What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-05 · 266 added, 165 removed, 879 unchanged (33% of the section changed)

3 unchanged sentences

(unaudited and in thousands, except share data)

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Current assets:

49 unchanged sentences

(unaudited and in thousands, except per share data)

Three months ended March 31,

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

2022 2023 2022 2023

Service revenue $ 42,550 $ 44,522 $ 92,287 $ 92,729

13 unchanged sentences

General, administrative and other 9,180 10,199 17,740 20,379

Net loss on divestitures, disposals and impairments charges 767 241

Net (gain) loss on divestitures, disposals and impairments charges ( 1,193 ) 265 ( 426 ) 506

Operating income 19,725 20,738 44,876 41,372

Interest expense 5,988 9,396 11,530 17,935

(Gain) loss on property damage, net of insurance claims ( 1,899 ) 271

Net (gain) loss on property damage, net of insurance claims ( 1,376 ) ( 235 ) ( 3,275 ) 36

Other, net ( 7 ) ( 125 ) 17 ( 647 )

17 unchanged sentences

(unaudited and in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Stock-based compensation expense 3,085 4,163

Deferred income tax expense (benefit) 76 ( 178 )

Deferred income tax expense 1,711 7

Amortization of intangibles 634 647

1 unchanged sentence

Amortization and accretion of debt 243 255

Net loss on divestitures, disposals and impairment charges 767 241

(Gain) loss on property damage, net of insurance claims ( 1,899 ) 271

Net (gain) loss on divestitures, disposals and impairment charges ( 426 ) 506

Net (gain) loss on property damage, net of insurance claims ( 3,275 ) 36

Gain on sale of real property — ( 658 )

Other ( 6 ) —

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

5 unchanged sentences

Accrued and other liabilities ( 10,242 ) ( 3,328 )

Incentive payment from vendor — 6,000

Deferred preneed funeral and cemetery revenue 2,633 8,106

10 unchanged sentences

Payments against the credit facility ( 78,100 ) ( 51,400 )

Payment of debt issuance costs for the credit facility and senior notes ( 339 ) —

Payments on acquisition debt and obligations under finance leases ( 202 ) ( 256 )

4 unchanged sentences

Net cash provided by (used in) financing activities ( 20,085 ) 10,508

Net increase (decrease) in cash and cash equivalents ( 261 ) 123

Net decrease in cash and cash equivalents ( 90 ) ( 200 )

Cash and cash equivalents at beginning of period 1,148 1,170

4 unchanged sentences

(unaudited and in thousands)

Three months ended June 30, 2022

Outstanding Common

2 unchanged sentences

Earnings Treasury

Balance – March 31, 2022 14,889 $ 263 $ 238,423 $ 151,864 $ ( 270,529 ) $ 120,021

Net income — — — 10,899 — 10,899

Issuance of common stock from employee stock purchase plan 12 — 398 — — 398

Issuance of common stock to directors and board advisor 2 — 99 — — 99

Cancellation and surrender of restricted stock — — 2 — — 2

Stock-based compensation expense — — 1,379 — — 1,379

Dividends on common stock — — ( 1,730 ) — — ( 1,730 )

Treasury stock acquired ( 205 ) — — — ( 8,224 ) ( 8,224 )

Balance – June 30, 2022 14,698 $ 263 $ 238,571 $ 162,763 $ ( 278,753 ) $ 122,844

Three months ended June 30, 2023

Outstanding Common

Stock Additional

Capital Retained

Earnings Treasury

Balance – March 31, 2023 14,935 $ 266 $ 239,962 $ 185,687 $ ( 278,753 ) $ 147,162

Net income — — — 8,286 — 8,286

Issuance of common stock from employee stock purchase plan 16 — 397 — — 397

Issuance of common stock to directors and board advisor 2 — 65 — — 65

Exercise of stock options 4 — ( 20 ) — — ( 20 )

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

Stock-based compensation expense — — 1,957 — — 1,957

Dividends on common stock — — ( 1,679 ) — — ( 1,679 )

Balance – June 30, 2023 14,958 $ 266 $ 240,681 $ 193,973 $ ( 278,753 ) $ 156,167

Six months ended June 30, 2022

Outstanding Common

Stock Additional

Capital Retained

Earnings Treasury

Balance – December 31, 2021 15,332 $ 263 $ 236,809 $ 135,462 $ ( 244,519 ) $ 128,015

3 unchanged sentences

Exercise of stock options 9 — ( 22 ) — — ( 22 )

Cancellation and surrender of restricted common stock ( 5 ) — ( 207 ) — — ( 207 )

Cancellation and surrender of restricted stock ( 5 ) — ( 205 ) — — ( 205 )

Stock-based compensation expense — — 2,839 — — 2,839

2 unchanged sentences

Other 27 — 1,358 — — 1,358

Balance – March 31, 2022 14,889 $ 263 $ 238,423 $ 151,864 $ ( 270,529 ) $ 120,021

Balance – June 30, 2022 14,698 $ 263 $ 238,571 $ 162,763 $ ( 278,753 ) $ 122,844

Six months ended June 30, 2023

Outstanding Common

7 unchanged sentences

Issuance of common stock to former executive 30 — 826 — — 826

Issuance of restricted common stock 142 2 ( 2 ) — — —

Issuance of restricted stock 142 2 ( 2 ) — — —

Exercise of stock options 5 — ( 41 ) — — ( 41 )

3 unchanged sentences

Other 8 — 276 — — 276

Balance – March 31, 2023 14,935 $ 266 $ 239,962 $ 185,687 $ ( 278,753 ) $ 147,162

Balance – June 30, 2023 14,958 $ 266 $ 240,681 $ 193,973 $ ( 278,753 ) $ 156,167

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

6 unchanged sentences

Funeral Home operations, which currently accounts for approximately 70 % of our total revenue and Cemetery operations, which currently accounts for approximately 30 % of our total revenue.

At March 31, 2023, we operated 173 funeral homes in 26 states and 32 cemeteries in 11 states.

