CARRIAGE SERVICES INC 10-K

Item 8. Financial Statements and Supplementary Data CARRIAGE SERVICES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page CONSOLIDATED FINANCIAL STATEMENTS: Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 36 Consolidated Balance Sheet s as of December 31, 202 5 and 202 4 38 Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 , and 202 3 39 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 202 5 , 202 4 , and 202 3 41 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 , 202 4 , and 202 3 40 Notes to Consolidated Financial Statements 42 1. Basis of Presentation and Summary of Significant Accounting Pol icies 42 2. Re cently Issu ed A ccounting Standards 50 3. Business Com binations 51 4. Goodwill 52 5. Divested Operat ions 52 6. Receivables 53 7 . Fair Value Measurements 54 8. Trust Investments 55 9 . Receivables from Preneed Funeral Trusts 62 1 0. Contracts Funded by Insurance 63 1 1. Intangibles and Other Non Current Assets 64 1 2. Credit Facility and Acquisition Debt 65 1 3. Senio r Notes 67 1 4. Leases 68 1 5. Commit ments and Contingencies 70 1 6. Income Taxes 71 1 7. Stockholders' Equity 73 1 8. Earnings Per Share 77 1 9. Segment Reporting 78 2 0. Supplementary Da ta 82 35 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Carriage Services, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Carriage Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 26, 2026 expressed an unqualified opinion. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Company's auditor since 2014. Houston, Texas February 26, 2026 36 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Carriage Services, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Carriage Services, Inc., (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated February 26, 2026 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Houston, Texas February 26, 2026 37 CARRIAGE SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 1,688 $ 1,165 Accounts receivable, net 40,647 30,193 Inventories 7,763 7,920 Prepaid and other current assets 5,978 4,123 Current assets held for sale — 1,135 Total current assets 56,076 44,536 Preneed cemetery trust investments 109,152 98,120 Preneed funeral trust investments 115,416 106,219 Preneed cemetery receivables, net 67,055 50,958 Receivables from preneed funeral trusts, net 16,255 22,372 Property, plant, and equipment, net 286,810 273,004 Cemetery property, net 115,645 109,576 Goodwill 427,897 414,859 Intangible and other non-current assets, net 43,607 40,427 Operating lease right-of-use assets 12,045 14,953 Cemetery perpetual care trust investments 95,625 85,103 Non-current assets held for sale 322 19,453 Total assets $ 1,345,905 $ 1,279,580 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of debt and lease obligations $ 4,296 $ 3,914 Accounts payable 18,999 15,427 Accrued and other liabilities 33,922 38,460 Current liabilities held for sale — 240 Total current liabilities 57,217 58,041 Acquisition debt, net of current portion 5,581 4,895 Long-term liabilities held for sale — 13,842 Credit facility 125,435 135,382 Senior notes 397,319 396,597 Obligations under finance leases, net of current portion 9,339 6,045 Obligations under operating leases, net of current portion 10,538 14,035 Deferred preneed cemetery revenue 76,781 61,767 Deferred preneed funeral revenue 33,663 39,261 Deferred tax liability 55,409 51,429 Other long-term liabilities 1,854 1,179 Deferred preneed cemetery receipts held in trust 109,152 98,120 Deferred preneed funeral receipts held in trust 115,416 106,219 Care trusts’ corpus 93,425 84,218 Total liabilities 1,091,129 1,071,030 Commitments and contingencies: Stockholders’ equity: Common stock, $ 0.01 par value; 80,000,000 shares authorized and 27,378,870 and 26,881,355 shares issued, respectively and 15,751,052 and 15,253,537 shares outstanding, respectively 274 269 Additional paid-in capital 238,539 243,825 Retained earnings 294,716 243,209 Treasury stock, at cost; 11,627,818 shares ( 278,753 ) ( 278,753 ) Total stockholders’ equity 254,776 208,550 Total liabilities and stockholders’ equity $ 1,345,905 $ 1,279,580 The accompanying notes are an integral part of these Consolidated Financial Statements. 38 CARRIAGE SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year ended December 31, 2025 2024 2023 Revenue: Service revenue $ 191,278 $ 183,051 $ 182,166 Property and merchandise revenue 188,503 186,932 169,490 Other revenue 37,659 34,215 30,864 Total revenue 417,440 404,198 382,520 Field costs and expenses: Cost of service 95,220 90,704 91,799 Cost of merchandise 129,096 126,922 123,817 Cemetery property amortization 9,388 8,168 6,039 Field depreciation expense 13,167 13,729 14,166 Regional and unallocated funeral and cemetery costs 17,747 15,364 16,576 Other expenses 6,146 5,921 5,828 Total field costs and expenses 270,764 260,808 258,225 Gross profit 146,676 143,390 124,295 Corporate costs and expenses: General, administrative, and other 48,648 59,011 42,125 Net loss on divestitures and impairment charges 371 2,580 1,191 Operating income 97,657 81,799 80,979 Interest expense 28,365 32,075 36,266 Net gain on property damage, net of insurance claims — ( 417 ) ( 343 ) Other, net ( 971 ) 61 ( 1,373 ) Income before income taxes 70,263 50,080 46,429 Expense for income taxes 22,196 16,079 13,186 (Benefit) expense related to discrete income tax items ( 3,440 ) 1,048 ( 170 ) Total expense for income taxes 18,756 17,127 13,016 Net income $ 51,507 $ 32,953 $ 33,413 Basic earnings per common share: $ 3.29 $ 2.17 $ 2.24 Diluted earnings per common share: $ 3.25 $ 2.10 $ 2.14 Dividends declared per common share: $ 0.45 $ 0.45 $ 0.45 Weighted average number of common and common equivalent shares outstanding: Basic 15,428 14,971 14,803 Diluted 15,634 15,443 15,455 The accompanying notes are an integral part of these Consolidated Financial Statements. 39 CARRIAGE SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 51,507 $ 32,953 $ 33,413 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,507 22,890 21,117 Provision for credit losses 3,576 3,351 3,050 Stock-based compensation expense 7,806 6,520 7,703 Deferred income tax expense (benefit) 3,980 ( 698 ) 3,307 Amortization of intangibles 1,205 1,357 1,401 Amortization of debt issuance costs 512 622 699 Amortization and accretion of debt 563 539 515 Net loss on divestitures and impairment charges 371 2,580 1,191 Net gain on property damage, net of insurance claims — ( 417 ) ( 343 ) Net gain on sale of excess real property ( 993 ) — ( 1,407 ) Changes in operating assets and liabilities that provided (used) cash: Accounts and preneed receivables ( 28,151 ) ( 24,620 ) ( 8,122 ) Inventories, prepaid, and other current assets ( 1,687 ) 1,056 ( 72 ) Intangible and other non-current assets ( 3,547 ) ( 4,402 ) ( 3,246 ) Preneed funeral and cemetery trust investments ( 17,724 ) 1,390 ( 775 ) Accounts payable ( 369 ) 1,616 169 Accrued and other liabilities ( 1,764 ) 3,590 2,988 Deferred preneed funeral and cemetery revenue ( 1,752 ) 6,866 14,968 Deferred preneed funeral and cemetery receipts held in trust 22,653 ( 3,197 ) ( 966 ) Net cash provided by operating activities 60,693 51,996 75,590 Cash flows from investing activities: Acquisitions of businesses and real property ( 59,026 ) — ( 44,500 ) Capital expenditures ( 20,628 ) ( 16,098 ) ( 18,039 ) Proceeds from divestitures and sale of other assets 44,483 12,057 4,132 Proceeds from insurance claims — 403 1,403 Net cash used in investing activities ( 35,171 ) ( 3,638 ) ( 57,004 ) Cash flows from financing activities: Borrowings from the credit facility 137,525 54,900 86,100 Payments against the credit facility ( 147,825 ) ( 97,000 ) ( 97,700 ) Payment of debt issuance costs for the credit facility — ( 781 ) — Payments on acquisition debt and obligations under finance leases ( 1,116 ) ( 1,061 ) ( 1,167 ) Proceeds from the exercise of stock options and employee stock purchase plan contributions 1,718 2,626 1,494 Taxes paid on restricted stock, performance award vestings, and exercise of stock options ( 8,276 ) ( 593 ) ( 252 ) Dividends paid on common stock ( 7,025 ) ( 6,807 ) ( 6,708 ) Net cash used in financing activities ( 24,999 ) ( 48,716 ) ( 18,233 ) Net increase (decrease) in cash and cash equivalents 523 ( 358 ) 353 Cash and cash equivalents at beginning of period 1,165 1,523 1,170 Cash and cash equivalents at end of period $ 1,688 $ 1,165 $ 1,523 Supplemental disclosure of cash flow information: Cash paid for interest and financing costs $ 26,820 $ 30,629 $ 34,682 Cash paid for taxes 16,990 16,654 10,448 Land purchased in exchange for debt — — 2,550 The accompanying notes are an integral part of these Consolidated Financial Statements. 40 CARRIAGE SERVICES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands) Shares Outstanding Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Balance - December 31, 2022 14,732 $ 264 $ 238,780 $ 176,843 $ ( 278,753 ) $ 137,134 Net income — — — 33,413 — 33,413 Issuance of common stock from employee stock purchase plan 63 — 1,494 — — 1,494 Issuance of common stock to directors and board advisor 16 — 451 — — 451 Issuance of common stock to former executive 30 — 826 — — 826 Issuance of restricted common stock 142 2 ( 2 ) — — — Exercise of stock options 12 — ( 174 ) — — ( 174 ) Restricted common stock, performance awards, and stock options surrendered for taxes paid ( 3 ) — ( 78 ) — — ( 78 ) Stock-based compensation expense — — 6,426 — — 6,426 Dividends on common stock ($ 0.45 per share) — — ( 6,708 ) — — ( 6,708 ) Other 8 — 276 — — 276 Balance - December 31, 2023 15,000 $ 266 $ 241,291 $ 210,256 $ ( 278,753 ) $ 173,060 Net income — — — 32,953 — 32,953 Issuance of common stock from employee stock purchase plan 57 — 1,187 — — 1,187 Issuance of common stock to directors and board advisor 17 — 531 — — 531 Issuance of restricted common stock 157 2 ( 2 ) — — — Exercise of stock options 68 1 1,439 — — 1,440 Restricted common stock, performance awards, and stock options surrendered for taxes paid ( 76 ) — ( 593 ) — — ( 593 ) Stock-based compensation expense — — 5,989 — — 5,989 Dividends on common stock ($ 0.45 per share) — — ( 6,807 ) — — ( 6,807 ) Other 31 — 790 — — 790 Balance -December 31, 2024 15,254 $ 269 $ 243,825 $ 243,209 $ ( 278,753 ) $ 208,550 Net income — — — 51,507 — 51,507 Issuance of common stock from employee stock purchase plan 34 — 1,133 — — 1,133 Issuance of common stock to directors and board advisor 7 — 266 — — 266 Issuance of common stock 271 3 ( 3 ) — — — Issuance of restricted common stock 115 1 ( 1 ) — — — Exercise of stock options 132 1 584 — — 585 Restricted common stock, performance awards, and stock options surrendered for taxes paid ( 74 ) — ( 8,276 ) — — ( 8,276 ) Stock-based compensation expense — — 7,540 — — 7,540 Dividends on common stock ($ 0.45 per share) — — ( 7,025 ) — — ( 7,025 ) Other 12 — 496 — — 496 Balance - December 31, 2025 15,751 $ 274 $ 238,539 $ 294,716 $ ( 278,753 ) $ 254,776 The accompanying notes are an integral part of these Consolidated Financial Statements. 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Carriage Services, Inc. (“Carriage,” the “Company,” “we,” “us,” or “our”) is a leading provider of funeral and cemetery services and merchandise in the United States (“U.S.”). Our operations are reported in two business segments: Funeral Home Operations, which currently accounts for approximately 65 % of our total revenue and Cemetery Operations, which currently accounts for approximately 35 % of our total revenue. At December 31, 2025, we operated 155 funeral homes in 24 states and 28 cemeteries in 9 states. Our funeral home operations are principally service businesses that generate revenue from sales of burial and cremation services and related merchandise, such as caskets and urns. Funeral services include consultation, the removal and preparation of remains, the sale of caskets and related funeral merchandise, the use of funeral home facilities for visitation and memorial services and transportation services. We provide funeral services and products on both an “atneed” (time of death) and “preneed” (planned prior to death) basis. Our cemetery operations generate revenue primarily through sales of cemetery interment rights (primarily grave sites, lawn crypts, mausoleum spaces and niches), related cemetery merchandise (such as memorial markers, outer burial containers and monuments) and services (interments, inurnments and installation of cemetery merchandise). We provide cemetery services and products on both an atneed and preneed basis. Principles of Consolidation The accompanying Consolidated Financial Statements include the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, we evaluate our critical estimates and judgments, which include those related to the impairment of goodwill and the fair value measurements used in business combinations. These policies are considered critical because they may result in fluctuations in our reported results from period to period due to the significant judgments, estimates, and assumptions about complex and inherently uncertain matters and because the use of different judgments, assumptions, or estimates could have a material impact on our financial condition or results of operations. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there can be no assurance the margins, operating income, and net earnings, as a percentage of revenue, will be consistent from period to period. Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. We maintain cash and cash equivalents at U.S. financial institutions for which the combined account balances in individual institutions may exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. As of December 31, 2025, approximately $ 2.6 million of our deposits were not covered by FDIC insurance. We have not experienced any losses and believe we are not exposed to any significant risk with such accounts. Funeral and Cemetery Receivables Our funeral receivables are recorded in Accounts receivable, net and primarily consist of amounts due for funeral services already performed. Atneed cemetery receivables and preneed cemetery receivables with payments expected to be received within one year from the balance sheet date are also recorded in Accounts receivable, net. Preneed cemetery receivables with payments expected to be received beyond one year from the balance sheet date are recorded in Preneed cemetery receivables, net. Our cemetery receivables generally consist of preneed sales of cemetery interment rights and related products and services, which are typically financed through interest-bearing installment sales contracts, generally with terms of up to five years , with such interest income reflected as Other revenue . In substantially all cases, we receive an initial down payment at the time the contract is signed. For our funeral and atneed cemetery receivables, we have a collections policy where statements are sent to the customer at 30 days past due. Past due notification letters are sent at 45 days and continue until payment is received or the contract is placed 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) with a third-party collections agency. For our preneed cemetery receivables, we have a collections policy where past due notification letters are sent to the customer beginning at 15 days past due and periodically thereafter until payment is received or the contract is cancelled. Our allowance for credit losses reflects our best estimate of expected credit losses over the term of both our funeral and cemetery receivables. Our policy is to write off receivables when we have determined they will no longer be collectible. Write-offs are applied as a reduction to the allowance for credit losses and any recoveries of previous write-offs are netted against bad debt expense in the period recovered. We determine our allowance for credit losses by using a loss-rate methodology, in which we assess our historical write-off of receivables against our total receivables over several years. From this historical loss-rate approach, we also consider the current and forecasted economic conditions expected to be in place over the life of our receivables. These estimates are impacted by a number of factors, including changes in the economy, demographics, and competition in our local communities. We monitor our ongoing credit exposure through an active review of our customers’ receivables balance against contract terms and due dates. Our activities include timely performance of our accounts receivable reconciliations, assessment of our aging of receivables, dispute resolution, and payment confirmation. We monitor any change in our historical write-off of receivables utilized in our loss-rate methodology and assess forecasted changes in market conditions within our credit reserve. See Note 6 to the Consolidated Financial Statements for additional information related to our funeral and cemetery receivables. Inventory Inventory consists primarily of caskets, outer burial containers, and cemetery monuments and markers and is recorded at the lower of its cost basis or net realizable value. Inventory is relieved using specific identification in fulfillment of performance obligations on our contracts. Business Combinations Tangible and intangible assets acquired, and liabilities assumed are recorded at fair value and goodwill is recognized for any difference between the price of the acquisition and fair value. We recognize the assets acquired, the liabilities assumed, and any non-controlling interest at the fair value as of that date. Acquisition related costs are recognized separately from the acquisition and are expensed as incurred. We customarily estimate related transaction costs known at closing. 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. See Note 3 to the Consolidated Financial Statements for additional information related to acquisitions. Divested Operations Prior to divesting a funeral home or cemetery, we first determine whether the sale of the net assets and activities (together referred to as a “set”) qualifies as a business. First, we perform a screen test to determine if the set is not a business. The principle factor in the screen test is that if substantially all of the fair value of the gross assets sold resides in a single asset or group of similar assets, the set is not a business. If the screen is not met, we perform an assessment to determine if the set is a business by evaluating whether the set has both inputs and a substantive process that together significantly contribute to the ability to create outputs. When both inputs and a substantive process are present then the set is determined to be a business, and we consider the accounting treatment of goodwill for that set (see discussion of Goodwill below). Goodwill is only allocated to the sale if the set is considered to be a business. See Notes 4 and 5 to the Consolidated Financial Statements for additional information related to divestitures. Goodwill The excess of the purchase price over the fair value of identifiable net assets of funeral home businesses and cemeteries we acquire is recorded as goodwill. Goodwill has an indefinite life and is not subject to amortization. As such, we test goodwill for impairment on an annual basis as of August 31 st each year. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. We performed our most recent annual goodwill impairment test as of August 31, 2025. We intend to perform a quantitative impairment test at least once every three years and perform a qualitative assessment during the remaining two years. We conducted qualitative assessments in 2023 and 2024; however, we performed a quantitative assessment in 2025. No goodwill impairment was recorded as a result of our assessments. In addition to our annual test, we assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value of a reporting unit may be greater than 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) fair value. Factors that could trigger an interim impairment review include, but are not limited to, significant negative industry or economic trends and significant adverse changes in the business climate, which may be indicated by a decline in our market capitalization or decline in operating results. Our quantitative goodwill impairment test involves estimates and management judgment. In the quantitative analysis, we compare the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of that reporting unit is not considered impaired. 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 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. When we divest a portion of a reporting unit that constitutes a business in accordance with GAAP, we allocate goodwill associated with that business to be included in the gain or loss on divestiture. The goodwill allocated is based on the relative fair value of the business being divested and the portion of the reporting unit that will be retained. Additionally, after each divestiture, we will test the goodwill remaining in the portion of the reporting unit to be retained for impairment using a qualitative assessment unless we deem a quantitative assessment to be appropriate to ensure the fair value of our reporting units is greater than their carrying value. For the year ended December 31, 2025 and 2024, after each divestiture, we concluded that it was more-likely-than not that the fair value of our reporting units was greater than their carrying value and thus there was no impairment to goodwill. See Notes 4 and 5 to the Consolidated Financial Statements for additional information related to goodwill. Intangible Assets Our intangible assets include tradenames resulting from acquisitions and are included in Intangible and other non-current assets, net on our Consolidated Balance Sheets. Our tradenames are considered to have an indefinite life and are not subject to amortization. As such, we test our intangible assets for impairment on an annual basis as of August 31 st each year. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than not that the fair value of the tradename is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. We performed our most recent annual intangible assets impairment test as of August 31, 2025. We intend to perform a quantitative impairment test at least once every three years and perform a qualitative assessment during the remaining two years. We conducted qualitative assessments in 2023 and 2024; however, we performed a quantitative assessment in 2025. In addition to our intangible assets annual test, we assess the impairment of intangible assets whenever certain events or changes in circumstances indicate that the carrying value of the intangible asset may be greater than the fair value. Factors that could trigger an interim impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results and significant negative industry or economic trends. Our quantitative intangible asset impairment test involves estimates and management judgment. Our quantitative analysis is performed using the relief from royalty method, which measures the tradenames by determining the value of the royalties that we are relieved from paying due to our ownership of the asset. We determine the fair value of the asset by discounting the cash flows that represent a savings in lieu of paying a royalty fee for use of the tradename. 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 and the determination and application of an appropriate royalty rate and discount rate. To estimate the royalty rates for the individual tradename, we mainly rely on the profit split method, but also consider the comparable third-party license agreements and the return on asset method. A scorecard is used to assess the relative strength of the individual tradename to further adjust the royalty rates selected under the profit-split method for qualitative factors. In accordance with the guidance, if the fair value of the tradename is less than its carrying amount, then an impairment charge is recorded in an amount equal to the difference. 