What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-03-01 · 407 added, 368 removed, 1429 unchanged (35% of the section changed)

4 unchanged sentences

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheet as of December 31, 202 2 and 202 3

Consolidated Balance Sheet s as of December 31, 202 4 and 202 3

Consolidated Statements of Operations for the Years Ended December 31, 202 4 , 202 3 and 202 2

7 unchanged sentences

We have audited the accompanying consolidated balance sheets of Carriage Services, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule included under Item 15(2) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 1, 2024 expressed an unqualified opinion.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2025 expressed an unqualified opinion.

Basis for opinion

16 unchanged sentences

Dallas, Texas

March 1, 2024

February 28, 2025

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Board of Directors and Stockholders

Carriage Services, Inc.

2 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 1, 2024 expressed an unqualified opinion on those financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated February 28, 2025 expressed an unqualified opinion on those financial statements.

Basis for opinion

16 unchanged sentences

Dallas, Texas

March 1, 2024

February 28, 2025

CARRIAGE SERVICES, INC.

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

4 unchanged sentences

Prepaid and other current assets 4,123 4,791

Current assets held for sale 1,135 —

Total current assets 44,536 41,721

9 unchanged sentences

Cemetery perpetual care trust investments 85,103 85,331

Non-current assets held for sale 19,453 —

Total assets $ 1,279,580 $ 1,268,052

4 unchanged sentences

Accrued and other liabilities 38,460 35,362

Current liabilities held for sale 240 —

Total current liabilities 58,041 51,070

Acquisition debt, net of current portion 4,895 5,461

Long-term liabilities held for sale 13,842 —

Credit facility 135,382 177,794

42 unchanged sentences

General, administrative and other 59,011 42,125 37,471

Net loss on divestitures, disposals and impairment charges 666 2,029 1,191

Net loss on divestitures, disposals and impairments charges 2,580 1,191 2,029

Operating income 81,799 80,979 79,726

Interest expense 32,075 36,266 25,895

Accretion of discount on convertible notes 20 — —

Loss on extinguishment of debt — — 190

3 unchanged sentences

Expense for income taxes 16,079 13,186 16,243

Tax benefit related to discrete items ( 1,171 ) ( 430 ) ( 170 )

Expense (benefit) related to discrete income tax items 1,048 ( 170 ) ( 430 )

Total expense for income taxes 17,127 13,016 15,813

13 unchanged sentences

(in thousands)

Outstanding Common

Stock Additional

Capital Retained

Earnings Treasury

Shares Outstanding Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total

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

2 unchanged sentences

Issuance of common stock to directors and board advisor 12 — 435 — — 435

Issuance of restricted common stock 9 — — — — —

Exercise of stock options 10 — ( 63 ) — — ( 63 )

Cancellation and surrender of restricted common stock ( 11 ) — ( 375 ) — — ( 375 )

Restricted common stock and stock options surrendered for taxes paid ( 6 ) — ( 205 ) — — ( 205 )

Stock-based compensation expense — — 5,524 — — 5,524

Dividends on common stock — — ( 6,763 ) — — ( 6,763 )

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

Treasury stock acquired ( 695 ) — — — ( 34,234 ) ( 34,234 )

Other 27 — 1,358 — — 1,358

Balance – December 31, 2022 14,732 $ 264 $ 238,780 $ 176,843 $ ( 278,753 ) $ 137,134

2 unchanged sentences

Issuance of common stock to directors and board advisor 16 — 451 — — 451

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

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

Exercise of stock options 12 — ( 174 ) — — ( 174 )

Cancellation and surrender of restricted common stock ( 6 ) — ( 205 ) — — ( 205 )

Restricted common stock and stock options surrendered for taxes paid ( 3 ) — ( 78 ) — — ( 78 )

Stock-based compensation expense — — 6,426 — — 6,426

Dividends on common stock — — ( 6,708 ) — — ( 6,708 )

Treasury stock acquired ( 695 ) — — — ( 34,234 ) ( 34,234 )

Other 8 — 276 — — 276

3 unchanged sentences

Issuance of common stock to directors and board advisor 17 — 531 — — 531

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

Issuance of restricted common stock 157 2 ( 2 ) — — —

Exercise of stock options 68 1 1,439 — — 1,440

Cancellation and surrender of restricted common stock ( 3 ) — ( 78 ) — — ( 78 )

Restricted common stock and stock options surrendered for taxes paid ( 76 ) — ( 593 ) — — ( 593 )

Stock-based compensation expense — — 5,989 — — 5,989

14 unchanged sentences

Stock-based compensation expense 6,520 7,703 5,959

Deferred income tax expense (benefit) ( 692 ) 3,036 3,307

Deferred income tax (benefit) expense ( 698 ) 3,307 3,036

Amortization of intangibles 1,357 1,401 1,286

16 unchanged sentences

Cash flows from investing activities:

Acquisitions of businesses and real estate ( 3,285 ) ( 33,876 ) ( 44,500 )

Acquisitions of businesses and real property — ( 44,500 ) ( 33,876 )

Proceeds from divestitures and sale of other assets 12,057 4,132 5,027

5 unchanged sentences

Payments against the credit facility ( 97,000 ) ( 97,700 ) ( 120,100 )

Payment to redeem the 6.625% senior notes due 2026 ( 400,000 ) — —

Payment of call premium for the redemption of the 6.625% senior notes due 2026 ( 19,876 ) — —

Proceeds from the issuance of the 4.25% senior notes due 2029 395,500 — —

Payment of debt issuance costs for the credit facility and 4.25% senior notes due 2029 ( 2,197 ) ( 922 ) —

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

Payment of debt issuance costs for the credit facility ( 781 ) — ( 922 )

Payments on acquisition debt and obligations under finance leases ( 1,061 ) ( 1,167 ) ( 882 )

Payments on contingent consideration recorded at acquisition date ( 461 ) — —

Proceeds from the exercise of stock options and employee stock purchase plan contributions 2,626 1,494 1,745

Taxes paid on restricted stock vestings and exercise of stock options ( 2,647 ) ( 327 ) ( 252 )

Taxes paid on restricted stock vesting and exercise of stock options ( 593 ) ( 252 ) ( 327 )

Dividends paid on common stock ( 6,807 ) ( 6,708 ) ( 6,763 )

1 unchanged sentence

Net cash used in financing activities ( 48,716 ) ( 18,233 ) ( 8,512 )

Net increase in cash and cash equivalents 259 22 353

Net (decrease) increase in cash and cash equivalents during the year ( 358 ) 353 22

Cash and cash equivalents at beginning of year 1,523 1,170 1,148

16 unchanged sentences

All significant intercompany balances and transactions have been eliminated.

Reclassifications

Certain reclassifications have been made to prior period amounts in our income tax footnote related to the presentation of deferred right-of-use assets and deferred lease liabilities to conform to the current period presentation with no effect on our previously reported Consolidated Balance Sheet, Consolidated Statements of Operations and Consolidated Statements of Cash Flows.

Use of Estimates

6 unchanged sentences

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

We maintain cash and cash equivalents at United States financial institutions for which the combined account balances in individual institutions may exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.

We maintain cash and cash equivalents at United States financial institutions for which the combined account balances in individual institutions may exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.

As of December 31, 2024, approximately $ 3.3 million of our deposits were not covered by FDIC insurance.

4 unchanged sentences

Preneed cemetery receivables with payments expected to be received beyond one year from the balance sheet date are recorded in Preneed cemetery receivables, net.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

cemetery receivables generally consist of preneed sales of cemetery interment rights and related products and services, which are typically financed through interest-bearing installment sales contracts, generally with terms of up to five years , with such interest income reflected as Other revenue .

Our cemetery receivables generally consist of preneed sales of cemetery interment rights and related products and services, which are typically financed through interest-bearing installment sales contracts, generally with terms of up to five years , with such interest income reflected as Other revenue .

In substantially all cases, we receive an initial down payment at the time the contract is signed.

For our funeral and atneed cemetery receivables, we have a collections policy where statements are sent to the customer at 30 days past due.

Past due notification letters are sent at 45 days and continue until payment is received or the contract is placed with a third-party collections agency.

Past due notification letters are sent at 45 days and continue until payment is received or the contract is placed

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

with a third-party collections agency.

For our preneed cemetery receivables, we have a collections policy where past due notification letters are sent to the customer beginning at 15 days past due and periodically thereafter until payment is received or the contract is cancelled.

17 unchanged sentences

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

During the year ended December 31, 2023, we acquired a business in the Bakersfield, California area consisting of three funeral homes, two cemeteries and one cremation focused business for $ 44.0 million in cash.

During the year ended December 31, 2022, we acquired a business in Kissimmee, Florida consisting of two funeral homes for $ 6.3 million and a business in the Charlotte, North Carolina area consisting of three funeral homes, one cemetery and one cremation focused business for $ 25.0 million.

The pro forma impact of the acquisitions on prior periods is not presented as the impact is not material to our reported results.

The results of the acquired businesses are included in our results of operations from the date of acquisition.

See Note 3 to the Consolidated Financial Statements for additional information related to acquisitions.

6 unchanged sentences

Goodwill is only allocated to the sale if the set is considered to be a business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for an aggregate of $ 1.1 million and merged one funeral home with another business we own in a nearby market.

During the year ended December 31, 2022, we sold four funeral homes for $ 1.5 million and merged one funeral home with another business we own in a nearby market.

During the year ended December 31, 2021, we sold two funeral homes and one cemetery for $ 2.5 million and we merged six funeral homes with other businesses we own in nearby markets.

See Notes 4 and 5 to the Consolidated Financial Statements for additional information related to divestitures.

5 unchanged sentences

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

We conducted a quantitative assessment in 2022 and a qualitative assessment in 2023.

We conducted a quantitative assessment in 2022 and a qualitative assessment in 2023 and 2024.

In addition to our annual test, we assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value of a reporting unit may be greater than fair value.

Factors that could trigger an interim impairment review include, but are not limited to, significant negative industry or economic trends and significant adverse changes in the business climate, which may be indicated by a decline in our market capitalization or decline in operating results.

