What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-05 · 341 added, 250 removed, 934 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except share data)

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Current assets:

7 unchanged sentences

Preneed cemetery receivables, net 21,081 22,427

Receivables from preneed trusts, net 16,844 16,976

Receivables from preneed funeral trusts, net 16,844 17,758

Property, plant and equipment, net 269,051 267,431

14 unchanged sentences

Credit facility 46,064 58,937

Senior notes due 2026 395,968 396,122

Senior notes 395,968 394,303

Obligations under finance leases, net of current portion 5,531 5,356

15 unchanged sentences

Treasury stock, at cost;

8,025,339 at both December 31, 2020 and March 31, 2021

8,025,339 and 8,350,043 at December 31, 2020 and June 30, 2021

( 102,050 ) ( 114,351 )

5 unchanged sentences

(unaudited and in thousands, except per share data)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Service revenue $ 38,880 $ 40,119 $ 79,612 $ 87,876

14 unchanged sentences

Home office depreciation and amortization 354 277 736 566

Net loss (gain) on divestitures and impairments charges 14,693 ( 308 )

Net loss on divestitures, disposals and impairments charges — 827 14,693 519

Operating income 18,266 20,924 20,416 47,170

1 unchanged sentence

Accretion of discount on convertible subordinated notes ( 66 ) — ( 131 ) ( 20 )

Loss on extinguishment of debt — ( 23,807 ) — ( 23,807 )

Other, net ( 2 ) 2 ( 6 ) ( 66 )

17 unchanged sentences

(unaudited and in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Net income (loss) $ ( 4,197 ) $ 12,933

Net income $ 2,200 $ 6,766

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 9,247 10,536

Provision for bad debt and credit losses 690 588

Provision for credit losses 1,507 849

Stock-based compensation expense 1,546 2,537

Deferred income tax expense 3,596 1,514

Amortization of deferred financing costs 200 193

Amortization of capitalized commissions and non-compete agreements 328 320

Accretion of discount on convertible subordinated notes 65 20

Accretion of debt discount, net of debt premium on senior notes 75 80

Net loss (gain) on divestiture and impairment charges 14,693 ( 308 )

Net loss on disposal of other assets 60 329

Deferred income tax expense (benefit) 4,867 ( 4,461 )

Amortization of intangibles 638 645

Amortization of debt issuance costs 393 345

Amortization and accretion of debt 282 201

Loss on extinguishment of debt — 23,807

Net loss on divestitures, disposals and impairment charges 14,789 700

Changes in operating assets and liabilities that provided (required) cash:

9 unchanged sentences

Cash flows from investing activities:

Acquisition of businesses ( 28,000 ) —

Acquisition of real estate — (350)

Acquisition of businesses and real estate ( 28,011 ) ( 2,935 )

Proceeds from divestitures and sale of other assets 78 3,622

Proceeds from insurance reimbursements — 120

Capital expenditures ( 5,786 ) ( 8,751 )

3 unchanged sentences

Payments against the credit facility ( 70,000 ) ( 87,568 )

Payment of call premium for the redemption of the senior notes due 2026 — ( 19,876 )

Payments of debt issuance and transaction costs ( 66 ) ( 6,430 )

Conversions and maturity of the convertible subordinated notes due 2021 — ( 3,980 )

Payments of debt issuance costs and transaction costs ( 14 ) ( 7 )

Payments on acquisition debt and obligations under finance leases ( 679 ) ( 452 )

3 unchanged sentences

Dividends paid on common stock ( 2,682 ) ( 3,607 )

Purchase of treasury stock — ( 11,559 )

Net cash provided by (used in) financing activities 2,694 ( 32,893 )

6 unchanged sentences

(unaudited and in thousands)

Three months ended June 30, 2020

Outstanding Common

2 unchanged sentences

Earnings Treasury

Balance – December 31, 2019 17,855 $ 259 $ 242,147 $ 86,213 $ ( 102,050 ) $ 226,569

Balance – March 31, 2020 17,909 $ 259 $ 242,234 $ 82,016 $ ( 102,050 ) $ 222,459

Net income — — — 6,397 — 6,397

Issuance of common stock from employee stock purchase plan 17 1 262 — — 263

Issuance of common stock to directors 8 — 147 — — 147

Stock-based compensation expense — — 568 — — 568

Dividends on common stock — — ( 1,343 ) — — ( 1,343 )

Balance – June 30, 2020 17,934 $ 260 $ 241,868 $ 88,413 $ ( 102,050 ) $ 228,491

Three months ended June 30, 2021

Outstanding Common

Stock Additional

Capital Retained

Earnings Treasury

Balance – March 31, 2021 18,048 $ 261 $ 238,056 $ 115,236 $ ( 102,050 ) $ 251,503

Net loss — — — ( 6,167 ) — ( 6,167 )

1 unchanged sentence

Issuance of common stock to directors 5 — 160 — — 160

Exercise of stock options 85 1 52 — — 53

Cancellation and surrender of restricted common stock ( 1 ) — — — — —

Stock-based compensation expense — — 1,070 — — 1,070

Dividends on common stock — — ( 1,808 ) — — ( 1,808 )

Treasury stock acquired ( 325 ) — — — ( 12,301 ) ( 12,301 )

Balance – June 30, 2021 17,826 $ 262 $ 237,891 $ 109,069 $ ( 114,351 ) $ 232,871

The accompanying condensed notes are an integral part of these Consolidated Financial Statements.

CARRIAGE SERVICES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited and in thousands)

Six months ended June 30, 2020

Outstanding Common

Stock Additional

Capital Retained

Earnings Treasury

Balance – December 31, 2019 17,855 $ 259 $ 242,147 $ 86,213 $ ( 102,050 ) $ 226,569

Net income — — — 2,200 — 2,200

Issuance of common stock from employee stock purchase plan 44 1 624 — — 624

Issuance of common stock to directors 17 — 294 — — 294

Issuance of restricted common stock 10 — — — — —

3 unchanged sentences

Other 18 — 468 — — 468

Balance – March 31, 2020 17,909 $ 259 $ 242,234 $ 82,016 $ ( 102,050 ) $ 222,459

Balance – June 30, 2020 17,934 $ 260 $ 241,868 $ 88,413 $ ( 102,050 ) $ 228,491

Six months ended June 30, 2021

Outstanding Common

12 unchanged sentences

Convertible notes conversions — — ( 1,424 ) — — ( 1,424 )

Balance – March 31, 2021 18,048 $ 261 $ 238,056 $ 115,236 $ ( 102,050 ) $ 251,503

Treasury stock acquired ( 325 ) — — — ( 12,301 ) ( 12,301 )

Balance – June 30, 2021 17,826 $ 262 $ 237,891 $ 109,069 $ ( 114,351 ) $ 232,871

The accompanying notes are an integral part of these Consolidated Financial Statements.

4 unchanged sentences

(“Carriage,” the “Company,” “we,” “us,” or “our”) is a leading provider of funeral and cemetery services and merchandise in the United States.

As of March 31, 2021, we operated 173 funeral homes in 26 states and 32 cemeteries in 12 states.

As of June 30, 2021, we operated 171 funeral homes in 26 states and 32 cemeteries in 12 states.

Our operations are reported in two business segments:

49 unchanged sentences

To the extent that information not available to us at the closing date subsequently becomes available during the allocation period, we may adjust goodwill, intangible assets, assets or liabilities associated with the acquisition.

During the three months ended March 31, 2020, we acquired one funeral home and cemetery combination business in Lafayette, California for $ 33.0 million in cash, of which $ 5.0 million was deposited in escrow in 2019 and $ 28.0 million was paid at closing in 2020.

We acquired substantially all of the assets and assumed certain operating liabilities of these businesses.

Divested Operations

9 unchanged sentences

As such, we test goodwill for impairment on an annual basis as of August 31 st each year.

Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

Under current guidance, we are permitted to first assess

qualitative factors to determine whether it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

Our intent is to perform a quantitative impairment test at least once every three years and perform a qualitative assessment during the remaining two years.

3 unchanged sentences

Generally Accepted Accounting Principles (“GAAP”), we allocate goodwill associated with that business to be included in the gain or loss on divestiture.

The goodwill allocated is based on the relative fair values of the business being divested and the portion of the reporting unit that will be retained.

The goodwill allocated is based on the relative fair value of the business being divested and the portion of the reporting unit that will be retained.

Additionally, after each divestiture, we will test the goodwill remaining in the portion of the reporting unit to be retained for impairment using a qualitative assessment unless we deem a quantitative assessment to be appropriate to ensure the fair value of our reporting units is greater than their carrying value.

27 unchanged sentences

In accordance with respective state laws, we are required to deposit a specified amount into perpetual and memorial care trust funds for each interment right and certain memorials sold.

Income from the trust funds is distributed to us and used to provide for the care and maintenance of the cemeteries and mausoleums.

Such trust fund income is recognized as revenue when realized by the trust and distributable to us.

