5 unchanged sentences
Funeral Home Operations, which currently account for approximately 70% of our revenue, and Cemetery Operations, which currently account for approximately 30% of our revenue.
−Removed: At June 30, 2022, we operated 167 funeral homes in 26 states and 31 cemeteries in 11 states.
+Added: At September 30, 2022, we operated 169 funeral homes in 26 states and 31 cemeteries in 11 states.
We compete with other publicly held and independent operators of funeral and cemetery companies.
10 unchanged sentences
Executive Leadership Changes
−Removed: On April 1, 2022, Rob Franch joined our executive leadership team as Chief Information Officer.
−Removed: During the six months ended June 30, 2022, we sold real property for $2.7 million and two funeral homes for $0.9 million for a net gain of $0.6 million.
−Removed: Credit Facility
−Removed: On May 27 2022, we entered into a second amendment and commitment increase to the Credit Facility with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.
−Removed: Pursuant to this amendment, the revolving credit commitment was increased from $200.0 million to $250.0 million.
−Removed: Business Impact under the Macroeconomic Environment of COVID-19
+Added: On September 27, 2022, C.
+Added: Benjamin Brink informed the Company of his plans to resign from his position as Executive Vice President, Chief Financial Officer and Treasurer effective January 2, 2023.
+Added: Brink will remain in his role through January 2, 2023 and will serve as a consultant for the Company for six months thereafter.
+Added: The planned resignation was not the result of any disagreement Mr.
+Added: Brink had with the Company on any matter related to the Company's operations, policies, and practices, including any matters concerning the Company's controls or any financial or accounting-related matters or disclosures.
+Added: During the nine months ended September 30, 2022, we acquired a business consisting of two funeral homes for $6.3 million in cash.
+Added: During the nine months ended September 30, 2022, we sold real property for $3.3 million and two funeral homes for $0.9 million for a net gain of $0.7 million.
+Added: Business Impacts of COVID-19
On March 11, 2020, COVID-19 was deemed a global pandemic and since then, the Company has continued to proactively monitor and assess the pandemic’s current and potential impact to the Company’s operations.
−Removed: Throughout the pandemic, the Company’s senior leadership team has taken steps to assist our businesses in appropriately adjusting and adapting to the conditions resulting from the COVID-19 pandemic.
−Removed: Our businesses are open and ready to provide service to the families and communities they serve.
−Removed: While our businesses provide an essential public function, along with a critical responsibility to the communities and families they serve, the health and safety of our employees and the families we serve remain our top priority.
−Removed: We continue to review and update our processes and procedures to comply with all regulatory mandates and procure additional supplies to ensure that each of our businesses have appropriate personal protective equipment to provide these essential services.
−Removed: The Company also implemented additional safety and precautionary measures as it concerns our businesses’ day-to-day interaction with the families and communities they serve.
−Removed: The overall impact of the macroeconomic environment to the deathcare industry from the pandemic may provide varying results as compared to other industries.
−Removed: Our industry’s revenues are impacted by various factors, including the number of funeral services performed, the average price for a service and the mix of traditional burial versus cremation contracts.
−Removed: the second quarter of 2022, we continued to see the number of funeral contracts normalize to pre-COVID-19 levels.
+Added: Since that time, the Company’s senior leadership team has taken steps to assist our businesses throughout each phase of the COVID-19 pandemic, including updating our processes and procedures to comply with all regulatory mandates, along with keeping the health and safety of our employees and the families we serve our top priority.
+Added: While we believe the country has begun to transition to a post-pandemic phase, we continue to monitor the situation and may make appropriate adjustments to our operations as necessary.
+Added: The overall macroeconomic impact from the pandemic to the deathcare industry may provide varying results as compared to other industries.
+Added: Our industry’s revenues are impacted by various factors, including for example, fluctuations in the death rate, the number of funeral services performed, the average price for a service and the mix of traditional burial versus cremation contracts.
+Added: During the third quarter of 2022, we continued to see the death rate normalize to pre-COVID-19 levels, which
+Added: accelerated during the latter part of the third quarter.
Regardless of these recent trends, our businesses have remained focused on being innovative and resourceful, providing families immediate service as part of the grieving process.
−Removed: Within our financial reporting environment, we have considered various areas that could affect the results of our operations, though the scope, severity and duration of these impacts remain uncertain at this time because the ultimate impact of COVID-19 remains uncertain, including the potential impacts of new variants of COVID-19, such as the Delta and Omicron variants, and any resulting government responses to such variants.
+Added: Within our financial reporting environment, we have considered the impact of COVID-19 on the assumptions and estimates used in preparing our consolidated financial statements.
+Added: In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made but are complicated by the continued uncertainty surrounding the normalization of the death rate and the scope, severity and duration of the COVID-19 pandemic and its ultimate impact.
+Added: This includes the potential impacts of new variants of COVID-19, its sub-variants and any other new variants, and any resulting impacts from such variants.
We do not believe we are particularly vulnerable to concentrations, with respect to geographic area, revenue for specific products or our relationships with our vendors.
−Removed: Our relationships with our vendors and suppliers have remained consistent and we continue to receive reliable service.
−Removed: To date, we have not experienced any material supply chain impacts or disruptions from our vendors attributable to COVID-19.
−Removed: Remote working arrangements, when utilized, have not materially affected our ability to maintain and support operations, including financial reporting systems, internal controls over financial reporting, and disclosure controls and procedures.
+Added: To date, we have not experienced any material supply chain impacts or disruptions from our vendors attributable to COVID-19 and we continue to receive reliable service.
We believe our access to capital, the cost of our capital, or the sources and uses of our cash should be relatively consistent in the near term.
−Removed: While the expected duration of the pandemic is unknown, we have not currently experienced any material negative impacts to our liquidity position, access to capital, or cash flows as a result of COVID-19.
−Removed: See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources for additional information related to our liquidity position.
−Removed: During the second quarter of 2022, we continued to see a decrease in COVID-19-related deaths and the normalization of funeral contracts to pre-COVID-19 levels at broadly higher funeral contract revenue averages.
−Removed: During this same time, we have not seen an adverse impact to our overall financial performance.
−Removed: Although we expect these trends to continue, we will continue to assess these impacts, including the potential impacts of new variants of COVID-19, such as the Delta and Omicron variants, and implement appropriate procedures, plans, strategy, and issue any disclosures that may be required, as the situation surrounding the pandemic and related regulatory mandates and restrictions, if any, evolves.
+Added: While the expected duration and potential future impacts of the pandemic are unknown, we have not currently experienced any material negative impacts to our liquidity position, access to capital, or cash flows as a result of COVID-19.
+Added: See “Liquidity and Capital Resources” below for additional information related to our liquidity position.
+Added: During the third quarter of 2022, we continued to see a decrease in COVID-19-related deaths and an accelerated normalization of the death rate to pre-COVID-19 levels.
+Added: The normalization of the death rate to pre-COVID-19 levels during the third quarter of 2022 resulted in lower volumes, revenues, earnings and margins when compared to the third quarter of 2021, but overall financial performance remains at or above prior reporting periods during and prior to the COVID-19 pandemic.
+Added: Although we expect these trends to continue, we will continue to assess these impacts, including the potential impacts of new variants of COVID-19, its sub-variants and any other new variants, and implement appropriate procedures, plans, strategy, and issue any disclosures that may be required, as the situation surrounding the pandemic and related regulatory mandates and restrictions, if any, evolves.
Inflationary Trends
Beginning in the second quarter of 2022, we began to experience modest cost increases and surcharges from our vendors and suppliers on merchandise and goods due to broader inflationary, raw material cost increases, and global supply chain impacts.
−Removed: Although we have taken steps to mitigate these cost increases, we expect these impacts to continue through the end of the year.
+Added: This trend in modest cost increases continued during the third quarter of 2022, with the Company experiencing, for example, higher costs related to full-time hourly base rates, utilities, funeral supplies, merchandise costs and insurance.
+Added: Although we have taken steps to mitigate these cost increases and we expect these impacts to continue through the end of the year, the ultimate scope and duration of these impacts are unknown at this time.
More broadly, the U.S.
−Removed: economy has recently experienced an increase in the rate of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.
−Removed: Such inflation may negatively impact consumers or discretionary spending, although we have not experienced such impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past.
+Added: economy continues to experience higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.
+Added: Such inflation may negatively impact consumers or discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced such impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past.
Although we expect these trends to continue through the end of the year, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate these cost increases, if possible.
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Our business strategy is based on strong, local leadership with entrepreneurial principles that is focused on sustainable long term market share, revenue, and profitability growth in each local business.
−Removed: We believe Carriage has the most innovative operating model in the funeral and cemetery industry, which we are able to achieve through a decentralized, high-performance
−Removed: culture and operating framework linked with incentive compensation programs that attract top quality industry talent to our organization.
+Added: We believe Carriage has the most innovative operating model in the funeral and cemetery industry, which we are able to achieve through a decentralized, high-performance culture and operating framework linked with incentive compensation programs that attract top quality industry talent to our organization.