Factors that could trigger an interim impairment review include, but are not

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

limited to, significant negative industry or economic trends and significant adverse changes in the business climate, which may be indicated by a decline in our market capitalization or decline in operating results.

Our quantitative goodwill impairment test involves estimates and management judgment.

6 unchanged sentences

In accordance with the guidance, if the fair value of the reporting unit is less than its carrying amount an impairment charge is recorded in an amount equal to the difference.

For our 2023 annual qualitative assessment, we determined that there were no factors that would indicate the need to perform an additional quantitative goodwill impairment test.

We concluded that it is more-likely-than-not that the fair value of our reporting units is greater than their carrying value and thus there was no impairment to goodwill.

For our 2022 annual impairment test, we concluded that there was no impairment to goodwill as the fair value of our reporting units was greater than the carrying value.

Goodwill is only allocated to a divestiture if the set is considered to be a business.

2 unchanged sentences

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

For the years ended December 31, 2023 and 2022, after each divestiture, we concluded that it was more-likely-than not that the fair value of our reporting units was greater than their carrying value and thus there was no impairment to goodwill.

During the year ended December 31, 2022, we allocated $ 0.9 million of goodwill related to the sale of two funeral homes for a loss recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

See Note 4 to the Consolidated Financial Statements for additional information related to goodwill.

See Notes 4 and 5 to the Consolidated Financial Statements for additional information related to goodwill.

Intangible Assets

Our intangible assets include tradenames resulting from acquisitions and are included in Intangible and other non-current assets, net on our Consolidated Balance Sheet.

Our intangible assets include tradenames resulting from acquisitions and are included in Intangible and other non-current assets, net on our Consolidated Balance Sheets.

Our tradenames are considered to have an indefinite life and are not subject to amortization.

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

Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than not that the fair

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

value of the tradename is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test.

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

We performed our most recent annual intangible assets impairment test as of August 31, 2024.

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

We conducted a quantitative assessment in 2022 and a qualitative assessment in 2023.

We conducted a quantitative assessment in 2022 and a qualitative assessment in 2023 and 2024.

In addition to our intangible assets annual test, we assess the impairment of intangible assets whenever certain events or changes in circumstances indicate that the carrying value of the intangible asset may be greater than the fair value.

7 unchanged sentences

In accordance with the guidance, if the fair value of the tradename is less than its carrying amount, then an impairment charge is recorded in an amount equal to the difference.

As a result of our 2023 qualitative assessment, we determined that there were factors that would indicate the need to perform an additional quantitative impairment test for certain funeral home businesses.

As a result of this additional quantitative impairment test, we recorded an impairment to the tradenames for two of our funeral homes of $ 0.2 million, during the year ended December 31, 2023, as the carrying amount of these tradenames exceeded the fair value.

For our 2022 annual impairment test performed as of August 31 each year, we concluded there that was no impairment to our intangible assets as the fair value of our intangible assets was greater than the carrying value.

See Note 11 to the Consolidated Financial Statements for additional information related to intangible assets.

5 unchanged sentences

and (iii) cemetery perpetual care trusts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our preneed and perpetual care trust funds are reported in accordance with the principles of consolidating Variable Interest Entities (“VIEs”).

3 unchanged sentences

We have recognized financial interests of third parties in the trust funds in our financial statements as Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus .

The fair value of our trust fund assets are accounted for as Collateralized Financing Entities (“CFEs”) in ASC Topic 810.

Fixed income securities are classified as trading securities and accounted for at fair value.

Equity securities with readily determinable market values are accounted for at fair value.

The fair value of our trust fund assets is accounted for as Collateralized Financing Entities (“CFEs”) in ASC Topic 810.

The accounting guidance for CFEs allows companies to elect to measure both the financial assets and financial liabilities using the more observable of the fair value of the financial assets or fair value of the financial liabilities.

Pursuant to this guidance, we have determined the fair value of the financial assets of the trusts are more observable and we first measure those financial assets at fair value.

Our fair value of the financial liabilities mirror the fair value of the financial assets, in accordance with the ASC.

Our fair value of the financial liabilities mirrors the fair value of the financial assets, in accordance with the ASC.

Any changes in fair value are recognized in earnings.

3 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

An enterprise is required to perform an analysis to determine whether the enterprise’s variable interest(s) give it a controlling financial interest in a VIE.

12 unchanged sentences

During the year ended December 31, 2023, we withdrew $ 8.6 million of realized capital gains and earnings from our preneed funeral and cemetery trust investments.

We did not withdraw any realized capital gains and earnings from our preneed trust investments during the year ended December 31, 2024.

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 funeral trust investments and Preneed cemetery trust investments and increase our Deferred preneed funeral revenue and Deferred preneed cemetery revenue.

Held for Sale

The Company classifies assets and liabilities (disposal groups) to be sold as held for sale (“HFS”) in the period in which all of the following criteria are met:

(1) management, having the authority to approve the action, commits to a plan to sell the disposal group;

(2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups;

(3) an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated;

(4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Company’s control extend the period of time required to sell the disposal group beyond one year;

(5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell.

Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met.

Conversely, gains are not recognized on the sale of a disposal group until the date of sale.

The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposal group at the time it was initially classified as held for sale.

Additionally, depreciation is not recorded during the period in which the long-lived assets, included in the disposal group, are classified as held for sale.

Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group, if material, in the line items current and non-current assets held for sale and current and long-term liabilities held for sale in the Consolidated Balance Sheets.

During the year ended December 31, 2024, the Company announced that it was exploring the divestiture of certain non-core businesses in markets that no longer aligned with its strategic objectives and is undergoing a process to find a suitable buyer of these businesses.

We expect to close on the sale of these businesses within the next twelve months.

As of December 31, 2024, the assets and liabilities of these non-core businesses, included in our funeral home and cemetery segments, have been classified as held for sale.

The table below presents the carrying amounts of the assets and liabilities included as part of the expected sale (in thousands):

December 31, 2024

Accounts receivable, net $ 833

Inventories 302

Current assets held for sale $ 1,135

Preneed cemetery trust investments $ 4,876

Preneed funeral trust investments 2,197

Preneed cemetery receivables, net 1,671

Property, plant and equipment, net 4,898

Cemetery property, net 3,362

Intangible and other non-current assets, net 215

Cemetery perpetual care trust investments 2,234

Non-current assets held for sale $ 19,453

Accounts payable $ 94

Accrued and other liabilities 146

Current liabilities held for sale $ 240

Deferred preneed cemetery revenue $ 3,517

Deferred preneed funeral revenue 1,018

Deferred preneed cemetery receipts held in trust 4,876

Deferred preneed funeral receipts held in trust 2,197

Care trusts’ corpus 2,234

Long-term liabilities held for sale $ 13,842

Fair Value Measurements

1 unchanged sentence

This guidance defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).

The guidance establishes a three-level valuation hierarchy for disclosure of fair value measurements.

The guidance establishes a three-level valuation hierarchy for disclosure of fair value

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

measurements.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

7 unchanged sentences

We capitalize sales commissions and other direct selling costs related to preneed cemetery merchandise and services and preneed funeral trust contracts as these costs are incremental and recoverable costs of obtaining a contract with a customer.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 8 years for our preneed cemetery merchandise and services contracts.

The selling costs related to the sales of cemetery interment rights, which include real property and other costs related to cemetery development activities, continue to be expensed using the specific identification method in the period in which the sale of the cemetery interment right is recognized as revenue.

The selling costs related to preneed funeral insurance contracts continue to be expensed in the period incurred as these contracts are not included on our Consolidated Balance Sheet.

The selling costs related to preneed funeral insurance contracts continue to be expensed in the period incurred as these contracts are not included on our Consolidated Balance Sheets.

See Note 11 to the Consolidated Financial Statements for additional information related to capitalized commissions on preneed contracts.

Internally Developed Software

We capitalize costs incurred during the “application development stage” of an internally developed software project, meaning only costs directly related to designing, coding, and testing the software are capitalized, while preliminary project costs and post-implementation activities are expensed, and the capitalized software is then amortized over its estimated useful life, typically ranging from two to five years .

See Note 11 to the Consolidated Financial Statements for additional information related to internally developed software.

Property, Plant and Equipment

8 unchanged sentences

Factors that could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results.

We evaluate our long-lived assets for impairment when a funeral home or cemetery business has negative earnings before interest, taxes, depreciation and amortization (“EBITDA”) for four consecutive years and if there has been a decline in EBITDA in that same period.

We test the recoverability of our long-lived assets by comparing their carrying value to the sum of the undiscounted cash flows expected to result from the use of the assets over their remaining useful lives.

We recognize an impairment loss if the carrying amount of the long-lived asset is not recoverable and exceeds its fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Additionally, assets to be disposed of and assets not expected to provide any future service potential are recorded at the lower of their carrying amount or fair value less estimated costs to sell.

7 unchanged sentences

accumulated depreciation ( 145,990 ) ( 138,045 )

Property, plant and equipment, net including HFS

$ 277,902 $ 287,484

Held for sale

Property, plant and equipment, net

During the year ended December 31, 2023, we acquired $ 12.8 million of property, plant and equipment related to our acquisition of a business located in Bakersfield, CA, as more fully described in Note 3 to the Consolidated Financial Statements and $ 3.1 million related to the acquisition of real estate.

Additionally, we sold real estate for $ 3.1 million, with a carrying value of $ 1.7 million, resulting in a gain on the sale of $ 1.4 million.

$ 273,004 $ 287,484

During the year ended December 31, 2024, we sold six funeral homes and one cemetery that had a carrying value of property, plant and equipment of $ 3.1 million, which was included in the loss on sale and recorded in Net loss on divestitures, disposals and impairment charges on Consolidated Statements of Operations, more fully described in Note 5 to Consolidated Financial Statements.

Additionally, we sold real property for $ 1.1 million, with a carrying value of $ 0.8 million, resulting in a $ 0.3 million gain on the sale, which was recorded in Net loss on divestitures, disposals and impairment charges on Consolidated Statements of Operations.