Income from the trust funds is distributed to us and used to

provide for the care and maintenance of the cemeteries and mausoleums.

Trust fund income is recognized as revenue when realized by the trust and distributable to us.

We are restricted from withdrawing any of the principal balances of these funds.

24 unchanged sentences

Property, plant and equipment is comprised of the following (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Land $ 82,615 $ 83,361

4 unchanged sentences

Property, plant and equipment, net $ 269,051 $ 267,431

During the three months ended March 31, 2021, we acquired land for $0.4 million.

We also divested two funeral homes that had a carrying value of property, plant and equipment of $ 1.5 million, which was included in the gain on sale of divestitures and recorded in Net loss (gain) on divestitures and impairment charges on our Consolidated Statements of Operations, described in Note 4 to the Consolidated Financial Statements included herein.

Our growth and maintenance capital expenditures totaled $ 2.7 million and $ 4.3 million for the three months ended March 31, 2020 and 2021, respectively, for property, plant, equipment and cemetery development.

In addition, we recorded depreciation expense of $ 3.6 million and $ 3.4 million for the three months ended March 31, 2020 and 2021, respectively.

During the six months ended June 30, 2021, we acquired real estate for $ 2.9 million.

We also divested three funeral homes that had a carrying value of property, plant and equipment of $ 2.4 million, which was included in the Gain (loss) on divestitures and recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations, described in Note 4 to the Consolidated Financial Statements included herein.

Our growth and maintenance capital expenditures totaled $ 3.0 million and $ 4.4 million for the three months ended June 30, 2020 and 2021, respectively and $ 5.8 million and $ 8.8 million for the six months ended June 30, 2020 and 2021, respectively, for property, plant, equipment and cemetery development.

In addition, we recorded depreciation expense of $ 3.6 million and $ 3.4 million for the three months ended June 30, 2020 and 2021, respectively and $ 7.2 million and $ 6.8 million for the six months ended June 30, 2020 and 2021, respectively.

Cemetery Property

3 unchanged sentences

This provides the added benefit of relevant data that is not available to third party appraisers.

Through this thorough internal process, the Company is able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices and park infrastructure and condition.

Cemetery property was $ 101.1 million at both December 31, 2020 and March 31, 2021, net of accumulated amortization of $ 46.6 million and $ 48.1 million, respectively.

Through this thorough internal process, we are able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices and park infrastructure and condition.

Cemetery property was $ 101.1 million and $ 100.6 million at December 31, 2020 and June 30, 2021, respectively, net of accumulated amortization of $ 46.6 million and $ 50.3 million, respectively.

When cemetery property is sold, the value of the cemetery property (interment right costs) is expensed as amortization using the specific identification method in the period in which the sale of the interment right is recognized as revenue.

We recorded amortization expense for cemetery interment rights of $ 0.9 million and $ 1.5 million for the three months ended March 31, 2020 and 2021, respectively.

We recorded amortization expense for cemetery interment rights of $ 1.1 million and $ 2.2 million for the three months ended June 30, 2020 and 2021, respectively and $ 2.0 million and $ 3.7 million for the six months ended June 30, 2020 and 2021, respectively.

We have operating and finance leases.

9 unchanged sentences

The lease terms used to calculate the ROU asset and related lease liability include options to extend the lease when it is reasonably certain that we will exercise that option.

Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition.

Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities.

These are expensed as incurred and recorded as variable lease expense.

We have real estate lease agreements which require payments for lease and non-lease components and account for these as a single lease component.

Leases with an initial term of 12 months or less, that do not include an option to renew the underlying asset, are not recorded on our Consolidated Balance Sheet and expense is recognized on a straight-line basis over the lease term.

Operating lease ROU assets are included in Operating lease right-of-use assets and operating lease liabilities are included in Current portion of operating lease obligation s and Obligations under operating leases, net of current portion on our

Consolidated Balance Sheet.

We have real estate lease agreements which require payments for lease and non-lease components and we account for these as a single lease component.

Leases with an initial term of 12 months or less,

that do not include an option to renew the underlying asset, are not recorded on our Consolidated Balance Sheet and expense is recognized on a straight-line basis over the lease term.

Finance lease ROU assets are included in Property, plant and equipment, net and finance lease liabilities are included in Current portion of finance lease obligations and O bligations under finance leases, net of current portion on our Consolidated Balance Sheet.

8 unchanged sentences

The fair value of options or awards containing options is determined using the Black-Scholes valuation model or the Monte-Carlo simulation pricing model.

The fair value of the performance awards related to market performance conditions is determined using a Monte-Carlo simulation pricing model.

The fair value of the performance awards related to market performance conditions is determined using the Monte-Carlo simulation pricing model.

The fair value of the ESPP is determined based on the discount element offered to employees and the embedded option element, which is determined using an option calculation model.

8 unchanged sentences

For cemetery property interment rights, control transfers to the customer when the property is developed and the interment right has been sold and can no longer be marketed or sold to another customer.

Sales taxes collected are recognized on a net basis in our consolidated financial statements.

On our atneed contracts, we generally deliver the merchandise and perform the services at the time of need.

10 unchanged sentences

The earnings from our preneed trust investments, as well as trust management fees charged by our wholly-owned registered investment advisory firm (“CSV RIA”) are recorded in Other revenue .

As of March 31, 2021, CSV RIA provided investment management and advisory services to approximately 80 % of our trust assets, for a fee based on the market value of trust assets.

As of June 30, 2021, CSV RIA provided investment management and advisory services to approximately 80 % of our trust assets, for a fee based on the market value of trust assets.

Under state trust laws, we are allowed to charge the trust a fee for advising on the investment of the trust assets and these fees are recognized as income in the period in which services are provided.

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheet of $ 8.2 million and $ 8.1 million at December 31, 2020 and March 31, 2021, respectively.

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheet of $ 8.2 million and $ 8.4 million at December 31, 2020 and June 30, 2021, respectively.

As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods.

2 unchanged sentences

Balances due on undelivered preneed cemetery contracts have been reclassified to reduce Deferred preneed cemetery revenue on our Consolidated Balance Sheet.

The transaction price allocated to preneed merchandise and service performance obligations that were unfulfilled were $ 7.9 million and $ 8.5 million at December 31, 2020 and March 31, 2021, respectively.

The transaction price allocated to preneed merchandise and service performance obligations that were unfulfilled were $ 7.9 million and $ 9.8 million at December 31, 2020 and June 30, 2021, respectively.

As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods.

19 unchanged sentences

Due to the uncertainty of receiving Internal Revenue Service (“IRS”) approval regarding our non-automatic accounting method changes, a reserve has been recorded against the benefit derived from this carrying back that the net operating losses generated.

At both December 31, 2020 and March 31, 2021, the reserve for uncertain tax positions was $ 3.7 million.

At both December 31, 2020 and June 30, 2021, the reserve for uncertain tax positions was $ 3.7 million.

Income tax expense during interim periods is based on our forecasted annual effective tax rate plus any discrete items, which are recorded in the period in which they occur.

Discrete items include, but are not limited to, such events as changes in estimates due to finalization of income tax returns, tax audit settlements, tax effects of exercised or vested stock-based awards and increases or decreases in valuation allowances on deferred tax assets.

Our income tax benefit was $ 2.2 million for the three months ended March 31, 2020 compared to an income tax expense of $ 5.6 million for the three months ended March 31, 2021.

Our operating tax rate before discrete items was 33.6 % and 31.0 % for the three months ended March 31, 2020 and 2021, respectively.

For the three months ended June 30, 2020 and 2021, we had an income tax expense of $ 3.4 million and an income tax benefit of $ 4.2 million, respectively and for the six months ended June 30, 2020 and 2021, we had an income tax expense of $ 1.3 million and $ 1.4 million, respectively.

Our operating tax rate before discrete items was 33.5 % and 33.0 % for the three months ended June 30, 2020 and 2021, respectively and 33.3 % and 28.5 % for the six months ended June 30, 2020 and 2021, respectively.

Computation of Earnings Per Common Share

3 unchanged sentences

Share-based awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are recognized as participating securities and included in the computation of both basic and diluted earnings per share.

Our grants of restricted stock awards to our employees and directors are considered participating securities, and we have prepared our earnings per share calculations attributable to common stockholders to exclude outstanding unvested restricted stock awards, using the two-class method, in both the basic and diluted weighted average shares outstanding calculation.

Our grants of restricted stock awards to our employees and directors are considered participating securities, and we have prepared our

earnings per share calculations attributable to common stockholders to exclude outstanding unvested restricted stock awards, using the two-class method, in both the basic and diluted weighted average shares outstanding calculation.

Our performance awards are considered to be contingently issuable shares because their issuance is contingent upon the satisfaction of certain performance and service conditions.

In accordance with ASC 260, we have included in the computation of diluted earnings per share the number of performance awards that would have been issuable as if the end of the reporting period was the end of the contingency period.

These shares are considered to be outstanding at the beginning of the reporting period.

