expected to increase at a faster
rate beginning in 2019 as the “Baby Boomer” generation
begins to pass away. While generations past have
traditionally chosen to be buried, cremation has increased
in popularity, with long‐term implications for the
profitability of the industry. The industry has historically
been dominated by local funeral homes and cemetarians
and competition has been low. While still highly
fragmented, the industry has begun to consolidate over
the last several decades as large chains have entered the
market. A major contributor to this trend is growth in
demand for preneed arrangements, driven by the increase
in information available to consumers.
Aging US Population
Following World War II, the United States experienced a
population boom. Dubbed the “Baby Boomer” generation,
this group includes individuals that are aged between 52
and 70.
In the decades following this post‐war population boom,
the population of the United States has grown older and is
expected to continue to do so. Currently, the percentage
of the population that is 65 years old or older is projected
to grow 3% annually through 2019 vs. growth in the total
population of 1% over the same time period3
. The year
2019 is an important date because this is the year that the
Baby Boomer generation is expected to begin passing
away, which will drive the total Y/Y growth in deaths to a
peak of 1.8% in 20323
.
Source: United States Census Bureau
2019
Baby Boomers begin to pass
away

6.
Page 6
Burial & Cremation Rates
One of the biggest trends in the deathcare industry is the
increase in cremations as a method of disposal. Based on
the most recent data (2013), the national cremation rate
is expected to hit 50% in 20186
.
The biggest implication of this trend to the deathcare
industry is that cremations typically generate less revenue
for the funeral home. According to the latest industry
statistics, the price of a typical cremation can range from
$1,100 for a direct cremation7
(just the cremation, no
service) to about $6,000 for a cremation with a funeral
service and viewing6
. This is in contrast to the median
price of $7,2006
for a traditional funeral and burial. These
cost savings are the primary motivation for the increased
preference for cremation9
.
Demand for Preneed Services
While the concept of selling a funeral service or burial plot
prior to the time of need is not new, it has grown in
popularity over the last two decades. In fact, according to
a 1998 telephone survey conducted by the AARP, 43% of
Americans age 50 or older had been contacted regarding
the purchase of a funeral in advance10
. By selling
funeral/cemetery services in advance, chains like Carriage
Services or Service Corporation International are able to
ensure that they will have a demand for their services in
the future. They are also able to invest the proceeds into a
trust fund and generate additional revenue by charging
management fees and keeping a certain percentage of
trust earnings. At Service Corporation International (the
largest funeral home chain in America), preneed revenue
accounted for 49% of total revenue in 201511
.
Industry Consolidation
In the past, funeral arrangements were typically made at
the time of death and the local funeral home was the
default choice, resulting in low competition among
industry participants. However, with the advent of the
internet, the amount of information available to
consumers has increased dramatically and a growing
number of consumers (18% according to an AARP survey)8
are shopping around to find the best prices. As a response
to this increased competition, several companies have
emerged as industry consolidators and are attempting to
capitalize on economies of scale to secure market share
and grow their businesses. The major publically‐traded
players in the deathcare industry are as follows:
Despite the growth of these companies over the last 20+
years (10 for STON), the industry is still highly fragmented
with 86% of funeral homes still privately owned by families
or individuals6
, representing a large opportunity for
continued consolidation.
Regulatory Environment
The deathcare industry is lightly regulated at the federal
level but state regulations can be more stringent and
present a unique challenge to companies who act as
consolidators. Federal oversight falls under the jurisdiction
of the Federal Trade Commission’s (FTC) Funeral Rule. The
rule prohibits certain practices that have been deemed
unfair and requires companies to give their customers
accurate, itemized pricing information.
At the state level regulations are more varied, the result of
the historically fragmented nature of the industry. While
there are currently 18 states that have adopted the FTC’s
Funeral Rule, the rest have their own set of rules regulating
the industry. Currently, state regulators have been
focusing their efforts on the preneed market. Common
issues addressed include: licensure requirements for
preneed sales, requirements for placing funds in trusts,
contract cancellation provisions, and consumer protection
recovery funds8
.
0%
10%
20%
30%
40%
50%
60%
70%
80%
2005 2010 2013 2014E 2015E 2020E 2030E
Cremation vs. Burial Rates
2005 ‐ 2030
Cremation Burial
Source: National Funeral
Directors Association
Company Ticker % Market Share
Service Corp. Intl. SCI 12%
Carriage Services, Inc. CSV 1%
StoneMor Partners STON 1%
Source: National Funeral Directors Association

7.
Page 7
MARKETS AND COMPETITION
Due to the traditionally family‐owned nature of the
deathcare industry, market share is primarily determined
through the heritage and reputation of the funeral
home/cemetery, although quality of service, competitive
pricing and well maintained, conveniently located facilities
are also important considerations.
The two most prominent companies in this industry,
Service Corp. Intl. (SCI) and Carriage Services (CSV), have
been public since the 1990’s and have followed a similar
path to the present. Immediately following their IPO’s,
both of these companies pursued aggressive consolidation
strategies that were primarily financed with debt. While
initially successful, the market crash in 1999 caused
performance to stumble and both companies lost access
to credit markets and underwent a painful deleveraging
process while simultaneously shedding about 95% of their
market capitalization.
Following some management turnover in the mid‐2000’s,
both SCI and CSV refocused and began pursuing selective
acquisition strategies. Currently, both companies operate
decentralized businesses, preferring a hands‐off approach
with regard to their acquired funeral homes and
cemeteries. This allows them to benefit from the
established reputations of the previous owners and still
creating scale in their businesses. This is appealing to
acquisition targets for two reasons. First, it allows owners
to focus on providing the highest level of service to their
clients without having to worry about the business side of
their operation. Second, most funeral homes do not have
a succession plan in place for when the funeral director
retires. Acquisition by a larger company allows the
directors to cash out of their business while ensuring that
their business will still survive.