Additionally, we sold real property for $ 3.1 million, with a carrying value of $ 1.7 million, resulting in a $ 1.4 million gain on the sale.

We also divested one funeral home that had a carrying value of property, plant and equipment of $ 0.3 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.

During the year ended December 31, 2022, we acquired $ 8.1 million of property, plant and equipment related to our business combinations, described in Note 3 to the Consolidated Financial Statements and $ 2.6 million related to real estate acquisitions.

Additionally, we sold real estate for $ 3.3 million, with a carrying value of $ 1.8 million, resulting in a gain on the sale of $ 1.4 million, which was recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

We also divested four funeral homes that had a carrying value of property, plant and equipment of $ 1.3 million, described in Note 5 to the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our growth and maintenance capital expenditures totaled $ 18.4 million and $ 10.9 million for the years ended December 31, 2022 and 2023, respectively, for property, plant, equipment.

Our growth and maintenance capital expenditures totaled $ 9.1 million, $ 10.9 million and $ 18.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, for property, plant, equipment.

In addition, we recorded depreciation expense of $ 14.3 million, $ 14.7 million and $ 13.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

5 unchanged sentences

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

Cemetery property was $ 104.2 million and $ 114.6 million, net of accumulated amortization of $ 59.0 million and $ 64.6 million at December 31, 2022 and 2023, respectively.

Cemetery property totaled $ 112.9 million and $ 114.6 million, net of accumulated amortization of $ 72.6 million and $ 64.6 million at December 31, 2024 and 2023, respectively, which includes $ 3.4 million of cemetery property held for sale at December 31, 2024.

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 totaled $ 7.7 million and $ 7.1 million for the years ended December 31, 2022 and 2023, respectively, for cemetery property development.

Our growth capital expenditures totaled $ 7.0 million, $ 7.1 million and $ 7.7 million for the years ended December 31, 2024, 2023 and 2022, respectively, for cemetery property development.

We recorded amortization expense for cemetery interment rights of $ 8.2 million, $ 6.0 million and $ 6.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

During the year ended December 31, 2024, we sold one cemetery that had a carrying value of cemetery property of $ 0.8 million, which was included in the loss on sale and recorded in Net loss on divestitures, disposals and impairment charges on Consolidated Statements of Operations, more fully described in Note 5 to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the year ended December 31, 2023, we acquired cemetery property for $ 9.0 million related to our acquisition of a business located in Bakersfield, CA, as more fully 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.

During the year ended December 31, 2022, we divested one cemetery that had a carrying value of cemetery property of $ 0.1 million, which was included in the gain or loss on the sale of divestitures and recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

We also sold 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.

We have operating and finance leases.

5 unchanged sentences

A right-of-use (“ROU”) asset represents our right to use the underlying asset for the lease term and the lease liability represents our obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized on our Consolidated Balance Sheet at the lease commencement date based on the present value of lease payments over the lease term.

For our leases that do not provide an implicit interest rate in the agreement, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.The lease terms used to calculate the ROU asset and related lease liability include options to extend the lease when it is reasonably certain that we will exercise that option.

ROU assets and lease liabilities are recognized on our Consolidated Balance Sheets at the lease commencement date based on the present value of lease payments over the lease term.

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

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

2 unchanged sentences

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

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

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

Finance lease ROU assets are included in Property, plant and equipment, net and finance lease

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

See Note 14 to the Consolidated Financial Statements for additional information related to leases.

11 unchanged sentences

We treat the tax effects of exercised or vested awards as discrete items in the reporting period in which they occur.

We did not have an excess tax benefit or deficiency related to share-based payments for the years ended December 31, 2023 and 2022.

For the year ended December 31, 2021, the excess tax benefit was $ 1.2 million.

The excess tax benefit and tax deficiency are recorded within Tax benefit related to discrete items on our Consolidated Statements of Operations.

Excess tax benefits and deficiencies related to share-based payments are included in operating cash flows on the Consolidated Statements of Cash Flows.

For the year ended December 31, 2024, the excess tax deficiency related to share-based payments was $ 0.8 million.

We had immaterial amounts of excess tax deficiency for the years ended December 31, 2023 and 2022.

Excess tax benefits and deficiencies are recorded within Expense (benefit) related to discrete income tax items on our Consolidated Statements of Operations and are included in operating cash flows on the Consolidated Statements of Cash Flows.

See Note 17 to the Consolidated Financial Statements for additional information related to equity plans and stock-based compensation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Recognition

9 unchanged sentences

For these contracts, we allocate the transaction price to each performance obligation based on its relative standalone selling price, which is based on prices charged to customers per our general price list.

Package discounts are reflected net in Revenue .

We recognize revenue when the merchandise is transferred or the service is performed, in satisfaction of the corresponding performance obligation.

Sales taxes collected are recognized on a net basis in our Consolidated Financial Statements.

Ancillary funeral service revenue, which is recorded in Other revenue, represents revenue from our flower shop, monument company, pet cremation business and online cremation businesses .

Ancillary funeral service revenue, which is recorded in Other revenue, represents revenue from our flower shop, pet cremation business and online cremation businesses.

Revenue is recognized when control of the merchandise or services is transferred to the customer and are primarily sold on an atneed basis.

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

1 unchanged sentence

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

Balances due on undelivered preneed funeral trust contracts have been reclassified to reduce Deferred preneed funeral revenue on our Consolidated Balance Sheet of $ 8.9 million and $ 10.7 million at December 31, 2022 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

However, we estimate an average maturity period of ten years for preneed funeral contracts.

Balances due from customers on delivered preneed cemetery contracts are included in Accounts receivable, net and Preneed cemetery receivables, net on our Consolidated Balance Sheet.

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 $ 15.8 million at December 31, 2022 and 2023, respectively.

Balances due on undelivered preneed funeral trust contracts have reduced Deferred preneed funeral revenue by $ 10.2 million and $ 10.7 million at December 31, 2024 and 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.

However, we estimate an average maturity period of 10 years for preneed funeral contracts.

Balances due from customers on delivered preneed cemetery contracts are included in Accounts receivable, net and Preneed cemetery receivables, net on our Consolidated Balance Sheets.

Balances due on undelivered preneed cemetery contracts have reduced Deferred preneed cemetery revenue on our Consolidated Balance Sheets by $ 13.6 million and $ 15.8 million at December 31, 2024 and 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.

However, we estimate an average maturity period of eight years for preneed cemetery contracts.

3 unchanged sentences

We record deferred taxes for temporary differences between the tax basis and financial reporting basis of assets and liabilities.

We classify our deferred tax liabilities and assets as non-current on our Consolidated Balance Sheet.

We classify our deferred tax liabilities and assets as non-current on our Consolidated Balance Sheets.

We record a valuation allowance to reflect the estimated amount of deferred tax assets for which realization is uncertain.

2 unchanged sentences

provide certain disclosures of uncertain tax matters;

and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheet.

and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheets.

See Note 16 to the Consolidated Financial Statements for additional information related to income taxes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Computation of Earnings Per Common Share

10 unchanged sentences

We have evaluated events and transactions during the period subsequent to December 31, 2024 through the date the financial statements were issued for potential recognition or disclosure in the accompanying financial statements covered by this report.

See Note 24 to the Consolidated Financial Statements for additional information related to subsequent events.

RECENTLY ISSUED ACCOUNTING STANDARDS

Credit Losses - Vintage Disclosures

In March 2022, the FASB issued ASU, Financial Instruments - Credit Losses (“Topic 326”) to make the requirement to disclose gross write-offs by class of financing receivable and major security type consistent for all public business entities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

amendment in this update provides specific guidance on the disclosure for current period write-offs by year of origination for financing receivables.

This amendment is effective for fiscal years beginning after December 15, 2022, and therefore was effective for us beginning January 1, 2023.

Our adoption of these amendments had no impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

Segment Reporting

3 unchanged sentences

Additionally, the amendments require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We plan to adopt the amendments of Topic 280 for our fiscal year beginning January 1, 2024 and interim periods within our fiscal year beginning January 1, 2025.

We expect the adoption will have no impact on our consolidated financial statements.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and therefore were effective for us for our fiscal year beginning January 1, 2024 and for interim periods within our fiscal year beginning January 1, 2025.

The adoption had no material impact on our consolidated financial statements as it modified disclosure requirements only.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU, Income Taxes - Improvements to Income Tax Disclosures (“Topic 740”) to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information.

6 unchanged sentences

We plan to adopt the amendments of Topic 740 for our fiscal year beginning January 1, 2025.

We expect the adoption will have no impact on our consolidated financial statements.

We expect the adoption will have no material impact on our consolidated financial statements as it modifies disclosure requirements only.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Expense Disaggregation

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (“Topic 220”).

Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03.

The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses.

The amendments in this update require, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption.

This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted.

We expect the adoption will have no material impact on our consolidated financial statements as it modifies disclosure requirements only.

BUSINESS COMBINATIONS

We did not acquire any businesses in 2024.

On March 22, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business in the Bakersfield, CA area for $ 44.0 million in cash.

2 unchanged sentences

The results of the acquired businesses are reflected in our Consolidated Statements of Operations from the date of acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the breakdown of the purchase price allocation for our Bakersfield, CA business acquisition (in thousands):

15 unchanged sentences

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

Goodwill) Goodwill

Recorded Liabilities

Acquisition Date Type of Business Market Assets Acquired (Excluding Goodwill) Goodwill Recorded Liabilities and Debt Assumed

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

During the year ended December 31, 2022, we acquired a business consisting of two funeral homes in Kissimmee, FL for $ 6.3 million in cash and a business consisting of three funeral homes, one cemetery and one cremation focused business in the Charlotte, NC area for $ 25.0 million in cash.

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

The following table summarizes the breakdown of the purchase price allocation for our 2022 business acquisitions (in thousands):

Purchase Price Allocation

Current assets $ 219

Preneed trust assets 4,146

Property, plant & equipment 8,146

Cemetery property 2,375

Goodwill 19,511

Intangible and other non-current assets 2,145

Preneed trust liabilities ( 4,146 )

Deferred revenue ( 1,146 )

Purchase price $ 31,250

The intangible and other non-current assets relate to the fair value of tradenames and non-compete agreements.