We also believe that Carriage provides a unique consolidation and operating framework that offers a highly attractive succession planning solution for independent funeral home owners who want their legacy family business to remain operationally prosperous in their local communities.
39 unchanged sentences
We have the ability to draw on our Credit Facility, subject to its customary terms and conditions.
−Removed: At June 30, 2022, we had $72.5 million of availability under the Credit Facility.
−Removed: However, if our capital expenditures or acquisition plans change, we may need to access the capital markets to obtain additional funding and we may not be able to obtain such funding on terms and conditions that are acceptable to us.
+Added: At September 30, 2022, we had $78.7 million of availability under the Credit Facility.
+Added: However, if our capital expenditures or acquisition plans change, we may need to access the capital markets or seek further borrowing capacity from our lenders to obtain additional funding and we may not be able to obtain such funding on terms and conditions that are acceptable to us.
Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected.
For additional information regarding known material factors that could cause cash flow or access to and cost of finance sources to differ from our expectations, please read Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.
−Removed: Our plan is to use cash on hand and borrowings under our Credit Facility primarily for general corporate purposes, payment of dividends and debt obligations, strategic acquisitions, internal growth capital expenditures, share repurchases, dividend increases and further debt repayments.
+Added: Our plan is to use cash on hand and borrowings under our Credit Facility primarily for general corporate purposes, payment of dividends and debt obligations, strategic acquisitions, internal growth capital expenditures, and further debt repayments.
From time to time we may also use available cash resources (including borrowings under our Credit Facility) to repurchase shares of our common stock, subject to satisfying certain financial covenants in our Credit Facility and in the Indenture (defined below) governing our Senior Notes (defined below).
−Removed: We believe that our existing and anticipated cash resources will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments and dividends for the next 12 months, as well as our long-term financial obligations.
−Removed: We began 2022 with $1.1 million in cash and ended the second quarter with $1.1 million in cash.
−Removed: At June 30, 2022, we had borrowings of $175.2 million outstanding on our Credit Facility compared to $155.4 million at December 31, 2021.
+Added: We believe that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments and dividends for the next 12 months, as well as our long-term financial obligations.
+Added: We began 2022 with $1.1 million in cash and ended the third quarter with $0.8 million in cash.
+Added: At September 30, 2022, we had borrowings of $169.0 million outstanding on our Credit Facility compared to $155.4 million at December 31, 2021.
The following table sets forth the elements of cash flow (in thousands):
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Cash at beginning of the year $ 889 $ 1,148
Net cash provided by operating activities 69,699 50,046
−Removed: Acquisitions of real estate (2,935) (2,601)
+Added: Acquisitions of businesses and real estate (3,285) (8,876)
Proceeds from divestitures and sale of other assets 4,375 4,313
3 unchanged sentences
Net borrowings on our Credit Facility, acquisition debt and finance lease obligations 39,042 13,286
−Removed: Payments to redeem the Original Senior Notes (400,000) —
−Removed: Payment of call premium for the redemption of the Original Senior Notes (19,876) —
−Removed: Payment of debt issuance costs for the Credit Facility and Senior Notes (1,930) (339)
+Added: Payment to redeem the 6.625% senior notes due 2026 (400,000) —
+Added: Payment of call premium for the redemption of the 6.625% senior notes due 2026 (19,876) —
+Added: Payment of debt issuance costs for the Credit Facility and the Senior Notes (2,054) (339)
Proceeds from the issuance of the Senior Notes 395,500 —
7 unchanged sentences
Operating Activities
−Removed: For the six months ended June 30, 2022, cash provided by operating activities was $30.2 million compared to $41.4 million for the six months ended June 30, 2021.
−Removed: The decrease of $11.2 million is primarily due to unfavorable working capital changes in accrued liabilities and income tax receivables.
+Added: For the nine months ended September 30, 2022, cash provided by operating activities was $50.0 million compared to $69.7 million for the nine months ended September 30, 2021.
+Added: The decrease of $19.7 million is primarily due to unfavorable working capital changes in accrued liabilities, which were partially offset by favorable changes in income tax receivables.
Investing Activities
−Removed: Our investing activities, resulted in a net cash outflow of $10.2 million for the six months ended June 30, 2022 compared to $7.9 million for the six months ended June 30, 2021, a decrease of $2.3 million.
+Added: Our investing activities resulted in a net cash outflow of $22.7 million for the nine months ended September 30, 2022 compared to $11.2 million for the nine months ended September 30, 2021, a decrease of $11.5 million.
Acquisition and Divestiture Activity
−Removed: During the six months ended June 30, 2022, we sold real property for $2.9 million and two funeral homes for $0.9 million and we purchased real property for $2.6 million.
−Removed: During the six months ended June 30, 2021, we sold three funeral homes for $3.5 million and we purchased real property for $2.9 million.
+Added: During the nine months ended September 30, 2022, we acquired a business consisting of two funeral homes for $6.3 million in cash and we purchased real property for $2.6 million.
+Added: During the nine months ended September 30, 2022, we sold real property for $3.3 million and two funeral homes for $0.9 million.
+Added: During the nine months ended September 30, 2021, we sold three funeral homes for $3.5 million, sold real property for $0.7 million and purchased real property for $3.3 million.
+Added: We also received proceeds of $2.8 million from our property insurance policy for the reimbursement of renovation costs for our funeral and cemetery businesses that were damaged by Hurricane Ida.
Capital Expenditures
−Removed: For the six months ended June 30, 2022, capital expenditures (comprised of growth and maintenance spend) totaled $13.5 million compared to $8.8 million for the six months ended June 30, 2021, an increase of $4.7 million.
+Added: For the nine months ended September 30, 2022, capital expenditures (comprised of growth and maintenance spend) totaled $20.3 million compared to $15.3 million for the nine months ended September 30, 2021, an increase of $5.0 million.
The following tables present our growth and maintenance capital expenditures (in thousands):
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Cemetery development $ 4,120 $ 5,215
Renovations at certain businesses (1)
+Added: Other 142 447
Total Growth $ 6,292 $ 10,636
−Removed: (1) During the six months ended June 30, 2022, we spent $2.1 million for renovations on two businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance.
−Removed: Six months ended June 30,
+Added: (1) During the nine months ended September 30, 2022, we spent $2.4 million for renovations on two businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance.
+Added: Nine months ended September 30,
Facility repairs and improvements $ 2,172 $ 3,131
2 unchanged sentences
Paving roads and parking lots 1,140 1,065
−Removed: Other 376 422
Total Maintenance $ 8,960 $ 9,710
Financing Activities
−Removed: Our financing activities resulted in a net cash outflow of $20.1 million for the six months ended June 30, 2022 compared to $32.9 million for the six months ended June 30, 2021, a decrease of $12.8 million.
−Removed: During the six months ended June 30, 2022, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $19.6 million, offset by $36.7 million for the purchase of treasury stock and $3.5 million in dividends.
−Removed: During the six months ended June 30, 2021, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $12.8 million, offset by the following payments:
−Removed: i) $19.9 million for the call premium to redeem our Original Senior Notes;
+Added: Our financing activities resulted in a net cash outflow of $27.7 million for the nine months ended September 30, 2022 compared to $58.3 million for the nine months ended September 30, 2021, a decrease of $30.6 million.
+Added: During the nine months ended September 30, 2022, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $13.3 million, offset by $36.7 million for the purchase of treasury stock and $5.1 million in dividends.
+Added: During the nine months ended September 30, 2021, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $39.0 million, offset by the following payments:
+Added: i) $19.9 million for the call premium to redeem our 6.625% senior notes due 2026;
ii) $61.7 million for the purchase of treasury stock;
iii) $6.6 million for debt issuance and transactions costs related to our Senior Notes and Credit Facility;
−Removed: iv) $4.0 million for the conversions and maturity of our Convertible Notes;
+Added: iv) $4.0 million for the conversions and maturity of our 2.75% convertible subordinated notes due 2021 (the “ Convertible Notes ”) ;
and v) $5.4 million in dividends.
Share Repurchase
−Removed: On February 23, 2022, our Board authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (“the Exchange Act”).
+Added: On February 23, 2022, our Board of Directors (the “Board”) authorized an increase in our share repurchase program to permit us to purchase up to an additional $75.0 million under our share repurchase program, in addition to amounts previously authorized and outstanding in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (“the Exchange Act”).
Share repurchase activity is as follows (dollar value in thousands):
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Number of Shares Repurchased (1)
3 unchanged sentences
$ 65,540 $ 34,234
−Removed: 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.
+Added: (1) During the nine months ended September 30, 2021, 84,000 shares settled in October 2021, which had a cost of $3.8 million.
+Added: Our shares are 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.
−Removed: At June 30, 2022, our share repurchase program had $48.9 million authorized for repurchases.
+Added: During the three months ended September 30, 2022, we did not repurchase any shares of our common stock pursuant to our share repurchase program.
