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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-28 · 127 added, 258 removed, 201 unchanged (66% of the section changed)

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and our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, which would offset lower pricing power as preneed contracts mature.

In simple terms, volume and price are the two variables that affect funeral revenue.

The average revenue per contract is influenced by the mix of traditional and cremation services because our average cremation service revenue is approximately one-third of the average revenue earned from a traditional burial service.

Funeral homes have a relatively fixed cost structure.

Overall, volume, as funeral services performed, and pricing fluctuations impacting our average revenue per contract are the two variables that primarily affect funeral revenue.

The average revenue per contract is influenced by the mix of traditional and cremation services as our average cremation service revenue is approximately one-third of the average revenue earned from a traditional burial service.

Funeral homes have a relatively large fixed cost structure.

Cemetery Operations

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our ability to adapt to changes in the economy and consumer confidence;

controlling salary, merchandise, and other controllable costs;

exercising pricing leverage related to our atneed business to increase average price per interment right sold;

and our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, finance charges on installment contracts and our securities portfolio within the trust funds.

Inflationary and Macroeconomic Trends

During 2024, we continued to experience a stabilization of inflationary costs from our vendors and suppliers for merchandise and goods, particularly as it relates to utilities, funeral supplies and merchandise costs, with costs remaining flat when compared to 2023.

Also, after giving effect to the Credit Facility Amendment, executed during the third quarter of 2024, we experienced lower variable interest rates under our Credit Facility, which resulted in lower borrowing costs in the second half of the year compared to the same period in the prior year.

Further contributing to our lower borrowing costs was the pay down of $42.1 million on our revolving credit facility as we executed our focus to pay down our outstanding debt throughout 2024.

While we are encouraged by the stabilization of inflationary costs that we have experienced 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 remain unknown at this time.

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, 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.

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

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.

economy continues to experience the impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.

economy continues to experience the

impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices.

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.

Throughout 2024, we continued to experience lower volumes as compared to prior years due to fluctuations in the death rate, although overall financial performance remains at or above prior reporting periods.

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 into 2026, 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 prior year.

For further discussion of our key operating metrics, see our "Cash Flows", "Financial Highlights" and "Results of Operations" sections below.

For discussion of our results of operations and liquidity and capital resources for the fiscal year ended December 31, 2024, see Management's Discussion and Analysis of Financial Conditions, Liquidity and Capital Resources, Financial Highlights, and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year December 31, 2024, filed with the Securities and Exchange Commission on February 28, 2025.

LIQUIDITY AND CAPITAL RESOURCES

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We have the ability to draw on our Credit Facility, as needed, subject to its customary terms and conditions.

For 2025, our plan is to remain focused on executing our strategic objectives and growth strategy.

This includes prioritizing our capital allocation for debt repayments, the payment of dividends and debt obligations, internal growth capital expenditures, and general corporate purposes, as allowed under our Credit Facility.

For 2026, our plan is to remain focused on executing our growth strategy and other strategic objectives.

This includes prioritizing our capital allocation for potential strategic growth acquisitions, capital expenditures, debt repayments, the payment of dividends, and other general corporate purposes as allowed under our Credit Facility.

We expect to fund these payments using cash on hand and borrowings under our Credit Facility.

We believe that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments and dividends for the next 12 months, as well as our long-term financial obligations.

We believe that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments, potential growth acquisitions, and dividends for the next 12 months, as well as our long-term financial obligations.

However, if our capital allocations and expenditures or acquisition plans change, we may need to access the capital markets or seek further borrowing capacity from our lenders to obtain additional funding and we may not be able to obtain such funding on terms and conditions that are acceptable to us.

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We began 2025 with $1.2 million in cash and ended the year with $1.7 million in cash.

At December 31, 2024, we had borrowings of $137.0 million outstanding on our Credit Facility compared to $179.1 million at December 31, 2023 and $190.7 million at December 31, 2022.

As of December 31, 2025, we had borrowings of $126.7 million outstanding on our Credit Facility compared to $137.0 million as of December 31, 2024.