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Our 2025 quantitative assessment did not indicate any impairment to intangible assets as a result of our testing. As a result of our 2024 qualitative assessment, we determined that there were factors that would indicate the need to perform additional quantitative impairment tests for certain funeral home businesses. As a result of these additional quantitative impairment tests, we recorded an impairment to the tradenames for certain funeral home businesses of $ 0.6 million, during the year ended December 31, 2024, as the carrying amount of these tradenames exceeded their fair value. See Note 11 to the Consolidated Financial Statements for additional information related to intangible assets. Preneed and Perpetual Care Trust Funds Preneed sales generally require deposits to a trust or purchase of a third-party insurance product. We have established a variety of trusts in connection with funeral home and cemetery operations as required under applicable state laws. Such trusts include (i) preneed funeral trusts; (ii) preneed cemetery merchandise and service trusts; and (iii) cemetery perpetual care trusts. Our preneed and perpetual care trust funds are reported in accordance with the principles of consolidating Variable Interest Entities (“VIEs”). In the case of preneed trusts, the customers are the legal beneficiaries. In the case of perpetual care trusts, we do not have a right to access the corpus in the perpetual care trusts. Our trust fund assets are reflected in our financial statements as Preneed cemetery trust investments, Preneed funeral trust investments, and Cemetery perpetual care trust investments. We have recognized financial interests of third parties in the trust funds in our financial statements as Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus . Fixed income securities are classified as trading securities and accounted for at fair value. Equity securities with readily determinable market values are accounted for at fair value. The fair value of our trust fund assets is accounted for as Collateralized Financing Entities (“CFEs”) in ASC Topic 810. The accounting guidance for CFEs allows companies to elect to measure both the financial assets and financial liabilities using the more observable of the fair value of the financial assets or fair value of the financial liabilities. Pursuant to this guidance, we have determined the fair value of the financial assets of the trusts are more observable and we first measure those financial assets at fair value. Our fair value of the financial liabilities mirrors the fair value of the financial assets. In accordance with respective state laws, we are required to deposit a specified amount into perpetual and memorial care trust funds for each interment right and certain memorials sold. Income from the trust funds is distributed to us and used to provide for the care and maintenance of the cemeteries and mausoleums. Trust fund income is recognized as revenue when realized by the trust and distributable to us. We are restricted from withdrawing any of the principal balances of these funds. An enterprise is required to perform an analysis to determine whether the enterprise’s variable interest(s) give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the enterprise that has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Our analysis continues to support our position as the primary beneficiary in the majority of our funeral and cemetery trust funds. Our preneed funeral and preneed cemetery merchandise and service trusts, as well as the corresponding trust liabilities, are reflected in our financial statements net of an allowance for contract cancellations. We determine this allowance based on our five-year historical experience of contract cancellations. On an ongoing basis, we monitor our historical trend and adjust our allowance accordingly. See Notes 8 and 9 to the Consolidated Financial Statements for additional information related to preneed and perpetual care trust funds. Deferred Revenue We have preneed funeral trust fund assets in trusts that are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets. We account for these receivables at cost, reflected in our financial statements as Receivables from preneed funeral trusts, net, with a corresponding amount recognized as Deferred preneed funeral revenue . Under certain state regulations, we are allowed to retain certain amounts not required to be deposited to a trust or used to purchase a third-party insurance policy. These amounts we retain represent future revenue that are not held in trust accounts and are recorded in Deferred preneed funeral and cemetery revenue. Future revenue that are held in trust accounts are included in Deferred preneed funeral and cemetery receipts held in trust discussed above. 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) During the year ended December 31, 2023, we withdrew $ 8.6 million of realized capital gains and earnings from our preneed funeral and cemetery trust investments. We did not withdraw any realized capital gains and earnings from our preneed trust investments during the year ended December 31, 2025 and 2024. In certain states, we are allowed to make these withdrawals prior to the delivery of preneed merchandise and service contracts. The realized capital gains and earnings withdrawn increase our cash flow from operations, but are not recognized as revenue in our Consolidated Statements of Operations, however, they reduce our Preneed funeral trust investments and Preneed cemetery trust investments and increase our Deferred preneed funeral revenue and Deferred preneed cemetery revenue. Held for Sale The Company classifies assets and liabilities (disposal groups) to be sold as held for sale (“HFS”) in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposal group at the time it was initially classified as held for sale. Additionally, depreciation is not recorded during the period in which the long-lived assets, included in the disposal group, are classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group, if material, in the line items current and non-current assets held for sale and current and long-term liabilities held for sale in the Consolidated Balance Sheets. See Note 20 to the Consolidated Financial Statements for additional information related to assets and liabilities held for sale. Fair Value Measurements We measure the securities held by our funeral merchandise and service, cemetery merchandise and service, and cemetery perpetual care trusts at fair value on a recurring basis in accordance with ASC Topic 820. This guidance defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The guidance establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. We disclose the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. We currently do not have any assets that have fair values determined by Level 3 inputs and no liabilities measured at fair value. In the ordinary course of business, we are typically exposed to a variety of market risks. Currently, these are primarily related to changes in fair market values related to outstanding debts and changes in the values of securities associated with the preneed and perpetual care trusts. Management is actively involved in monitoring exposure to market risk and developing and utilizing risk management techniques when appropriate and when available for a reasonable price. See Notes 7 and 8 to the Consolidated Financial Statements for additional required disclosures related to the fair value measurement of our financial assets and liabilities. Capitalized Commissions on Preneed Contracts We capitalize sales commissions and other direct selling costs related to preneed cemetery merchandise and services and preneed funeral trust contracts as these costs are incremental and recoverable costs of obtaining a contract with a customer. Our 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) capitalized commissions on preneed contracts are amortized on a straight-line basis over the average maturity period of ten years for our preneed funeral trust contracts and eight years for our preneed cemetery merchandise and services contracts. The selling costs related to the sales of cemetery interment rights, which include real property and other costs related to cemetery development activities, continue to be expensed using the specific identification method in the period in which the sale of the cemetery interment right is recognized as revenue. The selling costs related to preneed funeral insurance funded contracts continue to be expensed in the period incurred as these contracts are not included on our Consolidated Balance Sheets. See Note 11 to the Consolidated Financial Statements for additional information related to capitalized commissions on preneed contracts. Internally Developed Software We capitalize costs incurred during the “application development stage” of an internally developed software project, meaning only costs directly related to designing, coding, and testing the software are capitalized, while preliminary project costs and post-implementation activities are expensed, and the capitalized software is then amortized over its estimated useful life, typically ranging from two to five years . See Note 11 to the Consolidated Financial Statements for additional information related to internally developed software. Property, Plant, and Equipment Property, plant, and equipment are stated at cost. The costs of ordinary maintenance and repairs are charged to operations as incurred, while renewals and major replacements that extend the useful economic life of the asset are capitalized. Depreciation of property, plant, and equipment is computed based on the straight-line method over the following estimated useful lives of the assets: Years Buildings and improvements 15 to 40 Furniture and fixtures 5 to 10 Machinery and equipment 3 to 15 Vehicles 5 to 7 Long-lived assets, such as property, plant, and equipment and right-of-use assets (see discussion of Leases below) are reported at the lower of their carrying amount or fair value and are reviewed for impairment whenever events, such as significant negative industry or economic trends or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors that could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results. We test the recoverability of our long-lived assets by comparing their carrying value to the sum of the undiscounted cash flows expected to result from the use of the assets over their remaining useful lives. We recognize an impairment loss if the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. Additionally, assets to be disposed of and assets not expected to provide any future service potential are recorded at the lower of their carrying amount or fair value less estimated costs to sell. If we determine that the carrying value is not recoverable from the proceeds of the sale, we record an impairment loss at that time. See Note 20 to the Consolidated Financial Statements for additional information related to property, plant, and equipment. Cemetery Property When we acquire a cemetery, we utilize an internal and external approach to determine the fair value of the cemetery property. From an external perspective, we obtain an accredited appraisal to provide reasonable assurance for property existence, property availability (unrestricted) for development, property lines, available spaces to sell, identifiable obstacles or easements, and general valuation inclusive of known variables in that market. From an internal perspective, we conduct a detailed analysis of the acquired cemetery property using other cemeteries in our portfolio as a benchmark. This provides the added benefit of relevant data that is not available to third-party appraisers. Through this thorough internal process, we are able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices and park infrastructure and condition. When cemetery property is sold, the value of the cemetery property (interment right costs) is expensed as amortization using the specific identification method in the period in which the sale of the interment right is recognized as revenue. See Note 20 to the Consolidated Financial Statements for additional information related to cemetery property. 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Leases We have 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 . We lease certain funeral homes, vehicles, and equipment under finance leases with original terms ranging from three and a half to forty years . We do not have any material lease agreements with residual value guarantees, sale-leaseback terms, material restrictive covenants, related parties or sublease arrangements. We determine if an arrangement is a lease at inception based on the facts and circumstances of the agreement. A right-of-use (“ROU”) asset represents our right to use the underlying asset for the lease term and the lease liability represents our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized on our Consolidated Balance Sheets at the lease commencement date based on the present value of lease payments over the lease term. For our leases that do not provide an implicit interest rate in the agreement, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. The lease terms used to calculate the ROU asset and related lease liability include options to extend the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, while the expense for finance leases is recognized as depreciation expense and interest expense using the effective interest method of recognition. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense. We have real estate lease agreements which require payments for lease and non-lease components, and we account for these as a single lease component. Leases with an initial term of 12 months or less, that do not include an option to renew the underlying asset, are not recorded on our Consolidated Balance Sheets and expense is recognized on a straight-line basis over the lease term. Operating lease ROU assets are included in Operating lease right-of-use assets and operating lease liabilities are included in Current portion of operating lease obligation s and Obligations under operating leases, net of current portion on our Consolidated Balance Sheets. Finance lease ROU assets are included in Property, plant, and equipment, net and finance lease liabilities are included in Current portion of finance lease obligations and O bligations under finance leases, net of current portion on our Consolidated Balance Sheets. See Note 14 to the Consolidated Financial Statements for additional information related to leases. Equity Plans and Stock-Based Compensation We have equity-based employee and director compensation plans under which we have granted stock awards, stock options, and performance awards. We also have an employee stock purchase plan (the “ESPP”). We recognize compensation expense in an amount equal to the fair value of the stock-based awards expected to vest or to be purchased over the requisite service period. We recognize the effect of forfeitures in compensation cost when they occur and any previously recognized compensation cost for an award is reversed in the period that the award is forfeited. Fair value is determined on the date of the grant. The fair value of restricted stock is determined using the stock price on the grant date. The fair value of options or awards containing options is determined using the Black-Scholes valuation model or the Monte-Carlo simulation pricing model. The fair value of the performance awards related to market performance conditions is determined using the Monte-Carlo simulation pricing model. The fair value of the ESPP is determined based on the discount element offered to employees and the embedded option element, which is determined using an option calculation model. We recognize all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) as income tax benefit or expense in the income statement. We treat the tax effects of exercised or vested awards as discrete items in the reporting period in which they occur. The excess tax benefit related to share-based payments was $ 2.8 million for the year ended December 31, 2025. The excess tax deficiency related to share-based payments was $ 0.8 million for the year ended December 31, 2024. We had immaterial amounts of excess tax deficiency for the year ended December 31, 2023. Excess tax benefits and deficiencies are recorded within Expense (benefit) related to discrete income tax items on our Consolidated Statements of Operations and are included in operating cash flows on the Consolidated Statements of Cash Flows. See Note 17 to the Consolidated Financial Statements for additional information related to equity plans and stock-based compensation. 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Revenue Recognition Funeral and Cemetery Operations Revenue is recognized when control of the merchandise or services is transferred to the customer. Our performance obligations include the delivery of funeral and cemetery merchandise and services and cemetery property interment rights. Control transfers when merchandise is delivered or services are performed. For cemetery property interment rights, control transfers to the customer when the property is developed and the interment right has been sold and can no longer be marketed or sold to another customer. On our atneed contracts, we generally deliver the merchandise and perform the services at the time of need. Memorial services frequently include performance obligations to direct the service, provide facilities and motor vehicles, catering, flowers, and stationary products. All other performance obligations on these contracts, including arrangement, removal, preparation, embalming, cremation, interment, and delivery of urns and caskets and related memorialization merchandise are fulfilled at the time of need. Personalized marker merchandise and marker installation services sold on atneed contracts are recognized when control is transferred to the customer, generally when the marker is delivered and installed in the cemetery. Some of our contracts with customers include multiple performance obligations. For these contracts, we allocate the transaction price to each performance obligation based on its relative standalone selling price, which is based on prices charged to customers per our general price list. We recognize revenue when the merchandise is transferred or the service is performed, in satisfaction of the corresponding performance obligation. Sales taxes collected are recognized on a net basis in our Consolidated Financial Statements. Ancillary funeral service revenue, which is recorded in Other revenue, represents revenue from our flower shop, pet cremation business, and online cremation businesses. Revenue is recognized when control of the merchandise or services is transferred to the customer and are primarily sold on an atneed basis. The earnings from our preneed trust investments, as well as trust management fees charged by our wholly owned registered investment advisory firm CSV RIA are recorded in Other revenue . At December 31, 2025, CSV RIA provided investment management and advisory services to approximately 80 % of our trust assets, for a fee based on the market value of trust assets. Under state trust laws, we are allowed to charge the trust a fee for advising on the investment of the trust assets and these fees are recognized as income in the period in which services are provided. Balances due on undelivered preneed funeral trust contracts have reduced Deferred preneed funeral revenue by $ 11.3 million and $ 10.2 million at December 31, 2025 and 2024, respectively. As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods. However, we estimate an average maturity period of 10 years for preneed funeral contracts. Balances due from customers on delivered preneed cemetery contracts are included in Accounts receivable, net and Preneed cemetery receivables, net on our Consolidated Balance Sheets. Balances due on undelivered preneed cemetery contracts have reduced Deferred preneed cemetery revenue on our Consolidated Balance Sheets by $ 16.6 million and $ 13.6 million at December 31, 2025 and 2024, respectively. As these performance obligations are to be completed after the date of death, we cannot quantify the recognition of revenue in future periods. However, we estimate an average maturity period of eight years for preneed cemetery contracts. See Note 19 to the Consolidated Financial Statements for additional information related to the disaggregation of revenue by segment.. Income Taxes We and our subsidiaries file a consolidated U. S. federal income tax return, separate income tax returns in 14 states in which we operate and combined or unitary income tax returns in 10 states in which we operate. We record deferred taxes for temporary differences between the tax basis and financial reporting basis of assets and liabilities. We classify our deferred tax liabilities and assets as non-current on our Consolidated Balance Sheets. We record a valuation allowance to reflect the estimated amount of deferred tax assets for which realization is uncertain. Management reviews the valuation allowance at the end of each quarter and makes adjustments if it is determined that it is more-likely-than not that the tax benefits will be realized. We analyze tax benefits for uncertain tax positions and how they are to be recognized, measured, and derecognized in the financial statements; provide certain disclosures of uncertain tax matters; and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheets. Accrued interest and penalties related to uncertain tax positions is included in (Benefit) expense related to discrete income tax items on our Consolidated Statements of Operations. See Note 16 to the Consolidated Financial Statements for additional information related to income taxes. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Computation of Earnings Per Common Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options and performance awards. Share-based awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are recognized as participating securities and included in the computation of both basic and diluted earnings per share. Our grants of restricted stock awards to our employees and directors are considered participating securities, and we have prepared our earnings per share calculations attributable to common stockholders to exclude outstanding unvested restricted stock awards, using the two-class method, in both the basic and diluted weighted average shares outstanding calculation. Our performance awards are considered to be contingently issuable shares because their issuance is contingent upon the satisfaction of certain performance and service conditions. In accordance with ASC 260, we have included in the computation of diluted earnings per share the number of performance awards that would have been issuable as if the end of the reporting period was the end of the contingency period. These shares are considered to be outstanding at the beginning of the reporting period. See Note 18 to the Consolidated Financial Statements for additional information related to the computation of earnings per share. 2. RECENTLY ISSUED ACCOUNTING STANDARDS Income Taxes In December 2023, the FASB issued ASU, Income Taxes - Improvements to Income Tax Disclosures to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information. The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation; and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). The amendments in this update also require that all entities disclose on an annual basis (1) the amount of net income taxes paid disaggregated by federal and state taxes; and (2) the amount of net income taxes paid disaggregated by individual jurisdictions in which net income taxes paid is equal to or greater than five percent of total net income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, and therefore were effective for us for our fiscal year beginning January 1, 2025, and for interim periods within our fiscal year beginning January 1, 2026. The adoption has no material impact on our consolidated financial statements as it modified disclosure requirements only. See Note 16 to the Consolidated Financial Statements for additional information related to income taxes. Accounting Pronouncements Not Yet Adopted Expense Disaggregation In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures . Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The amendments in this update require, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We expect the adoption will have no material impact on our consolidated financial statements as it modifies disclosure requirements only. Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. Under the new guidance, costs associated with software developed for internal use will now be capitalized when management authorizes a project and when it is probable the project will be completed and used to perform the function intended, rather than when a project reaches the application development stage under existing guidance. The guidance is effective beginning January 1, 2028, with early adoption permitted, and can be applied prospectively, retrospectively, or on a modified retrospective basis. We have not determined the transition method, timing for adoption, or estimated the effect on our consolidated financial statements. 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. BUSINESS COMBINATIONS On September 9, 2025, we acquired a business consisting of six funeral homes, one cemetery, and one cremation focused business in the Orlando, FL area for approximately $ 49.0 million. The purchase price consisted of $ 47.0 million in cash at closing and $ 2.0 million of deferred purchase price payments. The net present value of such future deferred purchase price payments was $ 1.3 million. We acquired substantially all of the assets and assumed certain operating liabilities of these businesses. On September 17, 2025, we acquired a business consisting of two funeral homes in the Pensacola, FL area for $ 9.5 million in cash. We acquired substantially all of the assets and assumed certain operating liabilities of this business. The primary reasons for the acquisitions that contributed to the recognition of goodwill include enhancement of our footprint in strategic markets and the addition of deferred revenue that will enhance our long-term stability. The pro forma impact of these acquisitions on prior periods is not presented, as the impact is not significant to our reported results. The results of the acquired businesses are reflected in our Consolidated Statements of Operations from the date of acquisition. The following table summarizes the breakdown of the preliminary purchase price allocation for the businesses described above (in thousands): Preliminary Purchase Price Allocation Current assets $ 3,302 Preneed trust assets 4,068 Property, plant, and equipment 23,315 Cemetery property 2,733 Goodwill 37,746 Intangible and other non-current assets 3,222 Assumed liabilities ( 1,293 ) Preneed trust liabilities ( 4,068 ) Deferred revenue ( 12,526 ) Purchase price $ 56,499 The purchase price allocation was updated for immaterial measurement-period adjustments; no other material changes to the acquisition accounting were identified. The purchase accounting is preliminary as we have not finalized our assessment of the fair value because there has been insufficient time between the acquisition date and the issuance of these financial statements to complete our review and the final determination of fair value. We are also currently reviewing the allocation of goodwill between segments. We did not acquire any businesses during the year ended December 31, 2024. On March 22, 2023, we acquired a business consisting of three funeral homes, two cemeteries and one cremation focused business in the Bakersfield, CA area for $ 44.0 million in cash. We acquired substantially all of the assets and assumed certain operating liabilities of this business. The pro forma impact of these acquisitions on prior periods is not presented, as the impact is not significant to our reported results. The results of the acquired businesses are reflected in our Consolidated Statements of Operations from the date of acquisition. 