What changed in this filing

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Item 1. Business

2026-02-26 compared with 2025-02-28 · 46 added, 127 removed, 150 unchanged (54% of the section changed)

Carriage Services, Inc.

(“Carriage,” the “Company,” “we,” “us,” or “our”) was incorporated in the State of Delaware in December 1993 and is a leading provider of funeral and cemetery services and merchandise in the United States.

We operate in two business segments:

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COMPANY DEVELOPMENTS

Board of Directors and Leadership Changes

On February 22, 2024, the Board of Directors (the “Board”) of the Company announced the conclusion of the Company’s review of strategic alternatives following the Board’s vote on February 21, 2024, to bring the strategic review process to a close.

The strategic review process was first announced on June 29, 2023, which was overseen by the Board with assistance from experienced financial advisors and legal counsel.

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

February 22, 2024 (the “Transition Date”), the Company announced that Melvin C.

Payne, the Company’s founder and former Chief Executive Officer, would cease to serve as Executive Chairman of the Board, but would 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 began 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 with the Company, dated as of November 5, 2019, (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 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 surviving provisions of the Employment Agreement or either of the Releases.

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

On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board realigned the Company’s classes of directors to provide for equal apportionment among the three classes as a result of the previous announcement of Mr.

Payne, a then Class I director, would remain on the Board until the Company’s 2024 annual meeting of stockholders, at which time his term would expire.

To facilitate the class realignment, on March 7, 2024, Julie Sanders resigned from the Board as a Class II director (term expiring in 2025), and, effective as of March 7, 2024, was re-elected by the Board to serve as a Class I director until the Company’s 2024 annual meeting of shareholders.

Sanders continued to serve on the Audit, Compensation and Corporate Governance Committees of the Board.

On March 7, 2024, upon the recommendation of the Corporate Governance Committee of the Company, the Board elected Chad Fargason to serve as the Company’s first Non-Executive Chairman of the Board, effective on that date.

The election of Mr.

Fargason as the Board’s Non-Executive Chairman was as a result of the previous announcement of Mr.

Payne ceasing to serve as Executive Chairman of the Board of the Company, effective February 22, 2024.

Effective March 25, 2024, Kathryn Shanley was appointed to serve as the Company’s Chief Accounting Officer (Principal Accounting Officer).

In connection with the appointment of Ms.

Shanley as the Company’s Chief Accounting Officer (Principal Accounting Officer), effective March 25, 2024, L.

Kian Granmayeh ceased serving as the Company’s Principal Accounting Officer.

At that time, Mr.

Granmayeh continued to serve as the Company’s Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer).

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, the chair of our Compensation Committee is entitled to an additional annual retainer of $15,000, and the chair of our Corporate Governance Committee is entitled to an additional annual retainer of $10,000, which are payable in quarterly installments at the end of each quarter.

On May 14, 2024, the Board elected Julie Sanders to serve as chair of the Board’s Corporate Governance Committee, effective on that date, which was a result of the previous announcement of Chad Fargason, the prior chair of the Corporate Governance Committee, being elected to serve as the Company’s Non-Executive Chairman of the Board, effective March 7, 2024.

On June 6, 2024, L.

Kian Granmayeh informed the Company that he would resign from his position as Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) effective July 1, 2024 and would serve as a consultant for the Company for six months thereafter.

Granmayeh’s resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies, or practices, including any matters concerning the Company’s controls or any financial or accounting-related matters or disclosures.

In connection with Mr.

Granmayeh’s resignation, the Company’s Board appointed Kathryn Shanley, the Company’s Chief Accounting Officer (Principal Accounting Officer) as the Company’s Interim Principal Financial Officer, effective June 6, 2024, until a permanent replacement was identified.

No new compensatory arrangements were entered into with Ms.

Shanley in connection with her appointment as the Company’s interim Principal Financial Officer.

On October 30, 2024, the Board elected Dr.

Edmondo Robinson to serve as a Class II Director until the Company’s 2025 annual meeting of stockholders.

Robinson was appointed to serve as a member of the Compensation, Audit and Corporate Governance Committees.

Effective January 2, 2025, John Enwright was appointed to serve as the Company’s Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer).

In connection with the appointment of Mr.

Enwright as the Company’s Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer), effective January 2, 2025, Kathryn Shanley ceased serving as the Company’s Interim Principal Financial Officer.

Shanley continues to serve as the Company’s Chief Accounting Officer (Principal Accounting Officer).