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

Years Ended December 31,

2024 2023 2022

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

Year Ended December 31,

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

Net cash provided by operating activities 60,693 51,996

Acquisitions of businesses and real property (59,026) —

Capital expenditures (20,628) (16,098)

Proceeds from divestitures and sale of other assets 44,483 12,057

Proceeds from insurance claims — 403

Capital expenditures (16,098) (18,039) (26,081)

Net cash used in investing activities (35,171) (3,638)

Net (payments) borrowings on our credit facility, acquisition debt and finance lease obligations (43,161) (12,767) 34,418

Net payments on our credit facility, acquisition debt, and finance lease obligations (11,416) (43,161)

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

Net proceeds from employee equity plans 2,033 1,242 1,418

Net payments on employee equity plans (6,558) 2,033

Dividends paid on common stock (7,025) (6,807)

Purchase of treasury stock — — (36,663)

Net cash used in financing activities (24,999) (48,716)

Cash and cash equivalents at end of year $ 1,165 $ 1,523 $ 1,170

Cash and cash equivalents at end of period $ 1,688 $ 1,165

Operating Activities

For the year ended December 31, 2024, cash provided by operating activities was $52.0 million compared to $75.6 million for the year ended December 31, 2023 and $61.0 million for the year ended December 31, 2022.

The decrease of $23.6 million for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to the following non-recurring events, which occurred during 2023:

i) an $8.6 million withdrawal of realized capital gains and earnings from our preneed funeral and cemetery trust investments;

and ii) the receipt of a $6.0 million incentive payment from a vendor for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future, as well as non-recurring events, which occurred during 2024:

i) executive severance payments of $3.5 million and ii) payments of $3.3 million related to the Company’s review of strategic alternatives.

The increase of $14.6 million for the year ended December 31, 2023 compared to the same period in 2022 was primarily due to the non-recurring events occurring in 2023 mentioned above.

For the year ended December 31, 2025, cash provided by operating activities was $60.7 million compared to $52.0 million for the year ended December 31, 2024.

Investing Activities

Our investing activities resulted in a net cash outflow of $3.6 million f or the year ended December 31, 2024 compared to $57.0 million for the year ended December 31, 2023 and $52.5 million for the year ended December 31, 2022.

Our investing activities resulted in a net cash outflows of $35.2 million f or the year ended December 31, 2025, compared to net cash inflows of $3.6 million for the year ended December 31, 2024, a decrease of $31.5 million.

Acquisition and Divestiture Activity

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 and four cemeteries for an aggregate of $40.4 million.

Additionally, we sold real property for $4.0 million.

During the year ended December 31, 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.

During the year ended December 31, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business for $44.0 million and real property for $3.1 million of which $0.5 million was paid in cash and the remainder financed over fifteen years.

In addition, we sold two funeral homes and two cemeteries for an aggregate of $1.1 million and real property for $3.1 million.

We also received proceeds of $1.4 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 and a fire that occurred during the first quarter of 2023.

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.

In addition, we sold four funeral homes for $1.5 million, sold real estate for $3.3 million and purchased real estate for $2.6 million.

We also received proceeds of $2.4 million from our property insurance policy for the reimbursement of renovation costs for our funeral and cemetery businesses that were damaged by Hurricane Ida.

Insurance Proceeds

During the year ended December 31, 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 year ended December 31, 2024, our capital expenditures (comprised of growth and maintenance spend) totaled $16.1 million compared to $18.0 million for the year ended December 31, 2023, and $26.1 million for the year ended December 31, 2022.

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

Years Ended December 31,

2024 2023 2022

Cemetery development $ 7,007 $ 7,143 $ 7,679

Renovations at certain businesses (1)

For the year ended December 31, 2025, our capital expenditures (comprised of growth and maintenance spend) totaled $20.6 million compared to $16.1 million for the year ended December 31, 2024, an increase of $4.5 million.

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

Year ended December 31,

$ 13,639 $ 8,786

Cemetery projects — 1,206 788

Other 78 110 782

Total Growth $ 8,786 $ 9,963 $ 14,297

(1) During the year ended December 31, 2023, we spent $0.8 million for renovations to two businesses that were affected by Hurricane Ian, which occurred during the third quarter of 2022 and $0.4 million for renovations to one business that was damaged by a fire, which occurred during the first quarter of 2023, all of which was reimbursed by our property insurance.

During the year ended December 31, 2022, we spent $2.4 million for renovations on two businesses that were affected by Hurricane Ida, all of which was reimbursed by our property insurance.