+Added: At September 30, 2022, our share repurchase program had $48.9 million authorized for additional repurchases.
Cash Dividends
3 unchanged sentences
$ 0.1125 $ 1,730
+Added: September 1 st
+Added: $ 0.1125 $ 1,653
2021 Per Share Dollar Value
1 unchanged sentence
$ 0.1000 $ 1,808
+Added: September 1 st
+Added: $ 0.1000 $ 1,783
Credit Facility, Lease Obligations and Acquisition Debt
−Removed: The outstanding principal of our Credit Facility, lease obligations and acquisition debt at June 30, 2022 is as follows (in thousands):
−Removed: June 30, 2022
+Added: The outstanding principal of our Credit Facility, lease obligations and acquisition debt at September 30, 2022 is as follows (in thousands):
+Added: September 30, 2022
Credit Facility $ 169,000
4 unchanged sentences
Credit Facility
−Removed: On May 27 2022, we entered into a second amendment and commitment increase (the “Credit Facility Amendment”) to the first amended and restated credit agreement dated May 13, 2021 (as amended, the “Credit Facility”) with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.
+Added: On May 27 2022, we entered into a second amendment and commitment increase (the “Credit Facility Amendment”) to the first amended and restated credit agreement dated May 13, 2021 (as amended, including the Credit Facility Amendment, the “Credit Facility”) with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.
The Credit Facility Amendment provided, among other things, for (i) an increase to the Revolving Credit Commitments (as defined in the Credit Facility) under the Credit Facility from $200.0 million to $250.0 million in the aggregate;
2 unchanged sentences
(iv) an increase in the maximum Total Leverage Ratio (as defined in the Credit Facility) to 5.25 to 1.00;
−Removed: and (v) modifications to the restricted payments covenant to allow the Company to make additional stock repurchases, subject to the satisfaction of certain conditions therein.
−Removed: We incurred $0.3 million in transactions costs related to this amendment, which were capitalized and will be amortized over the remaining term of the related debt using the straight-line method.
−Removed: At June 30, 2022, our senior secured revolving Credit Facility was comprised of:
−Removed: (i) a $250.0 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.
+Added: and (v) modifications to the restricted payments covenant to allow us to make additional stock repurchases, subject to the satisfaction of certain conditions therein.
+Added: We incurred $0.3 million in transactions costs related to the Credit Facility Amendment, which were capitalized and will be amortized over the remaining term of the related debt using the straight-line method.
+Added: At September 30, 2022, our Credit Facility was comprised of:
+Added: (i) a $250.0 million revolving credit facility, including a $15.0 million million subfacility for letters of credit and a $10.0 million 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 13, 2026.
5 unchanged sentences
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 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.
−Removed: At June 30, 2022, we were subject to the following financial covenants under our Credit Facility:
+Added: At September 30, 2022, we were subject to the following financial covenants under our Credit Facility:
(A) a Total Leverage Ratio not to exceed 5.25 to 1.00 and (B) 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.
These financial maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis.
−Removed: We were in compliance with all of the covenants contained in our Credit Facility as of June 30, 2022.
−Removed: At June 30, 2022, we had outstanding borrowings under the Credit Facility of $175.2 million.
+Added: We were in compliance with all of the covenants contained in our Credit Facility as of September 30, 2022.
+Added: At September 30, 2022, we had outstanding borrowings under the Credit Facility of $169.0 million.
We also had one letter of credit for $2.3 million under the Credit Facility.
The letter of credit will expire on November 25, 2022 and is expected to automatically renew annually and secures our obligations under our various self-insured policies.
−Removed: At June 30, 2022, we had $72.5 million of availability under the Credit Facility.
−Removed: As of the effective date of the Credit Facility Amendment, outstanding borrowings under our Credit Facility bear interest at a prime rate or a BSBY rate, plus an applicable margin based our leverage ratio.
−Removed: At June 30, 2022, the prime rate margin was equivalent to 1.125% and the BSBY rate margin was 2.125%.
−Removed: The weighted average interest rate on our Credit Facility was 2.5% and 2.9% for the three months ended June 30, 2021 and 2022, respectively and 2.8% and 2.5% for the six months ended June 30, 2021 and 2022, respectively.
+Added: At September 30, 2022, we had $78.7 million of availability under the Credit Facility.
+Added: As of the effective date of the Credit Facility Amendment, outstanding borrowings under our Credit Facility bear interest at a prime rate or a BSBY rate, plus an applicable margin based on our leverage ratio.
+Added: At September 30, 2022, the prime rate margin was equivalent to 1.125% and the BSBY rate margin was 2.125%.
+Added: The weighted average interest rate on our Credit Facility was 2.0% and 4.3% for the three months ended September 30, 2021 and 2022, respectively, and 2.5% and 3.1% for the nine months ended September 30, 2021 and 2022, respectively.
The interest expense and amortization of debt issuance costs related to our Credit Facility are as follows (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
6 unchanged sentences
We lease certain funeral homes under finance leases with original terms ranging from ten to forty years.
−Removed: At June 30, 2022, operating and finance lease obligations were $36.7 million, with $4.4 million payable within 12 months.
+Added: At September 30, 2022, operating and finance lease obligations were $35.8 million, with $4.5 million payable within 12 months.
The lease cost related to our operating leases and short-term leases and depreciation expense and interest expense related to our finance leases are as follows (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
11 unchanged sentences
Original maturities range from nine to twenty years.
−Removed: At June 30, 2022, acquisition debt obligations were $6.4 million, with $0.8 million payable within 12 months.
+Added: At September 30, 2022, acquisition debt obligations were $6.3 million, with $0.8 million payable within 12 months.
The imputed interest expense related to our acquisition debt is as follows (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
Acquisition debt imputed interest expense $ 90 $ 78 $ 280 $ 237
−Removed: At June 30, 2022, the principal amount of our 4.25% senior notes due in May 2029 (the “Senior Notes”) was $400.0 million.
+Added: At September 30, 2022, the principal amount of our 4.25% senior notes due in May 2029 (the “Senior Notes”) was $400.0 million.
The 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.
10 unchanged sentences
The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of approximately 80 months of the Senior Notes.
−Removed: For both the three and six months ended June 30, 2022, the effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes was 4.42% and 4.30%, respectively.
−Removed: For the three and six months ended June 30, 2021, the effective interest rate on the unamortized debt discount and unamortized debt issuance costs for our $400 million in aggregate principal amount of 6.625% senior notes due 2026 (the “Original Senior Notes”) was 6.87% and 6.69%, respectively.
−Removed: For the six months ended June 30, 2021, 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 was 6.20% and 6.88%, respectively.
−Removed: All of our Original Senior Notes were redeemed on June 1, 2021.
−Removed: At June 30, 2022, the fair value of the Senior Notes, which are Level 2 measurements, was $327.7 million.
+Added: For both the three and nine months ended September 30, 2021 and 2022, the effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes was 4.42% and 4.30%, respectively.
+Added: At September 30, 2022, the fair value of the Senior Notes, which are Level 2 measurements, was $317.2 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):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
3 unchanged sentences
Senior Notes amortization of debt issuance costs 34 35 161 104
−Removed: At June 30, 2022, our future interest payments on our outstanding balance were $116.9 million, with $17.0 million payable within 12 months.
+Added: At September 30, 2022, our future interest payments on our outstanding balance were $112.5 million, with $17.0 million payable within 12 months.
FINANCIAL HIGHLIGHTS
Below are our financial highlights (in thousands except for volumes and averages):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
5 unchanged sentences
Gross profit $ 33,164 $ 25,598 $ 97,152 $ 87,788
−Removed: Net income (loss) $ (6,167) $ 10,899 $ 6,766 $ 27,301
−Removed: Revenue for the three months ended June 30, 2022 increased $2.3 million compared to the three months ended June 30, 2021, as we experienced a 1.5% increase in funeral contract volume, as well as a 2.0% increase in average revenue per funeral contract primarily due to market share gains and higher normalized death rates, offset by a 7.2% decrease in the number of preneed interment rights (property) sold, as well as a 5.6% decrease in the average price per interment right sold.
−Removed: Gross profit for the three months ended June 30, 2022 decreased $1.2 million compared to the three months ended June 30, 2021, primarily due to the increase in operating expenses in our cemetery segment.
−Removed: Net income for the three months ended June 30, 2022 increased $17.1 million compared to the three months ended June 30, 2021, primarily due to a $23.8 million loss on extinguishment of debt in 2021, a $2.0 million increase in net gain on divestitures, disposals and impairments charges, a $1.5 million decrease in interest expense, and a $1.4 million gain on insurance reimbursements, offset by a $8.4 million increase in income tax expense.
−Removed: Revenue for the six months ended June 30, 2022 increased $3.8 million compared to the six months ended June 30, 2021, as we experienced a 1.6% increase in funeral contract volume, as well as a 2.1% increase in average revenue per funeral
−Removed: contract primarily due to market share gains and higher normalized death rates, offset by a 0.8% decrease in the number of preneed interment rights (property) sold, as well as a 3.8% decrease in the average price per interment right sold.