See Note 15 to the Consolidated Financial Statements included herein related to the computation of earnings per share.

Subsequent Events

We have evaluated events and transactions during the period subsequent to March 31, 2021 through the date the financial statements were issued for potential recognition or disclosure in the accompanying financial statements covered by this report.

We have evaluated events and transactions during the period subsequent to June 30, 2021 through the date the financial statements were issued for potential recognition or disclosure in the accompanying financial statements covered by this report.

See Note 18 to the Consolidated Financial Statements included herein for additional information related to our subsequent events.

6 unchanged sentences

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company did not utilize the optional expedients and exceptions provided by this ASU during the three months ended March 31, 2021.

The Company did not utilize the optional expedients and exceptions provided by this ASU during the six months ended June 30, 2021.

The following table presents changes in goodwill in the accompanying Consolidated Balance Sheet (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Goodwill at the beginning of the period $ 398,292 $ 392,978

3 unchanged sentences

Goodwill at the end of the period $ 392,978 $ 391,972

During the three months ended March 31, 2021, we allocated $ 1.0 million of goodwill to the sale of one funeral home for a loss recorded in Net loss (gain) on divestitures and impairment charges .

During the six months ended June 30, 2021, we allocated $ 1.0 million of goodwill to the sale of one funeral home for a loss recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

DIVESTED OPERATIONS

During the three months ended March 31, 2021, we sold two funeral homes for $ 2.8 million.

During the three months ended March 31, 2020, we did not sell any funeral homes or cemeteries.

During the three and six months ended June 30, 2021, we sold one funeral home for $ 0.7 million and three funeral homes for $ 3.5 million, respectively.

During the three and six months ended June 30, 2020, we did not sell any funeral homes or cemeteries.

The operating results of these divested funeral homes are reflected in our Consolidated Statements of Operations as shown in the table below (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Revenue $ — $ 29 $ — $ 349

Operating income — 60

Gain on divestitures (1)

Income tax expense — ( 114 )

Net income from divested operations, after tax $ — $ 254

(1) Gain on divestitures is recorded in Net loss (gain) on divestitures and impairment charges on our Consolidated Statements of Operations.

Operating loss — ( 37 ) — ( 12 )

Gain (loss) on divestitures (1)

— ( 205 ) — 103

Income tax benefit (expense) — 80 — ( 26 )

Net income (loss) from divested operations, after tax $ — $ ( 162 ) $ — $ 65

(1) Gain (loss) on divestitures is recorded in Net loss on divestitures, disposals and impairments charges on our Consolidated Statements of Operations.

Accounts Receivable

Accounts receivable is comprised of the following (in thousands):

March 31, 2021

June 30, 2021

Funeral Cemetery Corporate Total

12 unchanged sentences

The following table summarizes the activity in our allowance for credit losses by portfolio segment (in thousands):

January 1, 2021 Provision for Credit Losses Write Offs Recoveries March 31, 2021

January 1, 2021 Provision for Credit Losses Write Offs Recoveries June 30, 2021

Trade and financed receivables:

4 unchanged sentences

Our preneed cemetery receivables are comprised of the following (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Cemetery interment rights $ 36,696 $ 39,871

2 unchanged sentences

The components of our preneed cemetery receivables are as follows (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Preneed cemetery receivables $ 47,222 $ 51,377

6 unchanged sentences

The following table summarizes the activity in our allowance for credit losses for Preneed cemetery receivables, net (in thousands):

January 1, 2021 Provision for Credit Losses Write Offs March 31, 2021

January 1, 2021 Provision for Credit Losses Write Offs June 30, 2021

Total allowance for credit losses on Preneed cemetery receivables, net

$ ( 1,644 ) $ ( 307 ) $ 583 $ ( 1,368 )

The amortized cost basis of our preneed cemetery receivables by year of origination as of March 31, 2021 is as follows (in thousands):

The amortized cost basis of our preneed cemetery receivables by year of origination at June 30, 2021 is as follows (in thousands):

2021 2020 2019 2018 2017 Prior Total

Total preneed cemetery receivables, at amortized cost $ 15,429 $ 13,943 $ 8,602 $ 4,392 $ 2,235 $ 2,044 $ 46,645

The aging of past due preneed cemetery receivables as of March 31, 2021 is as follows (in thousands):

The aging of past due preneed cemetery receivables at June 30, 2021 is as follows (in thousands):

Past Due 61-90

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Where quoted market prices are not available for the specific security, then fair values are estimated by using quoted prices of similar securities in active markets or inputs other than quoted prices that can corroborate observable market data.

These investments are fixed income securities, including foreign debt, corporate debt, preferred stocks, mortgage-backed securities and fixed income mutual funds and other investments, all of which are classified within Level 2 of the valuation hierarchy.

These investments are fixed income securities, including foreign debt, corporate debt, preferred stocks, mortgage-

backed securities and fixed income mutual funds and other investments, all of which are classified within Level 2 of the valuation hierarchy.

We review and update our fair value hierarchy classifications quarterly.

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The components of Preneed cemetery trust investments on our Consolidated Balance Sheet are as follows (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Preneed cemetery trust investments, at market value $ 89,081 $ 101,288

1 unchanged sentence

Preneed cemetery trust investments $ 86,604 $ 98,539

The cost and market values associated with preneed cemetery trust investments at March 31, 2021 are detailed below (in thousands):

The cost and market values associated with preneed cemetery trust investments at June 30, 2021 are detailed below (in thousands):

Fair Value Hierarchy Level Cost Unrealized

6 unchanged sentences

Preferred stock 2 12,205 1,090 ( 296 ) 12,999

Mortgage-backed securities 2 — — — —

Common stock 1 35,651 5,410 ( 2,356 ) 38,705

Mutual funds:

Equity 1 27 1 — 28

Fixed Income 2 10,767 1,388 ( 144 ) 12,011

26 unchanged sentences

Market value as a percentage of cost 106.7 %

The following table summarized our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at March 31, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2021

The following table summarized our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at June 30, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2021

In Loss Position Less than 12 months In Loss Position Greater than 12 months Total

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Preneed cemetery trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Investment income $ 653 $ 662 $ 972 $ 1,129

4 unchanged sentences

Net change in deferred preneed cemetery receipts held in trust ( 11,977 ) ( 5,563 ) 3,651 ( 16,985 )

$ — $ — $ — $ —

Purchases and sales of investments in the preneed cemetery trusts are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Purchases $ ( 13,597 ) $ ( 18,797 ) $ ( 32,454 ) $ ( 27,208 )

4 unchanged sentences

The components of Preneed funeral trust investments on our Consolidated Balance Sheet are as follows (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Preneed funeral trust investments, at market value $ 104,166 $ 112,910

1 unchanged sentence

Preneed funeral trust investments $ 101,235 $ 109,791

The cost and market values associated with preneed funeral trust investments at March 31, 2021 are detailed below (in thousands):

The cost and market values associated with preneed funeral trust investments at June 30, 2021 are detailed below (in thousands):

Fair Value Hierarchy Level Cost Unrealized

9 unchanged sentences

Mutual funds:

Equity 1 26 1 — 27

Fixed income 2 8,913 1,168 ( 94 ) 9,987

29 unchanged sentences

Market value as a percentage of cost 105.7 %

The following table summarized our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at March 31, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2021

The following table summarized our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at June 30, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2021

In Loss Position Less than 12 months In Loss Position Greater than 12 months Total

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Preneed funeral trust investment security transactions recorded in Other, net on the Consolidated Statements of Operations are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Investment income $ 604 $ 535 $ 862 $ 904

4 unchanged sentences

Net change in deferred preneed funeral receipts held in trust ( 11,793 ) ( 4,846 ) 1,898 ( 15,841 )

$ — $ — $ — $ —

Purchases and sales of investments in the preneed funeral trusts are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Purchases $ ( 13,153 ) $ ( 17,863 ) $ ( 31,691 ) $ ( 25,491 )

3 unchanged sentences

The components of Care trusts’ corpus are as follows (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Cemetery perpetual care trust investments, at market value $ 70,828 $ 75,290

1 unchanged sentence

Care trusts’ corpus $ 69,707 $ 73,899

The following table reflects the cost and fair market values associated with the trust investments held in perpetual care trust funds at March 31, 2021 (in thousands):

The following table reflects the cost and fair market values associated with the trust investments held in perpetual care trust funds at June 30, 2021 (in thousands):

Fair Value Hierarchy Level Cost Unrealized

8 unchanged sentences

Mutual funds:

Equity 1 20 1 21

Fixed Income 2 8,127 1,093 ( 161 ) 9,059

26 unchanged sentences

Market value as a percentage of cost 106.6 %

The following table summarized our fixed income securities (excluding mutual funds) within our perpetual care trust investment in an unrealized loss position at March 31, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2021

The following table summarized our fixed income securities (excluding mutual funds) within our perpetual care trust investment in an unrealized loss position at June 30, 2021, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2021

In Loss Position Less than 12 months In Loss Position Greater than 12 months Total

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Perpetual care trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Realized gains $ 439 $ 1,258 $ 1,148 $ 1,949

4 unchanged sentences

Perpetual care trust investment security transactions recorded in Other revenue on our Consolidated Statements of Operations are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Investment income $ 1,942 $ 2,710 $ 3,347 $ 5,223

2 unchanged sentences

Purchases and sales of investments in the perpetual care trusts are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Purchases $ ( 11,066 ) $ ( 12,919 ) $ ( 25,678 ) $ ( 19,056 )

Sales 9,458 13,307 22,152 19,263

RECEIVABLES FROM PRENEED TRUSTS

Our receivables from preneed trusts represent assets in trusts which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets.