Years Ended December 31,

Total Capital Expenditures

$ 20,628 $ 16,098

General equipment and furniture $ 3,994 $ 5,993 $ 4,834

Facility repairs and improvements 2,511 1,041 3,207

Vehicles 230 618 2,062

Paving roads and parking lots 577 424 1,157

Other — — 524

Total Maintenance $ 7,312 $ 8,076 $ 11,784

Financing Activities

Our financing activities resulted in a net cash outflow of $48.7 million for the year ended December 31, 2024, compared to a net cash outflow of $18.2 million for the year ended December 31, 2023, and a net cash outflow of $8.5 million for the year ended December 31, 2022.

For the year ended December 31, 2024, we had net payments on our Credit Facility, acquisition debt and finance leases of $43.2 million and paid dividends of $6.8 million.

For the year ended December 31, 2023, we had net payments on our Credit Facility, acquisition debt and finance leases of $12.8 million and paid dividends of $6.7 million.

For the year ended December 31, 2022, we had net borrowings on our Credit Facility, acquisition debt and finance leases of $34.4 million, offset by the following payments:

i) $36.7 million for the purchase of treasury stock;

ii) $6.8 million in dividends;

and iii) $0.9 million for debt issuance and transition costs related to our Credit Facility.

Our Board declared the following dividends payable on the dates below (in thousands, except per share amounts):

2024 Per Share Dollar Value

March 1st $ 0.1125 $ 1,686

June 1st $ 0.1125 $ 1,704

September 1st $ 0.1125 $ 1,708

December 1st $ 0.1125 $ 1,709

2023 Per Share Dollar Value

March 1st $ 0.1125 $ 1,661

June 1st $ 0.1125 $ 1,679

September 1st $ 0.1125 $ 1,683

December 1st $ 0.1125 $ 1,685

2022 Per Share Dollar Value

March 1st $ 0.1125 $ 1,725

June 1st $ 0.1125 $ 1,730

September 1st $ 0.1125 $ 1,653

December 1st $ 0.1125 $ 1,655

Share Repurchases

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 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.

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

Years Ended December 31,

2024 2023 2022

Number of Shares Repurchased — — 695,496

Average Price Paid Per Share $ — $ — $ 49.22

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

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

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

At December 31, 2024, our share repurchase program had $48.9 million authorized for repurchases.

Our financing activities resulted in a net cash outflow of $25.0 million for the year ended December 31, 2025, compared to a net cash outflow of $48.7 million for the year ended December 31, 2024, a decrease of $23.7 million.

During the year ended December 31, 2025, we had net payments on our Credit Facility, acquisition debt, and finance leases of $11.4 million, net payments on our employee equity plans of $6.6 million, and paid dividends of $7.0 million.

During the year ended December 31, 2024, we had net payments on our Credit Facility, acquisition debt, and finance leases of $43.2 million and paid dividends of $6.8 million.

Credit Facility, Lease Obligations, and Acquisition Debt

The outstanding principal of our Credit Facility, lease obligations and acquisition debt at December 31, 2024 is as follows (in thousands):

December 31, 2024 December 31, 2023

Credit Facility

Operating leases 16,845 18,510

Finance leases 6,578 6,423

Acquisition debt 5,466 5,998

Total $ 165,889 $ 210,031

Credit Facility

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.

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 to our Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplementary Data) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”).

The Credit Facility contains customary affirmative covenants, including, but not limited to, covenants with respect to the use of proceeds, payment of taxes and other obligations, continuation of the Company’s business and the maintenance of existing rights and privileges, the maintenance of property and insurance, among others.

In addition, the Credit Facility also contains customary negative covenants, including, but not limited to, covenants that restrict (subject to certain exceptions) the ability of the Company and the Subsidiary Guarantors to incur indebtedness, grant liens, make investments, engage in mergers and acquisitions, and pay dividends and other restricted payments, and certain financial maintenance covenants.

At December 31, 2024, we were subject to the following financial covenants under our Credit Facility:

(A) a Total Leverage Ratio not to exceed 5.00 to 1.00 and (B) a Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.20 to 1.00 as of the end of any period of four consecutive fiscal quarters.

These financial

maintenance covenants are calculated for the Company and its subsidiaries on a consolidated basis.

We were in compliance with all of the covenants contained in our Credit Facility at December 31, 2024.

At December 31, 2025, we had outstanding borrowings under the Credit Facility of $126.7 million.

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.

The letter of credit will expire on November 25, 2026 and is expected to automatically renew annually.