At June 30, 2023, we operated 172 funeral homes in 26 states and 32 cemeteries in 11 states.

Our funeral home operations are principally service businesses that generate revenue from sales of burial and cremation services and related merchandise, such as caskets and urns.

Funeral services include consultation, the removal and preparation of remains, the use of funeral home facilities for visitation and memorial services and transportation services.

Funeral services include consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and memorial services and transportation services.

We provide funeral services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis.

17 unchanged sentences

Inventory is relieved using specific identification in fulfillment of performance obligations on our contracts.

Held for Sale

At June 30, 2023, we had $ 0.3 million of assets classified as held for sale in Property, plant and equipment, net on our Consolidated Balance Sheet related to one funeral home that we divested on July 12, 2023.

The carrying value of these assets held for sale exceeded their fair value and in accordance with U.S.

Generally Accepted Accounting Principles (“GAAP”), we recognized an impairment of $ 0.2 million for assets related to property, plant and equipment, which was recorded in Net (gain) loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

Deferred Revenue

During the three months ended March 31, 2023, we withdrew $ 7.0 million of realized capital gains and earnings from our preneed cemetery trust investments.

During the six months ended June 30, 2023, we withdrew $ 8.6 million of realized capital gains and earnings from our preneed funeral and cemetery trust investments.

In certain states, we are allowed to make these withdrawals prior to the delivery of preneed merchandise and service contracts.

The realized capital gains and earnings withdrawn increase our cash flow from operations, but are not recognized as revenue in our Consolidated Statements of Operations, however, they reduce our Preneed cemetery trust investment and increase Deferred preneed cemetery revenue.

The realized capital gains and earnings withdrawn increase our cash flow from operations, but are not recognized as revenue in our Consolidated Statements of Operations, however, they reduce our Preneed funeral trust investments and Preneed cemetery trust investments and increase our Deferred preneed funeral revenue and Deferred preneed cemetery revenue.

Additionally, during the three and six months ended June 30, 2023, we received a $ 6.0 million incentive payment from a vendor for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future, which increased our cash flow from operations and Deferred preneed funeral revenue.

The incentive payment will be deferred until we complete our implementation of the program and begin selling prearranged funeral services.

Property, Plant and Equipment

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Land $ 84,405 $ 85,717

4 unchanged sentences

Property, plant and equipment, net $ 278,106 $ 287,582

During the three months ended March 31, 2023, we acquired $ 12.6 million of property, plant and equipment related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

During the three months ended March 31, 2022, we acquired real property for $ 2.6 million.

We also divested two funeral homes that had a carrying value of property, plant and equipment of $ 0.7 million, which was included in the loss on the sale of divestitures and recorded in Net loss on divestitures, disposals and impairment charges.

Our growth and maintenance capital expenditures totaled $ 4.6 million and $ 2.9 million for the three months ended March 31, 2022 and 2023, respectively, for property, plant and equipment.

In addition, we recorded depreciation expense of $ 3.4 million and $ 3.5 million for the three months ended March 31, 2022 and 2023, respectively.

During the six months ended June 30, 2023, we acquired $ 12.8 million of property, plant and equipment related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

Additionally, we sold real property for $ 1.2 million, with a carrying value of $ 0.6 million, resulting in a gain on the sale of $ 0.6 million, which was recorded in Net (gain) loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

During the six months ended June 30, 2022, we acquired real property for $ 2.6 million.

Additionally, we sold real property for $ 2.7 million, with a carrying value of $ 1.4 million, resulting in a gain on the sale of $ 1.3 million.We also divested two funeral homes that had a carrying value of property, plant and equipment of $ 0.7 million, which was included in the loss on the sale of divestitures and recorded in Net (gain) loss on divestitures, disposals and impairment charges.

Our growth and maintenance capital expenditures totaled $ 5.2 million and $ 2.6 million for the three months ended June 30, 2022 and 2023, respectively and $ 9.8 million and $ 5.5 million for the six months ended June 30, 2022 and 2023, respectively, for property, plant and equipment.

In addition, we recorded depreciation expense of $ 3.4 million and $ 3.7 million for the three months ended June 30, 2022 and 2023, respectively and $ 6.7 million and $ 7.2 million for the six months ended June 30, 2022 and 2023, respectively.

Cemetery Property

Cemetery property was $ 104.2 million and $ 113.3 million, net of accumulated amortization of $ 59.0 million and $ 59.8 million at December 31, 2022 and March 31, 2023, respectively.

Cemetery property was $ 104.2 million and $ 112.8 million, net of accumulated amortization of $ 59.0 million and $ 61.7 million at December 31, 2022 and June 30, 2023, respectively.

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

Our growth capital expenditures for cemetery property development totaled $ 2.3 million and $ 2.1 million for the three months ended March 31, 2022 and 2023, respectively.

We recorded amortization expense for cemetery interment rights of $ 1.3 million and $ 1.2 million for the three months ended March 31, 2022 and 2023, respectively.

During the three months ended March 31, 2023, we acquired cemetery property for $ 9.0 million related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

We also divested two cemeteries that had a carrying value of cemetery property of $ 0.8 million, which was included in the loss on the sale of divestitures and recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

Income tax expense was $ 5.1 million and $ 3.5 million for the three months ended March 31, 2022 and 2023, respectively.

Our operating tax rate before discrete items was 26.5 % and 28.9 % for the three months ended March 31, 2022 and 2023, respectively.

Our growth capital expenditures for cemetery property development totaled $ 1.4 million for both the three months ended June 30, 2022 and 2023 and $ 3.7 million and $ 3.5 million for the six months ended June 30, 2022 and 2023, respectively.

We recorded amortization expense for cemetery interment rights of $ 1.7 million and $ 1.9 million for the three months ended June 30, 2022 and 2023, respectively and $ 3.0 million and $ 3.1 million for the six months ended June 30, 2022 and 2023, respectively.