While there is little to no differentiation between the
products and services offered by industry participants (SCI
has been attempting to establish a brand but still typically
leaves the original name of acquired businesses
unchanged), competition for market share is not as
intense as one would expect. Again, the highly fragmented
nature of the industry means that there are plenty of
acquisition targets and only a few consolidators. While this
will likely change in the future, the largest companies still
rarely come into direct competition with each other.
Instead, most of the competitive pressure comes from
established local funeral homes/cemeteries. This is where
companies like SCI and CSV have an advantage. While it is
tough to compete in a new market against a competitor
with a better reputation, the lower cost structure (and
better prices) generated through the benefits of scale can
provide a serious benefit.
As noted in Industry Trends, demand for deathcare
services is driven by the total number of deaths. While the
growth in total deaths in 2015 was relatively flat at 2.6
million, total deaths are expected to grow at a 1% CAGR
over the next 3 years and then accelerate to a 1.6% CAGR
from 2019 – 2032, the result of the passing of the Baby
Boomer generation. This acceleration in demand bodes
well for the industry and should allow well managed
companies to achieve stable growth going forward.
Peer Comparisons
The table on the next page provides an overview of some
of the operating statistics from the three public companies
who operate in the deathcare industry. While there are
many regional and local factors at play that may influence
results in the short term, the companies who are likely to
outperform are the ones who can responsibly manage
their debt, continue to grow profitably, and return cash to
shareholders.
Source: Yahoo Finance

8.
Page 8
 Service Corp. Intl. – The largest funeral home
consolidator in the US with approximately 14% market
share. While the company has gotten into financial
trouble in the past (near bankruptcy in early 2000’s),
they now have the healthiest balance sheet and
highest returns in the sector. Recently, SCI has been
focusing on deleveraging the company further to
protect against economic shocks. Furthermore,
returning cash to shareholders is a high priority. SCI
reinstated their dividend in 2005 and has raised it 8
times since. Additionally, the company has
repurchased 41% of their outstanding shares since
2004. Going forward, it is likely that SCI will be the
strongest performer.
 StoneMor Partners LP (STON) – STON is the only one
of the three companies presented here that is
structured as an MLP. This gives them a very attractive
dividend yield but also presents some unique risks.
While CSV and SCI operate far more funeral homes
than cemeteries, STON is the opposite, with 274
cemeteries and just 69 funeral homes. Because the
cemetery business is highly reliant on preneed sales
(60% of STON’s revenue is preneed), which are cash
flow negative at the outset, their business mix has led
to persistent concerns over the sustainability of their
distributions. Additionally, the rising cremation trend
is likely to hurt the cemetery business going forward.
For these reasons, it is likely that STON will not be a
strong performer going forward.
Source: Yahoo Finance
Carriage Services Service Corp. Intl. StoneMor Partners
Market Cap 358.1$ 4,829.0$ 83.5$
Enterprise Value 687.2$ 7,876.0$ 1,126.2$
Est.2016 Revenue Growth 0.9% 1.9% 12.6%
Est. 2016 EBITDA Growth 2.1% 2.3% 9.6%
Est. 2016 EBITDA Margin 25.9% 26.4% 31.3%
LT Debt/Total Capital 39.0% 27.0% 18.9%
# of Funeral Homes 167 1,535 105
Avg Rev per Service 5,441.0$ 5,188.0$ 3,076.3$
# of Cemeteries 32 469 307
Avg Rev per Interment 2,988.0$ Not reported 1,620.0$
Source: Yahoo Finance

9.
Page 9
ECONOMIC OUTLOOK
While the underlying source of demand is relatively stable
and economically insensitive, the deathcare industry is
more cyclical than first glance would suggest. This is largely
due to the increasing importance of preneed sales, which
have a tendency to be influenced by consumer spending.
Also, due to the high percentage of fixed income products
in their preneed trust portfolios, interest rates also play an
important role.
Real GDP per Capita
While it has certainly displayed some volatility, real GDP
per capita has grown at an average rate of 1.4% from 1990
through 2014. Growth picked up to 1.6% in 2015 and,
according to the USDA, is set to rise 2.2% in 2016 before
moderating to 1.7% by 2020. This relatively stable forecast
is a positive for preneed funeral/cemetery sales.
Personal Consumption Expenditures
Due to their discretionary nature, personal consumption
expenditures are an important economic driver of preneed
funeral and cemetery contracts. While PCE dipped in 2015,
the CBO expects it to return to a more normal 2% level
over the next two years.
Interest Rates
Preneed trust fund accounts typically have a high
percentage of fixed income products (70% for Carriage).
Thus, interest rates play an important role in generating
returns on these portfolios. While the CBO is forecasting
the 10‐year Treasury bond yield to increase to about 3.5%
by 2017, the Henry Fund team is less optimistic with a
median expectation 2.3%. In either case, the rising yields
are expected to have a positive effect on the income
generated by these portfolios. However, this does not
mean that rising rates do not also pose a risk. Because
these assets are intended to fund future funeral/cemetery
expenses, if rate increases cause asset values to decline
below the expected cost of these services, then Carriage
may take a serious hit to their operating cash flows. Given
the largely cash flow negative nature of their business, this
will likely have an adverse effect on the company’s
financial position.
CATALYSTS FOR GROWTH
 Higher than expected death rates – While total deaths
in the US have historically been fairly predictable,
were they to pick up for any reason (strong flu season,
etc.) it will be positive for CSV shares.
 Share repurchases – Currently CSV has a $25M
authorization outstanding. They are opportunistic
with their repurchases but it should be positive for
Source: Congressional Budget Office
Source: Congressional Budget Office

10.
Page 10
earnings if they are able to further reduce their share
count. The model currently assumes $10M in share
repurchased (3% reduction in share count) in 2016.