RECEIVABLES FROM PRENEED FUNERAL TRUSTS

Our receivables from preneed funeral trusts represent assets in trusts which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets.

We account for these investments at cost.

Receivables from preneed trusts are as follows (in thousands):

December 31, 2020 March 31, 2021

Preneed trust funds, at cost $ 17,365 $ 17,502

Receivables from preneed funeral trusts are as follows (in thousands):

December 31, 2020 June 30, 2021

Preneed trust funeral funds, at cost $ 17,365 $ 18,308

allowance for contract cancellation ( 521 ) ( 550 )

Receivables from preneed trusts, net $ 16,844 $ 16,976

The following summary reflects the composition of the assets held in trust and controlled by third parties to satisfy our future obligations under preneed arrangements related to the preceding contracts at December 31, 2020 and March 31, 2021.

Receivables from preneed funeral trusts, net $ 16,844 $ 17,758

The cost basis includes reinvested interest and dividends that have been earned on the trust assets.

Fair value includes unrealized gains and losses on trust assets.

The composition of the preneed trust funds at March 31, 2021 is as follows (in thousands):

The composition of the preneed funeral trust funds at June 30, 2021 is as follows (in thousands):

Cost Basis Fair Value

4 unchanged sentences

Total $ 18,308 $ 18,422

The composition of the preneed trust funds at December 31, 2020 is as follows (in thousands):

The composition of the preneed funeral trust funds at December 31, 2020 is as follows (in thousands):

Cost Basis Fair Value

8 unchanged sentences

The fair values of our receivables on preneed cemetery contracts are impracticable to estimate because of the lack of a trading market and the diverse number of individual contracts with varying terms.

Our acquisition debt and Credit Facility (as defined in Note 10) and Senior Notes (as defined in Note 12) are classified within Level 2 of the Fair Value Measurements hierarchy.

At March 31, 2021, the carrying value and fair value of our Credit Facility was $ 28.3 million.

We believe that our Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and therefore, the carrying value of our Credit Facility approximates fair value.

Our acquisition debt and New Credit Facility (as defined in Note 10) and New Senior Notes (as defined in Note 11) are classified within Level 2 of the Fair Value Measurements hierarchy.

At June 30, 2021, the carrying value and fair value of our New Credit Facility was $ 60.5 million.

We believe that our New Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and therefore, the carrying value of our New Credit Facility approximates fair value.

We estimate the fair value of our acquisition debt utilizing an income approach, which uses a present value calculation to discount payments based on current market rates as of the reporting date.

At March 31, 2021, the carrying value of our acquisition debt was $ 5.4 million, which approximated its fair value.

The fair value of our Senior Notes was approximately $ 417.6 million at March 31, 2021 based on the last traded or broker quoted price.

At December 31, 2020 and March 31, 2021, we did not have any assets that had fair values determined by Level 3 inputs and no liabilities measured at fair value.

At June 30, 2021, the carrying value of our acquisition debt was $ 5.2 million, which approximated its fair value.

The fair value of our New Senior Notes was approximately $ 399.5 million at June 30, 2021 based on the last traded or broker quoted price.

At December 31, 2020 and June 30, 2021, we did not have any assets that had fair values determined by Level 3 inputs and no liabilities measured at fair value.

We identified investments in fixed income securities, common stock and mutual funds presented within the preneed and perpetual care trust investments categories on our Consolidated Balance Sheet as having met the criteria for fair value measurement.

We account for these investments at cost.

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Intangible and other non-current assets are as follows (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Tradenames $ 23,565 $ 23,565

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Prepaid agreements not-to-compete are amortized over the term of the respective agreements, ranging generally from one to ten years .

Amortization expense was $ 187,000 and $ 168,000 for the three months ended March 31, 2020 and 2021, respectively.

Amortization expense was $ 166,000 and $ 169,000 for the three months ended June 30, 2020 and 2021, respectively and $ 353,000 and $ 337,000 for the six months ended June 30, 2020 and 2021, respectively.

Capitalized Commissions

1 unchanged sentence

These costs are amortized on a straight-line basis over the average maturity period for our preneed cemetery merchandise and services contracts and preneed funeral trust contracts, of eight and ten years , respectively.

Amortization expense related to capitalized commissions totaled $ 141,000 and $ 152,000 for the three months ended March 31, 2020 and 2021, respectively.

The aggregate amortization expense for our non-compete agreements and capitalized commissions as of March 31, 2021 is as follows (in thousands):

Non-Compete Agreements Capitalized Commissions

Amortization expense was $ 144,000 and $ 156,000 for the three months ended June 30, 2020 and 2021, respectively and $ 285,000 and $ 308,000 for the six months ended June 30, 2020 and 2021, respectively.

The aggregate amortization expense for our non-compete agreements and capitalized commissions as of June 30, 2021 is as follows (in thousands):

Prepaid Agreements Capitalized Commissions

Years ending December 31,

3 unchanged sentences

CREDIT FACILITY AND ACQUISITION DEBT

At March 31, 2021, our $ 190.0 million senior secured revolving credit facility (the “Credit Facility”) was comprised of:

At December 31, 2020, our senior secured revolving credit facility (the “Former Credit Facility”) was comprised of:

(i) a $ 190.0 million revolving credit facility, including a $ 15.0 million subfacility for letters of credit and a $ 10.0 million swingline, and (ii) an accordion or incremental option allowing for future increases in the facility size by an additional amount of up to $ 75.0 million in the form of increased revolving commitments or incremental term loans.

The final maturity of the Credit Facility will occur on May 31, 2023.

The Credit Facility is secured by a first-priority perfected security interest in and lien on substantially all of the Company’s personal property assets and those of the Credit Facility Guarantors.

In the event the Company’s actual Total Leverage Ratio is not at least 0.25 less than the required Total Leverage Ratio covenant level, at the discretion of the Administrative Agent, the Administrative Agent may unilaterally compel the Company and the Credit Facility Guarantors to grant and perfect first-priority mortgage liens on fee-owned real property assets which account for no less than 50 % of funeral operations EBITDA.

The Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, the maintenance of property and insurance, amongst others.

In addition, the Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and its subsidiaries party thereto as guarantors (the “Credit Facility Guarantors”) to incur additional indebtedness, grant liens on assets, make investments, engage in mergers and acquisitions, and pay dividends and other restricted payments, and certain financial covenants.

As of March 31, 2021, we were subject to the following financial covenants under our Credit Facility:

(A) a Total Leverage Ratio not to exceed 5.50 to 1.00, (B) a Senior Secured Leverage Ratio (as defined in the Credit Facility) not to exceed 2.00 to 1.00 as of the end of any period of four consecutive fiscal quarters, and (C) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters.

The final maturity of the Former Credit Facility will occur on May 31, 2023.

On May 13, 2021, in connection with the issuance of the New Senior Notes (defined in Note 11), we entered into an amended and restated $ 150.0 million senior secured revolving credit facility (the “New Credit Facility”) with the New Credit Facility Subsidiary Guarantors (as defined below), the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.

We incurred $ 0.8 million in transactions costs related to the New Credit Facility, which were capitalized and will be amortized over the remaining term of the related debt using the straight-line method.

On May 13, 2021, we used approximately $ 21.4 million of the availability under the New Credit Facility to repay the outstanding balances under our Former Credit Facility and all commitments thereunder were terminated.

In connection with the repayment in full of all amounts due thereunder, the Former Credit Facility was retired and $ 2.1 million of letters of credit

previously issued under the Former Credit Facility were deemed issued under (and remain outstanding under) the New Credit Facility.

In connection with the termination of the Former Credit Facility, for the three and six months ended June 30, 2021, we recognized a loss on the write-off of $ 0.1 million in unamortized debt issuance costs, which was recorded in Net loss on extinguishment of debt .

Immediately following the issuance of the New Senior Notes, we had outstanding borrowings under the New Credit Facility of $ 58.8 million and $ 89.1 million available for additional borrowings after giving effect to the $ 2.1 million of outstanding letters of credit.

Our obligations under the New Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the New Senior Notes and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).

The New Credit Facility allows for future increases in the facility size in the form of increased revolving commitments or new incremental term loans by an additional amount of up to $ 75.0 million in the aggregate.