During the six months ended June 30, 2023, we acquired cemetery property for $ 9.0 million related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

We also divested two cemeteries that had a carrying

value of cemetery property of $ 0.8 million, which was included in the loss on the sale of divestitures and recorded in Net (gain) loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

Income tax expense was $ 4.2 million and $ 3.4 million for the three months ended June 30, 2022 and 2023, respectively and $ 9.3 million and $ 6.9 million for the six months ended June 30, 2022 and 2023, respectively.

Our operating tax rate before discrete items was 28.0 % for both the three months ended June 30, 2022 and 2023 and 27.2 % and 28.5 % for the six months ended June 30, 2022 and 2023, respectively.

Subsequent Events

We have evaluated events and transactions during the period subsequent to March 31, 2023 through the date the financial statements were issued for potential recognition or disclosure in the accompanying financial statements covered by this report.

We have evaluated events and transactions during the period subsequent to June 30, 2023 through the date the financial statements were issued for potential recognition or disclosure in the accompanying financial statements covered by this report.

RECENTLY ISSUED ACCOUNTING STANDARDS

15 unchanged sentences

The measurement period to determine the fair values of acquired identifiable assets and assumed liabilities will end at the earlier of 12 months from the date of the acquisition or as soon as we receive the information we are seeking about facts and circumstances that existed as of the acquisition date.

We recorded provisional estimates for the assets and liabilities acquired as our valuations have not been finalized at March 31, 2023.

Estimated fair values of the assets acquired and liabilities assumed in this transaction as of the closing date are as follows (in thousands):

Estimated Fair Values

Subsequent to our initial purchase price allocation for this acquisition made during the first quarter of 2023, we have adjusted our purchase price allocation based on additional information which became available prior to June 30, 2023.

Provisional estimates for cemetery property have been recorded for the acquisition as our valuation has not been finalized at June 30, 2023.

The following table summarizes the breakdown of the purchase price allocation for our 2023 acquisition (in thousands):

Initial Purchase Price Allocation Adjustments Adjusted Purchase Price Allocation

Current assets $ 7,087 $ 131 $ 7,218

Preneed trust assets — 11,428 11,428

Property, plant & equipment 12,577 245 12,822

3 unchanged sentences

Assumed liabilities ( 300 ) ( 66 ) ( 366 )

Preneed trust liabilities — ( 11,428 ) ( 11,428 )

Deferred revenue ( 1,774 ) ( 204 ) ( 1,978 )

Purchase price $ 44,000 $ — $ 44,000

The current assets relate to accounts receivable and inventory.

The intangible and other non-current assets relate to the fair value of tradenames and right-of-use operating lease assets.

The assumed liabilities relate to operating lease obligations.

We did not estimate a fair value for cemetery perpetual care assets and liabilities for this acquisition as this information was not yet available.

However, these trust assets and liabilities offset in our Consolidated Balance Sheet.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for this business (in thousands):

The assumed liabilities relate to operating lease obligations and commissions payable.

The following table summarizes the fair value of the assets acquired and liabilities assumed for this business (in thousands):

Acquisition Date Type of Business Market Assets Acquired (Excluding

2 unchanged sentences

March 22, 2023 Three Funeral Homes, Two Cemeteries and One Cremation Focused Business Bakersfield, CA $ 44,266 $ 13,506 $ ( 13,772 )

We did not acquire any businesses during the three months ended March 31, 2022.

We did not acquire any businesses during the six months ended June 30, 2022.

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Goodwill at the beginning of the period $ 391,972 $ 410,137

3 unchanged sentences

Goodwill at the end of the period $ 410,137 $ 423,643

During the three months ended March 31, 2023, we recognized $ 13.6 million in goodwill related to our 2023 business combination;

During the six months ended June 30, 2023, we recognized $ 13.5 million in goodwill related to our 2023 business combination;

$ 4.5 million was allocated to our cemetery segment and $ 9.0 million was allocated to our funeral home segment.

DIVESTED OPERATIONS

During the three months ended March 31, 2023, we sold one funeral home and two cemeteries for an aggregate of $ 0.8 million.

During the three months ended March 31, 2022, we sold two funeral homes for an aggregate of $ 0.9 million.

During the three months ended June 30, 2023, we merged one funeral home with another business we own in an existing market.

During the six months ended June 30, 2023, we sold one funeral home and two cemeteries for an aggregate of $ 0.8 million and merged one funeral home with another business we own in an existing market.

During the three months ended June 30, 2022, we merged one funeral home with another business we own in an existing market.

During the six months ended June 30, 2022, we sold two funeral homes for an aggregate of $ 0.9 million and merged one funeral home with another business we own in an existing market.

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

Three months ended March 31,

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

2022 2023 2022 2023

Revenue $ 63 $ — $ 296 $ 66

Operating income 2 26

Operating income (loss) ( 4 ) ( 2 ) 25 24

Loss on divestitures (1)

2 unchanged sentences

Net loss from divested operations, after tax $ ( 3 ) $ ( 1 ) $ ( 494 ) $ ( 41 )

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

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

Accounts Receivable

3 unchanged sentences

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

March 31, 2023

June 30, 2023

Funeral Cemetery Corporate Total

12 unchanged sentences

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

January 1, 2023 Provision for Credit Losses Write Offs Recoveries March 31, 2023

January 1, 2023 Provision for Credit Losses Write Offs Recoveries June 30, 2023

Trade and financed receivables:

2 unchanged sentences

Total allowance for credit losses on trade and financed receivables $ ( 1,013 ) $ ( 857 ) $ 1,049 $ ( 594 ) $ ( 1,415 )

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheet of $ 8.9 million and $ 10.4 million at December 31, 2022 and March 31, 2023, respectively.

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheet of $ 8.9 million and $ 10.3 million at December 31, 2022 and June 30, 2023, respectively.