 Earnings reports (est. 5/3 – 5/9) – Should be a positive
catalyst if results are in‐line with guidance of $249 ‐
$253M and EPS of $1.69 ‐ $1.73.
INVESTMENT POSITIVES
 Very stable demand business – Due to its nature, the
deathcare industry is not going anywhere. There will
always be demand for these services.
 Opportunistic share repurchases – CSV authorized
and repurchased $45M in their own stock in 2015.
Their current $25M authorization could reduce their
share count by an additional 5% ‐ 7%, depending on
prices.
INVESTMENT NEGATIVES
 High use of leverage to finance current acquisitions –
Not necessarily a negative but it has been shown to
put significant financial pressure on the company
during recessions.
 Preneed sales are initially cash flow negative – As
preneed sales grow, it may become more difficult for
Carriage to meet their financial obligations,
particularly during economic downturns.
 Management turnover – A lack of consistency among
top finance managers is particularly concerning given
the first two factors listed here.
 Increasing demand for cremation – This trend puts
negative pressure on the company’s revenue outlook
as cremations generate about 1/3 the revenue of a
traditional burial.
 Financial revenue is subject to market fluctuations –
Since a portion of the company’s revenue and financial
position is tied to the future movements of financial
markets, events outside of the company’s control may
have a serious impact on their business.
VALUATION
The target price range of $33 ‐ $39 is based on a
discounted cash flow model. Because free cash flow is the
crucial driver of value, the assumptions underlying
revenues, expenses, working capital, net PP&E, and other
operating assets/liabilities are the most critical.
Revenue
Revenue is the most important factor in the estimation of
FCF and is based on a number of factors. To arrive at a
forecast, total revenue was divided into 3 segments:
funeral home operations, cemetery operations, and
financial revenue.
Funeral Home Operations
Total revenue from the operation of funeral homes is
forecasted to grow at a compound rate of 2.7% to $231M
by 2025. There are three major drivers underlying this
estimate: total deaths in the United States, CPI inflation,
and the 2025 cremation rate. Estimates for these variables
were based on the following:
 Total Deaths – In 2016, the total number of deaths
are estimated to grow at a 1.3% CAGR to 2.65M by
2025 based on the US Census Bureau’s total deaths
estimate in their 2013 (most recent) projections for
the US population3
.
 CPI Inflation – The model assumes inflation between
1.3% and 2.4% out to 2020. This is based on the
Congressional Budget Office’s (CBO) most recent
Budget and Economic Outlook (published Jan 2016)12
.
 2025 Cremation Rate – The National Funeral Home
Directors Association is expecting the national rate of
cremations to exceed 70% by 2030. The model
assumes that Carriage will hit this 70% mark by 2025
given their higher exposure to the eastern states,
which tend to have higher rates of cremation.
Furthermore, the model assumes this rate will grow
in a linear fashion, giving Carriage a 51% cremation
rate in 2016.
In the funeral home segment, revenue is generated
through the sale of both at‐need and preneed contracts.
Furthermore, at‐need contracts can be divided into three
categories: cremation contracts, traditional burial
contracts, and “other” contracts (generally merchandise
with no related services). To arrive at an estimate for total
segment operating revenue, estimates for average
revenue for each of these contracts is required as well.
 Total At‐Need Funeral Contracts – Assuming one
contract equals one death, the model forecasts total
at‐need contracts growing in‐line with total deaths
plus a marginal increase in share of .02 per year (in‐
line with historical trend). This gives Carriage a total

11.
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of 34,109 at‐need contracts in 2025 (3.2% CAGR)
which represents 0.97% of all deaths in the United
States.
 “Other” Revenue – Revenues generated form
“other” contracts are estimated to come in at $4.5 M
in 2016 and grow to $7.4M by 2025. Contracts
classified as “other” have held fairly steady at 7.2% ‐
7.7% of total at‐need contracts. By taking the average
of the last 5 years (7.4%), we arrive at an estimate of
1,888 “other” contracts in 2016. Average revenue of
$2,383 is pegged to the inflation rate assumption.
 Cremation Revenue – The estimate of 13,086
cremation contracts is based on the total number of
at‐need contracts in 2016 and the cremation rate of
51%. Average revenue per contract of $3,233 is
assumed to increase at 0.8% per year, slightly lower
than inflation. This assumption was made in light of
Carriage’s lack of success in reducing the number of
direct cremations over the last 5 years and because
price is the most important factor to consumers when
choosing cremation over burial. All together revenue
from cremations is expected to come in around $42.3
million in 2016 which is forecasted to grow to grow at
a 7.9% CAGR to $83.2M by 2025.
 Burial Revenue – The remaining 10,680 contracts are
all assumed to be burial contracts. Like the “other”
contracts, average revenue per burial contract of
$8,796 is benchmarked against the CBO’s inflation
estimate. Given these assumptions, total revenue
from burial contracts is forecasted to be $93.9 M in
2016 which declines at a 1.2% CAGR out to 2025 as
burials move out of favor.
 Total Preneed Revenue – A total of 8,498 preneed
contracts are expected to be sold in 2016, consistent
with the 5‐year average of preneed contracts as a
percentage of total at‐need contracts (33.1%). When
a preneed contract is sold, the proceeds from the sale
are deposited into a preneed trust. However, as
contracts mature and the service is performed
revenue is recognized. To arrive at an estimate for the
number of contracts recognized as revenue, we must
first come up with an estimate for preneed backlog.
The model assumes that the backlog will grow in line
with total deaths in the United States. From here we
can back into an estimate for the number of preneed
funeral contracts that are recognized as revenue in
each year (7,500 in 2016 and 9,882 in 2025). By
assuming these contracts follow the same
cremation/burial distribution as the at‐need
contracts and using the same average revenue
estimates, we arrive at a total of $44.7M in preneed
revenue in 2016 which grows to $56.4M by 2025.