At December 31, 2025, we had $121.1 million of availability under the Credit Facility.

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.

We have no material assets or operations independent of the Subsidiary Guarantors, as all of our assets and operations are held and conducted by the Subsidiary Guarantors.

Additionally, we do not currently have any significant restrictions on our ability to receive dividends or loans from any Subsidiary Guarantors.

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

Years Ended December 31,

2024 2023 2022

Credit Facility interest expense $ 13,390 $ 17,251 $ 7,105

Credit Facility amortization of debt issuance costs 469 552 412

The interest payments on our remaining borrowings under the Credit Facility will be determined based on the average outstanding balance of our borrowings and the prevailing interest rate during that time.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 12 to our Consolidated Financial Statements for further detail of our debt and interest payments.

See Note 12 of Part II, Item 8.

Financial Statements and Supplementary Data for additional information related to our Credit Facility.

The information discussed therein is incorporated by reference into this Part I, Item 1 of this Annual Report.

Lease Obligations

Our lease obligations consist of operating and finance leases.

We lease certain office facilities, certain funeral homes, vehicles and equipment under operating leases with original terms ranging from one to twenty years.

Many leases include one or more options to renew, some of which include options to extend the leases for up to forty years.

In addition, we lease certain other funeral homes, vehicles and equipment under finance leases with original terms ranging from three and a half to forty years.

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

Years Ended December 31,

2024 2023 2022

Operating lease cost $ 3,998 $ 3,526 $ 3,375

Short-term lease cost 232 372 329

Variable lease cost 380 234 324

Finance lease cost:

Depreciation of leased assets $ 511 $ 541 $ 438

Interest on lease liabilities 506 500 442

At December 31, 2024, non-cancelable operating and finance lease obligations were $35.2 million with $5.5 million payable within 12 months.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 14 to our Consolidated Financial Statements for further detail of our lease payments.

Our lease obligations consist of operating and finance leases for certain office facilities and funeral homes as well as vehicles and equipment.

See Note 14 of Part II, Item 8.

Financial Statements and Supplementary Data for additional information related to lease obligations.

The information discussed therein is incorporated by reference into this Part I, Item 1 of this Annual Report.

Acquisition Debt

Acquisition debt consists of deferred purchase price and promissory notes payable to sellers.

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 nine to twenty years.

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

Years Ended December 31,

2024 2023 2022

Acquisition debt imputed interest expense $ 406 $ 291 $ 311

At December 31, 2025, acquisition debt obligations were $6.2 million, with $0.6 million payable within 12 months.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 12 to our Consolidated Financial Statements for further detail of our debt payments.

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.

The Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee (“Collateral Trustee”).

The Senior Notes are unsecured, senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally by each of the Subsidiary Guarantors.

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

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.

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.

In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the Senior Notes at a price equal to 100% of the principal amount of the Senior Notes, plus accrued and unpaid interest.

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

The Indenture also contains customary events of default.

The debt discount and the debt issuance costs are being amortized using the effective interest method over the remaining term of 53 months of the Senior Notes.

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

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 and debt issuance costs related to our Senior Notes are as follows (in thousands):

Years Ended December 31,

2024 2023 2022

Senior Notes interest expense $ 17,000 $ 17,000 $ 16,980

Senior Notes amortization of debt discount 539 515 493

Senior Notes amortization of debt issuance costs 153 147 140

See Note 12 of Part II, Item 8.

Financial Statements and Supplementary Data for additional information related to acquisition debt.

The information discussed therein is incorporated by reference into this Part I, Item 1 of this Annual Report.

At December 31, 2025, the principal amount of our 4.25% Senior Notes due in May 2029 (the “Senior Notes”) was $400.0 million.

We have future interest payments on our outstanding balance of $59.5 million, with $17.0 million payable within 12 months.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 13 to our Consolidated Financial Statements for further detail of our debt and interest payments.

See Note 13 of Part II, Item 8.

Financial Statements and Supplementary Data for additional information related to our Senior Notes.

The information discussed therein is incorporated by reference into this Part I, Item 1 of this Annual Report.

Off-Balance Sheet Arrangements

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Payments for such agreements are generally not made in advance.

These agreements are generally for one to ten 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.

We have future payments on our consulting agreements of $2.2 million, with $1.0 million payable within 12 months.