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

2 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Interment rights $ 45,351 $ 56,781

3 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Preneed cemetery receivables $ 58,830 $ 72,339

6 unchanged sentences

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

January 1, 2023 Provision for Credit Losses Write Offs March 31, 2023

January 1, 2023 Provision for Credit Losses Write Offs June 30, 2023

Total allowance for credit losses on Preneed cemetery receivables, net

$ ( 1,283 ) $ ( 487 ) $ ( 271 ) $ ( 2,041 )

The amortized cost basis of our preneed cemetery receivables by year of origination at March 31, 2023 is as follows (in thousands):

The amortized cost basis of our preneed cemetery receivables by year of origination at June 30, 2023 is as follows (in thousands):

2023 2022 2021 2020 2019 Prior Total

Total preneed cemetery receivables, at amortized cost $ 20,254 $ 23,893 $ 12,418 $ 6,082 $ 2,563 $ 1,813 $ 67,023

The aging of past due preneed cemetery receivables at March 31, 2023 is as follows (in thousands):

The aging of past due preneed cemetery receivables at June 30, 2023 is as follows (in thousands):

Past Due 61-90

7 unchanged sentences

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

The transaction price allocated to preneed merchandise and service performance obligations that were unfulfilled were $ 11.6 million and $ 11.9 million at December 31, 2022 and March 31, 2023, respectively.

The transaction price allocated to preneed merchandise and service performance obligations that were unfulfilled were $ 11.6 million and $ 14.2 million at December 31, 2022 and June 30, 2023, respectively.

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

5 unchanged sentences

Our acquisition debt and Credit Facility (as defined in Note 11) and Senior Notes (as defined in Note 12) are classified within Level 2 of the Fair Value Measurements hierarchy.

At March 31, 2023, the carrying value and fair value of our Credit Facility was $ 213.6 million.

At June 30, 2023, the carrying value and fair value of our Credit Facility was $ 204.0 million.

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

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

At March 31, 2023, the carrying value of our acquisition debt was $ 4.0 million, which approximated its fair value.

The fair value of our Senior Notes was $ 328.2 million at March 31, 2023 based on the last traded or broker quoted price.

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

of the reporting date.

At June 30, 2023, the carrying value of our acquisition debt was $ 3.9 million, which approximated its fair value.

The fair value of our Senior Notes was $ 343.1 million at June 30, 2023 based on the last traded or broker quoted price.

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

7 unchanged sentences

The value of the investments in this fund cannot be redeemed because the investments include restrictions that do not allow for redemption within the first 12 months after acquisition.

Our unfunded commitment for this investment at March 31, 2023 is $ 10.0 million.

Our unfunded commitment for this investment at June 30, 2023 is $ 10.0 million.

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

5 unchanged sentences

These earnings are recognized in Other revenue on our Consolidated Statements of Operations, when a service is performed or merchandise is delivered.

Trust management fees charged by CSV RIA are included as revenue in the period in which they are earned.

Trust management fees charged by our wholly-owned registered investment advisory firm (“CSV RIA”) are included as revenue in the period in which they are earned.

Our investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk.

9 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Preneed cemetery trust investments, at market value $ 98,269 $ 92,898

1 unchanged sentence

Preneed cemetery trust investments $ 95,065 $ 89,874

The cost and market values associated with preneed cemetery trust investments at March 31, 2023 are detailed below (in thousands):

The cost and market values associated with preneed cemetery trust investments at June 30, 2023 are detailed below (in thousands):

Fair Value Hierarchy Level Cost Unrealized

42 unchanged sentences

Market value as a percentage of cost 91.0 %

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at March 31, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2023

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2023

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

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

Three months ended March 31,

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

2022 2023 2022 2023

Investment income $ 571 $ 689 $ 1,062 $ 1,279

4 unchanged sentences

Net change in deferred preneed cemetery receipts held in trust 11,363 ( 4,271 ) 2,399 7,202

$ — $ — $ — $ —

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

Three months ended March 31,

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

2022 2023 2022 2023

Purchases $ ( 309 ) $ ( 2,784 ) $ ( 1,624 ) $ ( 9,138 )

4 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Preneed funeral trust investments, at market value $ 107,995 $ 106,713

1 unchanged sentence

Preneed funeral trust investments $ 104,553 $ 103,317

The cost and market values associated with preneed funeral trust investments at March 31, 2023 are detailed below (in thousands):

The cost and market values associated with preneed funeral trust investments at June 30, 2023 are detailed below (in thousands):

Fair Value Hierarchy Level Cost Unrealized

42 unchanged sentences

Market value as a percentage of cost 93.3 %

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at March 31, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2023

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2023

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

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

Three months ended March 31,

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

2022 2023 2022 2023

Investment income $ 481 $ 577 $ 847 $ 1,063

4 unchanged sentences

Net change in deferred preneed funeral receipts held in trust 9,709 ( 4,198 ) 1,346 5,690

$ — $ — $ — $ —

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

Three months ended March 31,

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

2022 2023 2022 2023

Purchases $ — $ ( 2,687 ) $ ( 590 ) $ ( 8,750 )

1 unchanged sentence

Cemetery Perpetual Care Trust Investments

Care trusts’ corpus on our Consolidated Balance Sheet represent the corpus of those trusts plus undistributed income.

Care trusts’ corpus on our Consolidated Balance Sheet represents the corpus of those trusts plus undistributed income.