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table summarizes the breakdown of the purchase price allocation for our Bakersfield, CA business acquisition (in thousands): Initial Purchase Price Allocation Adjustments Adjusted Purchase Price Allocation Current assets $ 7,087 $ 131 $ 7,218 Preneed trust assets — 11,428 11,428 Property, plant & equipment 12,577 245 12,822 Cemetery property 9,035 — 9,035 Goodwill 13,612 ( 106 ) 13,506 Intangible and other non-current assets 3,763 — 3,763 Assumed liabilities ( 300 ) ( 66 ) ( 366 ) Deferred tax liability — — — Preneed trust liabilities — ( 11,428 ) ( 11,428 ) Deferred revenue ( 1,774 ) ( 204 ) ( 1,978 ) Purchase price $ 44,000 $ — $ 44,000 The current assets relate to accounts receivable and inventory. The intangible and other non-current assets relate to the fair value of tradenames and right-of-use operating lease assets. The assumed liabilities relate to operating lease obligations and commissions payable. As of December 31, 2023, our accounting for this acquisition is complete. 4. GOODWILL Many of the former owners and staff of our acquired funeral home and cemetery businesses have provided high quality service to families for generations, which often represents a substantial portion of the value of a business. The excess of the purchase price over the fair value of identifiable net assets of acquired funeral home and cemetery businesses is recorded as goodwill. The following table presents changes in goodwill in the accompanying Consolidated Balance Sheets (in thousands): December 31, 2025 December 31, 2024 Goodwill at the beginning of the year $ 414,859 $ 423,643 Increase in goodwill related to acquisitions 37,746 — Decrease in goodwill related to divestitures ( 24,708 ) ( 8,784 ) Goodwill at the end of the year $ 427,897 $ 414,859 During the year ended December 31, 2025, we allocated $ 24.7 million of goodwill to the sale of thirteen funeral homes and four cemeteries which was recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations, of which $ 23.0 million was allocated to our funeral home segment and $ 1.7 million was allocated to our cemetery segment. During the year ended December 31, 2024, we allocated $ 8.8 million of goodwill to the sale of six funeral homes and one cemetery which was recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations, of which $ 7.8 million was allocated to our funeral homes segment and $ 1.0 million was allocated to our cemetery segment. As a result of our 2025 and 2024 annual qualitative impairment assessments, we determined that there were no factors that would indicate the need to perform an additional quantitative goodwill impairment test. We concluded that it is more-likely-than-not that the fair value of our reporting units is greater than their carrying value and thus there was no impairment to goodwill. See Notes 1, 3, and 5 to the Consolidated Financial Statements for a discussion of the methodology used for our annual goodwill impairment test and a discussion of our acquisitions and divestitures. 5. DIVESTED OPERATIONS During the year ended December 31, 2025, we sold thirteen funeral homes and four cemeteries for an aggregate of $ 40.4 million and merged two funeral homes with other businesses we own in existing markets. During the year ended December 31, 2024, we sold six funeral homes and one cemetery for an aggregate of $ 10.9 million and merged three funeral homes with other business we own in existing markets. During the year ended December 31, 2023, we sold two funeral homes and two cemeteries for an aggregate of $ 1.1 million and merged one funeral home with another business we own in a nearby market. 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 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, 2025 2024 2023 Impairment of goodwill, intangibles, and PPE $ 1,761 $ 637 $ 454 Net (gain) loss on divestitures ( 1,451 ) 1,224 106 Net loss on disposals of fixed assets 61 719 631 Total $ 371 $ 2,580 $ 1,191 For the years ending December 31, 2025, 2024 and 2023, after each divestiture, we concluded that it was more-likely-than not that the fair value of our reporting units was greater than their carrying value and thus there was no impairment to goodwill. See Note 1 to the Consolidated Financial Statements for a discussion of the methodology used for assessing goodwill impairment after a divestiture of a business. 6. RECEIVABLES Accounts Receivable Accounts receivable is comprised of the following (in thousands): December 31, 2025 Column1 Funeral Cemetery Corporate Held for Sale Total Trade and financed receivables $ 7,369 $ 31,267 $ — $ — $ 38,636 Other receivables 1,245 2,614 1,726 — 5,585 Allowance for credit losses ( 363 ) ( 3,211 ) — — ( 3,574 ) Accounts receivable, net $ 8,251 $ 30,670 $ 1,726 $ — $ 40,647 December 31, 2024 Column1 Funeral Cemetery Corporate Held for Sale Total Trade and financed receivables $ 7,085 $ 24,355 $ — $ ( 833 ) $ 30,607 Other receivables 557 345 — — 902 Allowance for credit losses ( 302 ) ( 1,014 ) — — ( 1,316 ) Accounts receivable, net $ 7,340 $ 23,686 $ — $ ( 833 ) $ 30,193 Other receivables include supplier rebates, commissions due from third-party insurance companies and perpetual care income receivables. The following table summarizes the activity in our allowance for credit losses by portfolio segment for the year ended December 31, 2025 (in thousands): January 1, 2025 Provision for Credit Losses Write Offs Recoveries December 31, 2025 Trade and financed receivables: Funeral $ ( 302 ) $ ( 1,021 ) $ 1,811 $ ( 851 ) $ ( 363 ) Cemetery ( 1,014 ) ( 999 ) ( 1,198 ) — ( 3,211 ) Total allowance for credit losses on trade and financed receivables $ ( 1,316 ) $ ( 2,020 ) $ 613 $ ( 851 ) $ ( 3,574 ) Cemetery Receivables Our cemetery receivables are comprised of the following (in thousands): December 31, 2025 December 31, 2024 Interment rights $ 99,741 $ 79,436 Merchandise and services 17,761 13,128 Unearned finance charges 4,805 4,983 Cemetery receivables $ 122,307 $ 97,547 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The components of our cemetery receivables are as follows (in thousands): December 31, 2025 December 31, 2024 Cemetery receivables $ 122,307 $ 97,547 Less: unearned finance charges ( 4,805 ) ( 4,983 ) Cemetery receivables, at amortized cost $ 117,502 $ 92,564 Less: allowance for contract cancellation and credit losses ( 5,812 ) ( 3,018 ) Less: balances due on undelivered cemetery preneed contracts ( 16,579 ) ( 13,576 ) Less: amounts in accounts receivable ( 28,056 ) ( 23,341 ) Preneed cemetery receivables, net including HFS $ 67,055 $ 52,629 Less: Held for sale — ( 1,671 ) Preneed cemetery receivables, net $ 67,055 $ 50,958 The following table summarizes the activity in our allowance for credit losses for Preneed cemetery receivables, net for the year ended December 31, 2025 (in thousands): January 1, 2025 Provision for Credit Losses Write Offs December 31, 2025 Total allowance for credit losses on Preneed cemetery receivables, net $ ( 2,004 ) $ ( 1,556 ) $ 959 $ ( 2,601 ) The amortized cost basis of our cemetery receivables by year of origination as of December 31, 2025 is as follows (in thousands): 2025 2024 2023 2022 2021 Prior Total Total cemetery receivables, at amortized cost $ 60,523 $ 32,912 $ 13,978 $ 6,886 $ 2,254 $ 949 $ 117,502 The aging of past due cemetery receivables as of December 31, 2025 is as follows (in thousands): 31-60 Past Due 61-90 Past Due 91-120 Past Due >120 Past Due Total Past Due Current Total Recognized revenue $ 2,523 $ 1,174 $ 460 $ 4,345 $ 8,502 $ 92,421 $ 100,923 Deferred revenue 575 236 258 4,226 5,295 16,089 21,384 Total contracts $ 3,098 $ 1,410 $ 718 $ 8,571 $ 13,797 $ 108,510 $ 122,307 The aging of past due preneed cemetery receivables as of December 31, 2024 is as follows (in thousands): 31-60 Past Due 61-90 Past Due 91-120 Past Due >120 Past Due Total Past Due Current Total Recognized revenue $ 1,599 $ 1,065 $ 832 $ 2,578 $ 6,074 $ 72,914 $ 78,988 Deferred revenue 302 160 105 612 1,179 17,380 18,559 Total contracts $ 1,901 $ 1,225 $ 937 $ 3,190 $ 7,253 $ 90,294 $ 97,547 7. FAIR VALUE MEASUREMENTS We evaluated our financial assets and liabilities for those that met the criteria of the disclosure requirements and fair value framework. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate the fair values of those instruments due to the short-term nature of the instruments. The fair values of our receivables on preneed cemetery contracts are impracticable to estimate because of the lack of a trading market and the diverse number of individual contracts with varying terms. Our acquisition debt and Credit Facility (as defined in Note 12) and Senior Notes (as defined in Note 13) are classified within Level 2 of the Fair Value Measurements hierarchy. At December 31, 2025, the carrying value and fair value of our Credit Facility was $ 126.7 million. We believe that our Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and therefore, the carrying value of our Credit Facility approximates fair value. We estimate the fair value of our acquisition debt utilizing an income approach, which uses a present value calculation to discount payments based on current market rates as of the reporting date. At December 31, 2025, the carrying value of our acquisition debt was $ 6.2 million, which approximated its fair value. The fair value of our Senior Notes was $ 385.7 million at December 31, 2025, based on the last traded or broker quoted price. 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In addition, we have an investment in a limited partnership fund, whose fair value has been estimated using the net asset value per share practical expedient described in ASC 820-10-35-59, Fair Value Measurement of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) and therefore, has not been classified in the fair value hierarchy. The investment strategy of this fund is to generate attractive risk-adjusted returns over a multi-year performance period through the construction of a concentrated portfolio of investments possessing certain distinct business attributes that suggest the potential for long-term value creation. The value of the investments in this fund cannot be liquidated at December 31, 2025 because the investments include restrictions that do not allow for liquidation until 2027. As of December 31, 2025, we do not have an unfunded commitment for this investment. Furthermore, we have six investments in real estate debt and structured credit (“alternative investments”), whose fair value has been estimated using NAV and therefore, has not been classified in the fair value hierarchy. The investment strategy for these alternative investments is to create capital growth, income generation, and risk-adjusted returns. Capital growth is achieved by identifying high-potential investments that are appreciated over time. Income generation may involve dividends, rental income, or interest from various investments. Risk-adjusted returns focus on balancing potential profits with acceptable levels of risk, often through diversification and careful asset allocation. The real estate debt is approximately 44 % of the total alternative investment and can be liquidated with a 40-day notice period and cannot exceed 5 % of the total fund’s value. The structured credit is approximately 56 % of the total alternative investment and can be liquidated with a 15-day notice period with no restrictions. As of December 31, 2025, we had approximately $ 43.1 million in unfunded commitments for these investments. We identified investments in fixed income securities, common stock, and mutual funds presented within the preneed and perpetual care trust investments categories on our Consolidated Balance Sheets as having met the criteria for fair value measurement. Our receivables from preneed funeral trusts represent assets in trusts, which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets. We account for these receivables at cost. The following three-level valuation hierarchy based upon the transparency of inputs is utilized in the measurement and valuation of financial assets or liabilities as of the measurement date: • Level 1—Fair value of securities based on unadjusted quoted prices for identical assets or liabilities in active markets. Our investments classified as Level 1 securities include cash, U.S. treasury debt, common stock and equity mutual funds; • Level 2—Fair value of securities estimated based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation. These inputs include interest rates, yield curves, credit risk, prepayment speeds, rating and tax-exempt status. Our investments classified as Level 2 securities include U.S. agency obligations, foreign debt, corporate debt, preferred stocks, certificates of deposit and fixed income mutual funds and other investments. • Level 3—Unobservable inputs based upon the reporting entity’s internally developed assumptions, which market participants would use in pricing the asset or liability. As of December 31, 2025 and 2024, we did not have any assets that had fair values determined by Level 3 inputs and no liabilities measured at fair value. See Notes 8 and 9 to our Consolidated Financial Statements for the fair value hierarchy levels of our trust investments. 