Cemetery Operations
Cemetery operating revenues are anticipated to decline
11.1% in 2016. This estimate is based on the total number
of interment rights sold, the distribution of at‐need and
preneed interment rights, and the average revenue per
right.
 Total Interment Rights – Total interment rights sold
in 2016 are expected to come in at 15,810. As of 2015,
Carriage owned 32 cemeteries. Given that this
number has never been higher than 33 over the last
10 years and Carriage’s stated preference for the
funeral home business, this number is expected to
remain constant. Interment rights per cemetery are
expected to improve by 15 in each year out to 2025.
This is in‐line with historical increases and consistent
with the assumption that Carriage will keep growing
their cemetery business without purchasing new
cemeteries.
 At‐need and Preneed Interment Rights – Each year
Carriage disclosed the percentage of interment rights
that can be classified as preneed. This percentage is
anticipated to be 48.5%, a 1% reduction from 2015
but in‐line with the slight downward trend that this
metric has exhibited over the last 5 years. Given this
assumption, the model predicts that 7,668 preneed
and 8,142 at‐need rights will be sold in 2016. Revenue
from preneed sales is recognized once 10% of the
contract value has been received by Carriage. In
2016, the model assumes 92.4% of total preneed
interment revenue will be able to be recognized, in‐
line with historical averages.
 Average Revenue per Interment Right – Average
revenue of $3,028 is pegged to the CBO’s inflation
projection.
Financial Revenue
Financial revenue is expected to decline slightly to $17.3
million 2016 and grow at a 2.1% CAGR to $24.1M by 2025.
There are four sources of revenue in this segment:
preneed funeral commission income, preneed funeral
trust earnings, preneed cemetery trust earnings, and
preneed cemetery finance charges.

12.
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 Preneed Funeral Commission Income – As
previously mentioned, some of Carriage’s preneed
funeral contracts are secured through life insurance
contracts, on which the company earns a
commission from the insurance broker. Due to a lack
of data on the number of these types of
arrangements, commission income is assumed to be
a constant percentage (4.9%) of total preneed
funeral revenue.
 Preneed Funeral & Cemetery Trust Earnings – A
certain portion of Carriage’s preneed trust
investments are allowed to be withdrawn each year
and recognized as income. However, the amount
and circumstances of these withdrawals are
regulated at the state level and each one is different.
Due to this, the model forecasts preneed
funeral/cemetery trust earnings to be in‐line with
the 5‐year average of earnings as a % of prior year
trust investments.
 Preneed Cemetery Finance Charges – Preneed
cemetery interment rights are typically sold on an
installment basis which are classified as preneed
cemetery receivables and Carriage earns a small fee
for servicing these accounts. The model forecasts
this source of revenue as 5.8% of preneed
receivables, in‐line with the 5‐year average.
Expenses
Key expense assumptions include cost of goods sold,
depreciation & amortization, and general & administrative
expenses.
 Cost of Goods Sold – This expense is broken down
into smaller funeral and cemetery COGS and
forecasted as a percentage of the respective
segment revenue. Overall, this line item is expected
to improve about 180 bps by 2025 as the company
continues to gain scale.
 Depreciation & Amortization – Depreciation is
forecasted as a percentage of prior year net PP&E
and amortization is forecasted as a percentage of
deferred charges and other non‐current assets.
Both metrics have held relatively stable over the
last 5 years and this trend is expected to continue.
 General and Administrative – Forecasted as a
constant percentage of revenue. This metric has
held fairly constant between 11% ‐ 12% over the
last 5 years. As a result, G&A is expected to be
11.7% of revenue in the forecast period.
Key Balance Sheet Accounts
To arrive at 2016 FCF, forecasts for several balance sheet
accounts are needed. The most important of which are net
working capital, net PP&E, and “other” long‐term
operating assets and liabilities.
 Net Working Capital – All working capital items are
forecasted to remain in‐line with their 5‐year
historical averages as a percentage of revenue
(except inventory, which is based on COGS). Overall,
NWC is forecasted to increase to $13.5M in 2016 and
grow modestly to $17.6M in 2025.
 Net PP&E & Cemetery Property – The forecast for
net PP&E is derived from estimates for capital
expenditures and depreciation. CapEx as a
percentage of revenue is expected to decrease to 7%
from the unusually high 12.5% in 2015. This is more
in line with historical averages. After accounting for
depreciation, net PP&E is expected to grow 1.5% in
2016. Cemetery property is forecasted to be $75.6
M, the same as 2015 given that no cemetery
acquisitions have been modeled.
 Other Long‐Term Operating Assets & Liabilities –
These accounts include deferred charges/other non‐
current assets, the present value of operating leases,
deferred preneed funeral/cemetery revenue, and
other LT liabilities. All of these accounts are
forecasted to remain constant as a percentage of
revenue. The exception is the PV of operating leases,
which is expected to grow in line with net PP&E.
Results of Model & Sensitivity Testing
After all line items have been forecasted, 2016 free cash
flow is expected to come in at $43.4 M and grow to $53.3
in 2025. This yields a substantial discount from the March
31, 2016 price of $22.50. However, we still recommend a
Hold rating given the amount of risk we see at Carriage
Services relating to their management and leverage.
After running sensitivity analyses on several of the key
input variables, a target price range of $33 ‐ $39 seems
reasonable. Overall, free cash flow is most sensitive to
NOPLAT growth in the continuing value period, growth in
the cremation rate, the 2016 inflation rate (as a proxy for
the increase in average revenue per contract for several

13.
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inputs), the increase in average revenue per cremation
contract, beta, and the equity risk premium.
Model vs. Consensus Estimates
Currently, the model predicts total 2016 revenue of
$245.5M and EPS of $0.94 vs consensus of $251.1 M and
$1.48/share. The majority of the differences are in the
cemetery segment, where the model predicts a decline to
$42.7 M and consensus is forecasting an increase to $49.9
M. While it is unclear exactly where the difference is, it is
highly likely that analysts are forecasting future
acquisitions of cemeteries in this segment.