Code of Business Conduct and Ethics

Effective October 30, 2024, our Board, on the recommendation of the Board’s Audit Committee, approved various amendments to the Company’s Code of Business Conduct and Ethics (the “Code”), which applies to all directors, officers and employees of the Company and its subsidiaries.

In addition to making certain technical and administrative updates, the amendments to the Code include, among other things, summarizing and clarifying the Company’s existing compliance requirements and also identifies and expands upon certain policies, including those related to suppliers and vendors, environmental, and discrimination, retaliation and harassment.

The approval of the amendments to the Code did not relate to or result in any waiver, whether explicit or implicit, of any provision of the prior version of the Code.

A copy of the Code, as amended, is available on the Corporate Governance section of our website.

Credit Facility

On July 31, 2024, the Company entered into a fourth amendment, (the “Credit Facility Amendment”), to our senior secured revolving credit facility (as amended, the “Credit Facility”), with the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent.

The Credit Facility Amendment provided, among other things, for (i) 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.

During the year ended December 31, 2024, we sold six funeral homes, one cemetery and real property for an aggregate of $12.0 million for a net loss of $1.2 million.

Leadership Changes

On January 16, 2026, Carriage Services, Inc.

(the “Company”) announced that the Board of Directors (the “Board”) appointed Steven D.

Metzger to serve as the Company’s President and Chief Operating Officer, effective as of February 2, 2026.

Metzger’s appointment was made in connection with certain executive leadership changes and appointments announced by the Company to better align with the Company’s business strategy.

During the year ended December 31, 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.

Additionally, we acquired the real property for one funeral home that we previously leased from a third party for a purchase price of $2.5 million.

During the year ended December 31, 2025, we sold thirteen funeral homes, four cemetery and real property for an aggregate of $40.4 million resulting in a gain of $1.5 million.

Additionally, we sold real property for $4.0 million resulting in a gain of $1.0 million.

OUR OPERATIONS

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(i) ceremony and tribute, generally in the form of a funeral or memorial service;

(ii) disposition of remains, either through burial or cremation;

(ii) care of remains, either through burial or cremation;

and (iii) memorialization, generally through monuments, markers, or inscriptions.

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We have recognized $0.8 million of this incentive payment to-date.

This partnership agreement is projected to double our commission income in 2025, while expanding our market share across our funeral home portfolio.

This partnership agreement increased our commission income 52.0% in 2025 over the previous year.

We are projecting this partnership to help drive year-over-year growth in preneed funeral sales of 20% over the next five years.

Trust funded contracts typically provide cash that is invested in various securities with the expectation that returns will exceed the growth factor in the insurance contracts.

The cash flow and earnings from insurance contracts are more stable, but are generally lower than traditional trust fund investments.

In markets that depend on preneed sales for market share, we supplement the arrangements written by our local funeral directors with sales sourced by our own sales counselors and by third-party sellers.

We sold 11,967 and 10,750 preneed funeral contracts, net of cancellations, during the years ended December 31, 2025 and 2024, respectively.

At December 31, 2025, we had a backlog of 93,286 preneed funeral contracts to be delivered in the future.

In addition to preneed funeral contracts, we also offer “pre-planned” funeral arrangements whereby a customer determines in advance substantially all of the details of a funeral service without any financial commitment or other obligation on the part of the customer until the actual time of need.

Pre-planned funeral arrangements permit a family to avoid the burden of making deathcare plans at the time of need and enable a funeral home to establish relationships with a customer that may eventually lead to an atneed sale.

Personalization and pre-planning continue to be two important trends in the funeral and cemetery industry, but the national trend toward more cremations may be the most significant.

Personalization and pre-planning continue to be two important trends in the funeral and cemetery industry;

however, the national trend toward more cremations may be the most significant.

While this trend is expected to continue, other factors are expected to lead to rising industry revenue, including an increase in spending on additional or unique funeral and cremation services.

Shifting preferences will likely continue to lead to a considerable rise in cremations;

Shifting preferences will likely lead to a continued rise in cremations;

as such, we are focused on educating and providing our cremation customers with additional services and products that are available.

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Our preneed cemetery strategy is to build family heritage in our cemeteries by selling property and interment rights prior to death through full time, highly motivated, and entrepreneurial local sales teams.

Our goal is to build broader and deeper teams of sales leaders and counselors in our larger and more strategically located cemeteries, including the development of standardized sales systems across our portfolio of cemeteries, in order to focus on growth of our preneed property sales.

Cemetery merchandise and services are often purchased in addition to cemetery property at the time of sale.