−Removed: Gross profit for the six months ended June 30, 2022 decreased $1.8 million compared to the six months ended June 30, 2021, primarily due to the increase in operating expenses in our cemetery segment.
−Removed: Net income for the six months ended June 30, 2022 increased $20.5 million compared to the six months ended June 30, 2021, primarily due primarily due to a $23.8 million loss on extinguishment of debt in 2021, a $3.5 million decrease in interest expense, a $3.3 million gain on insurance reimbursements and a $0.9 million increase in net gain on divestitures, disposals and impairments charges, offset by a $7.9 million increase in income tax expense.
+Added: Net income $ 13,046 $ 5,860 $ 19,812 $ 33,161
+Added: Revenue for the three months ended September 30, 2022 decreased $7.5 million compared to the three months ended September 30, 2021, as we experienced an 11.6% decrease in funeral contract volume, which was slightly offset by a 2.9% increase in average revenue per funeral contract, as well as a 13.6% decrease in the number of preneed interment rights (property) sold and a 4.1% decrease in the average price per interment right sold.
+Added: The decreases in funeral contract volume and the number of interment rights sold primarily correspond to the significant decline in COVID-19 related cases as compared to the third quarter of 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Gross profit for the three months ended September 30, 2022 decreased $7.6 million compared to the three months ended September 30, 2021, primarily due to the decrease in revenue.
+Added: Net income for the three months ended September 30, 2022 decreased $7.2 million compared to the three months ended September 30, 2021, primarily due to the $7.6 million decrease in gross profit, a $1.6 million increase in interest expense, a $1.3 million increase in general and administrative expense, offset by a $2.3 million decrease in income tax expense and a $0.9 million decrease in net gain on divestitures, disposals and impairments charges.
+Added: Revenue for the nine months ended September 30, 2022 decreased $3.7 million compared to the nine months ended September 30, 2021, as we experienced a 2.9% decrease in funeral contract volume, which was slightly offset by a 2.4% increase in average revenue per funeral contract, as well as a 4.9% decrease in the number of preneed interment rights (property) sold and a 4.0% decrease in the average price per interment right sold.
+Added: The decreases in funeral contract volume and the number of interment rights sold primarily correspond to the decline in COVID-19 related cases in 2022 compared to 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Gross profit for the nine months ended September 30, 2022 decreased $9.4 million compared to the nine months ended September 30, 2021, due to the decrease in revenue, as well as the increase in operating expenses in both our funeral and cemetery segments.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, funeral supplies, merchandise costs and insurance.
+Added: Net income for the nine months ended September 30, 2022 increased $13.3 million compared to the nine months ended September 30, 2021, due to a $23.8 million loss on extinguishment of debt in 2021, a $3.3 million gain on insurance reimbursements in 2022, a $1.9 million decrease in interest expense, and a $1.8 million decrease in net gain on divestitures, disposals and impairments charges, offset by a $9.4 million decrease in gross profit, a $5.5 million increase in income tax expense and a $2.8 million increase in general and administrative expense.
Further discussion of Revenue and the components of Gross profit for our funeral home and cemetery segments is presented herein under “– Results of Operations.”
1 unchanged sentence
REPORTING AND NON-GAAP FINANCIAL MEASURES
−Removed: We also present our financial performance in our “Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended June 30, 2022 issued on July 27, 2022 and discussed in the corresponding earnings conference call.
+Added: We also present our financial performance in our “Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended September 30, 2022 issued on October 26, 2022 and discussed in the corresponding earnings conference call.
The Trend Report is used as a supplemental financial statement by management and investors to compare our current financial performance with our previous results and with the performance of other companies.
2 unchanged sentences
Below is a reconciliation of Net income, a GAAP financial measure, to Adjusted net income, a non-GAAP financial measure, (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
−Removed: Net income (loss) $ (6,167) $ 10,899 $ 6,766 $ 27,301
+Added: Net income $ 13,046 $ 5,860 $ 19,812 $ 33,161
Special items (1)
Severance and separation costs (2)
+Added: — 1,431 1,575 1,431
Accretion of discount on Convertible Notes (1)
Loss on extinguishment of debt (3)
−Removed: 23,807 — 23,807 —
−Removed: Net (gain) loss on divestitures and other costs 205 (1,284) (103) (581)
+Added: Net (gain) loss on divestitures 282 — 179 (575)
+Added: Net impact of impairment of goodwill and other 500 — 500 —
Litigation reserve (4)
13 unchanged sentences
Special items are taxed at the operating tax rate for the period except for the Accretion of the discount on Convertible Notes, as this is a non-tax deductible item and the Change in uncertain tax reserves and other, as this item is a tax benefit.
−Removed: (2) Costs related to the termination or resignation of certain key members of leadership in the first quarter of 2021.
−Removed: (3) Loss on the redemption of our Original Senior Notes during the second quarter of 2021.
+Added: (2) Costs related to the departure of certain key members of leadership in the first quarter of 2021 and in the third quarter of 2022.
+Added: (3) Loss on the redemption of our 6.625% senior notes due 2026 during the second quarter of 2021.
(4) Costs related to litigation matters.
1 unchanged sentence
(6) Relates to health and safety expenses, including personal protective equipment (“PPE”) due to COVID-19.
−Removed: We purchased more PPE during the three and six months ended 2021 compared to the same periods in 2022.
−Removed: (7) Relates to the write-off of certain fixed assets and interest paid on our Original Senior Notes for the two-week period during which our Senior Notes were issued prior to the redemption of our Original Senior Notes.
+Added: We purchased more PPE during the three and nine months ended 2021 compared to the same periods in 2022.
+Added: (7) Relates to the write-off of certain fixed assets and interest paid on our 6.625% senior notes due 2026 for the two-week period during which our Senior Notes were issued prior to the redemption of our 6.625% senior notes due 2026.
(8) Adjusted net income is defined as Net income plus adjustments for Special items and other expenses or gains that we believe do not directly reflect our core operations and may not be indicative of our normal business operations.
Below is a reconciliation of Gross profit (a GAAP financial measure) to Operating profit (a non-GAAP financial measure) (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
9 unchanged sentences
Below is a breakdown of Operating profit (a non-GAAP financial measure) by Segment (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
7 unchanged sentences
RESULTS OF OPERATIONS
−Removed: The following is a discussion of our results of operations for the three and six months ended June 30, 2022 and 2021.
+Added: The following is a discussion of our results of operations for the three and nine months ended September 30, 2022 and 2021.
The term “same store” refers to funeral homes and cemeteries acquired prior to January 1, 2018 and owned and operated for the entirety of each period being presented, excluding certain funeral home and cemetery businesses that we intend to divest in the near future.
1 unchanged sentence
This classification of acquisitions has been important to management and investors in monitoring the results of these businesses and to gauge the leveraging performance contribution that a selective acquisition program can have on total company performance.
−Removed: The term “divested” when discussed in the Funeral Home Segment, refers to two funeral homes we sold and one funeral home we merged with another business in an existing market in the first six months of 2022 and three funeral homes we sold in the first six months of 2021.
+Added: The term “divested” when discussed in the Funeral Home Segment, refers to two funeral homes we sold and one funeral home we merged with another business in an existing market in the first nine months of 2022 and three funeral homes we sold in the first nine months of 2021.
The term “divested” when discussed in the Cemetery Segment, refers to one cemetery we sold during 2021.
5 unchanged sentences
The following table sets forth certain information regarding our Revenue and Operating profit from our funeral home operations (in thousands):
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Same store operating revenue $ 57,321 $ 51,258
14 unchanged sentences
The following measures reflect the significant metrics over this comparative period:
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Contract volume 10,889 9,499
8 unchanged sentences
Cremation rate 55.9% 58.2%
−Removed: Funeral home same store operating revenue increased $1.7 million for the three months ended June 30, 2022 compared to the same period in 2021.
−Removed: The increase in operating revenue is primarily related to a 1.9% increase in same store contract volume, as well as a 1.6% increase in the average revenue per contract excluding preneed interest.
−Removed: The same store contract volume increased in spite of a 45.4% decrease in same store COVID-19 related contracts during the second quarter of 2022 compared to the second quarter of 2021.
−Removed: This additional volume increase is primarily due to market share gains and higher normalized death rates.
−Removed: The increase in average revenue per contract in the second quarter of 2022 reflects increases of 1.8% in cremations with memorial services and 1.5% in burials with memorial services compared to the second quarter of 2021.
−Removed: These increases are primarily due to the normalization of customer preferences for memorial services and our continued focus to welcome and educate families on the many products and service options that are available with cremation.
−Removed: Funeral home same store operating profit for the three months ended June 30, 2022 decreased $0.1 million when compared to the same period in 2021, due to the increase in operating expenses.
+Added: Funeral home same store operating revenue decreased $6.1 million for the three months ended September 30, 2022 compared to the same period in 2021.
+Added: The decrease in operating revenue is primarily due to a 12.8% decrease in same store contract volume, which was slightly offset by a 2.5% increase in the average revenue per contract excluding preneed interest.