Another difference between the street and the model is
the share count. Currently, analysts are forecasting a lower
share count vs the model. This is likely the result of higher
share repurchases. The model assumes that Carriage will
repurchase about $10 M in shares each year. However, it
is worth noting that this is just a rough estimate given that
the company has stated that they intend to repurchase
stock but has given no real guidance as to the amount or
timing.
KEYS TO MONITOR
To recap, Carriage Services is uniquely positioned to grow
as an industry consolidator in a highly fragmented industry
and appears to be slightly undervalued. However, the risk
inherent to their business model warrants a larger
discount than the 2% ‐ 15% implied by their valuation.
Additionally, turnover in top level management does not
inspire confidence in Carriage’s ability to manage their
debt or grow responsibly. For this
Some factors that may cause a change of opinion include:
 Increase in total deaths – This may be caused by the
baby boomer generation passing away sooner than
expected.
 Disciplined acquisitions – If Carriage can demonstrate
that they can be responsible in regards to the timing
and financing of funeral home acquisitions, we might
be a little more willing to accept the risk.
 Pullback in share price – a pullback to around
$20/share would yield a much more comfortable
+40% discount, a more comfortable range for the risk
we see in this stock.
REFERENCES
1. Bloomberg Terminal
2. FactSet
3. Census.gov Population Projections
http://www.census.gov/population/age/data/2013.h
tml
4. Centers for Disease Control and Prevention. National
Center for Health Statistics. VitalStats. Mortality Data.
5. http://www.cdc.gov/nchs/nvss/new_nvss.htm#new_
mortality
6. National Funeral Directors Association
http://nfda.org/about‐funeral‐service‐/trends‐and‐
statistics.html
7. Cremation Resource
http://www.cremationresource.org/cremation/what‐
is‐the‐cost‐of‐human‐cremation.html
8. AARP Report on the Deathcare Industry
http://www.aarp.org/money/estate‐planning/info‐
2000/aresearch‐import‐197‐IB44.html
9. Wirthlin Worldwide: 2005 Study of American Attitudes
Toward Ritualization and Memorialization
http://sifuneralservices.com/common/cms/documen
ts/2005Wirthlin_A.pdf
10. AARP: Older Americans and Preneed Funeral & Burial
Arrangements
http://assets.aarp.org/rgcenter/consume/d16999_na
tional.pdf
11. Service Corporation International 2015 Earnings Press
Release
http://investors.scicorp.com/phoenix.zhtml?c=10806
8&p=irol‐newsArticle&ID=2137289
12. Congressional budget Office: The Budget & Economic
Outlook 2016 – 2026 (Jan 2016)
https://www.cbo.gov/publication/51129
13. Carriage Services 2015 Conference Call Transcript
http://seekingalpha.com/article/3904206‐carriage‐
services‐csv‐ceo‐mel‐payne‐q4‐2015‐results‐
earnings‐call‐transcript?part=single
14. Service Corporation International 10‐k
http://investors.sci‐
corp.com/phoenix.zhtml?c=108068&p=irol‐sec
15. StoneMor Partners 10‐k
http://www.stonemor.com/investors/default.aspx

14.
Page 14
IMPORTANT DISCLAIMER
Henry Fund reports are created by student enrolled in the
Applied Securities Management (Henry Fund) program at
the University of Iowa’s Tippie School of Management.
These reports are intended to provide potential employers
and other interested parties an example of the analytical
skills, investment knowledge, and communication abilities
of Henry Fund students. Henry Fund analysts are not
registered investment advisors, brokers or officially
licensed financial professionals. The investment opinion
contained in this report does not represent an offer or
solicitation to buy or sell any of the aforementioned
securities. Unless otherwise noted, facts and figures
included in this report are from publicly available sources.
This report is not a complete compilation of data, and its
accuracy is not guaranteed. From time to time, the
University of Iowa, its faculty, staff, students, or the Henry
Fund may hold a financial interest in the companies
mentioned in this report.

15. CV NOPLAT Growth Beta
39.60$ ‐2% ‐1% 0% 1% 2% 3% 39.60$ 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2
10% 29.27 31.07 33.51 37.03 42.53 52.32 1% 87.62 85.37 83.21 81.14 79.15 77.23 75.39 73.61
12% 28.38 30.56 33.51 37.77 44.41 56.24 2% 77.23 73.61 70.24 67.11 64.18 61.43 58.86 56.44
14% 27.75 30.19 33.51 38.29 45.75 59.04 3% 68.65 64.18 60.13 56.44 53.07 49.99 47.14 44.51
16% 27.28 29.92 33.51 38.68 46.76 61.14 4% 61.43 56.44 52.02 48.06 44.51 41.30 38.39 35.74
18% 26.91 29.71 33.51 38.99 47.54 62.78 5% 55.29 49.99 45.37 41.30 37.70 34.49 31.61 29.01
20% 26.61 29.54 33.51 39.23 48.17 64.09 6% 49.99 44.51 39.81 35.74 32.16 29.01 26.20 23.68