The final maturity of the New Credit Facility will occur on May 13, 2026.

The New Credit Facility is secured by a first-priority perfected security interest in and lien on substantially all of the Company’s personal property assets and those of the Subsidiary Guarantors.

In addition, the New Credit Facility includes provisions which require the Company and the Subsidiary Guarantors, upon the occurrence of an event of default or in the event the Company’s actual Total Leverage Ratio is not at least 0.25 less than the required Total Leverage Ratio covenant level under the New Credit Facility, to grant additional liens on real property assets accounting for no less than 50 % of the Company’s and the Subsidiary Guarantors’ funeral operations if requested by the administrative agent.

The New Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, the maintenance of property and insurance, amongst others.

In addition, the New Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and the Subsidiary Guarantors to incur indebtedness, grant liens, make investments, engage in mergers and acquisitions, and pay dividends and other restricted payments, and certain financial maintenance covenants.

At June 30, 2021, we were subject to the following financial covenants under our New Credit Facility:

(A) a Total Leverage Ratio not to exceed 5.00 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the New Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters.

These financial maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis.

We were in compliance with the total leverage ratio, fixed charge coverage ratio and senior secured leverage ratio covenants contained in our Credit Facility as of March 31, 2021.

We were in compliance with all of the covenants contained in our New Credit Facility as of June 30, 2021.

Our Credit Facility and Acquisition debt consisted of the following (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Credit Facility $ 47,200 $ 60,500

5 unchanged sentences

Total acquisition debt, net of current portion $ 4,482 $ 4,401

At March 31, 2021, we had outstanding borrowings under the Credit Facility of $ 28.3 million.

We also had one letter of credit for $ 2.1 million outstanding under the Credit Facility, which bears interest at 3.125 % and will expire on November 25, 2021.

The letter of credit will automatically renew annually and secures our obligations under our various self-insured policies.

At March 31, 2021, we had $ 159.6 million of availability under the Credit Facility after giving effect to the $ 2.1 million of the outstanding letter of credit.

Outstanding borrowings under our Credit Facility bear interest at either a prime rate or a LIBOR rate, plus an applicable margin based upon our leverage ratio.

At March 31, 2021, the prime rate margin was equivalent to 1.5 % and the LIBOR rate margin was 2.5 %.

The weighted average interest rate on our Credit Facility was 4.3 % and 3.3 % for the three months ended March 31, 2020 and 2021, respectively.

At June 30, 2021, we had outstanding borrowings under the New Credit Facility of $ 60.5 million.

We also had one letter of credit for $ 2.1 million outstanding under the New Credit Facility, which will expire on November 25, 2021.

This letter of credit is expected to automatically renew annually and secures our obligations under our various self-insured policies.

At June 30, 2021, we had $ 87.4 million of availability under the New Credit Facility.

Outstanding borrowings under our New Credit Facility bear interest at either a prime rate or a LIBOR rate, plus an applicable margin based upon our leverage ratio.

At June 30, 2021, the prime rate margin was equivalent to 0.75 % and the LIBOR rate margin was 1.75 %.

The weighted average interest rate on our New Credit Facility was 2.5 % and 2.8 % and for the three and six months ended June 30, 2021, respectively.

The weighted average interest rate on our Former Credit Facility was 3.6 % and 3.9 % for the three and six months ended June 30, 2020, respectively.

T he interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Credit Facility interest expense $ 1,106 $ 372 $ 2,336 $ 817

Credit Facility amortization of debt issuance costs 118 99 245 217

See Note 18 to the Consolidated Financial Statements herein for additional information related to our Credit Facility.

Acquisition debt consists of deferred purchase price and promissory notes payable to sellers.

2 unchanged sentences

The imputed interest expense related to our acquisition debt is as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Acquisition debt imputed interest expense $ 124 $ 93 $ 251 $ 190

CONVERTIBLE SUBORDINATED NOTES

During the three months ended March 31, 2021, we converted approximately $ 2.4 million in aggregate principal amount of our 2.75 % convertible subordinated notes due 2021 (the “Convertible Notes”) held by certain holders for approximately $ 3.8 million in cash and recorded $ 1.4 million for the reacquisition of the equity component.

The Convertible Notes matured on March 15, 2021, at which time all Convertible Notes outstanding, approximately $ 0.2 million in aggregate principal amount, were paid in full in cash at par value.

Therefore, no Convertible Notes remain outstanding at March 31, 2021.

The carrying values of the liability and equity components of our Convertible Notes are reflected on our Consolidated Balance Sheet as follows (in thousands):

December 31, 2020 March 31, 2021

Current liabilities:

Principal amount $ 2,559 $ —

Unamortized discount of liability component ( 20 ) —

Convertible Notes issuance costs, net of accumulated amortization of $ 63 and $ 64 , respectively

Carrying value of the liability component $ 2,538 $ —

Carrying value of the equity component $ 319 $ —

The carrying value of the liability component and the carrying value of the equity component are recorded in Convertible subordinated notes due 2021 and Additional paid-in capital , respectively, on our Consolidated Balance Sheet at December 31, 2020.

The interest expense and accretion of debt discount and debt issuance costs related to our Convertible Notes are as follows (in thousands):

Three months ended March 31,

Convertible Notes interest expense $ 43 $ 18

Convertible Notes accretion of debt discount 65 20

Convertible Notes amortization of debt issuance costs 6 1

The effective interest rate on the unamortized debt discount for both the three months ended March 31, 2020 and 2021 was 11.4 %.

The effective interest rate on the debt issuance costs for the three months ended March 31, 2020 and 2021 was 3.2 % and 3.1 % , respectively.

The carrying value of our 6.625 % senior notes due 2026 (the “Senior Notes”) is reflected on our Consolidated Balance Sheet as follows (in thousands):

December 31, 2020 March 31, 2021

On May 13, 2021, we completed the issuance of $ 400.0 million in aggregate principal amount 4.25 % Senior Notes due 2029 (the “New Senior Notes”) and related guarantees by the Subsidiary Guarantors in a private offering under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the “Securities Act”).

We used the proceeds of $ 395.5 million from the offering of the New Senior Notes, which are net of a 1.125 % debt discount of $ 4.5 million, together with cash on hand and borrowings under the New Credit Facility, to redeem all of our existing $ 400.0 million in aggregate principal amount 6.625 % senior notes due 2026 (the “Original Senior Notes”).

We paid a premium of $ 19.9 million to redeem the Original Senior Notes on June 1, 2021 at a redemption price of 104.97 % of the principal amount thereof, plus accrued and unpaid interest of $ 13.25 million.

We incurred $ 1.3 million in transaction costs related to the New Senior Notes.

For the three and six months ended June 30, 2021, we recognized a net loss of $ 23.7 million related to the redemption of the Original Senior Notes, which was recorded in Net loss on extinguishment of debt .

The loss is composed of the $ 19.9 million call premium, the write-off of $ 3.4 million in unamortized debt discount, the write-off of $ 1.8 million in unamortized debt issuance costs, offset by the write-off of $ 1.4 million in unamortized debt premium.

The New Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee (“Collateral Trustee”).

The New Senior Notes bear interest at 4.25 % per year.

Interest on the New Senior Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021.

The New Senior Notes mature on May 15, 2029, unless earlier redeemed or purchased.

The New Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally by each of the Subsidiary Guarantors.

We may redeem the New Senior Notes, in whole or in part, at the redemption price of 102.13 % on or after May 15, 2024, 101.06 % on or after May 15, 2025 and 100% on or after May 15, 2026, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time before May 15, 2024, we may also redeem all or part of the New Senior Notes at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption.

In addition, before May 15, 2024, we may redeem up to 40 % of the aggregate principal amount of the New Senior Notes outstanding using an amount of cash equal to the net proceeds of certain equity offerings, at a price of 104.25 % of the principal amount of the New Senior Notes, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption;

provided that (1) at least 50 % of the aggregate principal amount of the New Senior Notes (including any additional New Senior Notes) outstanding under the Indenture remain outstanding immediately after the occurrence of such redemption (unless all New Senior Notes are redeemed concurrently), and (2) each such redemption must occur within 180 days of the date of the consummation of any such equity offering.

If a “change of control” occurs, holders of the New Senior Notes will have the option to require us to purchase for cash all or a portion of their New Senior Notes at a price equal to 101 % of the principal amount of the New Senior Notes, plus accrued and unpaid interest.

In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the New Senior Notes at a price equal to 100 % of the principal amount of the New Senior Notes, plus accrued and unpaid interest.

sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates.

The Indenture also contains customary events of default.

The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of approximately 95 months of the New Senior Notes.

The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the New Senior Notes for both three and six months ended June 30, 2021 was 4.42 % and 4.30 %, respectively.