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Cemetery perpetual care trust investments, at market value $ 66,307 $ 78,363

1 unchanged sentence

Care trusts’ corpus $ 65,495 $ 77,589

The following table reflects the cost and market values associated with the trust investments held in cemetery perpetual care trust funds at March 31, 2023 (in thousands):

The following table reflects the cost and market values associated with the trust investments held in cemetery perpetual care trust funds at June 30, 2023 (in thousands):

Fair Value Hierarchy Level Cost Unrealized

38 unchanged sentences

Market value as a percentage of cost 90.4 %

The following table summarizes our fixed income securities (excluding mutual funds) within our cemetery perpetual care trust investment in an unrealized loss position at March 31, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2023

The following table summarizes our fixed income securities (excluding mutual funds) within our cemetery perpetual care trust investment in an unrealized loss position at June 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

June 30, 2023

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

15 unchanged sentences

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

Three months ended March 31,

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

2022 2023 2022 2023

Realized gains $ 994 $ 671 $ 1,244 $ 831

4 unchanged sentences

Cemetery perpetual care trust investment security transactions recorded in Other revenue are as follows (in thousands):

Three months ended March 31,

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

2022 2023 2022 2023

Investment income $ 2,776 $ 2,881 $ 5,538 $ 6,078

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

Three months ended March 31,

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

2022 2023 2022 2023

Purchases $ ( 280 ) $ ( 2,310 ) $ ( 411 ) $ ( 6,711 )

4 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Preneed funeral trust funds, at cost $ 20,594 $ 21,732

1 unchanged sentence

Receivables from preneed funeral trusts, net $ 19,976 $ 21,080

The following summary reflects the composition of the assets held in trust and controlled by third parties to satisfy our future obligations related to the underlying preneed funeral contracts at December 31, 2022 and March 31, 2023.

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

Fair value includes unrealized gains and losses on trust assets.

The composition of the preneed funeral trust funds at March 31, 2023 is as follows (in thousands):

The composition of the preneed funeral trust funds at June 30, 2023 is as follows (in thousands):

Cost Basis Fair Value

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Tradenames $ 25,610 $ 29,074

4 unchanged sentences

Intangible and other non-current assets, net $ 32,930 $ 37,333

During the three months ended March 31, 2023, we increased the value of our tradenames by $ 3.6 million related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

During the six months ended June 30, 2023, we increased the value of our tradenames by $ 3.5 million, with $ 1.3 million allocated to our funeral home segment and $ 2.2 million allocated to our cemetery segment, related to our 2023 business combination, described in Note 3 to the Consolidated Financial Statements.

Capitalized Commissions

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

Amortization expense was $ 170,000 and $ 189,000 for the three months ended March 31, 2022 and 2023, respectively.

Amortization expense was $ 174,000 and $ 196,000 for the three months ended June 30, 2022 and 2023, respectively and $ 344,000 and $ 385,000 for the six months ended June 30, 2022 and 2023, respectively.

Prepaid Agreements

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

Amortization expense was $ 148,000 and $ 131,000 for the three months ended March 31, 2022 and 2023, respectively.

Amortization expense was $ 142,000 and $ 131,000 for the three months ended June 30, 2022 and 2023, respectively and $ 290,000 and $ 262,000 for the six months ended June 30, 2022 and 2023, respectively.

Internal-use Software

Internal-use software is amortized on a straight-line basis typically over three to five years .

Amortization expense was $ 56,000 and $ 62,000 for the three months ended March 31, 2022 and 2023, respectively.

The aggregate amortization expense for our capitalized commissions, prepaid agreements and internal-use software as of March 31, 2023 is as follows (in thousands):

Amortization expense was $ 55,000 and $ 72,000 for the three months ended June 30, 2022 and 2023, respectively and $ 111,000 and $ 134,000 for the six months ended June 30, 2022 and 2023, respectively.

The aggregate amortization expense for our capitalized commissions, prepaid agreements and internal-use software as of June 30, 2023 is as follows (in thousands):

Capitalized Commissions Prepaid Agreements Internal-use Software

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CREDIT FACILITY AND ACQUISITION DEBT

At March 31, 2023, our senior secured revolving credit facility (the “Credit Facility”) was comprised of:

At June 30, 2023, our senior secured revolving credit facility (the “Credit Facility”) was comprised of:

(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 aggregate in the form of increased revolving commitments or incremental term loans.

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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.

At March 31, 2023, we were subject to the following financial covenants under our Credit Facility:

At June 30, 2023, we were subject to the following financial covenants under our Credit Facility:

(A) a Total Leverage Ratio not to exceed 6.00 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.

We were in compliance with all of the covenants contained in our Credit Facility as of March 31, 2023.

We were in compliance with all of the covenants contained in our Credit Facility as of June 30, 2023.

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Credit Facility $ 190,700 $ 204,000

5 unchanged sentences

Total acquisition debt, net of current portion $ 3,438 $ 3,370

At March 31, 2023, we had outstanding borrowings under the Credit Facility of $ 213.6 million.

At June 30, 2023, we had outstanding borrowings under the Credit Facility of $ 204.0 million.

We also had one letter of credit for $ 2.3 million under the Credit Facility.

The letter of credit will expire on November 27, 2023 and is expected to automatically renew annually and secures our obligations under our various self-insured policies.

At March 31, 2023, we had $ 34.1 million of availability under the Credit Facility.

At June 30, 2023, we had $ 43.7 million of availability under the Credit Facility.

Outstanding borrowings under our Credit Facility bear interest at a prime rate or the Bloomberg Short-Term Bank Yield Index (“BSBY”) rate, plus an applicable margin based on our leverage ratio.

At March 31, 2023, the prime rate margin was equivalent to 2.375 % and the BSBY rate margin was 3.375 %.

The weighted average interest rate on our Credit Facility was 2.1 % and 7.9 % for the three months ended March 31, 2022 and 2023, respectively.

At June 30, 2023, the prime rate margin was equivalent to 2.625 % and the BSBY rate margin was 3.625 %.

The weighted average interest rate on our Credit Facility was 2.9 % and 8.6 % for the three months ended June 30, 2022 and 2023, respectively and 2.5 % and 8.3 % for the six months ended June 30, 2022 and 2023, respectively.

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

Three months ended March 31,

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

2022 2023 2022 2023

Credit Facility interest expense $ 1,314 $ 4,668 $ 2,161 $ 8,479

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

Three months ended March 31,

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

2022 2023 2022 2023

Acquisition debt imputed interest expense $ 79 $ 71 $ 159 $ 142

The carrying value of our 4.25 % senior notes due 2029 (the “Senior Notes”) is reflected on our Consolidated Balance Sheet as follows (in thousands):

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Long-term liabilities:

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Carrying value of the Senior Notes $ 395,243 $ 395,571

At March 31, 2023, the fair value of the Senior Notes, which are Level 2 measurements, was $ 328.2 million.