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

We have future payments on our employment agreements of $10.0 million, with $5.5 million payable within 12 months.

We have future payments on our employment agreements of $3.8 million, all of which is payable within 12 months.

Letter of credit - We have one letter of credit for $2.2 million under the Credit Facility, which secures our obligations under our various self-insurance policies in the event we are unable to meet the self-insurance portion of our claim payment obligations.

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FINANCIAL HIGHLIGHTS

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

Years Ended December 31,

2024 2023 2022

Revenue $ 404,198 $ 382,520 $ 370,174

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

Year ended December 31,

2025 2024 Inc/(Dec) % Change

Total revenue $ 417,440 $ 404,198 $ 13,242 3.3 %

Funeral contracts 43,523 44,103 (580) (1.3) %

Average revenue per funeral contract $ 5,714 $ 5,543 $ 5,493

Average revenue per funeral contract excluding preneed interest $ 5,693 $ 5,549 $ 144 2.6 %

Preneed interment rights (property) sold 14,573 14,523 50 0.3 %

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Net income $ 51,507 $ 32,953 $ 18,554 56.3 %

Revenue in 2024 increased $21.7 million compared to 2023, primarily as a result of a 22.9% increase in preneed interment rights (property) sold and a 7.3% increase in the average price per preneed interment right sold.

Additionally, we experienced a 3.1% increase in the average revenue per funeral contract, which was offset by a 4.9% decrease in funeral contract volume.

Revenue in 2023 increased $12.3 million compared to 2022, primarily as a result of a 9.4% increase in the average price per interment right sold, an 8.6% increase in the number of preneed interment rights (property) sold and a 0.9% increase in average revenue per funeral contract, offset by a 2.4% decrease in funeral contract volume.

The funeral contract volume decrease is primarily a result of the lower impact of COVID-19 related deaths in the first quarter of 2023 as compared to the same period in 2022.

Further discussion of revenue for our funeral home and cemetery segments is presented under “Results of Operations.”

Gross profit in 2024 increased $19.1 million compared to 2023, primarily due to the increase in revenue from our cemetery segment, as well as lower operating expenses in both of our segments.

The overall decrease in operating expenses reflects the continued progress we have made successfully executing on our cost management initiatives in 2024.

Gross profit in 2023 increased $5.1 million compared to 2022, primarily due to the increase in revenue from our cemetery segment, offset by an increase in operating expenses in our cemetery segment.

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

Net income in 2024 decreased $0.5 million compared to 2023, primarily due to a $16.9 million increase in general, administrative and other expenses, primarily comprised of one-time costs related to executive severance payments and the Company’s review of strategic alternatives, a $4.1 million increase in income tax expense and a $1.4 million increase in loss on divestitures, disposals and impairment charges.

These increases in expenses were offset by the $19.1 million increase in gross profit contribution from our businesses and a $4.2 million decrease in interest expense.

Net income in 2023 decreased $8.0 million compared to 2022, primarily due to the following:

(1) a $10.4 million increase in interest expense;

(2) a $4.7 million increase in general, administrative and other expenses;

and (3) a $1.0 million increase in divestitures, disposals, impairment charges and insurance reimbursements, offset by (4) the increase in gross profit of $5.1 million and (4) a $2.8 million decrease in tax expense.

Further discussion of general, administrative and other expenses, net loss on divestitures, disposals and impairment charges, interest expense, income taxes and other components of income and expenses are presented under “Other Financial Statement Items.”

Revenue in 2025 increased $13.2 million compared to 2024, primarily as a result of a 0.3% increase in preneed interment rights (property) sold and an 8.1% increase in the average price per preneed interment right sold.

Additionally, we experienced a 2.6% increase in the average revenue per funeral contract, which was partially offset by a 1.3% decrease in funeral contract volume.

Gross profit in 2025 increased $3.3 million compared to 2024, primarily due to the increases in revenue from both our segments, as well as lower operating expenses.

Net income in 2025 increased $18.6 million compared to 2024, primarily due to a $10.4 million decrease in general, administrative, and other expenses, as 2024 is comprised of one-time costs related to executive severance payments and the Company’s review of strategic alternatives, a $3.3 million increase in gross profit contribution from our businesses, a $2.2 million decrease in loss on divestitures and impairment charges and a $3.7 million decrease in interest expense, offset by a $1.6 million increase in income tax expense.