The carrying value of our Senior Notes is reflected on our Consolidated Balance Sheet as follows (in thousands):

December 31, 2020 June 30, 2021

Long-term liabilities:

Principal amount $ 400,000 $ 400,000

Debt premium, net of accumulated amortization of $ 221 and $ 279 , respectively

Debt premium, net of accumulated amortization of $ 221

Debt discount, net of accumulated amortization of $ 1,293 and $ 62 , respectively

3 unchanged sentences

Carrying value of the Senior Notes $ 395,968 $ 394,303

At March 31, 2021, the fair value of the Senior Notes, which are Level 2 measurements, was $ 417.6 million.

The Senior Notes were issued under an indenture, dated as of May 31, 2018 (the “Indenture”), among us, certain of our existing subsidiaries (collectively, the “Subsidiary Guarantors”), as guarantors, and Wilmington Trust, National Association., as trustee.

The Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by each of the Subsidiary Guarantors.

The Senior Notes are due on June 1, 2026 unless earlier redeemed or repurchased and bear interest at 6.625 % per year, which is payable semi-annually in arrears on June 1 and December 1 of each year.

We may redeem all or part of the Senior Notes at any time prior to June 1, 2021 at a redemption price equal to 100 % of the principal amount of Senior Notes redeemed, plus a “make whole” premium, and accrued and unpaid interest, if any, to the date of redemption.

We have the right to redeem the Senior Notes at any time on or after June 1, 2021 at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to the date of redemption.

Additionally, at any time before June 1, 2021, we may redeem up to 40 % of the aggregate principal amount of the Senior Notes issued with an amount equal to the net proceeds of certain equity offerings, at a price equal to 106.625 % of the principal amount of the Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption;

provided that (1) at least 60 % of the aggregate principal amount of the Senior Notes (including any additional Senior Notes) originally issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding Senior Notes held by us);

and (2) each such redemption must occur within 180 days of the date of the closing of each such equity offering.

If a “change of control” occurs, holders of the Senior Notes will have the option to require us to purchase for cash all or a portion of their Senior Notes at a price equal to 101 % of the principal amount of the Senior Notes, plus accrued and unpaid interest.

In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the Senior Notes at a price equal to 100 % of the principal amount of the Senior Notes, plus accrued and unpaid interest.

The Indenture contains restrictive covenants limiting our ability and our Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates.

The Indenture also contains customary events of default.

At June 30, 2021, the fair value of the New Senior Notes, which are Level 2 measurements, was $ 399.5 million.

The interest expense and amortization of debt discount, debt premium and debt issuance costs related to our Senior Notes are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Senior Notes interest expense $ 6,625 $ 6,642 $ 13,250 $ 13,267

2 unchanged sentences

Senior Notes amortization of debt issuance costs 69 53 136 127

The debt discount, the debt premium and the debt issuance costs are being amortized using the effective interest method over the remaining term of approximately 62 months of the Senior Notes.

The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes, issued in May 2018, for both three months ended March 31, 2020 and 2021 was 6.87 % and 6.69 %, respectively.

The effective interest rate on the unamortized debt premium and the unamortized debt issuance costs for the Senior Notes, issued in December 2019, for both three months ended March 31, 2020 and 2021 was 6.20 % and 6.88 %, respectively.

On April 30, 2021, we delivered a notice of conditional redemption to the trustee for the Senior Notes to call for redemption on June 1, 2021, all of the outstanding aggregate principal amount of the Senior Notes at a redemption price of 104.969% of the principal amount thereof, plus accrued and unpaid interest up to, but excluding, the scheduled redemption date.

See Note 18 to the Consolidated Financial Statements herein for additional information regarding the notice of conditional redemption for our Senior Notes.

The effective interest rate on the unamortized debt issuance costs for the Original Senior Notes, issued in May 2018, for both three and six months ended June 30, 2021 was 6.87 % and 6.69 %, respectively.

The effective interest rate on the unamortized debt premium and the unamortized debt issuance costs for the additional Original Senior Notes, issued in December 2019, for both three and six months ended June 30, 2021 was 6.20 % and 6.88 %, respectively.

Our lease obligations consist of operating and finance leases related to real estate and equipment.

The components of lease cost are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

Income Statement Classification 2020 2021 2020 2021

Operating lease cost Facilities and grounds expense (1)

$ 954 $ 964 $ 1,911 $ 1,924

Short-term lease cost Facilities and grounds expense (1)

2 unchanged sentences

Depreciation of leased assets Depreciation and amortization (2)

$ 109 $ 109 $ 218 $ 217

Interest on lease liabilities Interest expense 125 119 251 239

4 unchanged sentences

Supplemental cash flow information related to our leases is as follows (in thousands):

Three months ended March 31,

Six months ended June 30,

Cash paid for operating leases included in operating activities $ 1,507 $ 1,930

1 unchanged sentence

Right-of-use assets obtained in exchange for new leases is as follows (in thousands):

Three months ended March 31,

Six months ended June 30,

Right-of-use assets obtained in exchange for new operating lease liabilities $ 77 $ 75

1 unchanged sentence

Supplemental balance sheet information related to leases is as follows (in thousands):

Lease Type Balance Sheet Classification December 31, 2020 March 31, 2021

Lease Type Balance Sheet Classification December 31, 2020 June 30, 2021

Operating lease right-of-use assets Operating lease right-of-use assets $ 21,201 $ 20,256

9 unchanged sentences

Total lease liabilities $ 28,238 $ 27,134

The average lease terms and discount rates at March 31, 2021 are as follows:

The average lease terms and discount rates at June 30, 2021 are as follows:

Weighted-average remaining lease term (years) Weighted-average discount rate

1 unchanged sentence

Finance leases 5.4 8.2 %

The aggregate future lease payments for operating and finance leases as of March 31, 2021 are as follows (in thousands):

The aggregate future lease payments for operating and finance leases at June 30, 2021 are as follows (in thousands):

Operating Finance

9 unchanged sentences

Present value of lease liabilities $ 21,438 $ 5,696

At March 31, 2021, we had no additional significant operating or finance leases that had not yet commenced.

At June 30, 2021, we had no additional significant operating or finance leases that had not yet commenced.

COMMITMENTS AND CONTINGENCIES

Chinchilla v.

Carriage Services, Inc., et al.

, Superior Court of California, San Joaquin County, Case No.

STK-CV-UOE-2021-0004661.

On May 19, 2021, a putative class action against the Company and several of our subsidiaries was filed.

Plaintiff, a former employee, seeks monetary damages on behalf of himself and other similarly situated current and former non-exempt employees.

Plaintiff claims that the Company failed to, among other things, pay minimum wages, provide meal and rest breaks, pay overtime, provide accurately itemized wage statements, reimburse employees for business expenses, and provide wages when due.

At June 30, 2021, we are unable to reasonably estimate the possible loss or ranges of loss, if any.

STOCKHOLDERS ’ EQUITY

Restricted Stock

During the three months ended March 31, 2021, we issued restricted stock to certain employees totaling 9,300 shares that vest over a three -year period and had an aggregate grant date market value of $ 324,000 at a weighted average stock price of $ 34.79 .

During the three months ended March 31, 2020, we issued restricted stock to certain employees totaling 10,200 shares that vest over a three -year period and had an aggregate grant date market value of $ 255,000 at a weighted average stock price of $ 25.00 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for restricted stock awards of $ 184,000 and $ 121,000 , for the three months ended March 31, 2020 and 2021, respectively.

During the three months ended June 30, 2020 and 2021, we did not issue restricted stock.

We cancelled 966 shares of restricted stock in connection with an employee's termination of employment.

During the six months ended June 30, 2021, we issued restricted stock to certain employees totaling 9,300 shares that vest over a three-year period and had an aggregate grant date market value of $ 324,000 at a weighted average stock price of $ 34.79 .

In addition, 9,688 shares of vested restricted stock were returned for the payment of payroll taxes equivalent to $ 347,000 .

During the six months ended June 30, 2020, we issued restricted stock to certain employees totaling 10,200 shares that vest over a three-year period and had an aggregate grant date market value of $ 255,000 at a weighted average stock price of $ 25.00 .

In addition, 9,874 shares of vested restricted stock were returned for the payment of payroll taxes equivalent to $ 235,000 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for restricted stock awards of $ 183,000 and $ 98,000 , for the three months ended June 30, 2020 and 2021, respectively and $ 368,000 and $ 219,000 , for the six months ended June 30, 2020 and 2021, respectively.

Stock Options

During the three months ended March 31, 2021, we granted 701,400 options to certain key employee at a weighted average price of $ 34.79 .

During the three months ended June 30, 2021, we did not issue stock options.

During the six months ended June 30, 2021, we granted 701,400 options to certain key employees at a weighted average price of $ 34.79 .

These options will vest in one-fifth increments over a five-year period and have a ten-year term.

The fair value of these options was $ 7.1 million.

During the three months ended March 31, 2020, we did not issue any stock options.