At June 30, 2023, the fair value of the Senior Notes, which are Level 2 measurements, was $ 343.1 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.

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The Senior Notes mature on May 15, 2029, unless earlier redeemed or purchased and bear interest at 4.25 % per year, which is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021.

to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates.

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

The Indenture also contains customary events of default.

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

Three months ended March 31,

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

2022 2023 2022 2023

Senior Notes interest expense $ 4,230 $ 4,250 $ 8,480 $ 8,500

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The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of approximately 71 months of the Senior Notes.

The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the three months ended March 31, 2022 and 2023 was 4.42 % and 4.30 %, respectively.

The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the three and six months ended June 30, 2022 and 2023 was 4.42 % and 4.30 %, respectively.

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

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

Three months ended March 31,

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

Income Statement Classification 2022 2023 2022 2023

Operating lease cost Facilities and grounds expense (1)

$ 853 $ 917 $ 1,701 $ 1,792

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

76 92 178 186

Variable lease cost Facilities and grounds expense (1)

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Depreciation of leased assets Depreciation and amortization (2)

$ 109 $ 109 $ 217 $ 217

Interest on lease liabilities Interest expense 112 103 225 208

4 unchanged sentences

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

Three months ended March 31,

Six months ended June 30,

Cash paid for operating leases included in operating activities $ 1,795 $ 1,934

1 unchanged sentence

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

Three months ended March 31,

Six months ended June 30,

Right-of-use assets obtained in exchange for new operating lease liabilities $ 576 $ 1,067

1 unchanged sentence

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

Lease Type Balance Sheet Classification December 31, 2022 March 31, 2023

Lease Type Balance Sheet Classification December 31, 2022 June 30, 2023

Operating lease right-of-use assets Operating lease right-of-use assets $ 17,060 $ 17,123

9 unchanged sentences

Total lease liabilities $ 24,675 $ 24,387

The average lease terms and discount rates at March 31, 2023 are as follows:

The average lease terms and discount rates at June 30, 2023 are as follows:

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

1 unchanged sentence

Finance leases 11.1 8.1 %

The aggregate future lease payments for non-cancelable operating and finance leases at March 31, 2023 are as follows (in thousands):

The aggregate future lease payments for non-cancelable operating and finance leases at June 30, 2023 are as follows (in thousands):

Operating Finance

9 unchanged sentences

Present value of lease liabilities $ 19,441 $ 4,946

At March 31, 2023, we had no significant operating or finance leases that had not yet commenced.

At June 30, 2023, we had no significant operating or finance leases that had not yet commenced.

STOCKHOLDERS ’ EQUITY

1 unchanged sentence

Restricted stock activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Fair Value Shares Fair Value

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

2022 2023 2022 2023

Returned for payroll taxes 4,185 $ 207 1,434 $ 49

Cancelled 1,000 $ 31 2,400 $ 79

(1) Restricted stock granted during the three months ended March 31 2023 vests over a three-year period, if the employee has remained continuously employed by us during the vesting period, at a weighted average stock price of $ 32.63 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for restricted stock awards of $ 57,000 and $ 178,000 , for the three months ended March 31, 2022 and 2023, respectively.

Common stock activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Fair Value Shares Fair Value

Shares Fair Value Shares Fair Value Shares Fair Value Shares Fair Value

— $ — — $ — — $ — 142,020 $ 4,634

Returned for payroll taxes ( 49 ) $ ( 2 ) 39 $ 1 4,136 $ 205 1,473 $ 50

(1) During the three months ended March 31, 2023, we issued 30,000 shares of common stock to C.

Benjamin Brink (former executive) at a stock price of $ 27.54 , in accordance with his Separation and Release agreement pertaining to his resignation from his position as the Company's Executive Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer) effective January 2, 2023.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for common stock awards of $ 826,000 , for the three months ended March 31, 2023.

Cancelled 450 $ 16 776 $ 27 1,450 $ 47 1,826 $ 61

(1) Restricted stock granted during the six months ended June 30 2023 vests over a three-year period, if the employee has remained continuously employed by us during the vesting period, at a weighted average stock price of $ 32.63 .

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for restricted stock awards of $ 40,000 and $ 394,000 , for the three months ended June 30, 2022 and 2023, respectively and $ 97,000 and $ 572,000 for the six months ended June 30, 2022 and 2023, respectively.

Stock Options

Stock option grants and cancellations are as follows (in thousands, except shares):

Three months ended March 31,

Shares Fair Value Shares Fair Value

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

2022 2023 2022 2023

Shares Fair Value Shares Fair Value Shares Fair Value Shares Fair Value

— $ — — $ — 58,500 $ 959 214,191 $ 2,506

— $ — — $ — 310,000 $ 5,388 — $ —

Cancelled 18,138 $ 214 13,810 $ 152 25,138 $ 285 101,850 $ 1,334

(1) Stock options granted during the three months ended March 31, 2022 and 2023 had a weighted average price of $ 49.48 and $ 32.69 , respectively.

(1) Stock options granted during the six months ended June 30, 2022 and 2023 had a weighted average price of $ 49.48 and $ 32.69 , respectively.

The fair value of these options was calculated using the Black-Scholes option pricing model.

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These options will vest if the employee has remained continuously employed by us through the vesting period.

(2) Stock options granted during the three months ended March 31, 2022 had a weighted average price of $ 49.48 .

(2) Stock options granted during the six months ended June 30, 2022 had a weighted average price of $ 49.48 .

The fair value of these options was calculated using the Black-Scholes option pricing model and vest over a seven-year period and have a ten-year term.

These options will vest if the employee has remained continuously employed by us through the vesting period.