+Added: The same store contract volume decrease is primarily a result of the significant decline in COVID-19 related cases as compared to the third quarter of 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: The increase in average revenue per contract in the third quarter of 2022 reflects a 1.4% increase in cremations with memorial services.
+Added: This increase is primarily due to our continued focus to welcome and educate families on the many products and service options that are available with cremation.
+Added: Funeral home same store operating profit for the three months ended September 30, 2022 decreased $6.9 million when compared to the same period in 2021, primarily due to the decrease in operating revenue, with increased operating expenses as a percentage of revenue also contributing to the decline.
The comparable operating profit margin decreased 820 basis points to 36.5%.
−Removed: Operating expenses as a percentage of operating revenue increased 1.5% with the largest
−Removed: increases in property and general liability insurance of 0.5%, transportation costs of 0.3%, and general and administrative expenses of 0.3%, which were partially offset by a decrease in salaries and benefits expenses of 0.4%, primarily due to lower health insurance expenses.
−Removed: Funeral home acquired operating revenue for the three months ended June 30, 2022 increased $0.7 million compared to the same period in 2021.
−Removed: The increase in operating revenue is primarily due to a 6.9% increase in the average revenue per contract excluding preneed interest, as well as a 3.0% increase in acquired contract volume.
−Removed: The acquired contract volume increased in spite of a 74.1% decrease in acquired COVID-19 related contracts for the second quarter of 2022 compared to the second quarter of 2021.
−Removed: This additional volume increase is primarily due to market share gains and higher normalized death rates.
−Removed: The increase in average revenue per contract in the second quarter of 2022 reflects increases of 6.1% in burials with memorial services and 1.8% in cremations with memorial services compared to the second quarter of 2021.
−Removed: These increases are primarily due to the normalization of customer preferences for memorial services and our continued focus to welcome and educate families on the many products and service options that are available with cremation.
−Removed: Funeral home acquired operating profit for the three months ended June 30, 2022 increased $0.3 million when compared to the same period in 2021, due to the increase in acquired operating revenue and a decrease in operating expenses.
−Removed: The comparable operating profit margin increased 10 basis points to 40.0%.
−Removed: Operating expenses as a percentage of operating revenue decreased 0.1% with the largest decrease in salaries and benefits expenses of 0.9%, primarily due to lower health insurance expenses, offset by an increase in allowance for credit losses of 0.8%, due to the aging of higher accounts receivable related to the high volume of sales due to the COVID-19 spike during the latter half of 2021.
−Removed: Ancillary revenue, recorded in Other revenue , which represents revenue from our flower shop, pet cremation and online cremation businesses, as well as Ancillary operating profit each decreased $0.1 million for the three months ended June 30, 2022 compared to the same period in 2021.
−Removed: Preneed funeral insurance commissions and preneed funeral trust and insurance revenue (recorded in Other revenue ) on a combined basis, increased $0.2 million for the three months ended June 30, 2022 compared to the same period in 2021.
−Removed: The increase is primarily related to the increase in funeral insurance commissions, resulting from an increase in preneed insurance sales.
−Removed: Operating profit for preneed funeral insurance commissions and preneed trust and insurance, on a combined basis, increased $0.1 million for the same comparative period, primarily due to the increase in preneed funeral insurance commission revenue.
+Added: Operating expenses as a percentage of operating revenue increased 8.2% with the largest increases in salaries and benefits expenses of 3.7%, facilities and grounds expenses of 0.8%, general and administrative expenses of 0.8%, general
+Added: liability insurance of 0.7% and transportation costs of 0.4%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, funeral supplies and insurance.
+Added: Funeral home acquired operating revenue for the three months ended September 30, 2022 increased $0.2 million compared to the same period in 2021, due to the addition of two funeral home businesses added to our funeral home acquired portfolio during the third quarter of 2022, which contributed $0.4 million of operating revenue.
+Added: Excluding these two businesses, acquired operating revenue decreased $0.2 million, due to a 6.0% decrease in acquired contract volume, offset by a 3.7% increase in average revenue per contract excluding preneed interest.
+Added: Funeral home acquired operating profit for the three months ended September 30, 2022 decreased $0.3 million when compared to the same period in 2021, primarily due to an increase in operating expenses as a percentage of revenue.
+Added: The two funeral homes added to our acquired portfolio during the third quarter of 2022 contributed almost $0.2 million of operating profit.
+Added: Excluding these two businesses, acquired operating profit decreased $0.5 million.
+Added: The comparable operating profit margin decreased 520 basis points to 38.9%.
+Added: Operating expenses as a percentage of operating revenue increased 5.2% with the largest increase in salaries and benefits expenses of 2.3%, facilities and grounds expenses of 0.7%, general liability insurance of 0.7%, other funeral costs of 0.6% and general and administrative expenses of 0.5%, offset by a decrease in promotional expenses of 0.5%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, funeral supplies and insurance.
+Added: Ancillary revenue, recorded in Other revenue , which represents revenue from our flower shop, pet cremation and online cremation businesses, remained flat and Ancillary operating profit decreased $0.1 million for the three months ended September 30, 2022 compared to the same period in 2021.
+Added: Preneed funeral insurance commissions and preneed funeral trust and insurance revenue (recorded in Other revenue ), on a combined basis, increased $0.2 million for the three months ended September 30, 2022 compared to the same period in 2021.
+Added: The increase is primarily due to a 14.3% increase in earnings on preneed contracts for the three months ended September 30, 2022 compared to the same period in 2021, as recognition is triggered at the time a preneed contract matures to atneed.
+Added: Operating profit for preneed funeral insurance commissions and preneed trust and insurance, on a combined basis, increased $0.2 million for the same comparative period, primarily due to the increase in preneed funeral trust and insurance revenue.
The following table sets forth certain information regarding our Revenue and Operating profit from our funeral home operations (in thousands):
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Same store operating revenue $ 165,481 $ 163,776
8 unchanged sentences
Acquired operating profit 9,784 9,845
−Removed: Divested/planned divested operating profit 264 71
+Added: Divested/planned divested operating profit (loss) 205 (32)
Ancillary operating profit 790 560
3 unchanged sentences
The following measures reflect the significant metrics over this comparative period:
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Contract volume 31,503 30,686
8 unchanged sentences
Cremation rate 56.3% 57.6%
−Removed: Funeral home same store operating revenue increased $4.4 million for the six months ended June 30, 2022 compared to the same period in 2021.
−Removed: The increase in operating revenue is primarily related to a 2.7% increase in same store contract volume, as well as a 1.4% increase in the average revenue per contract excluding preneed interest.
−Removed: The same store contract volume increased in spite of a 48.4% decrease in COVID-19 related contracts for the six months ended June 30, 2022 compared to the same period in 2021.
−Removed: This additional volume increase is primarily due to market share gains and higher normalized death rates.
−Removed: The increase in average revenue per contract for the six months ended June 30, 2022 reflects increases of 4.2% in burials with memorial services and 2.3% in cremations with memorial services compared to the same period of 2021.
−Removed: These increases are primarily due to the normalization of customer preferences for memorial services and our continued focus to welcome and educate families on the many products and service options that are available with cremation.
−Removed: Funeral home same store operating profit for the six months ended June 30, 2022 increased $0.8 million when compared to the same period in 2021, due to the increase in operating revenue, offset by the increase in operating expenses as a percentage of revenue.
+Added: Funeral home same store operating revenue decreased $1.7 million for the nine months ended September 30, 2022 compared to the same period in 2021.
+Added: The decrease in operating revenue is primarily due to a 2.6% decrease in same store contract volume, offset by a 1.6% increase in the average revenue per contract excluding preneed interest.
+Added: The same store contract volume decrease is primarily a result of the decline in COVID-19 related cases in 2022 compared to 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: The increase in average revenue per contract for the nine months ended September 30, 2022 reflects increases of 2.1% and 0.9% in cremations and burials with memorial services, respectively.
+Added: These increases are primarily due to a combination of price increases and our continued focus on educating families on the many products and service options that are available with burials and cremations.
+Added: Funeral home same store operating profit for the nine months ended September 30, 2022 decreased $6.2 million when compared to the same period in 2021, due to the decrease in operating revenue and an increase in operating expenses as a percentage of revenue.
The comparable operating profit margin decreased 330 basis points to 39.9%.
−Removed: Operating expenses as a percentage of revenue increased 1.0% with the largest increases in allowance for credit losses of 0.3%, transportation costs of 0.2%, and general and administrative expenses of 0.2%, which were partially offset by a decrease in salaries and benefits expenses of 0.4%, primarily due to lower health insurance expenses.
−Removed: Funeral home acquired operating revenue for the six months ended June 30, 2022 increased $1.3 million compared to the same period in 2021.
−Removed: The increase in operating revenue is primarily due to an 8.8% increase in the average revenue per contract excluding preneed interest, while the acquired contract volume was flat in spite of a 65.6% decrease in COVID-19 related contracts for the six months ended June 30, 2022 compared to the same period in 2021.