22% 26.37 29.40 33.51 39.44 48.68 65.16 7% 45.37 39.81 35.11 31.07 27.56 24.49 21.78 19.36
24% 26.17 29.28 33.51 39.60 49.11 66.05 8% 41.30 35.74 31.07 27.10 23.68 20.71 18.10 15.79
26% 26.00 29.18 33.51 39.74 49.47 66.80
28% 25.85 29.10 33.51 39.86 49.78 67.45
30% 25.73 29.03 33.51 39.97 50.05 68.01
Annual improvement in interment rights/cemetery
39.60$ ‐20 ‐16 ‐12 ‐8 ‐4 0 4 8 12 16 20
50% 43.23 43.94 44.65 45.35 46.06 46.76 47.46 48.16 48.87 49.57 50.27
55% 40.79 41.49 42.20 42.90 43.61 44.31 45.01 45.72 46.42 47.12 47.82
60% 38.34 39.04 39.75 40.46 41.16 41.86 42.56 43.27 43.97 44.67 45.37
65% 35.89 36.60 37.30 38.01 38.71 39.41 40.12 40.82 41.52 42.22 42.92
70% 33.44 34.15 34.85 35.56 36.26 36.97 37.67 38.37 39.07 39.77 40.47
75% 30.99 31.70 32.40 33.11 33.81 34.52 35.22 35.92 36.62 37.32 38.02
80% 28.54 29.25 29.96 30.66 31.36 32.07 32.77 33.47 34.17 34.87 35.57
85% 26.09 26.80 27.51 28.21 28.92 29.62 30.32 31.02 31.72 32.42 33.12
90% 23.65 24.35 25.06 25.76 26.47 27.17 27.87 28.57 29.28 29.98 30.68
2016 Inflation Rate
39.60$ ‐3.00% ‐2.50% ‐2.00% ‐1.50% ‐1.00% ‐0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00%
‐3.00% 32.87 33.05 33.23 33.41 33.59 33.77 33.95 34.13 34.31 34.49 34.67 34.85 35.03
‐2.50% 33.46 33.64 33.82 34.00 34.18 34.36 34.54 34.72 34.90 35.08 35.26 35.44 35.62
‐2.00% 34.07 34.25 34.43 34.61 34.79 34.97 35.15 35.33 35.51 35.69 35.87 36.05 36.23
‐1.50% 34.72 34.90 35.08 35.26 35.44 35.62 35.80 35.98 36.16 36.34 36.52 36.70 36.88
‐1.00% 35.39 35.57 35.75 35.93 36.11 36.29 36.47 36.65 36.83 37.01 37.19 37.37 37.55
‐0.50% 36.09 36.27 36.45 36.63 36.81 36.99 37.17 37.35 37.53 37.71 37.89 38.07 38.25
0.00% 36.81 36.99 37.17 37.35 37.53 37.71 37.90 38.08 38.26 38.44 38.62 38.80 38.98
0.50% 37.58 37.76 37.94 38.12 38.30 38.48 38.66 38.84 39.02 39.20 39.38 39.56 39.74
1.00% 38.37 38.55 38.73 38.91 39.09 39.27 39.45 39.63 39.81 39.99 40.17 40.35 40.53
1.50% 39.20 39.38 39.56 39.74 39.92 40.10 40.28 40.46 40.64 40.82 41.00 41.18 41.36
2.00% 40.06 40.24 40.42 40.60 40.78 40.96 41.14 41.32 41.50 41.68 41.86 42.04 42.22
2.50% 40.96 41.14 41.32 41.50 41.68 41.86 42.04 42.22 42.40 42.58 42.76 42.94 43.12
3.00% 41.89 42.07 42.25 42.43 42.61 42.79 42.97 43.15 43.33 43.51 43.69 43.87 44.05
CV ROIC
Cremation Rate in 2025
Equity Risk
Premium
2016 Increase in Avg.
Revenue per Cremation

16. Carriage Services, Inc.
Revenue Decomposition
Fiscal Years Ending Dec. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Note 22
Funeral Segment
Funeral operating revenues 153.9 164.3 176.4 185.6 191.3 196.9 202.4 207.4 212.7 217.4 222.2 226.9 231.0
Y/Y growth 5.11% 6.76% 7.38% 5.2% 3.1% 2.9% 2.8% 2.5% 2.6% 2.2% 2.2% 2.1% 1.8%
Total deaths in the United States 2,596,993 2,626,418 2,619,000 2,650,000 2,681,000 2,712,000 2,743,000 2,777,000 2,811,000 2,848,000 2,887,000 2,927,000 2,971,000
Y/Y growth in deaths 3.46% 1.13% ‐0.28% 1.18% 1.17% 1.16% 1.14% 1.24% 1.22% 1.32% 1.37% 1.39% 1.50%
Projected Y/Y inflation rate 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Average Inflation Rate 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3%
Number of funeral homes 161 164 167
Total atneed funeral contracts 21,729 24,462 24,830 25,654 26,490 27,339 28,200 29,105 30,023 30,988 31,990 33,019 34,109
Atneed contracts % of total deaths 0.84% 0.93% 0.95% 0.97% 0.99% 1.01% 1.03% 1.05% 1.07% 1.09% 1.11% 1.13% 1.15%
Total cremation revenue 39.1 42.4 46.0 49.7 53.7 57.9 62.4 67.1 72.2 77.5 83.2
Total cremation rate 46.9% 47.3% 48.9% 51.0% 53.1% 55.2% 57.3% 59.5% 61.6% 63.7% 65.8% 67.9% 70.0%
Est. total cremation contracts 10,191 11,571 12,142 13,086 14,072 15,099 16,170 17,303 18,482 19,730 21,043 22,416 23,876
Y/Y growth in cremation contracts 4.7% 13.5% 4.9% 7.8% 7.5% 7.3% 7.1% 7.0% 6.8% 6.8% 6.7% 6.5% 6.5%
% direct cremations 67.1% 67.0% 65.8%
Avg. revenue per cremation 3,029 3,085 3,217 3,243 3,269 3,295 3,321 3,348 3,375 3,402 3,429 3,456 3,484
Y/Y growth in avg. revenue ‐1.78% 1.85% 4.28% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
0.84%
Revenue from burial contracts 94.6 93.9 94.2 94.2 93.9 93.3 92.3 91.0 89.2 86.8 84.1
% burial contracts 45.9% 45.3% 43.9% 41.6% 39.5% 37.4% 35.3% 33.2% 31.1% 29.0% 26.9% 24.8% 22.6%
Total burial contracts 9,974 11,081 10,900 10,680 10,469 10,227 9,955 9,660 9,331 8,977 8,593 8,172 7,722
Y/Y growth in burial contracts 1.8% 11.1% ‐1.6% ‐2.0% ‐2.0% ‐2.3% ‐2.7% ‐3.0% ‐3.4% ‐3.8% ‐4.3% ‐4.9% ‐5.5%
Avg. revenue per burial 8,350 8,581 8,681 8,794 8,999 9,213 9,433 9,661 9,895 10,134 10,377 10,627 10,885
Y/Y growth in avg. revenue 0.38% 2.77% 1.17% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Revenue from "other" contracts 4.5 4.8 5.0 5.3 5.6 5.9 6.3 6.6 7.0 7.4
% "other" contracts 7.2% 7.4% 7.2% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4%