The fair value of the options granted during the three months ended March 31, 2023 was estimated using the Black-Scholes option pricing model with the following assumptions:

The fair value of the options granted during the six months ended June 30, 2023 was estimated using the Black-Scholes option pricing model with the following assumptions:

Grant Date February 22, 2023

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Additional stock option activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Cash Shares Cash

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

2022 2023 2022 2023

Shares Cash Shares Cash Shares Cash Shares Cash

Exercised (1)

18,736 N/A 12,000 N/A

— N/A 17,300 N/A 18,736 N/A 29,300 N/A

Returned for option price (2)

2 unchanged sentences

— $ — 736 $ 20 1,601 $ 82 1,465 $ 41

(1) Stock options exercised during the three months ended March 31, 2022 and 2023 had a weighted average exercise price of $ 25.88 and $ 25.43 , respectively, with an aggregate intrinsic value of $ 0.5 million and $ 0.1 million, respectively.

(1) Stock options exercised during the three months ended June 30, 2023 had a weighted average exercise price of $ 20.06 with an aggregate intrinsic value of $ 0.2 million.

Stock options exercised during the six months ended June 30, 2022 and 2023 had a weighted average exercise price of $ 25.88 and $ 22.26 , respectively, with an aggregate intrinsic value of $ 0.5 million and $ 0.3 million, respectively.

(2) Represents shares withheld/cash received for the payment of the option price.

(3) Represents shares withheld/cash paid for the payment of payroll taxes.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for stock options of $ 638,000 and $ 710,000 , for the three months ended March 31, 2022 and 2023, respectively.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for stock options of $ 550,000 and $ 735,000 , for the three months ended June 30, 2022 and 2023, respectively and $ 1,188,000 and $ 1,445,000 for the six months ended June 30, 2022 and 2023, respectively.

Performance Awards

Performance award activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Fair Value Shares Fair Value

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

2022 2023 2022 2023

Shares Fair Value Shares Fair Value Shares Fair Value Shares Fair Value

Granted 23,263 $ 1,100 — $ — 27,013 $ 1,262 — $ —

Cancelled 13,974 $ 134 2,795 $ 27 20,961 $ 201 40,181 $ 1,012

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for performance awards of $ 566,000 and $ 63,000 for the three months ended March 31, 2022 and 2023, respectively.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for performance awards of $ 637,000 and $ 665,000 for the three months ended June 30, 2022 and 2023, respectively and $ 1,203,000 and $ 728,000 for the six months ended June 30, 2022 and 2023, respectively.

Employee Stock Purchase Plan

ESPP activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Price Shares Price

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

2022 2023 2022 2023

Shares Price Shares Price Shares Price Shares Price

ESPP 11,796 $ 33.70 16,386 $ 24.28 25,089 $ 39.86 38,042 $ 24.28

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

We recorded stock-based compensation expense, which is included in General, administrative and other expenses and Regional and unallocated funeral and cemetery costs , for the ESPP totaling $ 199,000 and $ 252,000 for the three months ended March 31, 2022 and 2023, respectively.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses and Regional and unallocated funeral and cemetery costs , for the ESPP totaling $ 152,000 and $ 163,000 for the three months ended June 30, 2022 and 2023, respectively and $ 351,000 and $ 415,000 for the six months ended June 30, 2022 and 2023 respectively.

Former Employee

Common stock activity is as follows (in thousands, except shares):

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

2022 2023 2022 2023

Shares Fair Value Shares Fair Value Shares Fair Value Shares Fair Value

— $ — — $ — — $ — 30,000 $ 826

Returned for payroll taxes — $ — — $ — — $ — 1,001 $ 28

(1) During the six months ended June 30, 2023, we issued 30,000 shares of common stock to a former executive at a stock price of $ 27.54 , in accordance with his Separation and Release agreement pertaining to his resignation from his position as the Company's Executive Vice President, Chief Financial Officer & Treasurer effective January 2, 2023.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses , for common stock awards of $ 826,000 , for the six months ended June 30, 2023.

Good To Great Incentive Program

During the three months ended March 31, 2023, we issued 8,444 shares of our common stock to certain employees, which were valued at $ 0.3 million at a grant date stock price of $ 32.69 .

During the three months ended March 31, 2022, we issued 27,448 shares of our common stock to certain employees, which were valued at $ 1.4 million at a grant date stock price of $ 49.48 .

During the six months ended June 30, 2023, we issued 8,444 shares of our common stock to certain employees, which were valued at $ 0.3 million at a grant date stock price of $ 32.69 .

During the six months ended June 30, 2022, we issued 27,448 shares of our common stock to certain employees, which were valued at $ 1.4 million at a grant date stock price of $ 49.48 .

Non-Employee Director and Board Advisor Compensation

Non-Employee Director and Board Advisor common stock activity is as follows (in thousands, except shares):

Three months ended March 31,

Shares Fair Value Shares Fair Value

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

2022 2023 2022 2023

Shares Fair Value Shares Fair Value Shares Fair Value Shares Fair Value

Board of Directors (1)

2,372 $ 94 1,077 $ 35 5,041 $ 236 4,595 $ 142

Advisor to the Board (1)

(1) Common stock granted during the three months ended March 31, 2022 and 2023 had a weighted average price of $ 53.33 and $ 30.52 , respectively.

We recorded compensation expense, which is included in General, administrative and other expenses , related to annual retainers, including the value of stock granted to non-employee Directors and an advisor to our Board, of $ 201,000 and $ 166,000 for the three months ended March 31, 2022 and 2023, respectively.

126 $ 5 153 $ 5 219 $ 10 316 $ 10

(1) Common stock granted during the three months ended June 30, 2022 and 2023 had a weighted average price of $ 39.65 and $ 32.47 , respectively and $ 46.83 and $ 31.01 for six months ended June 30, 2022 and 2023, respectively.

On June 21, 2023, the Board elected Chad Fargason to serve as a Class II Director until the 2025 annual meeting of shareholders.

Fargason was appointed to serve as the chairperson of the Corporate Governance Committee and a member of the Audit Committee.