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General consumer confidence and discretionary income may have a significant impact on our preneed sales success rate.

Cemetery revenue that originated from preneed contracts represented approximately 69% and 63% of our total cemetery revenue for 2024 and 2023, respectively.

Cemetery revenue that originated from preneed contracts represented approximately 71% and 70% of our total operating cemetery revenue for 2025 and 2024, respectively.

At December 31, 2025, we had a backlog of 65,681 preneed cemetery contracts to be delivered in the future.

Trust Funds and Insurance Contracts

Trust and Insurance Funded Contracts

We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws.

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Preneed sales generally require deposits to a trust or purchase of a third-party insurance product.

Trust fund income earned, along with the receipt and recognition of any insurance benefits, are not reflected in our revenue until the service is performed or the merchandise is delivered.

Trust fund income earned, along with the receipt and recognition of any insurance benefits, are not reflected in our revenue until the service is

performed or the merchandise is delivered.

Trust fund holdings and deferred revenue are reflected on our Consolidated Balance Sheets, while our insurance funded contracts are not reflected on our Consolidated Balance Sheets.

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This strategic objective champions the idea that every day presents a new opportunity to refine our processes, prioritize efficiencies, enhance our service, and exceed our prior achievements.

It embodies our dedication to continuous advancement and is the essence of our purpose statement.

These three strategic objectives are more than strategic imperatives.

Our three strategic objectives are more than strategic imperatives.

They represent our commitment to pursue excellence relentlessly, innovate with purpose, and redefine industry standards through superior service.

As part of our strategic objectives during 2025, we focused on the following:

Enhanced local brands:

We are committed to reinforcing the identity and presence of our local brands.

We can strengthen customer connections and loyalty by tailoring services to each community’s unique character and needs.

We expect to continue investing in brand-specific strategies highlighting local heritage and fostering deeper community engagement, which we believe ultimately enhances our competitive advantage across various markets.

Maximized evolving preferences:

By recognizing the dynamic nature of consumer preferences, we have and will continue to actively adapt our offerings to align with current and emerging trends.

We believe our agile approach to the various markets we serve demands that we always look ahead, delivering services that we believe resonate with our customers’ evolving needs and expectation.

Strategic mergers and acquisitions:

We aim to further expand its market reach and enhance its service portfolio through inorganic growth.

We will continue to identify and pursue acquisition opportunities in strategic growth markets that we believe promise the highest returns, with the expectation our integration of each new asset in a manner that will fortify our market positioning and drives shareholder value.

The growth profile we have established through our acquisitions over the last five years, serves as a good example of our focus on high quality, premier assets with significant growth potential.

We completed $59.0 million in strategic acquisitions while divesting $44.5 million in non-core assets, reinforcing our commitment to portfolio optimization and balance sheet discipline.

These actions reflect a deliberate focus on quality over quantity, prioritizing businesses that align culturally, enhance earnings quality, and strengthen long-term scalability and value creation.

Preneed funeral and cemetery sales:

We continue intensifying our efforts in pre-need sales to provide greater education and peace of mind to our customers and their families.

By offering comprehensive pre-planning services, we believe we will smooth the path for the future needs of our customers and secure a long-term revenue stream.

Relentless improvement:

Continuous improvement is at the heart of our reinvigorated operational philosophy.

By adopting a kaizen mindset, we are committed to incremental improvements in every aspect of our business.

We believe this proactive approach ensures efficiency, quality, and customer satisfaction.

Further, it highlights our commitment to operational efficiency and effectiveness, enhancing productivity, reducing costs, and uncovering new opportunities.

It aligns with our Relentless Improvement objective and underscores our dedication to excellence.

Passion for service and “Wow” playbook:

We believe our unwavering passion for service excellence sets us apart.

We have developed a “Wow” playbook, a guide to delivering exceptional experiences that should exceed customer expectations at selected customer touchpoints.

We believe training and empowering our staff to create “Wow” moments ensures a service level that cultivates enduring customer relationships.

For this purpose, we created the Director of Customer Care role, reflects our heightened focus on service excellence.

This role will focus on developing hospitality concepts, creating key performance indicators for customer experience, and implementing our “Wow” playbook.

This initiative underscores our commitment to improving service delivery, ensuring every interaction reflects our dedication to exceeding expectations.

“Trinity,” our digital transformation project:

We are currently streamlining processes to put our customers at the forefront of every decision.

This integrated system, known as “Trinity,” will provide comprehensive insights into customer interactions,

enabling personalized service and fostering customer loyalty.