8. TRUST INVESTMENTS Preneed trust investments represent trust fund assets that we are generally permitted to withdraw as the services and merchandise are provided to customers. Preneed funeral and cemetery contracts are secured by payments from customers, less amounts not required by law to be deposited into trust. These earnings are recognized in Other revenue on our Consolidated Statements of Operations, when a service is performed or merchandise is delivered. Trust management fees charged by our wholly owned registered investment advisory firm are included as revenue in the period in which they are earned. Our investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery. Cemetery perpetual care trust investments represent a portion of the proceeds from the sale of cemetery property interment rights that we are required by various state laws to deposit into perpetual care trust funds. The income earned from these perpetual care trusts offsets maintenance expenses for cemetery property and memorials. This trust fund income is recognized in Other revenue. Changes in the fair value of our trust fund assets ( Preneed funeral, cemetery and perpetual care trust investments ) are offset by changes in the fair value of our trust fund liabilities ( Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus ) and reflected in Other, net . There is no impact on earnings until such time the services are performed, or 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) the merchandise is delivered, causing the contract to be withdrawn from the trust in accordance with state regulations and the gain or loss is allocated to the contract. We rely on our trust investments to provide funding for the various contractual obligations that arise upon maturity of the underlying preneed contracts. Because of the long-term relationship between the establishment of trust investments and the required performance of the underlying contractual obligations, the impact of current market conditions that may exist at any given time is not necessarily indicative of our ability to generate profit on our future performance obligations. Preneed Cemetery Trust Investments The components of Preneed cemetery trust investments on our Consolidated Balance Sheets are as follows (in thousands): December 31, 2025 December 31, 2024 Preneed cemetery trust investments, at market value $ 112,531 $ 106,143 Less: allowance for contract cancellation ( 3,379 ) ( 3,147 ) Preneed cemetery trust investments $ 109,152 $ 102,996 Less: Held for sale — ( 4,876 ) Preneed cemetery trust investments $ 109,152 $ 98,120 The cost and market values associated with preneed cemetery trust investments at December 31, 2025, are detailed below (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 15,653 $ — $ — $ 15,653 Common stock 1 11,599 768 ( 1,709 ) 10,658 Limited partnership fund 3,496 — ( 93 ) 3,403 Mutual funds: Equity 1 9,483 — ( 279 ) 9,204 Fixed income 2 43,013 353 ( 50 ) 43,316 Alternative investments 29,380 374 ( 68 ) 29,686 Trust securities $ 112,624 $ 1,495 $ ( 2,199 ) $ 111,920 Accrued investment income $ 611 $ 611 Preneed cemetery trust investments $ 112,531 Market value as a percentage of cost 99.4 % 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The cost and market values associated with preneed cemetery trust investments at December 31, 2024 are detailed below (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 23,215 $ — $ — $ 23,215 Fixed income securities: U.S. agency obligations 2 664 1 ( 46 ) $ 619 Foreign debt 2 8,575 1,431 ( 8 ) 9,998 Corporate debt 2 8,500 365 ( 256 ) 8,609 Preferred stock 2 2,833 479 ( 176 ) 3,136 Certificates of deposit 2 79 — ( 5 ) 74 Common stock 1 29,325 4,322 ( 3,381 ) 30,266 Limited partnership fund 3,530 84 — 3,614 Mutual funds: Equity 1 911 85 — 996 Fixed income 2 27,268 94 ( 2,376 ) 24,986 Trust securities $ 104,900 $ 6,861 $ ( 6,248 ) $ 105,513 Accrued investment income $ 630 $ 630 Preneed cemetery trust investments $ 106,143 Market value as a percentage of cost 100.6 % The following table summarizes our fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands): December 31, 2024 In Loss Position Less than 12 months In Loss Position Greater than 12 months Total Fair market value Unrealized Losses Fair market value Unrealized Losses Fair market value Unrealized Losses Fixed income securities: U.S. agency obligations $ — $ — $ 479 $ ( 46 ) $ 479 $ ( 46 ) Foreign debt — — 211 ( 8 ) 211 ( 8 ) Corporate debt 1,274 ( 139 ) 94 ( 117 ) 1,368 ( 256 ) Preferred stock 889 ( 5 ) 891 ( 171 ) 1,780 ( 176 ) Certificates of deposit — — 74 ( 5 ) 74 ( 5 ) Total fixed income securities with an unrealized loss $ 2,163 $ ( 144 ) $ 1,749 $ ( 347 ) $ 3,912 $ ( 491 ) There were no fixed income securities (excluding mutual funds) within our preneed cemetery trust investments in an unrealized loss position at December 31, 2025. 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Preneed cemetery trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands): Year ended December 31, 2025 2024 2023 Investment income $ 2,712 $ 2,834 $ 2,479 Realized gains 12,008 11,600 3,492 Realized losses ( 7,784 ) ( 14,191 ) ( 2,507 ) Unrealized gains (losses), net ( 704 ) 613 ( 4,352 ) Expenses and taxes ( 1,951 ) ( 2,175 ) ( 1,653 ) Net change in deferred preneed cemetery receipts held in trust ( 4,281 ) 1,319 2,541 $ — $ — $ — Purchases and sales of investments in the preneed cemetery trusts are as follows (in thousands): Year ended December 31, 2025 2024 2023 Purchases $ ( 70,979 ) $ ( 25,246 ) $ ( 22,478 ) Sales 72,597 33,725 18,378 Preneed Funeral Trust Investments Preneed funeral trust investments represent trust fund assets that we are permitted to withdraw as services and merchandise are provided to customers. Preneed funeral contracts are secured by payments from customers, less retained amounts not required to be deposited into trust. The components of Preneed funeral trust investments on our Consolidated Balance Sheets are as follows (in thousands): December 31, 2025 December 31, 2024 Preneed funeral trust investments, at market value $ 118,993 $ 111,721 Less: allowance for contract cancellation ( 3,577 ) ( 3,305 ) Preneed funeral trust investments $ 115,416 $ 108,416 Less: Held for sale — ( 2,197 ) Preneed funeral trust investments $ 115,416 $ 106,219 The cost and market values associated with preneed funeral trust investments at December 31, 2025 are detailed below (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 20,985 $ — $ — $ 20,985 Fixed income securities: U.S agency obligations 2 306 — ( 18 ) 288 Common stock 1 11,981 793 ( 1,765 ) 11,009 Limited partnership fund 3,611 — ( 97 ) 3,514 Mutual funds: Equity 1 9,226 — ( 276 ) 8,950 Fixed income 2 41,059 331 ( 48 ) 41,342 Other investments 2 1,724 — — 1,724 Alternative investments 30,344 386 ( 70 ) 30,660 Trust securities $ 119,236 $ 1,510 $ ( 2,274 ) $ 118,472 Accrued investment income $ 521 $ 521 Preneed cemetery trust investments $ 118,993 Market value as a percentage of cost 99.4 % 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The estimated maturities of the fixed income securities (excluding mutual funds) included above are as follows (in thousands): Due in one year or less $ — Due in one to five years 189 Due in five to ten years 99 Thereafter — Total fixed income securities $ 288 The cost and market values associated with preneed funeral trust investments at December 31, 2024 are detailed below (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 33,735 $ — $ — $ 33,735 Fixed income securities: U.S agency obligations 2 387 — ( 30 ) 357 Foreign debt 2 8,193 1,373 ( 7 ) 9,559 Corporate debt 2 7,941 351 ( 134 ) 8,158 Preferred stock 2 2,577 460 ( 218 ) 2,819 Common stock 1 26,293 3,989 ( 2,876 ) 27,406 Limited partnership fund 3,392 80 — 3,472 Mutual funds: Equity 1 763 41 — 804 Fixed income 2 24,952 83 ( 2,118 ) 22,917 Other investments 2 1,910 — — 1,910 Trust securities $ 110,143 $ 6,377 $ ( 5,383 ) $ 111,137 Accrued investment income $ 584 $ 584 Preneed cemetery trust investments $ 111,721 Market value as a percentage of cost 100.9 % The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at December 31, 2025, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands): December 31, 2025 In Loss Position Less than 12 months In Loss Position Greater than 12 months Total Fair market value Unrealized Losses Fair market value Unrealized Losses Fair market value Unrealized Losses Fixed income securities: U.S agency obligations $ — $ — $ 288 $ ( 18 ) $ 288 $ ( 18 ) Total fixed income securities with an unrealized loss $ — $ — $ 288 $ ( 18 ) $ 288 $ ( 18 ) 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table summarizes our fixed income securities (excluding mutual funds) within our preneed funeral trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands): December 31, 2024 In Loss Position Less than 12 months In Loss Position Greater than 12 months Total Fair market value Unrealized Losses Fair market value Unrealized Losses Fair market value Unrealized Losses Fixed income securities: U.S agency obligations $ — $ — $ 274 $ ( 30 ) $ 274 $ ( 30 ) Foreign debt — — 203 ( 7 ) 203 ( 7 ) Corporate debt 1,225 ( 133 ) — ( 1 ) 1,225 ( 134 ) Preferred stock 842 ( 4 ) 717 ( 214 ) 1,559 ( 218 ) Total fixed income securities with an unrealized loss $ 2,067 $ ( 137 ) $ 1,194 $ ( 252 ) $ 3,261 $ ( 389 ) Preneed funeral trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands): Year ended December 31, 2025 2024 2023 Investment income 2,174 2,177 2,004 Realized gains 16,311 10,722 3,354 Realized losses ( 8,420 ) ( 12,947 ) ( 2,170 ) Unrealized gains (losses), net ( 764 ) 994 ( 3,104 ) Expenses and taxes ( 1,197 ) ( 1,120 ) ( 848 ) Net change in deferred preneed funeral receipts held in trust ( 8,104 ) 174 764 $ — $ — $ — Purchases and sales of investments in the preneed funeral trusts are as follows (in thousands): Year ended December 31, 2025 2024 2023 Purchases ( 63,188 ) ( 23,799 ) ( 21,425 ) Sales 85,178 31,038 17,300 Cemetery Perpetual Care Trust Investments Care trusts’ corpus on our Consolidated Balance Sheets represent the corpus of those trusts plus undistributed income. The components of Care trusts’ corpus are as follows (in thousands): December 31, 2025 December 31, 2024 Cemetery perpetual care trust investments, at market value $ 95,625 $ 87,337 Obligations due to (due from) trust ( 2,200 ) ( 885 ) Care trusts’ corpus, including HFS $ 93,425 $ 86,452 Less: Held for sale — ( 2,234 ) Care trusts' corpus $ 93,425 $ 84,218 60 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table reflects the cost and market values associated with the trust investments held in perpetual care trust funds at December 31, 2025 (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 8,800 $ — $ — $ 8,800 Fixed income securities: Corporate debt 2 94 2 — 96 Common stock 1 10,527 1,028 ( 1,451 ) 10,104 Limited partnership fund 2,892 — ( 77 ) 2,815 Mutual funds: Equity 1 9,271 216 ( 257 ) 9,230 Fixed income 2 39,229 319 ( 145 ) 39,403 Alternative investments 24,308 310 ( 57 ) 24,561 Trust securities $ 95,121 $ 1,875 $ ( 1,987 ) $ 95,009 Accrued investment income $ 616 $ 616 Preneed cemetery trust investments $ 95,625 Market value as a percentage of cost 99.9 % The estimated maturities of the fixed income securities (excluding mutual funds) included above are as follows (in thousands): Due in one year or less $ 25 Due in one to five years 71 Due in five to ten years — Thereafter — Total fixed income securities $ 96 The following table reflects the cost and market values associated with the trust investments held in perpetual care trust funds at December 31, 2024 (in thousands): Fair Value Hierarchy Level Cost Unrealized Gains Unrealized Losses Fair Market Value Cash and money market accounts 1 $ 14,054 $ — $ — $ 14,054 Fixed income securities: Foreign debt 2 7,770 1,262 ( 7 ) 9,025 Corporate debt 2 7,942 357 ( 402 ) 7,897 Preferred stock 2 2,725 418 ( 148 ) 2,995 Common stock 1 25,563 3,866 ( 3,036 ) 26,393 Limited partnership fund 3,078 73 — 3,151 Mutual funds: Equity 1 789 68 — 857 Fixed income 2 24,374 111 ( 2,115 ) 22,370 Trust securities $ 86,295 $ 6,155 $ ( 5,708 ) $ 86,742 Accrued investment income $ 595 $ 595 Preneed cemetery trust investments $ 87,337 Market value as a percentage of cost 100.5 % 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table summarizes our fixed income securities within our perpetual care trust investment in an unrealized loss position at December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands): December 31, 2024 In Loss Position Less than 12 months In Loss Position Greater than 12 months Total Fair market value Unrealized Losses Fair market value Unrealized Losses Fair market value Unrealized Losses Fixed income securities: Foreign debt $ — $ — $ 184 $ ( 7 ) $ 184 $ ( 7 ) Corporate debt 1,111 ( 121 ) 316 ( 281 ) 1,427 ( 402 ) Preferred stock 764 ( 4 ) 1,086 ( 144 ) 1,850 ( 148 ) Total fixed income securities with an unrealized loss $ 1,875 $ ( 125 ) $ 1,586 $ ( 432 ) $ 3,461 $ ( 557 ) Perpetual care trust investment security transactions recorded in Other, net on our Consolidated Statements of Operations are as follows (in thousands): Year ended December 31, 2025 2024 2023 Realized gains 1,897 1,432 1,025 Realized losses $ ( 1,966 ) $ ( 1,873 ) $ ( 639 ) Unrealized gains (losses), net ( 112 ) 447 ( 3,767 ) Net change in care trusts’ corpus 181 ( 6 ) 3,381 $ — $ — $ — Perpetual care trust investment security transactions recorded in Other revenue are as follows (in thousands): Year ended December 31, 2025 2024 2023 Investment income $ 10,664 $ 14,806 $ 12,824 Realized losses ( 888 ) ( 3,589 ) ( 1,583 ) Total $ 9,776 $ 11,217 $ 11,241 Purchases and sales of investments in the perpetual care trusts are as follows (in thousands): Year ended December 31, 2025 2024 2023 Purchases $ ( 64,928 ) $ ( 21,441 ) $ ( 18,024 ) Sales $ 64,880 $ 29,967 $ 21,613 9. RECEIVABLES FROM PRENEED FUNERAL TRUSTS Our receivables from preneed funeral trusts represent assets in trusts which are controlled and operated by third parties in which we do not have a controlling financial interest (less than 50%) in the trust assets. We account for these investments at cost. Receivables from preneed funeral trusts are as follows (in thousands): December 31, 2025 December 31, 2024 Preneed funeral trust funds, at cost $ 16,758 $ 23,063 Less: allowance for contract cancellation ( 503 ) ( 691 ) Receivables from preneed funeral trusts, net $ 16,255 $ 22,372 The following summary reflects the composition of the assets held in trust and controlled by third parties to satisfy our future obligations related to the underlying preneed funeral contracts at December 31, 2025 and 2024. The cost basis includes reinvested interest and dividends that have been earned on the trust assets. Fair value includes unrealized gains and losses on trust assets. 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The composition of the preneed trust funds at December 31, 2025, is as follows (in thousands): Historical Cost Basis Fair Value Cash and cash equivalents $ 2,220 $ 2,220 Fixed income investments 11,108 11,108 Mutual funds and common stocks 3,426 3,306 Annuities 4 4 Total $ 16,758 $ 16,638 The composition of the preneed trust funds at December 31, 2024, is as follows (in thousands): Historical Cost Basis Fair Value Cash and cash equivalents $ 6,826 $ 6,826 Fixed income investments 12,998 12,998 Mutual funds and common stocks 3,235 2,999 Annuities 4 4 Total $ 23,063 $ 22,827 10. CONTRACTS FUNDED BY INSURANCE When preneed funeral contracts are funded through third-party insurance policies, we earn a commission on the sale of the policies, which are recorded in Other revenue . These insurance commissions are subject to refund (charge-back) if the preneed policy is cancelled within a year or if there is an imminent death of beneficiary before the first year anniversary of the policy. Approximately 10% of our preneed funeral contracts are cancelled before the first year anniversary of the policy. As such, we recognize 90% of our commissions revenue at the time that it is earned. Based on our historical cancellation rate, we defer 10% of the commissions revenue earned for twelve months until the commission is no longer subject to refund. All selling costs incurred pursuant to the sale of the insurance funded preneed contracts are expensed as incurred. Additionally, during the year ended December 31, 2023, we received a $ 6.0 million incentive payment from a vendor for entering into a strategic partnership agreement to market and sell prearranged funeral services in the future, which increased our cash flow from operations and Deferred preneed funeral revenue. The incentive payment is subject to partial claw-back if certain preneed funeral sales volumes are not met within the ten-year term of the agreement. As such, we recognize the incentive payment in proportion to our achieved preneed funeral sales volume, net of cancellations, at each reporting period. We recognized $ 0.4 million in the year ended December 31, 2025, and $ 0.2 million in each of the years ended December 31, 2024 and 2023 of the incentive payment as Other revenue. Generally, at the time of the sale of either the preneed insurance or preneed trust contract, the intent is that the beneficiary has made a commitment to assign the proceeds to us for the fulfillment of the service and merchandise obligations on the preneed contract at the time of need. However, this commitment is generally revocable and the proceeds from the policy are portable, so the customer can choose to use an alternative provider at the time of need. Preneed funeral contracts to be funded at maturity by third-party insurance policies totaled $ 420.4 million and $ 421.3 million at December 31, 2025 and 2024, respectively, and are not recorded as assets or liabilities on our Consolidated Balance Sheets. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. INTANGIBLE AND OTHER NON-CURRENT ASSETS Intangible and other non-current assets are as follows (in thousands): December 31, 2025 December 31, 2024 Trade names $ 29,867 $ 28,116 Internally developed software, net of accumulated amortization of $ 1,898 and $ 764 , respectively 6,948 5,601 Capitalized commissions on preneed contracts, net of accumulated amortization of $ 5,288 and $ 4,653 , respectively 5,151 4,991 Prepaid agreements not-to-compete, net of accumulated amortization of $ 3,875 and $ 3,543 , respectively 650 923 Non-current prepaid and other intangibles, net of accumulated amortization of $ 478 and $ 109 , respectively 654 1,011 Deferred Compensation 337 — Intangible and other non-current assets, net including HFS $ 43,607 $ 40,642 Less: Held for sale — ( 215 ) Intangible and other non-current assets, net $ 43,607 $ 40,427 Trade names During the year ended December 31, 2025, we increased the value of our trade names by $ 3.1 million, with $ 2.1 million allocated to our funeral home segment and $ 1.0 million allocated to our cemetery segment, related to our acquisition of businesses, as more fully described in Note 3 to the Consolidated Financial Statements. During the year ended December 31, 2025, four of the funeral homes that we sold and one funeral home that was closed and subsequently sold as real property had a carrying value of trade names of $ 1.3 million, which was included in the loss on sale and recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations. During the year ended December 31, 2024, two of the funeral homes that we sold had a carrying value of trade names of $ 0.2 million, which was included in the loss on sale and recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations. See Notes See Notes 1, 3, and 5 to the Consolidated Financial Statements for additional information related to Tradenames. Internally Developed Software Internally developed software is typically amortized on a straight-line basis over five years . Amortization expense was $ 1.1 million for each of the years ended December 31, 2025, and $ 0.3 million for each of the years ended December 31, 2024 and 2023. Capitalized Commissions Amortization expense was $ 0.9 million for each of the years ended December 31, 2025 and 2024, and $ 0.8 million and for the year ended December 31, 2023. Prepaid Agreements Not-to-Compete Prepaid agreements not-to-compete are amortized over the term of the respective agreements, generally ranging from one to ten years . Amortization expense was $ 0.4 million, $ 0.5 million, and $ 0.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Non-current Prepaid and Other Intangibles Non-current prepaid agreements are related to software licenses that have been prepaid for multiple years. These agreements are amortized on a straight-line basis over the term of the respective agreements, generally ranging from two to three years . Other intangible assets relate to intellectual property and are amortized on a straight-line basis, typically over three years. Amortization expense was $ 0.1 million for each of the years ended December 31, 2025 and 2024 and $ 37 thousand for the year ended December 31, 2023. 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The aggregate amortization expense for our capitalized commissions, prepaid not-to-compete agreements, internal-use software and non-current prepaid and other agreements as of December 31, 2025 is as follows (in thousands): Capitalized Commissions Prepaid Agreements Not-to-compete Internally Developed Software Non-current Prepaid and Other Intangibles Years ending December 31, 2026 $ 964 $ 306 $ 1,701 $ 85 2027 906 182 1,704 488 2028 830 118 1,367 51 2029 727 30 1,090 30 2030 623 5 1,086 — Thereafter 1,101 9 — — Total amortization expense $ 5,151 $ 650 $ 6,948 $ 654 12. CREDIT FACILITY AND ACQUISITION DEBT At December 31, 2025, 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. Our obligations under the Credit Facility are unconditionally guaranteed on a joint and several basis by the same subsidiaries which guarantee the Senior Notes (as defined in Note 13) and certain of our subsequently acquired or organized domestic subsidiaries (collectively, the “Subsidiary Guarantors”). 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. 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, 2025, 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, 2025. 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Our Credit Facility and acquisition debt consisted of the following (in thousands): December 31, 2025 December 31, 2024 Credit Facility $ 126,700 $ 137,000 Debt issuance costs, net of accumulated amortization of $ 3,300 and $ 2,947 , respectively ( 1,265 ) ( 1,618 ) Total Credit Facility $ 125,435 $ 135,382 Acquisition debt $ 6,188 $ 5,466 Less: current portion ( 607 ) ( 571 ) Total acquisition debt, net of current portion $ 5,581 $ 4,895 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, 2026, and is expected to automatically renew annually and secures our obligations under our various self-insured policies. 