−Removed: The increase in average revenue per contract in the six months ending June 30, 2022 reflects increases of 6.9% in burials with memorial services and 5.2% in cremations with memorial services compared to the same period of 2021.
−Removed: These increases are primarily due to the normalization of customer preferences for memorial services and our continued focus to welcome and educate families on the many products and service options that are available with cremation.
−Removed: Funeral home acquired operating profit for the six months ended June 30, 2022 increased $0.4 million when compared to the same period in 2021, due to the increase in operating revenue, offset by the increase in operating expenses as a percentage of revenue.
+Added: Operating expenses as a percentage of revenue increased 3.3% with the largest increase in salaries and benefits expenses of 1.0%, general and administrative expenses of 0.6%, transportation expenses of 0.3%, general liability insurance of 0.3% and facilities and grounds expenses of 0.3%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, funeral supplies and insurance.
+Added: Funeral home acquired operating revenue for the nine months ended September 30, 2022 increased $1.5 million compared to the same period in 2021.
+Added: The increase was due, in part, to the addition of two funeral home businesses added to our funeral home acquired portfolio during the third quarter of 2022, which contributed $0.4 million of operating revenue.
+Added: Excluding these two businesses, acquired operating revenue increased $1.1 million due to a 7.1% increase in the average revenue per contract excluding preneed interest, slightly offset by a 2.0% decrease in acquired contract volume.
+Added: The acquired contract volume decrease is primarily a result of the decline in COVID-19 related cases in 2022 compared to 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: The increase in average revenue per contract for the nine months ended September 30, 2022 reflects increases of 2.4% and 0.7% in cremations and burials with memorial services, respectively.
+Added: These increases are primarily due to a combination of price increases and our continued focus on educating families on the many products and service options that are available with burials and cremations.
+Added: Funeral home acquired operating profit for the nine months ended September 30, 2022 increased $0.1 million when compared to the same period in 2021, primarily due to the two funeral homes added to our acquired portfolio during the third quarter of 2022, which contributed almost $0.2 million of operating profit.
+Added: Excluding these two businesses, acquired operating profit decreased $0.1 million.
The comparable operating profit margin decreased 240 basis points to 40.9%.
−Removed: Operating expenses as a percentage of revenue increased 1.1% with the largest increases in allowance for credit losses of 0.9% and funeral costs of 0.5%, which were partially offset by a decrease in salaries and benefits expenses of 0.2%, primarily due to lower health insurance expenses.
−Removed: Ancillary revenue, which is recorded in Other revenue , represents revenue from our flower shop, pet cremation and online cremation businesses, decreased $0.2 million and Ancillary operating profit decreased $0.1 million for the six months ended June 30, 2022 compared to the same period in 2021.
−Removed: Preneed funeral insurance commissions and preneed funeral trust and insurance revenue (recorded in Other revenue ) on a combined basis, increased $0.1 million for the six months ended June 30, 2022 compared to the same period in 2021.
−Removed: Operating profit for preneed funeral insurance commissions and preneed trust and insurance, on a combined basis, remained flat for the same comparative period.
+Added: Operating expenses as a percentage of operating revenue increased 2.4% with the largest increases in general and administrative expenses of 0.8%, salaries and benefits expenses of 0.6%, other funeral expenses of 0.6% and facilities and grounds expenses of 0.4%, offset by a decrease in promotional expenses of 0.5%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, funeral supplies and insurance.
+Added: Ancillary revenue, which is recorded in Other revenue , represents revenue from our flower shop, pet cremation and online cremation businesses, decreased $0.3 million and Ancillary operating profit decreased $0.2 million for the nine months ended September 30, 2022 compared to the same period in 2021.
+Added: Preneed funeral insurance commissions and preneed funeral trust and insurance revenue (recorded in Other revenue ), on a combined basis, increased $0.3 million for the nine months ended September 30, 2022 compared to the same period in 2021.
+Added: The increase is due to an increase in the number of preneed contracts that matured to atneed, as well as an increase in the earnings on these preneed contracts, as recognition is triggered at the time a preneed contract matures to atneed.
+Added: The number of contracts increased 2.2% and the average earnings per preneed contract increased 1.9% for the nine months ended September 30, 2022 compared to the same period in 2021.
+Added: Operating profit for preneed funeral insurance commissions and preneed trust and insurance, on a combined basis, increased $0.2 million for the same comparative period, primarily due to the increase in preneed funeral trust and insurance revenue.
Cemetery Segment
The following table sets forth certain information regarding our Revenue and Operating profit from our cemetery operations (in thousands):
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Same store operating revenue $ 16,342 $ 15,396
12 unchanged sentences
The following measures reflect the significant metrics over this comparative period:
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Preneed revenue as a percentage of operating revenue 61% 60%
8 unchanged sentences
Average price per interment right sold $ 7,159 $ 5,951
−Removed: Cemetery same store preneed revenue increased $0.4 million for the three months ended June 30, 2022 compared to the same period in 2021, as we experienced a 6.1% increase in the number of interment rights sold, while the average price per interment right sold remained flat.
−Removed: Cemetery same store atneed revenue, which represents 35% of our same store operating revenue decreased $0.4 million for the three months ended June 30, 2022 compared to the same period in 2021, as we experienced a 3.7% decrease in the number of interment rights sold, as well as a 2.2% decrease in the average price per interment right sold.
−Removed: Cemetery same store operating profit for the three months ended June 30, 2022 decreased $1.4 million from the same period in 2021, due to the increase in operating expenses.
+Added: Cemetery same store preneed revenue decreased $0.6 million for the three months ended September 30, 2022 compared to the same period in 2021, as we experienced a 13.8% decrease in the number of interment rights sold, slightly offset by a 1.2% increase in the average price per interment right sold.
+Added: Cemetery same store atneed revenue, which represents 40% of our same store operating revenue decreased $0.3 million for the three months ended September 30, 2022 compared to the same period in 2021, as we experienced a 13.2% decrease in the number of interment rights sold, which was offset by a 9.0% increase in the
+Added: average price per interment right sold.
+Added: The decrease in the number of interment rights sold is primarily a result of the decline in COVID-19 related cases as compared to the third quarter of 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Cemetery same store operating profit for the three months ended September 30, 2022 decreased $1.4 million from the same period in 2021, due to the decrease in operating revenue and an increase in operating expenses as a percentage of revenue.
The comparable operating profit margin decreased 700 basis points to 32.6%.
−Removed: Operating expenses as a percent of operating revenue increased 8.6% with the largest increases in the following areas:
−Removed: (1) allowance for credit losses of 4.9%, due to a change in estimate in the prior period, which resulted in lower credit loss expense in the prior period;
−Removed: (2) promotional expenses of 2.4% due to an increase in commissions paid on preneed sales;
−Removed: and (3) facilities and grounds expenses of 1.8%, primarily due to an increase in property and general liability insurance.
−Removed: Cemetery acquired preneed revenue decreased $0.7 million for the three months ended June 30, 2022 compared to the same period in 2021, as we experienced a 15.2% decrease in the average price per interment right sold, while the number of interment rights sold increased 10.7%.
−Removed: Cemetery acquired atneed revenue, which represents 34% of our acquired operating revenue, increased $0.7 million for the three months ended June 30, 2022 compared to the same period in 2021, as we experienced a 42.8% increase in the average price per interment right sold, while the number of interment rights sold decreased 16.3%.
−Removed: Cemetery acquired operating profit decreased $0.1 million for the three months ended June 30, 2022 from the same period in 2021.
−Removed: The comparable operating profit margin decreased 130 basis points to 56.6% primarily as a result a 1.3% increase in operating expenses as a percent of operating revenue.
−Removed: Preneed cemetery trust revenue and preneed cemetery finance charges (recorded in Other revenue ) on a combined basis increased $0.2 million for the three months ended June 30, 2022 compared to the same period in 2021.
−Removed: The increase in trust revenue is due to an increase in realized gains on delivered merchandise and services contracts.
−Removed: Operating profit for the two categories of Other Revenue , on a combined basis, increased $0.2 million for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to the increase in revenue.
+Added: Operating expenses as a percentage of operating revenue increased 7.0% with the largest increases in facilities and grounds expenses of 3.2%, salaries and benefits expenses of 1.1%, merchandise costs of 1.0%, general liability insurance of 0.7% and general and administrative expenses of 0.8%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, merchandise costs and insurance.
+Added: Cemetery acquired preneed revenue decreased $0.6 million for the three months ended September 30, 2022 compared to the same period in 2021, as we experienced a 16.9% decrease in the average price per interment right sold, as well as an 11.2% decrease in the number of interment rights sold.
+Added: Cemetery acquired atneed revenue, which represents 39% of our acquired operating revenue, increased $0.2 million for the three months ended September 30, 2022 compared to the same period in 2021, as we experienced a 12.9% increase in the average price per interment right sold, offset by a 4.5% decrease in the number of interment rights sold.