Further discussion of general, administrative and other expenses, net loss on divestitures and impairment charges, interest expense, income taxes and other components of income and expenses are presented under “Other Financial Statement Items.”

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 year ending December 31, 2024, dated February 26, 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 December 31, 2025, dated February 25, 2026, 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”).

Additionally, management employs segment gross profit for product pricing evaluation and uses segment adjusted operating profit to assess each segment’s performance by comparing results.

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):

Years Ended December 31,

2024 2023 2022

Year Ended December 31,

Gross profit $ 146,676 $ 143,390

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

Years Ended December 31,

2024 2023 2022

Year Ended December 31,

Funeral Home $ 112,004 $ 107,990

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Adjusted operating profit margin (1)

44.7% 42.1% 43.6%

(1) Adjusted operating profit margin is defined as adjusted operating profit as a percentage of revenue.

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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 six funeral homes we sold and three funeral homes we merged with other businesses we own in existing markets during the year ended December 31, 2024 and two funeral homes we sold and one funeral home we merged with another business we own in an existing market during the year ended December 31, 2023.

The term “divested” when discussed in the cemetery segment, refers to one cemetery we sold during the year ended December 31, 2024 and two cemeteries we sold during the year ended December 31, 2023.

The term “divested” when discussed in the funeral home segment, refers to thirteen funeral homes we sold and two funeral homes we merged with other businesses we own in existing markets during the year ended December 31, 2025 and six funeral homes we sold and three funeral home we merged with another business we own in an existing market during the year ended December 31, 2024.

The term “divested” when discussed in the cemetery segment, refers to four cemetery we sold during the year ended December 31, 2025 and one cemetery we sold during the year ended December 31, 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):

Years Ended December 31,

Year Ended December 31,

2025 2024 Inc/(Dec)

Operating $ 239,601 $ 230,954 $ 8,647 3.7 %

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Total $ 112,004 $ 107,990 $ 4,014 3.7 %

The following consolidated operating measures reflect the significant metrics over this comparative period:

The following measures reflect significant operating metrics over the comparative period:

Contract volume 41,579 40,652 927 2.3 %

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Cremation rate 60.8% 59.9% 0.9% 1.7 %

Funeral home operating revenue decreased $1.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decline in operating revenue was primarily driven by a 4.9% decrease in contract volume, which was partially offset by a 3.1% increase in the average revenue per contract excluding preneed interest.

The decline in funeral contract volume was primarily influenced by the lingering impact of the COVID-19 related pull forward effect.

However, we continued to successfully implement our enhanced pricing strategy through 2024, which contributed to the increase in average revenue per funeral contract.

Funeral home operating revenue increased $8.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase in operating revenue was primarily driven by a 1.4% increase in the average revenue per contract excluding preneed interest as well as a 2.3% increase in contract volume.

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 year ended December 31, 2025, increased $2.9 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 increased 70 basis points to 39.0%, driven by a 0.8% reduction in operating expenses as a percentage of revenue.

Key expense reductions include salary and benefits expenses which decreased 0.5%, cost of merchandise which decreased 0.4%, and other funeral costs which decreased 0.2%.

These decreases were partially offset by an increase in facilities and grounds expense of 0.6%.

The overall decrease in operating expenses reflects the continued progress we have made successfully executing on our cost management initiatives this year.

Ancillary revenue, which represents revenue from our flower shop, monument business, pet cremation business and online cremation businesses decreased $0.3 million, while ancillary adjusted operating profit increased $0.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease in ancillary revenue is primarily due to a decision to cease the operations of a cremation focused business at our Bakersfield, CA business, which did not contribute materially to adjusted operating profit.

The comparable adjusted operating profit margin decreased 20 basis points to 39.5%, driven by 0.2% increase in operating expenses as a percentage of revenue.

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

These increases were partially offset by decreases in transportation expenses, cost of merchandise, and facilities and grounds insurance.