The fair value of the options granted were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Grant date February 17, 2021

Dividend yield 1.15 %

Expected volatility 36.72 %

Risk-free interest rate 0.57 %

Expected holding period (years) 5.0

Black-Scholes value $ 10.14

During the three months ended March 31, 2021, employees exercised 101,000 stock options at a weighted average exercise price of $ 24.18 with an aggregate intrinsic value of $ 1.3 million.

We received $ 147,000 in cash for payment of the option price and we withheld $ 295,000 for payment of payroll taxes.

In addition, we accelerated 12,980 options in connection with the resignation of an employee which resulted in an additional $129,000 of stock-based compensation expense.

During the three months ended March 31, 2021, we also granted an additional 150,000 options to a certain key employee at a weighted average price of $ 34.79 .

We also granted an additional 150,000 options to a certain key employee at a weighted average price of $ 34.79 .

These options will vest when the price of our common stock closes at or above the specified prices below for three consecutive days within the ten-year term and the employee has remained continuously employed by us through such date.

The fair value of these options was $ 1.7 million.

The fair value of the options granted were estimated on the date of grant using the Monte-Carlo simulation pricing model using the following assumptions:

Grant date February 17, 2021 February 17, 2021

Awards granted 50,000 100,000

Fair value (in millions) $ 0.5 $ 1.2

Vesting share price $ 53.39 $ 77.34

Dividend yield 1.15 % 1.15 %

During the three and six months ended June 30, 2020, we granted 20,000 options to a certain key employee at a weighted average price of $ 18.02 .

On June 26, 2020, we cancelled 100,000 options in connection with the resignation of our President and Chief Operating Officer.

During the three months ended June 30, 2021, employees exercised 180,629 stock options of which 95,763 were surrendered by employees to pay the option price and taxes related to the option exercises.

These options were exercised at a weighted average exercise price of $ 20.44 with an aggregate intrinsic value of $ 3.1 million.

During the six months ended June 30, 2021, employees exercised 281,629 stock options of which 168,506 were surrendered by employees to pay the option price and taxes related to the option exercises.

These options were exercised at a weighted average exercise price of $ 21.78 with an aggregate intrinsic value of $ 4.4 million.

We received $ 1.7 million in cash for payment of the option price, of which $ 224,000 settled on July 2, 2021 and we withheld $ 976,000 for payment of payroll taxes.

In addition, in accordance with the terms of the separation agreement, we accelerated 12,980 options in connection with the resignation of an employee which resulted in an additional $ 129,000 of stock-based compensation expense.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for stock options, including the accelerated stock options discussed above of $ 122,000 and $ 480,000 , for the three months ended June 30, 2020 and 2021, respectively and $ 337,000 and $ 1,040,000 , for the six months ended June 30, 2020 and 2021, respectively.

Performance Awards

During the three and six months ended June 30, 2021, we granted 10,254 performance awards to certain employees with a fair value of $ 0.4 million.

During the three and six months ended June 30, 2021, we cancelled 6,987 and 34,935 performance awards, respectively, in connection with the termination of employment for three employees.

On June 1, 2021, we amended the performance award agreements granted on May 19, 2020 for certain executive employees.

The amendment granted an additional 70,236 performance awards payable in shares to three of our executives.

These awards will vest (if at all) on December 31, 2024, provided that the Company’s common stock reaches one of three predetermined growth targets for a sustained period beginning on the grant date of June 1, 2021 and ending on December 31, 2024.

The additional grant was treated as a modification of the original performance award agreement and resulted in an additional $ 2.6 million of incremental compensation costs, which are expected to be recognized over the remaining term of 43 months.

The fair values of the performance awards granted during the three months ended June 30, 2021 were determined by using

the Monte-Carlo simulation pricing model with the following assumptions:

April 16, 2021 June 1, 2021

Performance Period April 16, 2021 - December 31, 2024 June 1, 2021 - December 31, 2024

Simulation period (years) 3.71 3.58

Share price at grant date $ 35.83 $ 38.78

Expected volatility 41.17 % 41.79 %

Risk-free interest rate 0.52 % 0.46 %

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for stock options, including the accelerated stock options discussed above of $ 215,000 and $ 560,000 , for the three months ended March 31, 2020 and 2021, respectively.

Performance Awards

During the three months ended March 31, 2021, we did not issue any performance awards and we cancelled 27,948 performance awards in connection with the resignation of two employees.

During the three months ended March 31, 2020, we issued 237,500 performance awards to certain employees, payable in shares, with a fair value of $ 2.8 million.

During the six months ended June 30, 2020 , we issued 237,500 performance awards to certain employees, payable in shares, with a fair value of $ 2.8 million.

On May 19, 2020, we cancelled all performance award agreements previously awarded to all individuals during 2019 and the February 19, 2020 award.

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These new performance awards were treated as a modification of the cancelled awards and resulted in an additional $ 1.7 million of incremental compensation costs.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for performance awards of $ 121,000 and $ 237,000 for the three months ended March 31, 2020 and 2021, respectively.

On June 25, 2020, we granted an additional 13,974 performance awards to our then Vice-President of Cemetery Sales and Marketing with a fair value of $ 0.2 million.

On June 26, 2020, we cancelled 33,538 performance awards in connection with the resignation of our President and Chief Operating Officer.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for performance awards of $ 182,000 and $ 352,000 for the three months ended June 30, 2020 and 2021, respectively and $ 303,000 and $ 589,000 for the six months ended June 30, 2020 and 2021, respectively.

Employee Stock Purchase Plan

During the three months ended March 31, 2021, employees purchased a total of 18,182 shares at a weighted average price of $ 26.32 per share.

During the three months ended March 31, 2020, employees purchased a total of 26,294 shares at a weighted average price of $ 13.73 per share.

During the three months ended June 30, 2020 and 2021, employees purchased a total of 17,020 and 13,706 shares, respectively, at a weighted average price of $ 15.40 and $ 26.32 per share, respectively.

During the six months ended June 30, 2020 and 2021, employees purchased a total of 43,314 and 31,888 shares, respectively, at a weighted average price of $ 14.39 and $ 26.32 per share, respectively.

The fair value of the right (option) to purchase shares under the ESPP is estimated at the date of purchase with the four quarterly purchase dates using the following assumptions:

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Expected life (years) 0.25 , 0.50 , 0.75 , 1.00

We recorded stock-based compensation expense, which is included in General, administrative and other expenses and Regional and unallocated funeral and cemetery costs , for the ESPP totaling $ 163,000 and $ 206,000 for the three months ended March 31, 2020 and 2021, respectively.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses and Regional and unallocated funeral and cemetery costs , for the ESPP totaling $ 80,000 and $ 135,000 for the three months ended June 30, 2020 and 2021, respectively and $ 244,000 and $ 341,000 for the six months ended June 30, 2020 and 2021, respectively.

Non-Employee Director Compensation

During the three months ended March 31, 2021, we granted 5,040 shares of our common stock to six Directors, which were valued at $ 177,000 at a weighted average stock price of $ 35.19 .

During the three months ended March 31, 2020, we granted 8,821 shares of our common stock to five Directors, which were valued at $ 147,000 at a weighted average stock price of $ 16.15 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , related to annual retainers, including the value of stock granted to Directors above, of $ 201,000 and $ 231,000 for the three months ended March 31, 2020 and 2021, respectively.

During the three months ended June 30, 2021, we granted 4,333 shares of our common stock to six Directors and 135 shares of our common stock to an advisor to our Board, which were valued at $ 160,000 and $ 5,000 , respectively, at a weighted average stock price of $ 36.97 .

During the six months ended June 30, 2021, we granted 9,373 shares of our common stock to six Directors and 277 shares of our common stock to an advisor to our Board, which were valued at $ 338,000 and $ 10,000 , respectively, at a weighted average stock price of $ 36.01 .

During the three months ended June 30, 2020, we granted 7,859 shares of our common stock to five Directors, and 275 shares of common stock to an advisor to our Board, which were valued at $ 142,000 and $ 5,000 respectively at a weighted

average stock price of $ 18.12 .

During the six months ended June 30, 2020, we granted 16,680 shares of our common stock to five Directors, and 584 shares of common stock to an advisor to our Board, which were valued at $ 285,000 and $ 10,000 , respectively at a weighted average stock price of $ 17.08 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , related to annual retainers, including the value of stock granted to Directors and an advisor to our Board, of $ 201,000 and $ 219,000 for the three months ended June 30, 2020 and 2021, respectively and $ 402,000 and $ 455,000 for the six months ended June 30, 2020 and 2021, respectively.

Share Repurchase

On July 31, 2019, our Board approved an additional $25.0 million under our share repurchase program in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

During the three months ended March 31, 2021, we did not repurchase any shares of our common stock.

At March 31, 2021, we had approximately $ 25.6 million available for repurchases under our share repurchase program.

On May 18, 2021, our Board approved an additional $ 25.0 million under our share repurchase program in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

During the three and six months ended June 30, 2021, we repurchased 324,700 shares of common stock (of which 24,700 settled in July 2021) for a total cost of $ 12.3 million (of which $ 742,000 settled in July 2021) at an average cost of $ 37.88 per share pursuant to our share repurchase program.