The goodwill recorded for our 2022 business acquisitions is expected to be deductible for tax purposes.

As of December 31, 2022, our accounting for our 2022 business acquisitions is complete.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Acquisition Date Type of Business Market Assets

Goodwill) Goodwill

Recorded Liabilities

August 8, 2022 Two Funeral Homes Kissimmee FL $ 4,995 $ 2,694 $ ( 1,439 )

October 25, 2022 Three Funeral Homes, One Cemetery and One Cremation Focused Business Charlotte, NC $ 12,036 $ 16,817 $ ( 3,853 )

Many of the former owners and staff of our acquired funeral homes and certain cemeteries have provided high quality service to families for generations, which often represents a substantial portion of the value of a business.

The excess of the purchase price over the fair value of identifiable net assets of funeral home businesses and cemeteries acquired is recorded as goodwill.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

December 31, 2024 December 31, 2023

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

Goodwill at the beginning of the year $ 423,643 $ 410,137

Increase in goodwill related to acquisitions — 13,506

Decrease in goodwill related to divestitures ( 8,784 ) —

Decrease in goodwill related to assets held for sale ( 445 ) —

Goodwill at the end of the year $ 414,859 $ 423,643

During the year ended December 31, 2024, we allocated $ 8.8 million of goodwill to the sale of six funeral homes and one cemetery for a loss recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations of which $ 7.8 million was allocated to our funeral home segment and $ 1.0 million was allocated to our cemetery segment.

During the year ended December 31, 2023, we recognized $ 13.5 million in goodwill related to our acquisition of a business located in Bakersfield, CA, of which $ 4.5 million was allocated to our cemetery segment and $ 9.0 million was allocated to our funeral home segment.

During the year ended December 31, 2022, we recognized $ 19.5 million in goodwill related to our 2022 business acquisitions, of which $ 7.4 million was allocated to our cemetery segment and $ 12.1 million was allocated to our funeral home segment.

Additionally, during the year ended December 31, 2022, we allocated $ 0.9 million of goodwill to the sale of two funeral homes for a loss recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

We also recorded a $ 0.4 million goodwill impairment related to one funeral home and two cemeteries that were classified as held for sale at the balance sheet date, which was recorded in Net loss on divestitures, disposals and impairment charges in our Consolidated Statements of Operations.

As a result of our 2024 and 2023 annual qualitative impairment assessments, we determined that there were no factors that would indicate the need to perform an additional quantitative goodwill impairment test.

We concluded that it is more-likely-than-not that the fair value of our reporting units is greater than their carrying value and thus there was no impairment to goodwill.

See Notes 1, 3, and 5 to the Consolidated Financial Statements for a discussion of the methodology used for our annual goodwill impairment test and a discussion of our acquisitions and divestitures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

DIVESTED OPERATIONS

During the year ended December 31, 2024, we sold six funeral homes and one cemetery for an aggregate of $ 10.9 million and merged three funeral homes with other businesses we own in existing markets.

During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for an aggregate of $ 1.1 million and merged one funeral home with another business we own in a nearby market.

During the year ended December 31, 2022, we sold four funeral homes for an aggregate of $ 1.5 million and merged one funeral home with another business we own in a nearby market.

During 2021, we sold two funeral homes and one cemetery for an aggregate of $ 2.5 million and we merged six funeral homes with other businesses we own in nearby markets.

During 2022, we sold four funeral homes for an aggregate of $ 1.5 million and we merged one funeral home with another business we own in a nearby 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):

5 unchanged sentences

( 1,224 ) ( 106 ) ( 736 )

Income tax benefit 16 193 28

Income tax expense 348 28 193

Net loss from divested operations, after tax $ ( 735 ) $ ( 72 ) $ ( 488 )

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

For the years ended December 31, 2024, 2023 and 2022, after each divestiture, we concluded that it was more-likely-than not that the fair value of our reporting units was greater than their carrying value and thus there was no impairment to goodwill.

See Note 1 to the Consolidated Financial Statements for a discussion of the methodology used for assessing goodwill impairment after a divestiture of a business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounts Receivable

1 unchanged sentence

December 31, 2024

Funeral Cemetery Corporate Total

Funeral Cemetery Corporate Held for Sale Total

Trade and financed receivables $ 7,085 $ 24,355 $ — $ ( 833 ) $ 30,607

3 unchanged sentences

December 31, 2023

Funeral Cemetery Corporate Total

Funeral Cemetery Corporate Held for Sale Total

Trade and financed receivables $ 8,822 $ 18,459 $ — $ — $ 27,281

4 unchanged sentences

We do not provide an allowance for credit losses for these receivables as we have historically not had any collectability issues nor do we expect any in the foreseeable future.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the activity in our allowance for credit losses by portfolio segment for the year ended December 31, 2024 (in thousands):

11 unchanged sentences

Cemetery receivables $ 97,547 $ 77,755

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

3 unchanged sentences

Cemetery receivables, at amortized cost $ 92,564 $ 72,086

allowance for credit losses ( 1,985 ) ( 3,495 )

allowance for contract cancellation and credit losses ( 3,018 ) ( 3,495 )

balances due on undelivered cemetery preneed contracts ( 13,576 ) ( 15,797 )

amounts in accounts receivable ( 23,341 ) ( 17,219 )

Preneed cemetery receivables, net including HFS

52,629 35,575

Held for sale

Preneed cemetery receivables, net

$ 50,958 $ 35,575

The following table summarizes the activity in our allowance for credit losses for Preneed cemetery receivables, net for the year ended December 31, 2024 (in thousands):

6 unchanged sentences

The aging of past due cemetery receivables as of December 31, 2024 is as follows (in thousands):

Past Due 61-90

Past Due 91-120

Past Due >120

Past Due Total Past

Due Current Total

31-60 Past Due 61-90 Past Due 91-120 Past Due >120 Past Due Total Past Due Current Total

Recognized revenue $ 1,599 $ 1,065 $ 832 $ 2,578 $ 6,074 $ 72,914 $ 78,988

2 unchanged sentences

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

Past Due 61-90

Past Due 91-120

Past Due >120

Past Due Total Past

Due Current Total

31-60 Past Due 61-90 Past Due 91-120 Past Due >120 Past Due Total Past Due Current Total

Recognized revenue $ 1,877 $ 715 $ 353 $ 3,790 $ 6,735 $ 49,554 $ 56,289

1 unchanged sentence

Total contracts $ 2,343 $ 854 $ 443 $ 5,178 $ 8,818 $ 68,937 $ 77,755

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

FAIR VALUE MEASUREMENTS

8 unchanged sentences

The fair value of our Senior Notes was $ 364.4 million at December 31, 2024 based on the last traded or broker quoted price.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In addition, we have an investment in a limited partnership fund, whose fair value has been estimated using the net asset value per share practical expedient described in ASC 820-10-35-59, Fair Value Measurement of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) and therefore, has not been classified in the fair value hierarchy.

The investment strategy of this fund is to generate attractive risk-adjusted returns over a multi-year performance period through the construction of a concentrated portfolio of investments possessing certain distinct business attributes that suggest the potential for long-term value creation.

The value of the investments in this fund cannot be redeemed at December 31, 2023 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 December 31, 2023 is $ 10.0 million.

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.

The value of the investments in this fund cannot be liquidated at December 31, 2024 because the investments include restrictions that do not allow for liquidation until 2027.

As of December 31, 2024 we do not have an unfunded commitment for this investment.

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 Sheets as having met the criteria for fair value measurement.

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.

19 unchanged sentences

Cemetery perpetual care trust investments represent a portion of the proceeds from the sale of cemetery property interment rights that we are required by various state laws to deposit into perpetual care trust funds.

The income earned from

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

these perpetual care trusts offsets maintenance expenses for cemetery property and memorials.

The income earned from these perpetual care trusts offsets maintenance expenses for cemetery property and memorials.

This trust fund income is recognized in Other revenue.

3 unchanged sentences

Because of the long-term relationship between the establishment of trust investments and the required performance of the underlying contractual obligations, the impact of current market conditions that may exist at any given time is not necessarily indicative of our ability to generate profit on our future performance obligations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Preneed Cemetery Trust Investments

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

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

December 31, 2024 December 31, 2023

1 unchanged sentence

allowance for contract cancellation ( 3,147 ) ( 3,087 )

Preneed cemetery trust investments, including HFS

102,996 96,374

Held for sale

Preneed cemetery trust investments

$ 98,120 $ 96,374

The cost and market values associated with preneed cemetery trust investments at December 31, 2024 are detailed below (in thousands):

37 unchanged sentences

Common stock 1 43,057 9,466 ( 7,935 ) 44,588

Limited partnership fund

3,575 — ( 3 ) 3,572

Mutual funds:

Equity 1 553 10 ( 30 ) 533

Fixed Income 2 12,324 10 ( 3,310 ) 9,024

2 11,369 16 ( 2,759 ) 8,626

Trust securities

$ 102,879 $ 11,679 $ ( 16,031 ) $ 98,527

Accrued investment income $ 934 $ 934

41 unchanged sentences

Preneed funeral contracts are secured by payments from customers, less retained amounts not required to be deposited into trust.

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

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

December 31, 2024 December 31, 2023

1 unchanged sentence

allowance for contract cancellation ( 3,305 ) ( 3,405 )

Preneed funeral trust investments, including HFS

108,416 107,842

Held for Sale

Preneed funeral trust investments

$ 106,219 $ 107,842

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

25 unchanged sentences

Total fixed income securities $ 20,893

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

9 unchanged sentences

Common stock 1 38,600 8,858 ( 6,855 ) 40,603

Limited partnership fund

3,383 — ( 2 ) 3,381

Mutual funds:

6 unchanged sentences

Market value as a percentage of cost 97.3 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

8 unchanged sentences

Total fixed income securities with an unrealized loss $ 2,067 $ ( 137 ) $ 1,194 $ ( 252 ) $ 3,261 $ ( 389 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

22 unchanged sentences

Sales 31,038 17,300 7,419

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 Sheets represent the corpus of those trusts plus undistributed income.

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

2 unchanged sentences

Obligations due from trust ( 885 ) ( 980 )

Care trusts’ corpus, including HFS

$ 86,452 $ 84,351

Held for sale

Care trusts' corpus

$ 84,218 $ 84,351

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table reflects the cost and market values associated with the trust investments held in perpetual care trust funds at December 31, 2024 (in thousands):

22 unchanged sentences

Total fixed income securities $ 19,917

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

8 unchanged sentences

Common stock 1 36,413 8,098 ( 6,580 ) 37,931

Limited partnership fund

3,042 — ( 2 ) 3,040

Mutual funds:

5 unchanged sentences

Market value as a percentage of cost 95.7 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our fixed income securities (excluding mutual funds) within our perpetual care trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

16 unchanged sentences

Total fixed income securities with an unrealized loss $ 1,007 $ ( 61 ) $ 11,358 $ ( 4,759 ) $ 12,365 $ ( 4,820 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

17 unchanged sentences

Sales 29,967 21,613 5,444

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

RECEIVABLES FROM PRENEED FUNERAL TRUSTS

10 unchanged sentences

The composition of the preneed trust funds at December 31, 2024 is as follows (in thousands):

Cost Basis Fair Value

Historical Cost Basis Fair Value

Cash and cash equivalents $ 6,826 $ 6,826

3 unchanged sentences

Total $ 23,063 $ 22,827

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Cost Basis Fair Value

Historical Cost Basis Fair Value

Cash and cash equivalents $ 6,547 $ 6,547

7 unchanged sentences

Approximately 10% of our preneed funeral contracts are cancelled before the first year anniversary of the policy.

As such, we recognize 80% of our commissions revenue at the time that it is earned and we defer 20% of the commissions revenue earned for twelve months until the commission is no longer subject to refund.

As such, we recognize 90% of our commissions revenue at the time that it is earned.

Based on our historical cancellation rate, we defer 10% of the commissions revenue earned for twelve months until the commission is no longer subject to refund.

All selling costs incurred pursuant to the sale of the insurance funded preneed contracts are expensed as incurred.

1 unchanged sentence

The incentive payment is subject to partial claw-back if certain preneed funeral sales volumes are not met within the ten-year term of the agreement.

As such, we will recognize the incentive payment in proportion to our achieved preneed funeral sales volume per the agreement at each reporting period.

During the year ended December 31, 2023, we recognized $ 0.2 million of the incentive payment as Other revenue.

As such, we recognize the incentive payment in proportion to our achieved preneed funeral sales volume, net of cancellations, at each reporting period.

In each of the years ended December 31, 2024 and 2023, we recognized $ 0.2 million of the incentive payment as Other revenue.

Generally, at the time of the sale of either the preneed insurance or preneed trust contract, the intent is that the beneficiary has made a commitment to assign the proceeds to us for the fulfillment of the service and merchandise obligations on the preneed contract at the time of need.

However, this commitment is generally revocable and the proceeds from the policy are portable, so the customer can choose to use an alternative provider at the time of need.

Preneed funeral contracts to be funded at maturity by third-party insurance policies totaled $ 419.5 million and $ 434.9 million at December 31, 2022 and 2023, respectively, and are not recorded as assets or liabilities on our Consolidated Balance Sheet.

Preneed funeral contracts to be funded at maturity by third-party insurance policies totaled $ 421.3 million and $ 434.9 million at December 31, 2024 and 2023, respectively, and are not recorded as assets or liabilities on our Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

INTANGIBLE AND OTHER NON-CURRENT ASSETS

2 unchanged sentences

Tradenames $ 28,116 $ 28,862

Internally developed software, net of accumulated amortization of $ 764 and $ 444 , respectively

Capitalized commissions on preneed contracts, net of accumulated amortization

1 unchanged sentence

Prepaid agreements not-to-compete, net of accumulated amortization of $ 3,543 and $ 3,158 , respectively

Internal-use software, net of accumulated amortization of $ 200 and $ 444 , respectively

Other 124 380

Non-current prepaid and other intangibles, net of accumulated amortization of $ 109 and $ 37 , respectively

Intangible and other non-current assets, net including HFS

40,642 37,677

Held for Sale

Intangible and other non-current assets, net

$ 40,427 $ 37,677

During the year ended December 31, 2024, two of the funeral homes that we sold had a carrying value of tradenames of $ 0.2 million, which was included in the loss on sale and recorded in Net loss on divestitures, disposals and impairment charges on our Consolidated Statements of Operations.

During the year ended December 31, 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 acquisition of a business located in Bakersfield, CA, as more fully described in Note 3 to the Consolidated Financial Statements.

For our 2022 annual

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

assessment, there was no impairment to intangibles assets.

As a result of our 2024 and 2023 annual qualitative impairment assessments, we determined that there were factors that would indicate the need to perform additional quantitative impairment tests for certain funeral home businesses.

As a result of these additional quantitative impairment tests, we recorded a $ 0.6 million and a $ 0.2 million impairment to the tradenames of certain funeral homes during the years ended December 31, 2024 and 2023, respectively, as the carrying amount of these tradenames exceeded their fair value.

See Note 1 to the Consolidated Financial Statements included herein for a discussion of the methodology used for our indefinite-lived intangible asset impairment test.

Internally Developed Software

Internally developed software is typically amortized on a straight-line basis over five years .

Amortization expense was $ 0.3 million for each of the years ended December 31, 2024 and 2023, and $ 0.2 million for the year ended December 31, 2022.

Capitalized Commissions

Amortization expense was $ 0.9 million, $ 0.8 million and $ 0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Prepaid Agreements

Prepaid Agreements Not-to-Compete

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

Amortization expense was $ 0.6 million for each of the years ended December 31, 2021, 2022 and 2023.

Internal-use Software

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

Amortization expense was $ 0.2 million and $ 0.3 million for the years ended December 31, 2022 and 2023, respectively.

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

Capitalized Commissions Prepaid Agreements Internal-use Software

Amortization expense was $ 0.5 million for the year ended December 31, 2024, and $ 0.6 million for each of the years ended December 31, 2023 and 2022.

Non-current Prepaid and Other Intangibles

Non-current prepaid agreements are related to software licenses that have been prepaid for multiple years.

These agreements are amortized on a straight-line basis over the term of the respective agreements, generally ranging from two to three years.

Other intangible assets relate to intellectual property and are amortized on a straight-line basis, typically over three years.

Amortization expense was $ 0.1 million and $ 37 thousand for the years ended December 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The aggregate amortization expense for our capitalized commissions, prepaid not-to-compete agreements, internal-use software and non-current prepaid and other agreements as of December 31, 2024 is as follows (in thousands):

Capitalized Commissions Prepaid Agreements Not-to-compete Internally Developed Software Non-current Prepaid and Other Intangibles

Years ending December 31,

7 unchanged sentences

CREDIT FACILITY AND ACQUISITION DEBT

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

At December 31, 2024, our senior secured revolving credit facility (as amended, 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.

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

On July 31, 2024, the Company entered into a fourth amendment, (the “Credit Facility Amendment”), to our 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) the extension of the maturity date of the Credit Facility to July 31, 2029, provided that, if the Senior Notes (as defined in the Credit Facility) have a stated maturity date that is prior to July 31, 2029, then the maturity date shall instead be the date that is 91 days prior to the stated maturity date of the Senior Notes;

(ii) the establishment of Term Secured Overnight Financing Rate (“SOFR”) as a benchmark rate and the removal of BSBY from the Credit Facility, including conforming revisions to certain defined terms under the Credit Facility;

(iii) the conversion of each existing BSBY Rate Loan (as defined in the Credit Facility prior to giving effect to the Credit Facility Amendment) to a Term SOFR Loan (as defined in the Credit Facility);

(iv) modifications to the definitions of “Applicable Rate” and “Applicable Fee Rate” to change the applicable rates and pricing levels set forth in each pricing grid;

(v) the removal of certain mandatory prepayments arising from the issuance of either Equity Interests or Debt (as both are defined by the Credit Facility);

and (vi) modifications to the permitted investments covenant, relating to the Company’s ability to make certain acquisitions, subject to the satisfaction of certain conditions therein.

We incurred $ 0.8 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.

Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 13) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).

16 unchanged sentences

At December 31, 2024, we had outstanding borrowings under the Credit Facility of $ 137.0 million.

We also had one letter of credit for $ 2.3 million under the Credit Facility, which was increased to $ 2.6 million on July 7, 2023.

We also had one letter of credit for $ 2.2 million under the Credit Facility.

The letter of credit will expire on November 25, 2025 and is expected to automatically renew annually and secures our obligations under our various self-insured policies.

At December 31, 2024, we had $ 110.8 million of availability under the Credit Facility.

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.

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

Outstanding borrowings under our Credit Facility bear interest at a prime rate or the SOFR rate, plus an applicable margin based on our leverage ratio.

At December 31, 2024, the prime rate margin was equivalent to 1.50 % and the SOFR term margin was 2.50 %.

The weighted average interest rate on our Credit Facility was 8.4 % and 8.6 % for the years ended December 31, 2024 and 2023, respectively.

8 unchanged sentences

A majority of the deferred purchase price and notes bear no interest and are discounted at imputed interest rates ranging from 6.5 % to 7.3 %.

Original maturities typically range from five to twenty years .

Original maturities typically range from nine to twenty years .

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

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

CONVERTIBLE SUBORDINATED NOTES

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

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

Therefore, no Convertible Notes remain outstanding at December 31, 2022 and 2023.

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

Years ended December 31,

2021 2022 2023

Convertible Notes interest expense $ 18 $ — $ —

Convertible Notes accretion of debt discount 20 — —

Convertible Notes amortization of debt issuance costs 1 — —

The effective interest rate on the unamortized debt discount and debt issuance costs for the year ended December 31, 2021 was 3.1 % .