Ancillary revenue decreased $0.7 million, while ancillary adjusted operating profit decreased $0.1 million for the year ended December 31, 2025, compared to the year ended December 31, 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 $3.8 million and $2.9 million, respectively, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

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

Years Ended December 31,

Year Ended December 31,

2025 2024 Inc/(Dec)

Operating $ 130,631 $ 120,060 $ 10,571 8.8 %

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Total $ 148,228 $ 141,084 $ 7,144 5.1 %

Adjusted operating profit (loss)

Adjusted operating profit

Operating $ 58,653 $ 55,800 $ 2,853 5.1 %

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Total $ 74,974 $ 72,661 $ 2,313 3.2 %

The following consolidated measures reflect the significant metrics over this comparative period:

The following measures reflect the significant operating metrics over this comparative period:

Preneed revenue as a percentage of operating revenue 70.8% 70.3% 0.5% 0.7 %

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Average price per interment right sold $ 5,836 $ 5,486 $ 350 6.4 %

Cemetery operating revenue increased $23.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of a 22.9% increase in the number of preneed interment rights sold and a 7.3% increase in the average price per preneed interment right sold.

Cemetery atneed revenue, which represents 31% of our total operating revenue, increased $0.7 million for the year ended December 31, 2024, compared to the same period of the prior year, primarily due to an increase in delivered merchandise and services across our cemetery portfolio.

The increase in cemetery revenue highlights the effectiveness of our preneed cemetery sales growth plan, as we continue to focus on executing our strategic objectives.

Cemetery adjusted operating profit increased $16.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher revenue and improved operational efficiencies.

The comparable operating profit margin increased 540 basis point to 45.8%.

Operating expenses as a percentage of operating revenue decreased 5.5%, driven by reductions in key expenses such as salaries and benefits which decreased 3.6%, merchandise costs which decreased 0.9%, and general and administrative expenses which decreased 0.3% These decreases reflect the continued progress we have made successfully executing on our cost management initiatives.

Cemetery operating revenue increased $10.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily as a result of a 6.4% increase in the average price per preneed interment right sold coupled with a 3.6% increase in the number of preneed interment rights sold.

Cemetery atneed revenue, which represents approximately 29% of our total operating revenue, increased $2.5 million for the year ended December 31, 2025, compared to the same period of the prior year, primarily due to a 17.1% increase in atneed property sold as well as a 3.4% increase in atneed merchandise and service that was delivered within the period.

Cemetery adjusted operating profit increased $2.9 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The comparable operating profit margin decreased 160 basis points to 44.9%.

Operating expenses as a percentage of operating revenue increased 1.6%, 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, increased $0.4 million and $0.4 million, respectively, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

These increases are primarily due to a $0.2 million increase in finance charges on financed preneed contracts, as well as a $0.2 million increase in income earned on delivered merchandise and services and improved performance for our perpetual care trust fund.

The increase is due to a more favorable tax rate on perpetual care income taxes in 2025 compared to 2024.

Cemetery property amortization.

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Field depreciation.

Depreciation expense for our field businesses totaled $13.7 million for the year ended December 31, 2024, a decrease of $0.4 million compared to the year ended December 31, 2023, primarily driven by our business decision in 2023 to lease vehicles rather than purchase them.

Depreciation expense for our field businesses totaled $13.2 million for the year ended December 31, 2025, a decrease of $0.6 million compared to the year ended December 31, 2024, 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 $15.4 million for the year ended December 31, 2024, a decrease of $1.2 million compared to the year ended December 31, 2023, primarily driven by the following:

i) an $0.7 million decrease in incentive compensation costs, ii) a $0.7 million decrease in leadership and development expenses, offset by iii) a $0.4 million increase in salaries and benefits expenses.

Regional and unallocated funeral and cemetery costs totaled $17.7 million for the year ended December 31, 2025, a increase of $2.4 million compared to the year ended December 31, 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 $59.0 million for the year ended December 31, 2024, an increase of $16.9 million compared to the year ended December 31, 2023, primarily driven by the following:

i) a $6.2 million increase 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;

ii) a $4.6 million increase in other professional fees primarily related to the development of our digital transformation project;

iii) a $4.0 million increase primarily related to our agreement to pay our financial advisor in connection with the Company's previously concluded review of strategic alternatives;

iv) a $0.9 million increase in information technology expenses such as software license and support fees;

and v) a $1.2 million increase in various other general and administrative expenses.

Net loss on divestitures, disposals and impairment charges.

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

Years Ended December 31,

General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $48.6 million for the year ended December 31, 2025, a decrease of $10.4 million compared to the year ended December 31, 2024, primarily driven by a $6.2 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 an $6.2 million decrease in other professional fees.

These decreases were offset by a $1.0 million increase in depreciation and amortizations, $0.6 million increase in computer maintenance and licenses, and a $0.4 million increase in various other general and administrative expenses.