Our shares were purchased in the open market at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations.

Shares purchased pursuant to the repurchase program are currently held as treasury shares.

At June 30, 2021, we had approximately $ 38.3 million available for repurchase under our share repurchase program.

See Note 18 to the Consolidated Financial Statements included herein for additional information related to our share repurchase program.

Cash Dividends

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The following table sets forth the computation of the basic and diluted earnings per share (in thousands, except per share data):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

Numerator for basic and diluted earnings per share:

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Stock options 29 213 29 232

Performance awards — 331 — 166

Denominator for diluted earnings per common share - weighted average shares outstanding 17,889 18,511 17,862 18,364

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$ 0.36 $ ( 0.33 ) $ 0.12 $ 0.37

For the three months ended March 31, 2020 there were 1,034,084 stock options excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an antidilutive effect and 27,085 shares were excluded from the computation of diluted earnings per share amounts because the loss attributable to common stockholders was a loss, not income.

For the three months ended March 31, 2021, no stock options were excluded from the computation of diluted earnings per share.

For the three and six months ended June 30, 2020 there were 1,017,383 and 1,025,734 stock options, respectively, excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an

antidilutive effect.

For the three and six months ended June 30, 2021, no stock options were excluded from the computation of diluted earnings per share.

Our performance awards are considered to be contingently issuable shares because their issuance is contingent upon the satisfaction of certain performance and service conditions.

On April 1, 2021, our stock price reached $ 35.80 for an average of twenty days, thus meeting the performance criteria for the first tranche of performance awards to be considered outstanding and therefore, included in the computation of diluted earnings per share as of the beginning of the reporting period.

SEGMENT REPORTING

Revenue, disaggregated by major source for each of our reportable segments was as follows (in thousands):

Three months ended March 31, 2021

Three months ended June 30, 2021

Funeral Cemetery Total

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Total $ 59,832 $ 28,445 $ 88,277

Three months ended March 31, 2020

Three months ended June 30, 2020

Funeral Cemetery Total

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Total $ 59,121 $ 18,356 $ 77,477

Six months ended June 30, 2021

Funeral Cemetery Total

Services $ 79,747 $ 8,129 $ 87,876

Merchandise 44,831 7,082 51,913

Cemetery property — 31,589 31,589

Other revenue 7,028 6,508 13,536

Total $ 131,606 $ 53,308 $ 184,914

Six months ended June 30, 2020

Funeral Cemetery Total

Services $ 73,212 $ 6,400 $ 79,612

Merchandise 40,821 4,798 45,619

Cemetery property — 18,294 18,294

Other revenue 6,830 4,612 11,442

Total $ 120,863 $ 34,104 $ 154,967

The following table presents operating income (loss), income (loss) before income taxes and total assets (in thousands):

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Operating income (loss):

Three months ended March 31, 2021 $ 25,876 $ 9,493 $ ( 9,123 ) $ 26,246

Three months ended March 31, 2020 4,311 4,167 ( 6,328 ) 2,150

Three months ended June 30, 2021 $ 16,604 $ 11,498 $ ( 7,178 ) $ 20,924

Three months ended June 30, 2020 19,869 5,291 ( 6,894 ) 18,266

Six months ended June 30, 2021 $ 42,480 $ 20,991 $ ( 16,301 ) $ 47,170

Six months ended June 30, 2020 24,180 9,458 ( 13,222 ) 20,416

Income (loss) before income taxes:

Three months ended March 31, 2021 $ 25,718 $ 9,476 $ ( 16,620 ) $ 18,574

Three months ended March 31, 2020 4,119 4,105 ( 14,571 ) ( 6,347 )

Three months ended June 30, 2021 $ 16,462 $ 11,552 $ ( 38,373 ) $ ( 10,359 )

Three months ended June 30, 2020 19,674 5,348 ( 15,176 ) 9,846

Six months ended June 30, 2021 $ 42,174 $ 21,028 $ ( 54,987 ) $ 8,215

Six months ended June 30, 2020 23,792 9,453 ( 29,746 ) 3,499

Total assets:

March 31, 2021 $ 763,761 $ 378,945 $ 15,020 $ 1,157,726

June 30, 2021 $ 765,492 $ 387,979 $ 15,532 $ 1,169,003

December 31, 2020 764,535 366,964 14,326 1,145,825

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The following table presents t he detail of certain balance sheet accounts (in thousands):

December 31, 2020 March 31, 2021

December 31, 2020 June 30, 2021

Prepaid and other current assets:

Prepaid expenses $ 1,919 $ 1,702

Federal income taxes receivable — 498

State income taxes receivable — 513

Other current assets 157 149

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The following information is supplemental disclosure for the Consolidated Statements of Cash Flows (in thousands):

Three months ended March 31,

Cash paid for interest and financing costs $ 1,337 $ 616

Six months ended June 30,

Cash paid for interest $ 15,910 $ 14,329

Cash paid for taxes 177 7,663

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SUBSEQUENT EVENTS

New Notes Purchase Agreement

On April 29, 2021, we and certain of our existing subsidiaries (the “Subsidiary Guarantors”) entered into a Purchase Agreement with BofA Securities, Inc., as representative of the several initial purchasers named therein (collectively, the “Purchasers”), under which we agreed to sell $400 million in aggregate principal amount of 4.25% Senior Notes due 2029 (the “New Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A and to certain non-U.S.

persons outside of the United States pursuant to Regulation S, each under the Securities Act of 1933, as amended.

The New Notes will be issued pursuant to an indenture to be entered into among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee.

The sale of the New Notes to the Purchasers is expected to settle on May 13, 2021, subject to customary closing conditions, and is expected to result in approximately $394 million in net proceeds to us after deducting the Purchasers’ discount and estimated offering expenses payable by us.

We intend to use the net proceeds of the sale of the New Notes, together with borrowings under the amended and restated credit facility, which we expect to enter into concurrently with the settlement of the sale of the New Notes, to redeem all of our existing Senior Notes.

The New Notes will be our unsecured senior obligations and will bear interest at a rate of 4.25% per year.

Interest will be payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021.

The New Notes will mature on May 15, 2029, unless earlier repurchased or redeemed.

The New Notes will be guaranteed on a senior unsecured basis by the Subsidiary Guarantors.

Notice of Conditional Redemption

Our redemption obligation is conditioned on and subject to the completion of the offering of New Notes and the entry into an amended and restated credit facility in connection with the closing of the offering.

On July 26, 2021, the Board authorized an increase in the Company’s share repurchase program to permit the Company to purchase up to an additional $ 25 million of its outstanding common shares.

Prior to the Board’s approval of the increase, as of June 30, 2021, the Company had approximately $ 38.3 million authorization remaining under the original repurchase program.

Accordingly, as of July 26, 2021, the Company had approximately $ 63.3 million of share repurchase authorization remaining under the revised repurchase program.

The Company may repurchase shares from time to time in the open market or in other privately negotiated transactions, subject to market conditions and applicable Security and Exchange Commission rules.

On and effective July 28, 2021, the Board approved a second amendment and restatement to the Company’s Amended and Restated By-laws (as so amended and restated, the Second Amended and Restated By-laws) to implement, amongst other changes, an exclusive forum bylaw provision.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

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• our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

• our ability to meet the timing, objectives and cost saving expectations related to anticipated financing activities, including our deleveraging program, forecasts and planned uses of free cash flow, expected plans and projections for refinancing our senior notes and future capital allocation, including potential acquisitions, share repurchases, dividend increases, or debt repayment plans;

• our ability to meet the projected financial performance metrics included in our updated Milestone Two-Year Scenario, if at all;

• our ability to meet the timing, objectives and expectations related to our capital allocation framework, including our forecasted rates of return, planned uses of free cash flow and future capital allocation, including share repurchases, internal growth projects, potential strategic acquisitions, dividend increases, or debt repayment plans;

• the timely and full payment of death benefits related to preneed funeral contracts funded through life insurance contracts;

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• effects of the application of other applicable laws and regulations, including changes in such regulations or the interpretation thereof;

• the potential impact of epidemics and pandemics, including the COVID-19 coronavirus (“COVID-19”), on customer preferences and on our business;

• the potential impact of epidemics and pandemics, including the COVID-19 coronavirus, including new variants of COVID-19, such as the delta variant, on customer preferences and on our business;

• government, social, business and other actions that have been and will be taken in response to pandemics, including potential responses to new variants of COVID-19, such as the delta variant;

• effects of litigation;

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• our ability to consummate the divestiture of low performing businesses as currently expected, if at all, including expected use of proceeds related thereto;

• our ability to integrate acquired businesses with our existing businesses, including expected performance and financial improvements related thereto;

• our ability to identify and consummate strategic acquisitions, if at all, and successfully integrate acquired businesses with our existing businesses, including expected performance and financial improvements related thereto;

• economic, financial and stock market fluctuations;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements