What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 110 added, 113 removed, 204 unchanged (52% of the section changed)

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

At June 30, 2025, we operated 159 funeral homes in 25 states and 28 cemeteries in 10 states.

At September 30, 2025, we operated 159 funeral homes in 24 states and 28 cemeteries in 9 states.

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

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COMPANY DEVELOPMENTS

During the six months ended June 30, 2025, we sold two funeral homes and three cemeteries for an aggregate of $15.8 million resulting in a gain of $5.9 million.

During the nine months ended September 30, 2025, we acquired eight funeral homes, one cemetery, and one cremation focused business in Florida for an aggregate price of $56.5 million.

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

During the nine months ended September 30, 2025, we sold nine funeral homes and four cemeteries for an aggregate of $33.8 million resulting in a gain of $0.8 million.

Additionally, we sold real property for $4.1 million resulting in a gain of $1.1 million.

On July 16, 2025, we sold three funeral homes and one cemetery that was included in held for sale at June 30, 2025, for an aggregate of $5.5 million.

Macroeconomic, Inflationary, Borrowing Cost, and Volume Trends

During the first half of 2025, consumer spending on discretionary items continued to reflect mixed trends.

Based on various economic indicators, overall consumer spending remained strong, particularly among high-income earners, but it appears there was a shift towards more cautious spending, especially for middle and low-income households.

We believe this caution was influenced by factors like rising inflation, additional tariffs, and a more uncertain economic outlook.

Broad economic indicators have indicated that consumer confidence in the U.S.

economy has been dropping or remained flat over the past several months and may continue to drop, which could further influence consumer spending and the demand for our products and services.

Additionally, in April 2025, the U.S.

announced a series of new and increased tariffs on countries and specific goods, subject to evolving exemptions and additional proposed revisions.

Macroeconomic, Inflationary, and Borrowing Costs

During 2025, consumer spending on discretionary items reflected mixed trends.

Based on recent economic indicators, aggregate consumer spending continues to reflect minimal to modest growth, with higher-income consumers appearing more resilient, while many middle and lower-income consumers exhibit more cautious behavior, which could result in an overall reduction in consumer spending and demand for products and services.

This consumer caution appears to be influenced by factors like elevated inflation, heightened tariff and trade-policy uncertainty, and a more cautious macroeconomic environment.

Additionally, beginning in April 2025, the U.S.

government announced new and increased tariffs on countries and specific goods, subject to evolving exemptions and additional proposed revisions.

Certain of these tariffs have been stayed or otherwise modified and, since April 2025, the U.S.

has continued to announce new or revised tariffs.

Those policies, along with retaliatory actions by some trading partners and ongoing negotiations around trade policy, have led to increased uncertainty regarding the ultimate effect of the tarrifs on economic conditions, volatility, and unpredictability for global trade.

has continued to announce new or revised tariffs, along with new trade agreements with certain trading partners.

Those policies, along with retaliatory actions by some trading partners and ongoing negotiations around trade policy, have led to increased uncertainty regarding the ultimate effect of the tariffs on economic conditions, volatility, and unpredictability for global trade.

Given these uncertainties and the potential of rising tariffs, we evaluated, and continue to evaluate, our current vendor agreements for our major vendors to ensure, to the extent possible, we adequately addressed any associated risks.

Two vendors are currently impacted because they source a higher number of imported products from countries which have higher tariff impacts.

To mitigate this risk, these vendors have shifted the source of their products to countries that have a lower tariff impact.

We also continue to monitor the impacts of inflationary costs to our business.

While we are encouraged by the stabilization of inflationary costs that we have continued to experience in the first half of 2025 and throughout 2024, we are unable to forecast with any certainty whether inflationary costs will continue to moderate in future periods, as the ultimate scope and duration of these impacts could change as a result of the impact of increased tariffs and remain unknown at this time.

While inflationary pressures appear to have moderated and stabilized, we are unable to forecast or predict with any certainty whether inflationary costs will remain stable and continue to moderate in future periods, as the ultimate scope and duration of these impacts could change as a result of the impact of increased tariffs and remain unknown at this time.

More broadly, the U.S.

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Such inflation may negatively impact consumer discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced any material impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past.

Although such conditions have not materially impacted our business to date and we expect these trends to continue in 2025, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate any changes in consumer preferences or additional cost increases, if possible.

In addition, after giving effect to the Credit Facility Amendment, executed during the third quarter of 2024, we continue to experience lower variable interest rates under our Credit Facility, which resulted in lower borrowing costs in the first half of 2025 compared to the same period in the prior year.

Further contributing to our lower borrowing costs was the pay down of $24 million on our revolving credit facility during the first half of 2025.

During the first quarter of 2025, we experienced higher funeral volumes compared to the same period in the prior year, which we believe was partially related to a delay in the flu season, resulting in continued fluctuations in the death rate.

Although we expect fluctuations in the death rate to continue, we are unable to predict or forecast the duration or variation of the death rate with any certainty.

Regardless of these fluctuations in the death rate, we continue to focus on expanding market share, cost management and executing on our strategic operational plans.

Although such conditions have not materially impacted our business to date and we expect these trends to continue for the remainder of 2025 and into next year, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate any changes in consumer preferences or additional cost increases, if possible.

In addition, after giving effect to the Credit Facility Amendment, executed during the third quarter of 2024, we continue to experience lower variable interest rates and lower average debt outstanding under our Credit Facility, which resulted in lower borrowing costs in 2025 compared to the same period in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

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We began 2025 with $1.2 million in cash and ended the quarter with $1.2 million in cash.

At June 30, 2025, we had borrowings of $112.9 million outstanding on our Credit Facility compared to $137.0 million at December 31, 2024.

At September 30, 2025, we had borrowings of $134.9 million outstanding on our Credit Facility compared to $137.0 million at December 31, 2024.

The following table sets forth the elements of cash flow (in thousands):

Six months ended June 30,

Nine months ended September 30,

Cash and cash equivalents at beginning of period $ 1,165 $ 1,523

Net cash provided by operating activities 46,568 42,716

Acquisitions of businesses and real property (56,499) —

Proceeds from divestitures and sale of other assets 37,310 12,015

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Capital expenditures (12,715) (11,710)

Net cash provided by investing activities 12,813 4,392

Net cash (used in) provided by investing activities (31,904) 708

Net payments on our credit facility, acquisition debt, and finance lease obligations (2,527) (39,564)

Payment of debt issuance costs for the credit facility — (782)

Net payments on employee equity plans (6,800) 1,757

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Operating Activities

For the six months ended June 30, 2025, cash provided by operating activities was $21.9 million compared to $21.9 million for the six months ended June 30, 2024.

For the nine months ended September 30, 2025, cash provided by operating activities was $46.6 million compared to $42.7 million for the nine months ended September 30, 2024.

Investing Activities

Our investing activities resulted in a net cash inflows of $12.8 million f or the six months ended June 30, 2025, compared to $4.4 million for the six months ended June 30, 2024, an increase of $8.4 million.

Our investing activities resulted in a net cash outflows of $31.9 million f or the nine months ended September 30, 2025, compared to net cash inflows $0.7 million for the nine months ended September 30, 2024, a decrease of $32.6 million.

Acquisition and Divestiture Activity

During the six months ended June 30, 2025, we sold two funeral homes and three cemeteries for an aggregate of $15.8 million.

During the nine months ended September 30, 2025, we acquired eight funeral home businesses, one cemetery and one cremation focused business for the aggregate purchase price of approximately $58.5 million.

The purchase price for the businesses consisted of approximately (i) $56.5 million paid in cash at closing and (ii) $1.3 million, the net present value of future deferred payments totaling $2.0 million.

During the nine months ended September 30, 2025, we sold nine funeral homes and four cemeteries for an aggregate of $33.8 million.

Additionally, we sold real property for $4.1 million.

During the six months ended June 30, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million.

During the nine months ended September 30, 2024, we sold six funeral homes and one cemetery for an aggregate of $10.9 million.

Additionally, we sold real property for $1.1 million.

Insurance Proceeds

During the six months ended June 30, 2024, we received proceeds of $0.3 million from our property insurance policy for the reimbursement of renovation costs for certain of our funeral businesses damaged by Hurricane Ian that occurred during the third quarter of 2022.

During the nine months ended September 30, 2024, we received proceeds of $0.4 million from our property insurance policy for the reimbursement of renovation costs for certain of our funeral businesses damaged by Hurricane Ian that occurred during the third quarter of 2022.

Capital Expenditures

For the six months ended June 30, 2025, our capital expenditures (comprised of growth and maintenance spend) totaled $6.0 million compared to $7.1 million for the year ended June 30, 2024, a decrease of $1.1 million.

For the nine months ended September 30, 2025, our capital expenditures (comprised of growth and maintenance spend) totaled $12.7 million compared to $11.7 million for the year ended September 30, 2024, an increase of $1.0 million.

The following tables present our capital expenditures (in thousands):

Six months ended June 30,

Nine months ended September 30,

$ 8,440 $ 6,697

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Financing Activities

Our financing activities resulted in a net cash outflow of $34.5 million for the six months ended June 30, 2025, compared to a net cash outflow of $26.3 million for the six months ended June 30, 2024, an increase of $8.2 million.

During the six months ended June 30, 2025, we had net payments on our Credit Facility, acquisition debt, and finance leases of $24.3 million, net payments on our employee equity plans of $6.6 million, and paid dividends of $3.5 million.

During the six months ended June 30, 2024, we had net payments on our Credit Facility, acquisition debt, and finance leases of $24.4 million and paid dividends of $3.4 million.

Our financing activities resulted in a net cash outflow of $14.6 million for the nine months ended September 30, 2025, compared to a net cash outflow of $43.7 million for the nine months ended September 30, 2024, a decrease of $29.1 million.

During the nine months ended September 30, 2025, we had net payments on our Credit Facility, acquisition debt, and finance leases of $2.5 million, net payments on our employee equity plans of $6.8 million, and paid dividends of $5.3 million.

During the nine months ended September 30, 2024, we had net payments on our Credit Facility, acquisition debt, and finance leases of $39.6 million and paid dividends of $5.1 million.

FINANCIAL HIGHLIGHTS

Below are our financial highlights (in thousands except for volumes and averages):

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

Below are our consolidated financial highlights (in thousands except for volumes and averages):

Three months ended September 30, Nine months ended September 30,

2025 2024 2025 2024

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Net income $ 6,570 $ 9,866 $ 39,235 $ 23,098

Revenue for the three months ended June 30, 2025, decreased $0.2 million compared to the three months ended June 30, 2024.

We experienced a 0.6% decrease in the average price per interment right sold and a 3.9% decrease in the number of preneed interment rights (property) sold and a 0.8% decrease in funeral contract volume;

Revenue for the three months ended September 30, 2025 increased $2.1 million compared to the three months ended September 30, 2024.

We experienced a 5.5% decrease in funeral contract volume;

partially offset by a 2.0% increase in the average revenue per funeral contract excluding preneed interest.

Gross profit for the three months ended June 30, 2025, decreased $1.1 million compared to the three months ended June 30, 2024, primarily due to an increase in cost of revenue primarily from growth in salaries and benefits and promotional expenses during the second quarter of 2025 compared to the same period in 2024.

Net income for the three months ended June 30, 2025, increased $5.5 million compared to the three months ended June 30, 2024.

We experienced a $6.7 million decrease in general, administrative and other expenses, a $1.3 million decrease in interest expense;

partially offset by a $1.1 million decrease in gross profit and a $0.9 million increase in income tax expense.

Revenue for the six months ended June 30, 2025, increased $3.4 million compared to the six months ended June 30, 2024.

We experienced a 4.4% increase in the average price per interment right sold;

partially offset by a 4.8% decrease in the number of preneed interment rights (property) sold.

Additionally, we experienced a 1.9% increase in the average revenue per funeral contract.

Gross profit for the six months ended June 30, 2025, decreased $0.5 million compared to the six months ended June 30, 2024, primarily due to an increase in cost of revenue primarily from growth in salaries and benefits and promotional expenses during the second quarter of 2025 compared to the same period in 2024.

Net income for the six months ended June 30, 2025, increased $19.4 million compared to the six months ended June 30, 2024.

We experienced a $10.9 million decrease in general, administrative and other expenses, as the prior year included one-time costs related to executive severance payments and our agreement to pay our financial advisor in connection with the Company's previously concluded review of strategic alternatives, a $9.4 million increase in (gain)/loss on sale of divestitures and real property and a $2.7 million decrease in interest expense;

partially offset by a $2.5 million increase in income tax expense and a $0.5 million decrease in gross profit.

Additionally, we experienced a 1.7% increase in the number of preneed interment rights (property) sold and a 16.7% increase in the average price per interment right sold.

Gross profit for the three months ended September 30, 2025 increased $0.8 million compared to the three months ended September 30, 2024, primarily due to the growth in revenue described above.

Net income for the three months ended September 30, 2025 decreased $3.3 million compared to the three months ended September 30, 2024.

We experienced a $6.2 million increase in net loss on divestitures and impairment charges;

partially offset by a $1.8 million decrease in income tax expense, a $1.1 million decrease in interest expense, and a $0.8 million increase in gross profit contribution from our businesses.

Revenue for the nine months ended September 30, 2025 increased $5.5 million compared to the nine months ended September 30, 2024.

We experienced a 1.8% decrease in funeral contract volume which was partially offset by a 1.9% increase in the average revenue per funeral contract.

Additionally, we experienced a 2.8% decrease in the number of preneed interment rights (property) sold partially offset by an 8.4% increase in the average price per interment right sold.

Gross profit for the nine months ended September 30, 2025 increased $0.3 million compared to the nine months ended September 30, 2024, primarily due to the growth in revenue described above.

Net income for the nine months ended September 30, 2025 increased $16.1 million compared to the nine months ended September 30, 2024.

We experienced a $10.9 million decrease in general, administrative, and other expenses, as the prior year included one-time costs related to executive severance payments and our agreement to pay our financial advisor in connection with the Company's previously concluded review of strategic alternatives, a $1.2 million decrease in the loss on divestitures and impairment charges, a $3.8 million decrease in interest expense, and a $0.3 million increase in gross profit contributions from our businesses;

partially offset by a $0.7 million increase in income tax expense and a $0.4 million decrease in net gain on property damage, net of insurance claims.

Further discussion of revenue and the components of gross profit for our funeral home and cemetery segments is presented under “– Results of Operations.”

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REPORTING AND NON-GAAP FINANCIAL MEASURES

We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended June 30, 2025, dated August 6, 2025, and discussed in the corresponding earnings conference call.

We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended September 30, 2025, dated November 5, 2025, and discussed in the corresponding earnings conference call.

This Trend Report is used as a supplemental financial statement by management and investors to compare our current financial performance with our previous results and with the performance of other companies.

We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with United States generally accepted accounting principles (“GAAP”).

We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.

The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business.

Below is a reconciliation of gross profit (a GAAP financial measure) to adjusted operating profit (a non-GAAP financial measure) (in thousands):

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

Three months ended September 30, Nine months ended September 30,

2025 2024 2025 2024

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Below is a breakdown of adjusted operating profit (a non-GAAP financial measure) by segment (in thousands):

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

Three months ended September 30, Nine months ended September 30,

2025 2024 2025 2024

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RESULTS OF OPERATIONS

The following is a discussion of our results of operations for the three and six months ended June 30, 2025 and 2024.

The following is a discussion of our results of operations for the three and nine months ended September 30, 2025 and 2024.

The term “operating” in the funeral home and cemetery segments refers to all funeral homes and cemeteries that we owned and operated in the current reporting period, excluding certain funeral home and cemetery businesses that we have divested in such period.

The term “divested” when discussed in the funeral home segment refers to two funeral homes we sold during the six months ended June 30, 2025, and six funeral home we sold and one funeral home we merged with another business we owned in an existing market during the six months ended June 30, 2024.

The term “divested” when discussed in the cemetery segment refers to three cemeteries we sold during the six months ended June 30, 2025, and one cemetery we sold during the six months ended June 30, 2024.

The term “divested” when discussed in the funeral home segment refers to nine funeral homes we sold during the nine months ended September 30, 2025, and six funeral homes we sold and three funeral homes we merged with other businesses we owned in existing markets during the nine months ended September 30, 2024.

The term “divested” when discussed in the cemetery segment refers to four cemeteries we sold during the nine months ended September 30, 2025, and one cemetery we sold during the nine months ended September 30, 2024.

The term “ancillary” in the funeral home segment represents our flower shop, monument business, pet cremation business, and online cremation businesses.

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The following table sets forth certain information regarding our revenue and adjusted operating profit for our funeral home operations (in thousands):

Three months ended June 30,

Three months ended September 30,

Operating $ 55,853 $ 56,606

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Cremation rate 61.0% 60.4%

Funeral home operating revenue increased $0.8 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The increase in operating revenue is primarily driven by a 0.9% increase in the average revenue per contract excluding preneed interest and a 0.5% increase in contract volume.

Funeral home adjusted operating profit for the three months ended June 30, 2025, decreased $1.2 million when compared to the same period in 2024, primarily due to the increase in operating expense.

Funeral home operating revenue decreased $0.8 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The decline in operating revenue is primarily driven by a 2.1% decrease in contract volume;

partially offset by a 0.8% increase in the average revenue per contract excluding preneed interest.

Funeral home adjusted operating profit for the three months ended September 30, 2025 decreased $1.0 million when compared to the same period in 2024, primarily due to the decrease in operating expense.

The comparable operating profit margin decreased 130 basis points to 36.8%.

Operating expenses as a percentage of revenue increased 2.5%, with the largest increases being in investment expense, facilities and grounds expense, other funeral costs, and general and administrative expense.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses, decreased $0.2 million, while ancillary adjusted operating profit decreased $0.2 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The decrease in ancillary revenue is primarily due to a decision to cease the operations of a cremation focused business during the first quarter of 2024, which did not contribute materially to adjusted operating profit.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $1.5 million and $1.4 million, respectively, for the three months ended June 30, 2025, compared to the same period in 2024.

These increases are primarily due to an increase of $1.3 million in our general agency commission income for the second quarter of 2025 compared to the same period in 2024, which is a result of our continued focus on growth of our preneed funeral sales through our strategic partnership with a national insurance provider.

Operating expenses as a percentage of revenue increased 1.3%, with the largest increases being in salaries and benefits expenses, facilities and grounds expenses, promotional expenses, and general and administrative expense.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses, decreased $0.2 million, while ancillary adjusted operating profit increased $18.0 thousand for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The decrease in ancillary revenue is primarily due to a decline in our online cremation business.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $1.4 million and $1.2 million, respectively, for the three months ended September 30, 2025, compared to the same period in 2024.

This change is primarily due to growth of $1.0 million in general agency commission income for the third quarter of 2025 compared to the same period in 2024, which is a result of our continued focus on growth of our preneed funeral sales through our strategic partnership with a national insurance provider.

The following table sets forth certain information regarding our revenue and adjusted operating profit for our funeral home operations (in thousands):

Six months ended June 30,

Nine months ended September 30,

Operating $ 179,962 $ 176,650

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Cremation rate 60.7% 59.5%

Funeral home operating revenue increased $3.9 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Funeral home operating revenue increased $3.3 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in operating revenue was primarily driven by a 1.1% increase in the average revenue per contract excluding preneed interest while contract volume remained up.

The increase in revenue is driven by our success in implementing our enhanced pricing strategy through 2025, which contributed to the increase in average revenue per funeral contract.

Funeral home adjusted operating profit for the six months ended June 30, 2025, increased $1.0 million when compared to the same period in 2024, reflecting our ongoing focus on cost efficiency and operational improvements.

Funeral home adjusted operating profit for the nine months ended September 30, 2025 increased $0.1 million when compared to the same period in 2024, reflecting our ongoing focus on cost efficiency and operational improvements.

The comparable adjusted operating profit margin decreased 70 basis points to 39.5%, driven by a 0.7% increase in operating expenses as a percentage of revenue.

Key expense increases include facilities and grounds expense, general and administrative expense, and investment expense.

These decreases were partially offset by a decrease in salaries and benefits.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses decreased $0.4 million, while ancillary adjusted operating profit decreased $0.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $2.5 million and $1.9 million, respectively, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Key expense increases include facilities and grounds expense, other funeral costs, general and administrative expenses, and investment expense.

These increases were partially offset by a decrease in salaries and benefits and transportation expenses.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business, and online cremation businesses decreased $0.6 million, while ancillary adjusted operating profit decreased $0.1 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The decrease in ancillary revenue is primarily due to a decline in our online cremation business.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $3.9 million and $3.1 million, respectively, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

These increases are primarily due to the increase in our general agency commission income earned on the sale of preneed insurance policies as we continue to focus on growth of our preneed funeral sales through our strategic partnership with a national insurance provider that began during the second quarter of 2023.

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The following table sets forth certain information regarding our revenue and adjusted operating profit for our cemetery operations (in thousands):

Three months ended June 30,

Three months ended September 30,

Operating $ 35,586 $ 31,604

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Average price per interment right sold $ 6,261 $ 5,439

Cemetery operating revenue decreased $0.2 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, as we experienced a 2.4% decrease in the average price per interment right sold and a 0.2% decrease in the number of preneed interment rights (property) sold.

Cemetery atneed revenue, which represents approximately 29.8% of our total operating revenue, increased $0.7 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to a 19.9% increase in property sold on atneed contracts across our cemetery portfolio.

Cemetery adjusted operating profit decreased $1.7 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to an increase in operating expenses as a percentage of revenue.

Cemetery operating revenue increased $4.0 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, as we experienced a 15.1% increase in the average price per interment right sold and a 4.6% increase in the number of preneed interment rights (property) sold.

Cemetery atneed revenue, which represents approximately 26.9% of our total operating revenue, increased $0.6 million for the three months ended September 30, 2025, compared to the same period in 2024, as we experienced a 7% increase in sales to atneed customers primarily driven by an increase in average revenue per contract.

Cemetery adjusted operating profit increased $1.8 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to an increase in property sales and deliveries of merchandise and service items both to preneed and atneed customers while keeping costs relatively steady.

The comparable operating profit margin decreased 50 basis points to 48.5%.

Operating expenses as a percentage of revenue increased 4.8%, with the largest increases in salaries and benefits expenses, allowance for credit losses, promotional expenses, facilities and grounds insurance expense, and general and administrative expense.

Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, decreased $0.5 million and $0.4 million, respectively, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to a decrease in expected earnings for the current year in our perpetual care trust fund compared to earnings in prior year.

Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, increased $0.3 million and $0.2 million, respectively, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to a refund received from overpayment of 2024 perpetual care taxes.

The following table sets forth certain information regarding our revenue and adjusted operating profit for our cemetery operations (in thousands):

Six months ended June 30,

Nine months ended September 30,

Operating $ 96,790 $ 91,481

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Average price per interment right sold $ 5,904 $ 5,524

Cemetery operating revenue increased $1.3 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily as a result of a 2.7% increase in the average price per preneed interment right sold;

Cemetery operating revenue increased $5.3 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily as a result of a 6.9% increase in the average price per preneed interment right sold;

offset by a 0.1% decrease in the number of preneed interment rights sold.

Cemetery atneed revenue, which represents approximately 32% of our total operating revenue, increased $0.7 million for the six months ended June 30, 2025, compared to the same period of the prior year, primarily due to a 12.9% increase in property sold on atneed contracts across our cemetery portfolio.

Cemetery adjusted operating profit decreased $1.9 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to an increase in operating expenses as a percentage revenue.

Cemetery atneed revenue, which represents approximately 29% of our total operating revenue, increased $1.3 million for the nine months ended September 30, 2025, compared to the same period of the prior year, primarily due to an 11.6% increase in atneed property sold driven by an increase in average revenue per contract.

Cemetery adjusted operating profit decreased $0.2 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to an increase in operating expenses as a percentage of revenue.

The comparable operating profit margin decreased 280 basis points to 45.1%.

Operating expenses as a percentage of operating revenue increased 4.1%, driven by increases in key expenses such as promotional expenses, salaries and benefits, allowance for credit losses, and facilities and ground insurance.

Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, decreased $1.1 million and $0.9 million, respectively, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

These decreases are primarily due to a decrease in expected earnings for the current year in our perpetual care trust fund compared to earnings in prior year.

Operating expenses as a percentage of operating revenue increased 2.8%, driven by increases in key expenses such as promotional expenses, salaries and benefits, and allowance for credit losses.

Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, decreased $0.7 million and $0.8 million, respectively, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

These decreases are primarily due to realized capital gains in the third quarter of 2024 in our perpetual care trust fund.

There were no capital gain withdrawals in the third quarter of 2025.

Cemetery property amortization.

Cemetery property amortization totaled $2.2 million and $4.1 million for the three and six months ended June 30, 2025, respectively, a decrease of $0.3 million and $0.2 million compared to the three and six months ended June 30, 2024, respectively, primarily driven by the decrease in private mausoleums sold across our cemetery portfolio.

Cemetery property amortization totaled $2.8 million and $6.8 million for the three and nine months ended September 30, 2025, respectively, an increase of $0.8 million and $0.6 million compared to the three and nine months ended September 30, 2024, respectively, primarily driven by the increase in property sold across our cemetery portfolio.

Field depreciation.

Depreciation expense for our field businesses totaled $3.3 million and $6.6 million for the three and six months ended June 30, 2025, respectively, a decrease of $0.1 million and $0.3 million compared to the three and six months ended June 30, 2024, respectively, primarily driven by our business decision to lease vehicles rather than purchase them.

Depreciation expense for our field businesses totaled $3.2 million and $9.8 million for the three and nine months ended September 30, 2025, respectively, a decrease of $0.2 million and $0.4 million compared to the three and nine months ended September 30, 2024, respectively, primarily driven by our business decision to lease vehicles rather than purchase them.

Regional and unallocated funeral and cemetery costs.

Regional and unallocated funeral and cemetery costs consist of salaries and benefits for regional management, field incentive compensation and other related costs for field infrastructure.

Regional and unallocated funeral and cemetery costs totaled $3.3 million and $8.5 million for the three and six months ended June 30, 2025, respectively, a decrease of $1.0 million and an increase of $0.4 million compared to the three and six months ended June 30, 2024, respectively, primarily driven by a $1.4 million increase in leadership and development expenses.

Regional and unallocated funeral and cemetery costs totaled $4.1 million for the three months ended September 30, 2025, which is flat compared to the same period in 2024.

For the nine months ended September 30, 2025, Regional and unallocated funeral and cemetery costs were $12.6 million, an increase of $0.4 million compared to the nine months ended September 30, 2024, primarily driven by an increase in leadership and development expenses.

Other Financial Statement Items

General, administrative, and other.

General, administrative and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $11.9 million for the three months ended June 30, 2025, a decrease of $6.7 million compared to the same period in 2024, primarily driven by the following:

i) a $5.4 million decrease in consulting fees related to the Company's previously concluded review of strategic alternatives, ii) a $0.9 million decrease in incentive compensation expense, and iii) a $0.8 million decrease in separation and severance expenses recorded in the prior year related to our former Chief Financial Officer pursuant to his Separation and Release Agreement dated June 6, 2024.

These decreases were offset by a net $0.4 million increase in various other general and administrative expenses.

General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $12.2 million for the three months ended September 30, 2025, which is flat compared to the same period in 2024.

General, administrative, and other.

General, administrative and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $24.0 million for the six months ended June 30, 2025, an decrease of $10.9 million compared to the six months ended June 30, 2024, primarily driven by the following:

i) a $6.6 million decrease in salary and benefits expenses and cash and equity incentive compensation costs, primarily driven by the termination expense of our founder and former Executive Chairman of the Board pursuant to his Transition Agreement and termination expense for our former Chief Financial Officer pursuant to his Separation and Release Agreement recorded in the prior year, and ii) a $5.5 million decrease in other professional fees primarily related to the development of our digital transformation project.

General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $36.2 million for the nine months ended September 30, 2025, an decrease of $10.9 million compared to the nine months ended September 30, 2024, primarily driven by a $6.6 million decrease in salary and benefits expenses and cash and equity incentive compensation costs, primarily driven by the termination expense of our founder and former Executive Chairman of the Board pursuant to his Transition Agreement and termination expense for our former Chief Financial Officer pursuant to his Separation and Release Agreement recorded in the prior year, and a $5.5 million decrease in other professional fees primarily related to the development of our digital transformation project.

These decreases were offset by a $0.6 million increase in computer maintenance and licenses and a $0.6 million increase in various other general and administrative expenses.

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

The components of Net (gain) loss on divestitures, disposals, and impairment charges are as follows (in thousands):

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

Net loss on divestitures and impairment charges.

The components of Net loss on divestitures and impairment charges are as follows (in thousands):

Three months ended September 30, Nine months ended September 30,

2025 2024 2025 2024

Impairment of goodwill, intangibles, and PPE $ 1,644 $ 637 $ 1,761 $ 637

Net (gain) loss on divestitures (1) 8 (5,938) 1,509

Net loss on disposals of fixed assets — 15 50 59

Net loss (gain) on divestitures 4,962 (295) (976) 1,214

Net (gain) loss on disposals of fixed assets (47) 45 3 104

Total $ 6,559 $ 387 $ 788 $ 1,955

During the six months ended June 30, 2025, we sold two funeral homes and three cemeteries for an aggregate gain of $5.9 million.

We also recognized an impairment of $0.1 million on land held for sale during the six months ended June 30, 2025.

During the six months ended June 30, 2024, we sold six funeral homes and one cemetery for a loss of $1.5 million.

During the nine months ended September 30, 2025, we sold nine funeral homes and four cemeteries for an aggregate gain of $1.0 million.

We also recognized an impairment of $1.8 million on assets held for sale during the nine months ended September 30, 2025.

During the nine months ended September 30, 2024, we sold six funeral homes and one cemetery for a loss of $1.2 million.

We also recognized an impairment of $0.6 million as a result of our 2024 qualitative assessment of tradenames and an impairment of $40 thousand related to property, plant, and equipment for assets held for sale.

Interest expense .

Interest expense related to its respective debt arrangement is as follows (in thousands):

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

Three months ended September 30, Nine months ended September 30,

2025 2024 2025 2024

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Total $ 6,946 $ 8,035 $ 21,278 $ 25,071

Net (gain) loss on property damage, net of insurance claims.

During the six months ended June 30, 2024, we recorded a $0.4 million gain, net of insurance proceeds, for damages from Hurricane Ian, which occurred during the third quarter of 2022.

During the six months ended June 30, 2025, we recorded a $2.0 million gain on the sale of other real property not used in business operations.

We did not record any gain or loss activity during the six months ended June 30, 2024.

Net gain on property damage, net of insurance claims.

During the nine months ended September 30, 2024, we recorded a $0.4 million gain, net of insurance proceeds, for damages from Hurricane Ian, which occurred during the third quarter of 2022.

During the nine months ended September 30, 2025, we recorded a $1.1 million gain on the sale of other real property not used in business operations.

We did not record any gain or loss activity during the nine months ended September 30, 2024.

Income taxes.

Income tax expense totaled $5.1 million for the three months ended June 30, 2025, an increase of $0.9 million compared to the three months ended June 30, 2024.

Our operating tax rate before discrete items was 31.2% and 33.6% for the six months ended June 30, 2025 and 2024, respectively.

Income tax expense totaled $3.1 million for the three months ended September 30, 2025, a decrease of $1.8 million compared to the three months ended September 30, 2024.

Our operating tax rate before discrete items was 35.3% and 33.2% for the nine months ended September 30, 2025 and 2024, respectively.

Income taxes.

Income tax expense totaled $10.4 million for the six months ended June 30, 2025, an increase of $2.5 million compared to the six months ended June 30, 2024.

Our operating tax rate before discrete items was 31.2% and 33.2% for the six months ended June 30, 2025 and 2024, respectively.

Income tax expense totaled $13.6 million for the nine months ended September 30, 2025, an increase of $0.7 million compared to the nine months ended September 30, 2024.

Our operating tax rate before discrete items was 32.0% and 33.2% for the nine months ended September 30, 2025 and 2024, respectively.

CRITICAL ACCOUNTING ESTIMATES

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What changed 10-Q

Item 2. Management’s Discussion and Analysis