Net loss on divestitures and impairment charges.

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

Year ended December 31,

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

Net loss on divestitures 1,224 106

Net (gain) loss on divestitures (1,451) 1,224

Net loss on disposals of fixed assets 61 719

Total $ 371 $ 2,580

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

During the year ended December 31, 2025, we sold thirteen funeral homes and four cemeteries for an aggregate gain of $1.5 million.

We also recognized an impairment of $1.8 million on assets held for sale during the year ended December 31, 2025.

During the year ended December 31, 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.

During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for a loss of $0.1 million.

We recognized impairments of $0.2 million as a result of our 2023 qualitative assessment of tradenames.

Interest expense .

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

Years Ended December 31,

Year ended December 31,

Senior Notes $ 17,722 $ 17,692

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Net gain on property damage, net of insurance claims.

The components of Net gain on property damage, net of insurance claims are as follows (in thousands):

Years Ended December 31,

Gain on property damage by Hurricane Ian $ (417) (379)

Gain on property damage by Hurricane Ida — $ (28)

Loss on other property damage — 64

Total $ (417) $ (343)

During the year ended December 31, 2023, we recorded a $1.4 million gain on the sale of other real estate not used in business operations.

During the year ended December 31, 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 year ended December 31, 2025, we recorded a $1.0 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 year ended December 31, 2024.

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Income tax expense totaled $18.8 million for the year ended December 31, 2025, an increase of $1.6 million compared to the year ended December 31, 2024.

Our operating tax rate before discrete items was 32.1% and 28.4% for the years ended December 31, 2024 and 2023, respectively.

We recorded a net discrete tax expense of $1.0 million for the year ended December 31, 2024, an increase of $1.2 million compared to the year ended December 31, 2023.

The net discrete tax expense for the year ended December 31, 2024, includes expense related to equity compensation and other adjustments including return to provision analysis and state legislative changes.

Our operating tax rate before discrete items was 31.6% and 32.1% for the year ended December 31, 2025 and 2024, respectively.

We recorded a net discrete tax benefit of $3.4 million for the year ended December 31, 2025, a decrease of $4.5 million compared to the year ended December 31, 2024.

The net discrete tax benefit for the year ended December 31, 2025, is primarily due to vesting of long-term equity compensation, stock option exercises.

Our effective tax rate was 26.7% and 34.2% for years ended December 31, 2025 and 2024, respectively.

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Understanding our accounting policies and the extent to which our management uses judgment, assumptions and estimates in applying these policies is integral to understanding our Consolidated Financial Statements.

Our critical accounting policies are more fully described in Part II, Item 8, Financial Statements and Supplementary Data, Note 1.

Our critical accounting policies are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data” in Note 1.

We have identified the following accounting policies as those that require significant judgments, assumptions and estimates and that have a significant impact on our financial condition and results of operations.

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In the quantitative analysis, we compare the fair value of each reporting unit to its carrying value, including goodwill.

We determine fair value for each reporting unit using both an income approach, weighted 90%, and a market approach, weighted 10%.

We determine fair value for each reporting unit using an income approach, weighted 80%, and two market approaches, weighted 10% each.

Our methodology for determining an income-based fair value is based on discounting projected future cash flows.

The discounted cash flow valuation uses projections of future cash flows and includes assumptions concerning future operating performance and economic conditions that may differ from actual future cash flows.

Our methodology for determining a market approach fair value utilizes the guideline public company method, in which we rely on market multiples of comparable companies operating in the same industry as the individual reporting units.

The projected future cash flows include assumptions concerning future operating performance and economic conditions that may differ from actual future cash flows discounted at our weighted average cost of capital based on market participant assumptions.

Our first methodology for determining a market approach fair value utilizes the guideline public company method, in which we rely on market multiples of comparable companies operating in the same industry as the individual reporting units.

Our second market approach methodology utilizes the guideline transaction method, in which transaction multiples are derived from acquisitions of controlling interests in companies engaged in the same or similar lines of business as the reporting units.

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.

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Determining the fair value of identifiable assets, particularly intangibles and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.

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.

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, and other assets or liabilities associated with the acquisition.

When we acquire a cemetery, we utilize an internal and external approach to determine the fair value of the cemetery property.

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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 7. Management’s Discussion and Analysis