At December 31, 2024, we had $ 400.0 million in aggregate principal amount of 4.25 % Senior Notes due 2029 (the “Senior Notes”) and related guarantees by the Subsidiary Guarantors, which were issued in a private offering under Rule 144A and Regulation S of the Securities Act.

3 unchanged sentences

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

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

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

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

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

4 unchanged sentences

The effective interest rate on the unamortized debt discount and the unamortized debt issuance costs for the Senior Notes for both the years ended December 31, 2024 and 2023 was 4.42 % and 4.30 %, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

December 31, 2024 December 31, 2023

7 unchanged sentences

The fair value of the Senior Notes, which are Level 2 measurements, was $ 364.4 million at December 31, 2024.

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

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

Years ended December 31,

2 unchanged sentences

Senior Notes amortization of debt discount 539 515 493

Senior Notes amortization of debt premium 85 — —

Senior Notes amortization of debt issuance costs 153 147 140

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The aggregate maturities of our Senior Notes for the next five years subsequent to December 31, 2024 and thereafter are as follows (in thousands):

Principal Maturity Discount Amortization Carrying

Principal Maturity Discount Amortization Carrying Value

Years ending December 31,

22 unchanged sentences

(2) Depreciation and amortization expense is included within Field depreciation expense and General, administrative and other on our Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

7 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease liabilities 1,027 1,896

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

28 unchanged sentences

At December 31, 2024, we had no significant operating or finance leases that had not yet commenced .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Payments for such agreements are generally not made in advance.

These agreements are generally for one to five years and provide for bi-weekly or monthly payments.

These agreements are generally for one to ten years and provide for bi-weekly or monthly payments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We have employment agreements with our executive officers.

These agreements are generally for three to five years and provide for participation in various incentive compensation arrangements.

These agreements are generally for two to five years and provide for participation in various incentive compensation arrangements.

These agreements generally renew automatically on an annual basis after their initial term has expired.

11 unchanged sentences

(1) In connection with Mr.

Payne’s transition from Executive Chairman of the Board to serving as a special advisor to the Board, his employment agreement with the Company was terminated and he entered into a transition agreement, effective February 22, 2024.

For more information on this transition see Note 24 to the Consolidated Financial Statements.

Payne’s transition from Executive Chairman of the Board of Directors to serving as a special advisor to the Board of Directors, his employment agreement with the Company was terminated and he entered into a transition agreement, effective February 22, 2024.

Defined Contribution Plan

We sponsor a defined contribution plan, a 401K plan, for the benefit of our employees.

Matching contributions and plan administrative expenses totaled $ 2.5 million during the year ended December 31, 2021 and $ 2.8 million during the years ended December 31, 2022 and 2023.

Matching contributions and plan administrative expenses totaled $ 2.9 million for the year ended December 31, 2024, and $ 2.8 million for each of the years ended December 31, 2023 and 2022.

We do not offer any post-retirement or post-employment benefits.

3 unchanged sentences

We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of certain of these litigation matters.

Carriage Services, Inc., et al., Superior Court of California, Ventura County, Case No.

2024 CU OE 028098.

On July 29, 2024, a wage and hour class action was filed against the Company and several of its subsidiaries.

Plaintiff, a former employee, seeks monetary damages on behalf of herself and other similarly situated current and former non-exempt employees as the putative class for the alleged failure to pay legally mandated compensation and reimbursement expenses.

As of December 31, 2024, we are unable to reasonably estimate the possible loss or ranges of loss, if any.

The prospective class has not been certified by a court of competent jurisdiction and the Company intends to vigorously defend itself in all respects.

Rolling Hills Memorial Park , Superior Court of California, Contra Costa County, Case No.

On October 4, 2024, a consumer class action was filed against the Company’s subsidiary, Rolling Hills Memorial Park.

Plaintiff, an owner of an interment right and purchaser of merchandise and services from Rolling Hills Memorial Park, seeks monetary damages on behalf of herself and other similarly situated current and former consumers and owners of interment rights as the putative class for the alleged failure to properly set cemetery merchandise and maintain the perpetual care cemetery.

As of December 31, 2024, we are unable to reasonably estimate the possible loss or ranges of loss, if any.

The prospective class has not been certified by a court of competent jurisdiction and the Company intends to vigorously defend itself in all respects.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6 unchanged sentences

Total current provision $ 17,825 $ 9,709 $ 12,777

federal provision (benefit) $ ( 452 ) $ 1,723 $ 2,117

State provision (benefit) ( 240 ) 1,313 1,190

Total deferred provision (benefit) $ ( 692 ) $ 3,036 $ 3,307

federal (benefit) provision $ ( 1,338 ) $ 2,117 $ 1,723

State provision 640 1,190 1,313

Total deferred (benefit) provision $ ( 698 ) $ 3,307 $ 3,036

Total income tax provision $ 17,127 $ 13,016 $ 15,813

6 unchanged sentences

Effect of state income taxes, net of federal benefit 3,656 7.3 2,421 5.2 3,630 6.3

Effect of 162(m) officer's compensation limitation

1,717 3.4 — — — —

Effect of non-deductible expenses and other, net 1,019 2.0 864 1.8 59 0.1

11 unchanged sentences

Amortization of non-compete agreements 875 855

Right-of-use assets 4,819 4,347

Preneed assets, net 312 —

Lease liabilities 4,135 4,347

Total deferred income tax assets 24,089 20,957

Less valuation allowance ( 181 ) ( 156 )

valuation allowance ( 156 ) ( 156 )

Total deferred income tax assets $ 23,933 $ 20,801

2 unchanged sentences

Preneed liabilities — ( 1,070 )

Lease liabilities ( 4,212 ) ( 3,806 )

Right-of-use assets ( 3,670 ) ( 3,806 )

Prepaid assets and other ( 1,962 ) ( 1,189 )

1 unchanged sentence

Total net deferred tax liabilities $ ( 51,429 ) $ ( 52,127 )

Our deferred tax assets and liabilities, along with related valuation allowances, are classified as non-current on our Consolidated Balance Sheet at December 31, 2022 and 2023.

We record a valuation allowance to reflect the estimated amount

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

of deferred tax assets for which realization is uncertain.

Our deferred tax assets and liabilities, along with related valuation allowances, are classified as non-current on our Consolidated Balance Sheets at December 31, 2024 and 2023.

We record a valuation allowance to reflect the estimated amount of deferred tax assets for which realization is uncertain.

Management reviews the valuation allowance at the end of each quarter and makes adjustments if it is determined that it is more-likely-than not that the tax benefits will be realized.

We recognized an immaterial net decrease in our valuation allowance during the years ended December 31, 2024 and 2023.

For state reporting purposes, we have $ 10.1 million of net operating loss carryforwards that will expire between 2025 and 2043, if not utilized.

3 unchanged sentences

provide certain disclosures of uncertain tax matters;

and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheet.

The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits.

and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheets.

The deferred tax assets recognized for those net operating losses ( “ NOLs ”) are presented net of these unrecognized tax benefits.

At December 31, 2024, the Company’s unrecognized tax benefit (“UTB”) reserve for uncertain tax positions primarily relates to the uncertainty of receiving audit protection for revenue recognition of cemetery property for the benefit derived from carrying back losses generated in 2018 to tax years with a higher effective tax rate than the current 21.0% rate.

11 unchanged sentences

During 2023, we accrued interest of $ 0.1 million and in total, as of December 31, 2023, recognized a liability for interest of $ 0.3 million.

As of December 31, 2023, we expect to receive approximately $ 1.9 million as a result of amended federal returns filed in 2017 for the tax years ended December 31, 2013, 2014 and 2015 in connection with various legislative changes.

In addition, we expect to receive approximately $ 2.0 million of carryback claims filed in 2020 for the tax years ended December 31, 2018 and 2019 related to the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 in response to the COVID-19 pandemic.

In 2017, we filed amended returns for the tax years ending December 31, 2013, 2014, 2015, resulting in $ 1.9 million in refunds.

These amended returns were selected for a limited scope audit.

Additionally, losses incurred in the tax years ending December 31, 2018, and 2019 were carried back to the tax years 2015 and 2016, generating refunds exceeding $ 5.0 million, which require Joint Committee approval.

During the year ended December 31, 2024, the refunds for the tax years 2013, 2014, and 2015 were received;

however, the Joint Committee review is still pending.

At December 31, 2024, Carriage had not received final correspondence from the Internal Revenue Service indicating the completion of the audits.

As of December 31, 2024, tax years 2013 to 2023 remain subject to examination by taxing authorities.

8 unchanged sentences

The 2017 Plan expires on May 17, 2027.

All stock-based plans are administered by the Compensation Committee appointed by our Board.

All stock-based plans are administered by the Compensation Committee appointed by our Board of Directors (the “Board”).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2024, we had 2,295,753 shares available to issue under our 2017 Plan.

The termination of the Amended and Restated 2006 Plan does not affect the awards previously issued and outstanding.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Restricted Stock

7 unchanged sentences

(1) Restricted stock granted during the year ended December 31, 2024 and 2023 will vest 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 $ 24.48 and $ 32.63 , respectively.

A summary of the number of unvested restricted stock awards and their weighted average grant date fair values during the year ended December 31, 2023 is presented in the table below (shares in thousands):

A summary of the number of unvested restricted stock awards and their weighted average grant date fair values during the year ended December 31, 2024 is presented in the table below:

Restricted stock awards Shares Weighted Average

14 unchanged sentences

— $ — — $ — 12,600 $ 143

— $ — 12,600 $ 143 — $ —

Cancelled 532,266 $ 6,311 105,150 $ 1,380 45,590 $ 512

(1) Stock options granted during the year ended December 31, 2021, 2022 and 2023 had a weighted average price of $ 34.79 , $ 49.48 and $ 32.69 , respectively.

(1) Stock options granted during the years ended December 31, 2024, 2023 and 2022 had a weighted average price of $ 24.48 , $ 32.69 and $ 49.48 , respectively.

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

The options granted in 2021 and 2022 vest over a five-year period and have a ten-year term.

The options granted in 2023 vest over a three-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 options granted in 2024 and 2023 vest over a three-year period and have a ten-year term.