"Other" contracts 1,564 1,810 1,788 1,888 1,950 2,012 2,076 2,142 2,210 2,281 2,354 2,430 2,510
Y/Y growth in other contracts 1.7% 15.7% ‐1.2% 5.6% 3.3% 3.2% 3.1% 3.2% 3.2% 3.2% 3.2% 3.2% 3.3%
Avg. revenue for other contracts 2,246 2,116 2,352 2,383 2,438 2,496 2,556 2,618 2,681 2,746 2,811 2,879 2,949
Y/Y growth in avg. revenue 6.34% ‐5.79% 11.15% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Total preneed funeral contracts sold 8,125 6,940 7,797 8,498 8,775 9,056 9,341 9,641 9,945 10,265 10,597 10,938 11,299
Preneed contracts % of total atneed contracts 37.4% 28.4% 31.4% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1% 33.1%
Backlog of funeral contracts 80,714 82,842 84,353 85,351 86,350 87,348 88,347 89,442 90,537 91,729 92,985 94,273 95,690
Preneed funeral contracts recognized as revenue 8,996 4,812 6,286 7,500 7,777 8,058 8,343 8,546 8,850 9,073 9,341 9,649 9,882
Cremations 4,219 2,276 3,074 3,826 4,131 4,450 4,784 5,081 5,448 5,777 6,144 6,551 6,917
Burial 4,777 2,536 3,212 3,674 3,646 3,607 3,559 3,465 3,402 3,296 3,196 3,098 2,965
Total preneed revenue 52.7 28.8 37.8 44.7 46.3 47.9 49.5 50.5 52.0 53.1 54.2 55.6 56.4
Contracts for trust (871) 2,128 1,511 998 998 998 998 1,095 1,095 1,192 1,256 1,288 1,417
Cremations (408.50) 1,006.54 738.88 509.31 530.38 551.44 572.51 651.02 674.13 758.76 826.27 874.64 992.01
Burial (462.50) 1,121.46 772.12 489.14 468.07 447.01 425.94 444.05 420.95 432.94 429.84 413.68 425.15
Additions to trust (5.1) 12.7 9.1 6.0 5.9 5.9 5.9 6.5 6.4 7.0 7.3 7.4 8.1
Cemetary Segment
Operating revenues 40.5 42.9 46.7 42.7 45.0 47.5 50.0 52.6 55.3 58.1 61.0 64.0 67.1
Y/Y growth 1.0% 5.9% 8.9% ‐8.4% 5.4% 5.3% 5.3% 5.2% 5.1% 5.1% 5.0% 4.9% 4.9%
Total # of cemeteries 32 32 32 32 32 32 32 32 32 32 32 32 32
Total interment rights sold 14,400 15,170 15,615 16,296 16,782 17,268 17,754 18,240 18,726 19,212 19,698 20,184 20,670
Interment rights per cemetery 450 474 488 503 518 533 548 563 578 593 608 623 638
% of revenue from preneed interment rights 48.0% 48.0% 49.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5% 48.5%
Est. preneed interment rights sold 6,912 7,282 7,729 7,904 8,139 8,375 8,611 8,846 9,082 9,318 9,554 9,789 10,025
Est. atneed interment rights sold 7,488 7,889 7,885 8,392 8,643 8,893 9,143 9,394 9,644 9,894 10,144 10,395 10,645
Avg. price per interment 2,811 2,825 2,988 3,027 3,097 3,171 3,247 3,325 3,406 3,488 3,572 3,658 3,747
Y/Y Growth 1.0% 0.5% 5.8% 1.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
% of rights recognized as revenue 93.0% 91.3% 91.0% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4% 92.4%
Total preneed revenue prior to trust deposit 18.1 18.8 21.0 22.1 23.3 24.5 25.8 27.2 28.6 30.0 31.5 33.1 34.7
Deposits in perpetual care trust (10% of receipts) 1.81 1.88 2.10 2.21 2.33 2.45 2.58 2.72 2.86 3.00 3.15 3.31 3.47
Total preneed cemetery revenue recognized 16.3 16.9 18.9 19.9 21.0 22.1 23.2 24.5 25.7 27.0 28.4 29.8 31.2
Total atneed receipts 21.0 22.3 23.6 25.4 26.8 28.2 29.7 31.2 32.8 34.5 36.2 38.0 39.9
Deposits in perpetual care trust (10% of receipts) 2.10 2.23 2.36 2.54 2.68 2.82 2.97 3.12 3.28 3.45 3.62 3.80 3.99
Total atneed revenue recognized 18.9 20.1 21.2 22.9 24.1 25.4 26.7 28.1 29.6 31.1 32.6 34.2 35.9
Preneed contracts not recognized as revenue 605 623 641 659 677 695 713 731 749 767
Preneed additions to perpetual trust 2.2 1.9 2.0 2.1 2.3 2.4 2.5 2.6 2.7 2.9
Atneed additions to perpetual trust 2.5 2.7 2.8 3.0 3.1 3.3 3.5 3.6 3.8 4.0
Total additions to perpetual trust 4.7 4.6 4.9 5.1 5.4 5.7 5.9 6.2 6.5 6.9
Financial Revenue
Preneed funeral commission income 1.9 2.0 1.5 2.2 2.3 2.3 2.4 2.5 2.5 2.6 2.7 2.7 2.8
Preneed funeral trust earnings 7.4 7.4 8.0 6.9 7.6 8.3 9.1 9.8 10.6 11.5 12.4 13.3 14.3
Cemetery trust earnings 8.1 8.1 8.4 6.8 6.5 6.2 5.9 5.7 5.5 5.3 5.2 5.1 5.0
Preneed cemetery finance charges 1.4 1.4 1.6 1.3 1.3 1.4 1.5 1.6 1.6 1.7 1.8 1.9 2.0
Total preneed funeral contracts 8,125 6,940 7,797 8,498 8,775 9,056 9,341 9,641 9,945 10,265 10,597 10,938 11,299
Total preneed funeral revenue 52.7 28.8 37.8 44.7 46.3 47.9 49.5 50.5 52.0 53.1 54.2 55.6 56.4
Preneed funeral commission income
% preneed funeral revenue 3.5% 7.1% 3.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9%
Preneed cemetery receivables 24.5 26.3 28.0 21.9 23.1 24.4 25.6 27.0 28.4 29.8 31.3 32.8 34.4
Preneed cemetery finance charges
% of preneed cemetery receivables 5.8% 5.4% 5.7% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%
Preneed funeral trust earnings % of prior year
funeral trust investments 8.9% 7.7% 8.2% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1%
Preneed cemetery trust earnings % of prior year
cemetery trust investments 11.4% 11.9% 11.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7%