+Added: The decrease in the number of interment rights sold is primarily a result of the decline in COVID-19 related cases as compared to the third quarter of 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Cemetery acquired operating profit decreased $0.7 million for the three months ended September 30, 2022 from the same period in 2021, due to the decrease in revenue and an increase in operating expenses as a percentage of revenue.
+Added: The comparable operating profit margin decreased 830 basis points to 47.5%.
+Added: Operating expenses as a percentage of operating revenue increased 8.2% with the largest increases in salaries and benefits expenses of 2.1%, general liability insurance of 1.1%, facilities and grounds expenses of 0.9%, general and administrative expenses of 0.6%, merchandise costs of 0.6% and atneed commissions expense of 0.6%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, merchandise costs and insurance.
+Added: Preneed cemetery trust revenue and preneed cemetery finance charges (recorded in Other revenue ), as well as their respective operating profit remained flat for the three months ended September 30, 2022 compared to the same period in 2021.
The following table sets forth certain information regarding our Revenue and Operating profit from our cemetery operations (in thousands):
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Same store operating revenue $ 47,883 $ 46,616
12 unchanged sentences
The following measures reflect the significant metrics over this comparative period:
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Preneed revenue as a percentage of operating revenue 61% 61%
8 unchanged sentences
Average price per interment right sold $ 6,107 $ 5,403
−Removed: Cemetery same store preneed revenue increased $0.1 million for the six months ended June 30, 2022 compared to the same period in 2021, as we experienced a 0.5% increase in the number of interment rights sold, while the average price per interment right sold decreased 0.9%.
−Removed: Cemetery same store atneed revenue, which represents 38% of our same store operating revenue, decreased $0.4 million for the six months ended June 30, 2022 compared to the same period in 2021, as we experienced a 3.6% decrease in the number of interment rights sold, while the average price per interment right sold increased 0.5%.
−Removed: Cemetery same store operating profit for the six months ended June 30, 2022 decreased $1.8 million from the same period in 2021, due to the decrease in operating revenue and increase in operating costs.
+Added: Cemetery same store preneed revenue decreased $0.5 million for the nine months ended September 30, 2022 compared to the same period in 2021, as we experienced a 4.5% decrease in the number of interment rights sold, while the average price per interment right sold remained flat.
+Added: Cemetery same store atneed revenue, which represents 39% of our same store operating revenue, decreased $0.7 million for the nine months ended September 30, 2022 compared to the same period in 2021, as we experienced a 6.9% decrease in the number of interment rights sold, offset by a 3.1% increase in the average price per interment right sold.
+Added: The decrease in the number of interment rights sold is primarily a result of the decline in COVID-19 related cases in 2022 compared to 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Cemetery same store operating profit decreased $3.3 million for the nine months ended September 30, 2022 from the same period in 2021, due to the decrease in revenue and an increase in operating expenses as a percentage of revenue.
The comparable operating profit margin decreased 590 basis points to 36.0%.
−Removed: Operating expenses as a percent of operating revenue increased 5.4% with the largest increases in the following areas:
−Removed: (1) allowance for credit losses of 2.6%, due to a change in estimate in the second quarter of the prior year, which resulted in lower credit loss expense in the prior period;
−Removed: (2) promotional expenses of 1.4% due to an increase in commissions paid on preneed sales;
−Removed: and (3) facilities and grounds expenses of 1.2%, primarily due to an increase in property and general liability insurance.
−Removed: Cemetery acquired preneed revenue decreased $1.1 million for the six months ended June 30, 2022 compared to the same period in 2021, as we experienced an 8.9% decrease in the average price per interment right sold, as well as a 2.6% decrease in the number of interment rights sold.
−Removed: Cemetery acquired atneed revenue, which represents 35% of our acquired operating revenue, increased $0.4 million for the six months ended June 30, 2022 compared to the same period in 2021, as we experienced a 15.3% increase in the average price per interment right sold, while the number of interment rights sold decreased 12.7%.
−Removed: Cemetery acquired operating profit decreased $0.9 million for the six months ended June 30, 2022 from the same period in 2021, due to the decrease in operating revenue and increase in operating costs.
+Added: Operating expenses as a percentage of operating revenue increased 5.9% with the largest increases in facilities and grounds expenses of 1.4%, promotional expenses of 1.0%, allowance for credit losses of 0.9%, due to a change in estimate in the second quarter of the prior year, which resulted in lower credit loss expense in the prior period, general liability insurance of 0.6% and general and administrative expenses of 0.6%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, merchandise costs and insurance.
+Added: Cemetery acquired preneed revenue decreased $1.7 million for the nine months ended September 30, 2022 compared to the same period in 2021, as we experienced an 11.5% decrease in the average price per interment right sold, as well as a 4.8% decrease in the number of interment rights sold.
+Added: Cemetery acquired atneed revenue, which represents 36% of our acquired operating revenue, increased $0.6 million for the nine months ended September 30, 2022 compared to the same period in 2021, as we experienced a 14.5% increase in the average price per interment right sold, while the number of interment rights sold decreased 4.8%.
+Added: The decrease in the number of interment rights sold is primarily a result of the decline in COVID-19 related cases in 2022 compared to 2021, as the death rate normalized to pre-COVID-19 levels.
+Added: Cemetery acquired operating profit decreased $1.6 million for the nine months ended September 30, 2022 from the same period in 2021, due to the decrease in revenue and an increase in operating expenses as a percentage of revenue.
The comparable operating profit margin decreased 490 basis points to 52.7%.
−Removed: Operating expenses as a percent of operating revenue increased 3.5% with the largest increases in the following areas:
−Removed: (1) facilities and grounds expenses of 1.5%, primarily due to an increase in property and general liability insurance;
−Removed: (2) promotional expenses of 0.9% due to an increase in commissions paid on preneed and atneed sales;
−Removed: and (3) general and administrative expenses increased 0.7%.
−Removed: Preneed cemetery trust revenue and preneed cemetery finance charges (recorded in Other revenue ) on a combined basis increased $0.3 million for the six months ended June 30, 2022 compared to the same period in 2021.
+Added: Operating expenses as a percentage of operating revenue increased 4.9% with the largest increases in facilities and grounds expenses of 0.9%, salaries and benefits expenses increased 0.9%, general liability insurance of 0.8% and merchandise costs of 0.7%.
+Added: The increase in operating expenses is partially due to higher costs from inflationary impacts concentrated in our full-time hourly base rates, utilities, merchandise costs and insurance.
+Added: Preneed cemetery trust revenue and preneed cemetery finance charges (recorded in Other revenue ) on a combined basis increased $0.3 million for the nine months ended September 30, 2022 compared to the same period in 2021.
The increase in trust revenue is primarily due to an increase in realized gains on delivered merchandise and services contracts.
−Removed: Operating profit for the two categories of Other Revenue , on a combined basis, increased $0.3 million for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to the increase in revenue.
+Added: Operating profit for the two categories of Other Revenue , on a combined basis, increased $0.2 million for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to the increase in revenue.
Cemetery property amortization .
−Removed: Cemetery property amortization totaled $1.7 million and $3.0 million for the three and six months ended June 30, 2022, respectively, a decrease of $0.5 million and $0.7 million, respectively, compared to the same periods in 2021, primarily due to the decrease in property sold across our cemetery portfolio.
+Added: Cemetery property amortization totaled $1.3 million and $4.3 million for the three and nine months ended September 30, 2022, respectively, a decrease of $0.2 million and $0.9 million, respectively, compared to the same periods in 2021, primarily due to the decrease in property sold across our cemetery portfolio.
Field depreciation.
−Removed: Depreciation expense for our field businesses totaled $3.3 million and $6.6 million for the three and six months ended June 30, 2022, respectively, an increase of $0.1 million and $0.3 million, respectively, compared to the same periods in 2021, primarily due to depreciation from technology equipment added in the last twelve months.
+Added: Depreciation expense for our field businesses totaled $3.3 million and $9.8 million for the three and nine months ended September 30, 2022, respectively, an increase of $0.1 million and $0.4 million, respectively, compared to the same periods in 2021, primarily due to depreciation from computer and hardware equipment added in the last twelve months, as well as from assets added as a result of our acquisition during the third quarter of 2022.
Regional and unallocated funeral and cemetery costs.
Regional and unallocated funeral and cemetery costs consist of salaries and benefits for regional management, field incentive compensation and other related costs for field infrastructure.
−Removed: Regional and unallocated funeral and cemetery costs totaled $6.0 million for the three months ended June 30, 2022, an increase of $0.2 million compared to the same period in 2021, primarily due to the following:
−Removed: (1) a $0.6 million increase in incentive award trips and annual managing partner meetings, which were postponed in the prior year due to COVID-19;
−Removed: (2) a $0.2 million increase in salary and benefits expenses, which includes additional cemetery sales employees;
−Removed: offset by (3) a $0.5 million decrease in cash incentives and equity compensation;
−Removed: and (4) a $0.1 million decrease in health and safety expenses related to COVID-19.