The options granted in 2022 vest over a five-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.

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

1 unchanged sentence

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

(3) We granted 150,000 options to a key employee at a weighted average price of $ 34.79 .

These options will vest when the price of our common stock closes at or above $ 53.39 ( 50,000 options) and $ 77.34 ( 100,000 options) for three consecutive days within the ten-year term and the employee has remained continuously employed by us through such date.

The fair value of these options was $ 1.7 million.

(3) Stock options granted during the year ended December 31, 2022 had a weighted average price of $ 31.58 .

7 unchanged sentences

Exercised (1)

423,294 N/A 32,196 N/A 74,200 N/A

97,548 $ 1,439 74,200 N/A 32,196 N/A

Returned for option price (2)

16 unchanged sentences

2024 2023 2022 2022 2022

Grant date February 17 February 23 February 23 September 27 February 22

Grant date February 21 February 22 February 23 February 23 September 27

Expected holding period (years) 6.0 4.0 7.0 5.0 4.1

42 unchanged sentences

$ 31.58 - $ 31.58

The aggregate intrinsic value of the outstanding and exercisable stock options were both $ 0.4 million at December 31, 2023.

12,600 7.74 $ 31.58 8,400 7.74 $ 31.58

$ 32.69 - $ 49.48

724,675 6.86 $ 38.93 323,020 6.65 $ 37.59

$ 18.02 - $ 49.48

1,344,085 6.20 $ 32.39 616,840 4.13 $ 31.54

The aggregate intrinsic value of the outstanding and exercisable stock options were both $ 12.2 million and $ 5.8 million, respectively, at December 31, 2024.

We had $ 6.1 million of unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted average period of 2.5 years at December 31, 2024.

We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for stock options of $ 2.4 million, $ 2.3 million and $ 2.9 million for the years ended December 31, 2021, 2022 and 2023, respectively.

We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for stock options $ 2.5 million, $ 2.9 million and $ 2.3 million, for the years ended December 31, 2024, 2023 and 2022, respectively.

Performance Awards

5 unchanged sentences

Cancelled 80,276 $ 871 54,229 $ 1,565 30,743 $ 295

A summary of the number of performance awards and their weighted average grant date fair values during the year ended December 31, 2023 is presented in the table below (shares in thousands):

A summary of the number of performance awards and their weighted average grant date fair values during the year ended December 31, 2024 is presented in the table below:

Performance Awards Shares Weighted Average

2 unchanged sentences

At December 31 297,531 $ 22.23

At December 31, 2023, there was $ 2.3 million of unrecognized compensation cost related to performance awards expected to be recognized over a weighted average period of 12 months.

If all of the predetermined growth targets are met as of December 31, 2024, a total of 892,045 shares of common stock would be awarded to participants under this program.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The performance awards in the table above are presented at the first predetermined growth target.

However, at December 31, 2024, certain performance criteria for the third predetermined growth target were satisfied.

Therefore, a total of 415,812 shares of common stock are expected to be awarded to participants under this program.

There was no unrecognized compensation cost related to performance awards at December 31, 2024.

We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for performance awards of $ 1.1 million, $ 1.6 million and $ 2.5 million during the years ended December 31, 2024, 2023 and 2022, respectively.

3 unchanged sentences

the price being 85 % of the lower of the price on the first day of the plan entry date (beginning of the fiscal year) or the actual date of purchase (end of quarter).

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

ESPP activity is as follows:

Years Ended December 31,

26 unchanged sentences

(1) During the year ended December 31, 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 $ 0.8 million, for the year ended December 31, 2023.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses, for

common stock awards of $ 0.8 million, for the year ended December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7 unchanged sentences

Non-Employee Director and Board Advisor Compensation

Our Director Compensation Policy provides that each independent director is entitled to a quarterly retainer of $ 35,000 payable in cash and/or unrestricted shares of our common stock at the end of each quarter.

The lead director and chairman of our Audit Committee are entitled to an additional annual retainer of $ 10,000 , payable in quarterly installments of $ 2,500 each at the end of each quarter, and the chairman of our Corporate Governance and Compensation Committees are entitled to an additional annual retainer of $ 5,000 , payable in quarterly installments of $ 1,250 each at the end of each quarter.

On April 2, 2024, the Board revised the Director Compensation Policy to provide that each independent director is entitled to a quarterly retainer of $ 37,500 payable in cash and/or unrestricted shares of our common stock at the end of each quarter.

The chair of the Board, so long as he or she is an independent director, and the chair of our Audit Committee shall be entitled to an additional annual retainer of $ 20,000 , payable in quarterly installments of $ 5,000 each at the end of each quarter, and the chair of our Compensation Committee is entitled to an additional annual retainer of $ 15,000 , payable in quarterly installments of $ 3,750 each at the end of each quarter, and the chair of our Corporate Governance Committee is entitled to an additional annual retainer of $ 10,000 , payable in quarterly installments of $ 2,500 at the end of each quarter.

Any new independent director will receive upon admission to the Board a grant of $ 25,000 (in addition to the independent director annual retainer prorated at the time the new director is admitted to the Board) which can be taken in cash or unrestricted shares of our common stock.

The board advisor is entitled to a quarterly retainer of $ 18,750 payable in cash and/or unrestricted shares of our common stock at the end of each quarter.

The number of shares of such common stock will be determined by dividing the cash amount by the closing price of our common stock on the date of grant, which will be the date of admission to the Board.

22 unchanged sentences

SHARE REPURCHASE PROGRAM

Subject to market conditions, normal trading restrictions and satisfying certain financial covenants in our Credit Facility, and in the Indenture governing our Senior Notes, we may make purchases in the open market or through privately negotiated transactions under our Board authorized share repurchase program, in accordance with Rule 10b-18 of the Securities Exchange Act, as amended (the “Exchange Act”).

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 Exchange Act, which totaled up to $ 265.0 million in share repurchase authorizations.

3 unchanged sentences

Number of Shares Repurchased

2,906,983 695,496 —

Average Price Paid Per Share $ — $ — $ 49.22

1 unchanged sentence

$ — $ — $ 34,234

(1) These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period.

In December 2021, we repurchased 37,408 shares for $ 2.4 million, the settlement of which occurred in January 2022.

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.

17 unchanged sentences

Basic earnings per common share:

$ 2.17 $ 2.24 $ 2.78

Diluted earnings per common 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:

$ 2.10 $ 2.14 $ 2.63

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 (in thousands):

Years Ended December 31,

1 unchanged sentence

Antidilutive stock options 1,143 1,208 311

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

1 unchanged sentence

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SEGMENT REPORTING

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

Year Ended, December 31, 2023

Funeral Cemetery Total

Services $ 163,600 $ 18,566 $ 182,166

Merchandise 85,795 16,385 102,180

Cemetery property — 67,310 67,310

Other revenue 15,381 15,483 30,864

Total $ 264,776 $ 117,744 $ 382,520

Year Ended, December 31, 2022

Funeral Cemetery Total

Services $ 163,904 $ 17,367 $ 181,271

Merchandise 89,052 14,307 103,359

Cemetery property — 58,611 58,611

Other revenue 13,947 12,986 26,933

Total $ 266,903 $ 103,271 $ 370,174

Year Ended, December 31, 2021

Funeral Cemetery Total

Our Chief Operating Decision Maker (the “CODM”), who is the Chief Executive Officer, utilizes segment operating income (loss) for resource allocation across segments, particularly during the annual budgeting and forecasting processes.

The CODM examines variances on a monthly basis to make informed decisions regarding capital and personnel distribution among segments.

Additionally, the CODM employs segment gross profit for product pricing evaluation and uses segment adjusted operating profit to assess each segment’s performance by comparing results and return on assets against expected outcomes.

The tables below present revenue, disaggregated by major source for each of our reportable segments, as well as, significant segment expenses, other segment expenses, operating income (loss), depreciation and amortization, interest expense, income (loss) before income taxes, income tax expense (benefit), total assets, long-lived assets, goodwill, capital expenditures and number of operating locations by segment as follows, (in thousands, except number of operating locations) for the years ended December 31, 2024, 2023 and 2022, respectively:

Year Ended, December 31, 2024 Funeral Cemetery Corporate Total

Services $ 163,696 $ 19,355 $ — $ 183,051

2 unchanged sentences

Other revenue 18,382 15,833 — 34,215

Total $ 270,087 $ 105,799 $ 375,886

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents gross profit, operating income (loss), income (loss) before income taxes, depreciation and amortization, interest expense, income tax expense (benefit), total assets, long-lived assets, goodwill, capital expenditures and number of operating locations by segment (in thousands, except number of operating locations):

Funeral Cemetery Corporate Consolidated

2023 $ 81,912 $ 42,383 $ — $ 124,295

2022 83,067 36,159 — 119,226

Total revenue 263,114 141,084 — 404,198

Salaries, benefits and commission expenses

69,552 37,958 — 107,510

Operating income (loss):

Cost of merchandise 27,831 8,058 — 35,889

Allocated overhead costs (2)

13,135 4,883 — 18,018

Facilities and grounds expenses 10,561 6,527 — 17,088

General and administrative expenses (3)

10,324 3,616 — 13,940

Other segment expenses (4)

47,454 23,459 59,041 129,954

Operating income (loss) $ 84,257 $ 56,583 $ ( 59,041 ) $ 81,799

Depreciation and amortization $ 11,736 $ 10,161 $ 993 $ 22,890

Interest expense $ 947 $ 27 $ 31,101 $ 32,075

Income (loss) before income taxes $ 83,945 $ 56,933 $ ( 90,798 ) $ 50,080

2023 $ 82,453 $ 42,208 $ ( 78,232 ) $ 46,429

2022 85,196 35,126 ( 63,128 ) 57,194

Income tax expense (benefit) $ 28,709 $ 19,471 $ ( 31,053 ) $ 17,127

Total assets $ 781,006 $ 477,487 $ 21,087 $ 1,279,580

Long-lived assets $ 628,681 $ 207,427 $ 10,232 $ 846,340

Goodwill $ 356,869 $ 57,990 $ — $ 414,859

Capital expenditures $ 5,724 $ 8,814 $ 1,560 $ 16,098

Number of operating locations at year end 162 31 — 193

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(2) Allocated overhead costs include:

property insurance costs, property tax expenses and corporate overhead fees allocated to the field, such as information technology, human resources, legal and finance.

(3) General and administrative expenses include:

professional services, travel and meals expenses, computer software expenses and office supplies.

(4) The Corporate segment's other segment expenses primarily include general, administrative and other expenses, net loss on divestitures, disposals and impairment charges and amortization and depreciation expenses.

The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures, disposals and impairment charges and amortization and depreciation expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended, December 31, 2023 Funeral Cemetery Corporate Total

Services $ 163,600 $ 18,566 $ — $ 182,166

Merchandise 85,795 16,385 — 102,180

Cemetery property — 67,310 — 67,310

Other revenue 15,381 15,483 — 30,864

Total revenue 264,776 117,744 — 382,520

Salaries, benefits and commission expenses

72,210 33,962 — 106,172

Depreciation and amortization:

Cost of merchandise 29,387 7,445 — 36,832

Allocated overhead costs (2)

12,767 4,147 — 16,914

Facilities and grounds expenses 10,063 5,578 — 15,641

General and administrative expenses (3)

10,301 3,253 — 13,554

Other segment expenses (4)

48,742 21,436 42,250 112,428

Operating income (loss) $ 81,306 $ 41,923 $ ( 42,250 ) $ 80,979

Depreciation and amortization $ 12,197 $ 8,008 $ 912 $ 21,117

Interest expense $ 783 $ 8 $ 35,475 $ 36,266

2023 $ 783 $ 8 $ 35,475 $ 36,266

2022 753 — 25,142 25,895

2021 835 — 24,610 25,445

Income (loss) before income taxes $ 82,453 $ 42,208 $ ( 78,232 ) $ 46,429

Income tax expense (benefit) $ 23,115 $ 11,833 $ ( 21,932 ) $ 13,016

2023 $ 23,115 $ 11,833 $ ( 21,932 ) $ 13,016

2022 23,555 9,712 ( 17,454 ) 15,813

2021 22,141 10,181 ( 21,177 ) 11,145

Total assets $ 802,368 $ 448,018 $ 17,666 $ 1,268,052

2023 $ 802,368 $ 448,018 $ 17,666 $ 1,268,052

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

2021 769,539 390,344 18,748 1,178,631

Long-lived assets $ 648,253 $ 209,401 $ 5,732 $ 863,386

2023 $ 648,253 $ 209,401 $ 5,732 $ 863,386

2022 630,599 190,226 4,518 825,343

Goodwill $ 364,639 $ 59,004 $ — $ 423,643

Capital expenditures $ 7,483 $ 10,061 $ 495 $ 18,039

Number of operating locations at year end 171 32 — 203

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(2) Allocated overhead costs include:

property insurance costs, property tax expenses and corporate overhead fees allocated to the field, such as information technology, human resources, legal and finance.

(3) General and administrative expenses include:

professional services, travel and meals expenses, computer software expenses and office supplies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2022 Funeral Cemetery Corporate Total

Services $ 163,904 $ 17,367 $ — $ 181,271

Merchandise 89,052 14,307 — 103,359

Cemetery property — 58,611 — 58,611

Other revenue 13,947 12,986 — 26,933

Total revenue 266,903 103,271 — 370,174

Salaries, benefits and commission expenses

70,142 28,940 — 99,082

Cost of merchandise 29,944 6,483 — 36,427

Allocated overhead costs (2)

11,648 3,511 — 15,159

Facilities and grounds expenses 9,919 5,268 — 15,187

General and administrative expenses (3)

9,530 2,787 — 12,317

Other segment expenses (4)

53,640 21,187 37,449 112,276

Operating income (loss) $ 82,080 $ 35,095 $ ( 37,449 ) $ 79,726

Depreciation and amortization $ 11,591 $ 7,584 $ 624 $ 19,799

Interest expense $ 753 $ — $ 25,142 $ 25,895

Income (loss) before income taxes $ 85,196 $ 35,126 $ ( 63,128 ) $ 57,194

Income tax expense (benefit) $ 23,555 $ 9,712 $ ( 17,454 ) $ 15,813

Total assets $ 779,500 $ 396,389 $ 17,061 $ 1,192,950

Long-lived assets $ 630,599 $ 190,226 $ 4,518 $ 825,343

Goodwill $ 355,654 $ 54,483 $ — $ 410,137

Capital expenditures $ 14,917 $ 10,566 $ 598 $ 26,081

2023 $ 7,483 $ 10,061 $ 495 $ 18,039

2022 14,917 10,566 598 26,081

2021 11,511 9,704 3,668 24,883

Number of operating locations at year end 171 32 — 203

2023 171 32 — 203

2022 171 32 — 203

2021 170 31 — 201

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(2) Allocated overhead costs include:

property insurance costs, property tax expenses and corporate overhead fees allocated to the field, such as information technology, human resources, legal and finance.

(3) General and administrative expenses include:

professional services, travel and meals expenses, computer software expenses and office supplies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SUPPLEMENTARY DATA

Balance Sheet

Balance Sheets

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

Prepaids and other current assets:

Prepaid and other current assets:

Prepaid expenses $ 3,987 $ 3,779

10 unchanged sentences

Incentive compensation $ 12,860 $ 13,156

Salaries and wages 4,867 2,285

Insurance 3,584 3,017

1 unchanged sentence

Vacation 2,803 3,647

Ad valorem taxes 2,314 2,395

Interest 2,288 2,409

Salaries and wages 2,263 2,285

Perpetual care trust payable 2,143 1,358

Employee meetings and award trips 1,550 1,185

Income tax payable 459 —

Commissions 1,218 1,144

Perpetual care trust payable 222 1,358

Ad valorem and franchise taxes 455 2,395

Income tax payable 208 —

Other accrued liabilities 1,300 1,384

Total accrued and other liabilities, including HFS

38,606 35,362

Held for sale

Total accrued and other liabilities

$ 38,460 $ 35,362

Other long-term liabilities:

9 unchanged sentences

Land purchased in exchange for debt — 2,550 —

Unsettled share repurchases 2,429 — —

Fair value of donated real property 635 — —

SUBSEQUENT EVENTS

On February 22, 2024, the Board announced the conclusion of the Company’s review of strategic alternatives, first announced on June 29, 2023, which was overseen by the Board with assistance from experienced financial advisors and legal counsel.

On February 21, 2024, the Board voted to bring the strategic review process to a close.

The Board unanimously determined that continuing to execute on the Company’s strategic plan as an independent, public company is in the best interests of the Company and its stockholders at this time.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On February 22, 2024 (the “Transition Date”), the Company announced that Mr.

Payne, the Company’s founder and former Chief Executive Officer, will cease to serve as Executive Chairman of the Board, but he will remain on the Board until the Company’s 2024 annual meeting of stockholders, when the term for Class I directors is scheduled to expire.

Beginning on the Transition Date, Mr.

Payne will begin serving as a special advisor to the Board and senior management in a consulting role.

In connection with Mr.

Payne’s termination of employment, the employment-related provisions of his Employment Agreement, dated as of November 5, 2019, with the Company (as amended prior to the Transition Date, the “ Employment Agreement ”) terminated on the Transition Date.

On February 21, 2024, the Company and Mr.

Payne entered into a Transition Agreement (the “ Transition Agreement ”), setting forth the terms of his severance benefits and his consulting arrangement.

Under the Transition Agreement, Mr.

Payne is entitled to receive certain benefits, subject to the timely execution and non-revocation by Mr.

Payne and his spouse of waiver and release agreements in connection with the Transition Date and the end of the 12-month consulting term set forth in the Transition Agreement (the “ Releases ”) .

These payments and benefits include the following:

• Salary continuation for 24 months of $ 2.0 million ;

• 2023 annual bonus of $ 1.25 million ;

• Prorated 2024 bonus of $ 181,500 ;

• Prorated settlement of performance awards of $ 3.0 million payable in cash;

• Consulting payments of $ 1.0 million ;

• Payments for maintaining health benefits for Mr.

Payne and his spouse for up to 36 months;

• Reimbursement of legal expenses up to $ 35,000 .

All of the payments and benefits provided under the Transition Agreement are subject to Mr.

Payne’s continued compliance with certain confidentiality, non-competition, non-solicitation and non-disparagement provisions of the Employment Agreement, as well as to compliance by Mr.

Payne and his spouse with their respective Releases.

The Transition Agreement may be terminated by the Company upon the material breach of the Transition Agreement, the Employment Agreement or either of the Releases.

Payne’s death, any consulting fee payments would be paid to his estate.

CARRIAGE SERVICES, INC.

1 unchanged sentence

(in thousands)

Description Balance at

of year Charged to

expenses Deduction Balance at

Description Balance at beginning of year Charged to costs and expenses Deduction Balance at end of year

Year ended December 31, 2022:

Allowance for credit losses, current portion $ 1,287 $ 1,240 $ 1,537 $ 990

Allowance for credit losses of preneed cemetery receivables,

non-current portion 1,644 543 1,108 1,079

Employee severance accruals $ 641 $ 1,880 $ 1,361 $ 1,160

1 unchanged sentence

Year ended December 31, 2023:

Allowance for credit losses, current portion $ 990 $ 1,821 $ 1,798 $ 1,013

Allowance for credit losses of preneed cemetery receivables, non-current portion 1,079 997 793 1,283

Employee severance accruals $ 1,160 $ 186 $ 799 $ 547

1 unchanged sentence

Year Ended December 31, 2024:

Allowance for credit losses, current portion $ 1,013 $ 1,827 $ 1,334 $ 1,506

Allowance for credit losses of preneed cemetery receivables, non-current portion 1,283 1,223 251 2,255

Employee severance accruals $ 547 $ 6,207 $ 4,233 $ 2,521

2 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-K

Item 8. Financial Statements and Supplementary Data