17. Carriage Services, Inc.
Income Statement
$ in Millions except per share data
Fiscal Years Ending Dec. 31 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Funeral 163.1 173.7 185.8 194.7 201.1 207.6 213.9 219.6 225.9 231.5 237.2 242.9 248.1
Cemetery 50.0 52.4 56.7 50.8 52.9 55.1 57.4 59.8 62.4 65.1 68.0 70.9 74.1
Total Sales 213.1 226.1 242.5 245.5 254.0 262.6 271.2 279.5 288.3 296.6 305.2 313.9 322.2
Funeral (99.7) (104.9) (109.2) (112.9) (115.7) (118.3) (121.9) (125.2) (128.7) (131.9) (135.2) (138.5) (141.4)
Cemetery (28.9) (30.9) (31.8) (28.4) (29.3) (30.3) (31.6) (32.9) (34.3) (35.8) (37.4) (39.0) (40.7)
Regional and unallocated funeral and cemetery costs (10.0) (9.8) (12.0) (11.6) (12.0) (12.4) (12.8) (13.2) (13.6) (14.0) (14.4) (14.9) (15.2)
COGS ex. depreciation and amortization (138.6) (145.6) (153.0) (153.0) (157.0) (161.0) (166.3) (171.3) (176.7) (181.8) (187.0) (192.4) (197.4)
Depreciation (8.8) (9.2) (10.4) (12.2) (12.4) (12.6) (12.8) (13.1) (13.4) (13.6) (13.9) (14.2) (14.6)
Amortization (1.4) (1.3) (1.6) (2.0) (1.6) (1.7) (1.7) (1.8) (1.8) (1.9) (2.0) (2.0) (2.1)
Gross Profit 64.3 70.0 77.5 78.3 83.0 87.3 90.4 93.2 96.4 99.3 102.2 105.3 108.1
General, administrative and other (25.9) (28.9) (27.1) (28.8) (29.8) (30.8) (31.9) (32.8) (33.9) (34.8) (35.8) (36.9) (37.8)
Home office depreciation and amortization (1.5) (1.4) (1.7) (1.8) (1.9) (1.9) (1.9) (2.0) (2.0) (2.0) (2.1) (2.1) (2.2)
Operating Income 36.9 39.7 48.6 47.6 51.3 54.6 56.6 58.5 60.5 62.4 64.3 66.3 68.1
Interest expense (12.6) (10.3) (10.6) (17.4) (17.0) (17.3) (17.8) (18.3) (24.5) (19.1) (19.6) (20.2) (20.8)
Other, net 0.1 (6.7) (3.5) (2.5) (2.5) (2.6) (2.7) (2.8) (2.9) (3.0) (3.1) (3.1) (3.2)
Income before taxes 24.4 22.7 34.6 27.7 31.8 34.6 36.1 37.4 33.1 40.3 41.7 43.0 44.1
Provision for income taxes (9.2) (7.3) (13.7) (11.1) (12.7) (13.8) (14.4) (15.0) (13.2) (16.1) (16.7) (17.2) (17.6)
Net income from continuing operations 15.1 15.4 20.9 16.6 19.1 20.8 21.7 22.4 19.8 24.2 25.0 25.8 26.5
Income / loss from discontinued operations, net of tax 4.2 0.4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Preferred stock dividend (0.0) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Net income available to common stockholders 19.3 15.8 20.9 16.6 19.1 20.8 21.7 22.4 19.8 24.2 25.0 25.8 26.5
EPS (from continuing operations) 0.83 0.84 1.16 0.94 1.08 1.18 1.24 1.28 1.13 1.37 1.41 1.45 1.48
EPS (Discontinued operations) 0.23 0.02 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
EPS, net of discontinued operations 1.06 0.86 1.16 0.94 1.08 1.18 1.24 1.28 1.13 1.37 1.41 1.45 1.48
Basic Shares Outstanding 17.8 18.1 17.8 17.7 17.6 17.5 17.5 17.5 17.5 17.6 17.7 17.8 17.9
Dividends per Share 0.10 0.10 0.10 0.10 0.13 0.14 0.15 0.15 0.15 0.18 0.18 0.19 0.19
Total Dividends 1.8 1.8 1.8 1.8 2.3 2.5 2.6 2.7 2.6 3.1 3.2 3.4 3.4