−Removed: Regional and unallocated funeral and cemetery costs totaled $12.3 million for the six months ended June 30, 2022, an increase of $0.5 million compared to the same period in 2021, primarily due to the following:
−Removed: (1) a $1.0 million increase in incentive award trips and annual managing partner meetings, which were postponed in the prior year due to COVID-19;
−Removed: (2) a $0.5 million increase in salary and benefits expenses, which includes additional cemetery sales employees;
−Removed: (3) a $0.3 million increase in other general administrative costs, which includes higher travel costs;
−Removed: and (4) a $0.1 million increase in separation expenses;
−Removed: offset by (4) a $0.7 million decrease in cash incentives and equity compensation;
−Removed: and (5) a $0.7 million decrease in health and safety expenses related to COVID-19.
+Added: Regional and unallocated funeral and cemetery costs totaled $5.1 million for the three months ended September 30, 2022, a decrease of $1.7 million compared to the same period in 2021, primarily due to the following:
+Added: (1) a $1.1 million decrease in cash incentives and equity compensation;
+Added: (2) a $0.5 million decrease in health and safety expenses related to COVID-19;
+Added: (3) a $0.2 million decrease in salary and benefits expenses;
+Added: (4) a $0.1 million decrease in other general administrative costs;
+Added: offset by (5) a $0.2 million increase in incentive award trips and annual managing partner meetings, which were postponed in the prior year due to COVID-19.
+Added: Regional and unallocated funeral and cemetery costs totaled $17.4 million for the nine months ended September 30, 2022, a decrease of $1.2 million compared to the same period in 2021, primarily due to the following:
+Added: (1) a $1.7 million decrease in cash incentives and equity compensation;
+Added: (2) a $1.3 million decrease in health and safety expenses related to COVID-19;
+Added: (3) a $0.3 million decrease in salary and benefits expenses;
+Added: offset by (4) a $1.3 million increase in incentive award trips and annual managing partner meetings, which were postponed in the prior year due to COVID-19;
+Added: and (5) a $0.2 million increase in other general administrative costs.
Other Financial Statement Items
General, administrative and other.
−Removed: General, administrative and other expenses totaled $9.2 million for the three months ended June 30, 2022, an increase of $2.0 million compared to the same period in 2021, primarily due to the following:
+Added: General, administrative and other expenses totaled $10.4 million for the three months ended September 30, 2022, an increase of $1.3 million compared to the same period in 2021, primarily due to the following:
+Added: (1) a $1.4 million increase in separation expenses related to the departure of a key member of leadership;
+Added: (2) a $0.8 million increase in salary and benefits expenses, which includes talent additions to our recently developed marketing department, as well as a Chief Information Officer;
(3) a $0.5 million increase in other general administrative costs, which includes higher online marketing and advertising costs and software license fees for new technology;
−Removed: (2) a $0.8 million increase in salary and benefits expenses, which includes talent investment in our recently developed marketing department, as well as a Chief Information Officer;
−Removed: and (3) a $0.2 million increase in cash incentives and equity compensation.
−Removed: General, administrative and other expenses totaled $17.7 million for the six months ended June 30, 2022, an increase of $1.4 million compared to the same period in 2021, primarily due to the following:
+Added: offset by (4) a $1.0 million decrease in insurance claims expense, which included a one-time $1.0 million payment for residual insurance claims in 2021;
+Added: and (3) a $0.3 million decrease in cash incentives and equity compensation.
+Added: General, administrative and other expenses totaled $28.1 million for the nine months ended September 30, 2022, an increase of $2.8 million compared to the same period in 2021, primarily due to the following:
+Added: (1) a $2.4 million increase in salary and benefits expenses, which includes talent additions to our recently developed marketing department, as well as a Chief Information Officer;
(2) a $1.8 million increase in other general administrative costs, which includes higher online marketing and advertising costs and software license fees for new technology;
−Removed: (2) a $1.1 million increase in salary and benefits expenses, which includes talent investment in our recently developed marketing department, as well as a Chief Information Officer;
(3) a $0.1 million increase in cash incentives and equity compensation;
−Removed: offset by (4) a $1.6 million decrease in separation expense related to the resignation of two members of senior leadership in the first quarter of 2021, and (5) a $0.1 million decrease in divestiture expenses.
+Added: offset by (4) a $1.3 million decrease in insurance claims expense, which included a one-time $1.0 million payment for residual insurance claims in 2021;
+Added: (5) a $0.1 million decrease in separation expense related to the departure of certain key members of leadership, and (6) a $0.1 million decrease in divestiture expenses.
Net (gain) loss on divestitures, disposals and impairments charges.
The components of Net (gain) loss on divestitures, disposals and impairment charges are as follows (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
+Added: Assets held for sale impairment $ 500 $ — $ 500 $ —
Net (gain) loss on divestitures and real property 282 — 179 (575)
−Removed: Net loss on disposals of fixed assets 622 85 622 149
+Added: Net (gain) loss on disposals of fixed assets 76 (7) 698 142
Total $ 858 $ (7) $ 1,377 $ (433)
−Removed: During the six months ended June 30, 2022, we sold real property for $2.7 million and two funeral homes for $0.9 million for a net gain of $0.6 million.
−Removed: During the six months ended June 30, 2021, we sold three funeral homes for $3.5 million for a net gain of $0.1 million and disposed of fixed assets for a net loss of $0.6 million.
+Added: During the nine months ended September 30, 2022, we sold real property for $3.3 million and two funeral homes for $0.9 million for a net gain of $0.7 million, of which $0.1 million is recorded in Other, net related to the sale of assets not used in operating activities.
+Added: During the nine months ended September 30, 2021, we sold three funeral homes and real property for $4.2 million for a net loss of $0.2 million and disposed of fixed assets for a net loss of $0.7 million.
+Added: In addition, we recognized an impairment loss of $0.5 million for property, plant and equipment assets held for sale at September 30, 2021.
Interest expense .
Interest expense related to our various debt arrangement is as follows (in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2021 2022 2021 2022
7 unchanged sentences
Gain on insurance reimbursements.
−Removed: During the three and six months ended June 30, 2022, we recorded a gain on the reimbursements received from insurance for property damaged by Hurricane Ida that occurred during third quarter of 2021.
+Added: During the nine months ended September 30, 2022, we recorded a gain on the reimbursements received from insurance for property damaged by Hurricane Ida that occurred during the third quarter of 2021.
Income taxes.
−Removed: We had an income tax expense of $4.2 million and an income tax benefit of $4.2 million for the three months ended June 30, 2022 and 2021, respectively and income tax expense of $9.3 million and $1.4 million for the six month ended June 30, 2022 and 2021, respectively.
−Removed: Our operating tax rate before discrete items was 28.0% and 33.0% for the three months ended June 30, 2022 and 2021, respectively and 27.15% and 28.5% for the six month ended June 30, 2022 and 2021, respectively.
+Added: We had an income tax expense of $2.8 million and $5.1 million for the three months ended September 30, 2022 and 2021, respectively, and income tax expense of $12.1 million and $6.6 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: Our operating tax rate before discrete items was 30.6% and 28.2% for the three months ended September 30, 2022 and 2021, respectively, and 27.8% and 28.3% for the nine months ended September 30, 2022 and 2021, respectively.
On June 30, 2020, we filed carryback refund claims for the 2018 and 2019 tax years.
The majority of the net operating losses generated in 2018 are the result of filing non-automatic accounting method changes relating to the recognition of revenue from our cemetery property and merchandise and services sales.
−Removed: On October 11, 2021, we received an adverse ruling from the IRS related to our accounting method change for cemetery property revenue recognition filed in 2018 and subsequently filed an automatic accounting method change to adopt the IRS’ preferred method of revenue recognition for cemetery property effective for the year ending December 31, 2021.
+Added: On October 11, 2021, we received an adverse ruling from the IRS related to our accounting method change for cemetery property revenue recognition filed in 2018 and subsequently filed an automatic accounting method change to adopt the IRS’s preferred method of revenue recognition for cemetery property effective for the year ending December 31, 2021.
On March 2, 2022, we received approval from the IRS regarding our method change filed related to the revenue recognition of cemetery merchandise and services sales.
−Removed: As a result, we recorded a $0.6 million reduction to the reserve for uncertain tax positions, including interest, during the six months ended June 30, 2022.
−Removed: At December 31, 2021 and June 30, 2022, the reserve for uncertain tax positions was $3.8 million and $3.2 million, respectively, related to carrying back the net operating losses generated in the tax year ended December 31, 2018, filed under the CARES Act on June 30, 2020.
+Added: As a result, we recorded a $0.5 million reduction to the reserve for uncertain tax positions, including interest, during the nine months ended September 30, 2022.
+Added: At December 31, 2021 and September 30, 2022, the reserve for uncertain tax positions was $3.8 million and $3.3 million, respectively, related to carrying back the net operating losses generated in the tax year ended December 31, 2018 filed under the CARES Act on June 30, 2020.
OVERVIEW OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
10 unchanged sentences
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.