Concurrently with his appointment, the Board granted Mr.

Fargason 910 shares of our common stock under our Director Compensation Policy, which were valued at approximately $ 25,000 based on the closing price on the grant date.

We recorded compensation expense, which is included in General, administrative and other expenses , related to annual retainers, including the value of stock granted to non-employee Directors and an advisor to our Board, of $ 184,000 and $ 189,000 for the three months ended June 30, 2022 and 2023, respectively and $ 385,000 and $ 355,000 for the six months ended June 30, 2022 and 2023, respectively.

Share Repurchase

Share repurchase activity is as follows (dollar value in thousands):

Three months ended March 31

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

2022 2023 2022 2023

Number of Shares Repurchased 205,496 — 695,496 —

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Dollar Value of Shares Repurchased $ 8,224 $ — $ 34,234 $ —

(1) During the three months ended March 31, 2022, 52,242 shares settled in April 2022, which had a cost of $ 2.8 million.

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

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

At March 31, 2023, our share repurchase program had $ 48.9 million authorized for repurchases.

At June 30, 2023, our share repurchase program had $ 48.9 million authorized for repurchases.

Cash Dividend

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$ 0.1125 $ 1,661

$ 0.1125 $ 1,679

2022 Per Share Dollar Value

$ 0.1125 $ 1,725

$ 0.1125 $ 1,730

EARNINGS PER SHARE

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

Three months ended March 31,

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

2022 2023 2022 2023

Numerator for basic and diluted earnings per share:

11 unchanged sentences

$ 0.69 $ 0.53 $ 1.70 $ 1.10

For the three months ended March 31, 2023, 1,129,210 stock options were excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an antidilutive effect.

For the three months ended March 31, 2022, no stock options were excluded from the computation of diluted earnings per share.

Stock options excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an antidilutive effect are as follows:

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

2022 2023 2020 2023

Antidilutive stock options 366,038 1,236,490 259,359 1,183,146

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

At March 31, 2023, we had satisfied certain performance criteria for the first, second and third predetermined growth targets of our performance awards to be considered outstanding.

At June 30, 2023, we had satisfied certain performance criteria for the first, second and third predetermined growth targets of our performance awards to be considered outstanding.

Therefore, we included these awards in the computation of diluted earnings per share as of the beginning of the reporting period.

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

Three months ended March 31, 2023

Three months ended June 30, 2023

Funeral Cemetery Total

4 unchanged sentences

Total $ 64,505 $ 33,173 $ 97,678

Three months ended March 31, 2022

Three months ended June 30, 2022

Funeral Cemetery Total

4 unchanged sentences

Total $ 61,938 $ 28,662 $ 90,600

Six months ended June 30, 2023

Funeral Cemetery Total

Services $ 83,401 $ 9,328 $ 92,729

Merchandise 44,180 8,178 52,358

Cemetery property — 33,283 33,283

Other revenue 7,009 7,813 14,822

Total $ 134,590 $ 58,602 $ 193,192

Six months ended June 30, 2022

Funeral Cemetery Total

Services $ 83,656 $ 8,631 $ 92,287

Merchandise 45,810 6,878 52,688

Cemetery property — 30,200 30,200

Other revenue 6,827 6,759 13,586

Total $ 136,293 $ 52,468 $ 188,761

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

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Operating income (loss):

Three months ended March 31, 2023 $ 22,192 $ 8,613 $ ( 10,171 ) $ 20,634

Three months ended March 31, 2022 25,463 8,218 ( 8,530 ) 25,151

Three months ended June 30, 2023 $ 17,898 $ 13,039 $ ( 10,199 ) $ 20,738

Three months ended June 30, 2022 18,485 10,421 ( 9,181 ) 19,725

Six months ended June 30, 2023 $ 40,091 $ 21,651 $ ( 20,370 ) $ 41,372

Six months ended June 30, 2022 43,947 18,639 ( 17,710 ) 44,876

Income (loss) before income taxes:

Three months ended March 31, 2023 $ 22,333 $ 8,672 $ ( 18,659 ) $ 12,346

Three months ended March 31, 2022 27,209 8,259 ( 13,984 ) 21,484

Three months ended June 30, 2023 $ 18,112 $ 13,183 $ ( 19,593 ) $ 11,702

Three months ended June 30, 2022 19,765 10,427 ( 15,072 ) 15,120

Six months ended June 30, 2023 $ 40,446 $ 21,854 $ ( 38,252 ) $ 24,048

Six months ended June 30, 2022 46,973 18,686 ( 29,055 ) 36,604

Total assets:

March 31, 2023 $ 795,205 $ 412,342 $ 17,437 $ 1,224,984

June 30, 2023 $ 796,043 $ 429,272 $ 16,771 $ 1,242,086

December 31, 2022 779,500 396,389 17,061 1,192,950

2 unchanged sentences

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

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Prepaid and other current assets:

27 unchanged sentences

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

Three months ended March 31,

Six months ended June 30,

Cash paid for interest $ 10,901 $ 17,056

Cash paid for taxes 4,495 7,329

Unsettled share repurchases 2,784 —

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

7 unchanged sentences

any statements regarding future economic and market conditions or performance;

any statements regarding the timing of the strategic alternatives review;

the outcome of the strategic alternatives review, including whether any transaction occurs, at all;

any statements of belief;

6 unchanged sentences

• the effects of our talent recruitment efforts, incentive and compensation plans and programs, including such effects on our Standards Operating Model and the Company’s operational and financial performance;

• our ability to execute our growth strategy;

• our ability to execute our growth strategy, if at all;

• our ability to execute and meet the objectives of our High Performance and Credit Profile Restoration Plan, if at all;

21 unchanged sentences

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

• potential adverse impacts resulting from our recent announcement regarding our board of directors’ review of potential strategic alternatives for the Company;

• economic, financial and stock market fluctuations;

8 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.

What changed 10-Q

Item 1. Financial Statements