Each of these initiatives reinforces our commitment to excellence and innovation.

We feel confident in our strategic direction and look forward to building a future that promises differentiation, customer loyalty, and sustainable success, all while achieving our goal of driving shareholder value.

Preneed sales remain one of the most important drivers of long-term revenue, cash flow visibility, and margin expansion across our business.

We expect these sales will generate high-quality backlog, support disciplined inventory monetization, and create durable customer relationships that translate into future at-need performance.

In 2025, our consolidated preneed cemetery property production ended the year at $85 million, an increase of 8.4% over the prior year, while total cemetery production reached $143.6 million, an increase of 8.2% year over year, underscoring the effectiveness of our strategic focus and execution in this critical channel.

In addition, insurance-funded preneed funeral contracts sold grew by approximately 27%, resulting in $9.6 million in preneed funeral commission income, which reflects an increase of 51% over the prior year.

Modernized sales infrastructure and continued innovation:

In the fourth quarter of 2025, we implemented our next-generation sales enablement platform.

This enhanced platform significantly improved visibility into our preneed sales funnel, enabling more accurate and timely reporting and allowing our sales leaders to more effectively monitor lead progression, conversion efficiency, and overall sales productivity.

Since the launch, we generated $2.6 million in preneed production through our next generation platform, representing 12% of total fourth-quarter preneed property sales.

Systems that support scale:

Throughout 2025, we continued to invest in systems and processes designed to support disciplined growth.

We advanced our continuous improvement platform, modernized core technology infrastructure, and strengthened our data and reporting capabilities to improve decision-making speed and quality.

We believe these investments in our systems will enable better visibility, greater accountability, and more consistent execution across the organization.

Improved reliability, enhanced financial reporting, and more accessible data will allow our leaders at every level to operate with

confidence and clarity.

Importantly, we believe these systems convert effort into repeatable outcomes, a prerequisite for sustainable growth.

The funeral and cemetery industry has been, and remains, highly competitive.

The largest publicly held operators, in terms of revenue, of both funeral homes and cemeteries with operations in the United States are Service Corporation International (“SCI”), and Carriage.

We believe these two companies collectively represent approximately 23% of funeral and cemetery revenue in the United States.

The largest publicly held operators, in terms of revenue, of both funeral homes and cemeteries with operations in the U.S.

are Service Corporation International (“SCI”) and Carriage.

We believe these two companies collectively represent approximately 23% of funeral and cemetery revenue in the U.S.

Independent businesses, along with other privately-owned consolidators, represent the remaining 77% of industry revenue.

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On May 17, 2023, the FTC announced, as part of its continuing review of potential amendments to the Funeral Rule, that it would host a public workshop, held on September 7, 2023, to consider issues raised by certain consumer advocacy groups.

Although the FTC’s public workshop was completed, no further announcements related to the notice of proposed rulemaking on potential

amendments to the Funeral Rule have been announced by the FTC.

Although the FTC’s public workshop was completed, no further announcements related to the notice of proposed rulemaking on potential amendments to the Funeral Rule have been announced by the FTC.

We cannot predict what changes, if any, may be made to the Funeral Rule or the impact of any such changes on our business.

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AVAILABLE INFORMATION

We file annual, quarterly and other reports, and any amendments to those reports, and information with the United States Securities and Exchange Commission (“SEC”).

We file annual, quarterly and other reports, and any amendments to those reports, and information with the U.S Securities and Exchange Commission (“SEC”).

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

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Also posted on our website, and available in print upon request, are charters for our Audit Committee, Compensation Committee and Corporate Governance Committee.

Copies of the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are also posted on our website under “Investors - Corporate Governance – Governance Documents.” Within the time period required by the SEC and the New York Stock Exchange, we will post on our website any modifications to the charters and any waivers applicable to senior officers as defined in the applicable charters, as required by the Sarbanes-Oxley Act of 2002.

Copies of the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are also posted on our website under “Investors - Corporate Governance – Governance Documents.” Our Code of Business Conduct and Ethics applies to all of our officers, employees and directors, including our principal executive officer, principal financial officer, and principal accounting officer.

Within the time period required by the SEC and the New York Stock Exchange, we will post on our website any modifications to the charters and any waivers applicable to senior officers as defined in the applicable charters, as required by the Sarbanes-Oxley Act of 2002, as well as any amendments or modifications to our Code of Business Conduct and Ethics.

Information contained on our website is not part of this Annual Report on Form 10-K.

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 1. Business