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, 2025, the prime rate margin was equivalent to 1.13 % and the SOFR term margin was 2.50 %. The weighted average interest rate on our Credit Facility was 6.7 % and 8.7 % for the years ended December 31, 2025 and 2024, 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): Year ended December 31, 2025 2024 2023 Credit Facility interest expense $ 8,948 $ 13,390 17,251 Credit Facility amortization of debt issuance costs 353 469 552 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 8.5 %. Original maturities typically range from nine to twenty years . The imputed interest expense related to our acquisition debt is as follows (in thousands): Year ended December 31, 2025 2024 2023 Acquisition debt imputed interest expense 367 406 291 The aggregate maturities of our Credit Facility and acquisition debt for the next five years subsequent to December 31, 2025 and thereafter, excluding debt issuance costs, are as follows (in thousands): Credit Facility Acquisition Debt Years ending December 31, 2026 $ — $ 691 2027 — 691 2028 — 691 2029 126,700 691 2030 — 691 Thereafter — 5,947 Total Credit Facility and acquisition debt $ 126,700 $ 9,402 Less: Interest — ( 3,214 ) Present value of Credit Facility and acquisition debt $ 126,700 $ 6,188 66 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 13. SENIOR NOTES At December 31, 2025, 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 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 41 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 each of the years ended December 31, 2025 and 2024 was 4.42 %. The carrying value of our Senior Notes is reflected on our Consolidated Balance Sheets as follows (in thousands): The carrying value of our 4.25 % senior notes due 2029 (the “Senior Notes”) is reflected on our Consolidated Balance Sheets as follows (in thousands): December 31, 2025 December 31, 2024 Principal amount $ 400,000 $ 400,000 Debt discount, net of accumulated amortization of $ 2,411 and $ 1,848 , respectively ( 2,089 ) ( 2,652 ) Debt issuance costs, net of accumulated amortization of $ 685 and $ 526 , respectively ( 592 ) ( 751 ) Carrying value of the Senior Notes $ 397,319 $ 396,597 At December 31, 2025, the fair value of the Senior Notes, which are Level 2 measurements, was $ 385.7 million. The Senior Notes were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee. 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. The Indenture contains restrictive covenants limiting our ability and our Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to us, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates. The Indenture also contains customary events of default. The interest expense and amortization of debt discount and debt issuance costs related to our Senior Notes are as follows (in thousands): 67 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Year ended December 31, 2025 2024 2023 Senior Notes interest expense $ 17,000 $ 17,000 $ 17,000 Senior Notes amortization of debt discount 563 539 515 Senior Notes amortization of debt issuance costs 159 153 147 The aggregate maturities of our Senior Notes for the next five years subsequent to December 31, 2025 and thereafter are as follows (in thousands): Principal Maturity Discount Amortization Carrying Value Years ending December 31, 2026 $ — $ ( 588 ) $ ( 588 ) 2027 — ( 615 ) ( 615 ) 2028 — ( 642 ) ( 642 ) 2029 400,000 ( 244 ) 399,756 2030 — — — Thereafter — — — Total $ 400,000 $ ( 2,089 ) $ 397,911 14. LEASES Our lease obligations consist of operating and finance leases related to real estate, vehicles and equipment. The components of lease cost are as follows (in thousands): Years Ended December 31, Income Statement Classification 2025 2024 2023 Operating lease cost Facilities and grounds expense (1) $ 3,865 $ 3,998 $ 3,526 Short-term lease cost Facilities and grounds expense (1) 277 232 372 Variable lease cost Facilities and grounds expense (1) 183 380 234 Finance lease cost: Depreciation of leased assets Depreciation and amortization (2) $ 543 511 541 Interest on lease liabilities Interest expense 967 506 500 Total finance lease cost 1,510 1,017 1,041 Total lease cost $ 5,835 $ 5,627 $ 5,173 (1) Facilities and grounds expense is included within Cost of service and General, administrative, and other on our Consolidated Statements of Operations. (2) Depreciation and amortization expense is included within Field depreciation expense and General, administrative, and other on our Consolidated Statements of Operations. Supplemental cash flow information related to our leases is as follows (in thousands): Year ended December 31, 2025 2024 2023 Cash paid for operating leases included in operating activities $ 4,833 $ 4,325 $ 3,779 Cash paid for finance leases included in financing activities 642 1,083 1,153 68 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Right-of-use assets obtained in exchange for new leases are as follows (in thousands): Year ended December 31, 2025 2024 Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,501 $ 1,224 Right-of-use assets obtained in exchange for new finance lease liabilities 3,761 1,027 Supplemental balance sheet information related to leases is as follows (in thousands): Lease Type Balance Sheet Classification December 31, 2025 December 31, 2024 Operating lease right-of-use assets Operating lease right-of-use assets $ 12,045 $ 14,953 Finance lease right-of-use assets Property, plant, and equipment, net $ 12,174 $ 8,564 Accumulated depreciation Property, plant, and equipment, net ( 3,817 ) ( 3,214 ) Finance lease right-of-use assets, net $ 8,357 $ 5,350 Operating lease current liabilities Current portion of operating lease obligations $ 3,084 $ 2,810 Finance lease current liabilities Current portion of finance lease obligations 605 533 Total current lease liabilities Total current lease liabilities $ 3,689 $ 3,343 Operating lease non-current liabilities Obligations under operating leases, net of current portion $ 10,538 $ 14,035 Finance lease non-current liabilities Obligations under finance leases, net of current portion 9,339 6,045 Total non-current lease liabilities Total non-current lease liabilities $ 19,877 $ 20,080 Total lease liabilities $ 23,566 $ 23,423 The average lease terms and discount rates at December 31, 2025 are as follows: Weighted-average remaining lease term (years) Weighted-average discount rate Operating leases 6.0 8.2 % Finance leases 22.4 8.7 % The aggregate future lease payments for non-cancelable operating and finance leases at December 31, 2025 are as follows (in thousands): Operating Finance Lease payments due: 2026 $ 4,008 $ 1,681 2027 3,838 1,676 2028 3,518 1,184 2029 2,873 1,093 2030 813 1,108 Thereafter 1,831 15,663 Total lease payments $ 16,881 $ 22,405 Less: Interest ( 3,259 ) ( 12,461 ) Present value of lease liabilities, including HFS $ 13,622 $ 9,944 At December 31, 2025, we had no significant operating or finance leases that had not yet commenced . 69 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 15. COMMITMENTS AND CONTINGENCIES Non-Compete, Consulting, and Employment Agreements We have various non-compete agreements with former owners and employees. These agreements are generally for one to ten years and provide for periodic future payments over the term of the agreements. We have various consulting agreements with former owners of businesses we have acquired. 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. We have employment agreements with our executive officers. These agreements are generally for two to five years and provide for participation in various incentive compensation arrangements. These agreements generally renew automatically on an annual basis after their initial term has expired. At December 31, 2025, the maximum estimated future cash commitments under these agreements with remaining commitment terms, and with original terms of more than one year, are as follows (in thousands): Non-Compete Consulting (1) Employment (1) Total Years ending December 31, 2026 $ 1,226 $ 1,017 $ 3,754 $ 5,997 2027 795 685 — 1,480 2028 361 391 — 752 2029 240 20 — 260 2030 145 20 — 165 Thereafter 363 35 — 398 Total $ 3,130 $ 2,168 $ 3,754 $ 9,052 (1) In connection with Mr. Payne’s transition from Executive Chairman of the Board of Directors to serving as a special advisor to the Board of Directors, his employment agreement with the Company was terminated and he entered into a Transition Agreement, dated effective February 22, 2024. Defined Contribution Plan We sponsor a defined contribution plan, a 401K plan, for the benefit of our employees. Matching contributions and plan administrative expenses totaled $ 3.1 million, $ 2.9 million, and $ 2.8 million for the year ended December 31, 2025, 2024 and 2023, respectively. We do not offer any post-retirement or post-employment benefits. Litigation We are a party to various litigation matters and proceedings. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. If we determine that an unfavorable outcome is probable and can be reasonably estimated, we establish the necessary accruals. We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of certain of these litigation matters. Denning v. Carriage Services, Inc., et al., Superior Court of California, Ventura County, Case No. 2024 CU OE 028098. On July 29, 2024, a wage and hour class action was filed against the Company and several of its subsidiaries. Plaintiff, a former employee, seeks monetary damages on behalf of herself and other similarly situated current and former non-exempt employees as the putative class for the alleged failure to pay legally mandated compensation and reimbursement expenses. As of December 31, 2025, we are unable to reasonably estimate the possible loss or ranges of loss, if any. The prospective class has not been certified by a court of competent jurisdiction and the Company intends to vigorously defend itself in all respects. Frost v. Rolling Hills Memorial Park , Superior Court of California, Contra Costa County, Case No. C24-02653. On October 4, 2024, a consumer class action was filed against the Company’s subsidiary, Rolling Hills Memorial Park. Plaintiff, an owner of an interment right and purchaser of merchandise and services from Rolling Hills Memorial Park, seeks monetary damages on behalf of herself and other similarly situated current and former consumers and owners of interment rights as the putative class for the alleged failure to properly set cemetery merchandise and maintain the perpetual care cemetery. As of December 31, 2025, we are unable to reasonably estimate the possible loss or ranges of loss, if any. The prospective class has not been certified by a court of competent jurisdiction and the Company intends to vigorously defend itself in all respects. 70 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 16. INCOME TAXES U.S. income from continuing operations before income tax expense was $ 70.3 million, $ 50.1 million, and $ 46.4 million for the year ended December 31, 2025, 2024, and 2023, respectively. The provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2025 2024 2023 Current: U.S. federal provision $ 10,500 $ 13,902 $ 7,862 State provision 4,275 3,923 1,847 Total current provision $ 14,775 $ 17,825 $ 9,709 Deferred: U.S. federal (benefit) provision $ 4,507 $ ( 1,338 ) $ 2,117 State provision (benefit) ( 526 ) 640 1,190 Total deferred (benefit) provision $ 3,981 $ ( 698 ) $ 3,307 Total income tax provision $ 18,756 $ 17,127 $ 13,016 A reconciliation of income taxes calculated at the U.S. federal statutory rate to those reflected in the Consolidated Statements of Operations is as follows (dollars in thousands): Years Ended December 31, 2025 2024 2023 Amount Percent Amount Percent Amount Percent Federal statutory rate $ 14,755 21.0 % $ 10,517 21.0 % $ 9,750 21.0 % Effect of state income taxes, net of federal benefit 2,961 4.2 3,655 7.3 2,396 5.2 Effect of non-taxable or non-deductible expenses, net 162(m) Officers' Compensation Limitation 2,075 3.0 1,717 3.4 332 0.7 Restricted stock and performance awards ( 2,097 ) ( 3.0 ) 72 0.1 ( 4 ) — Divestiture and impairment of business 775 1.1 219 0.4 — — ESPP and stock options ( 376 ) ( 0.5 ) 601 1.2 157 0.3 Other adjustments 663 0.9 346 0.8 385 0.8 Total $ 18,756 26.7 % $ 17,127 34.2 % $ 13,016 28.0 % We are subject to taxation in the U.S. and various state jurisdictions. In 2025, state and local income taxes in California comprise the majority of the effect of state income taxes, net of federal benefit category. In 2024, and 2023, state and local income taxes in California and Virginia comprise the majority of the effect of state income taxes, net of federal benefit category. Income taxes paid by jurisdiction is a follows (in thousands): Years Ended December 31, 2025 2024 2023 U.S. federal $ 12,200 $ 13,178 $ 7,720 U.S. state and local California 1,919 1,398 573 Virginia (1) 981 — 683 All other states 1,890 2,078 1,472 Total income taxes paid $ 16,990 $ 16,654 $ 10,448 (1) The blank cells indicate that the amount of income tax paid during the year is either immaterial or does not meet the 5% disaggregation threshold . 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The tax effects of temporary differences from total operations that give rise to significant deferred tax assets and liabilities are as follows (in thousands): Years Ended December 31, 2025 2024 Deferred income tax assets: Net operating loss carryforwards $ 435 $ 483 Interest expense limitation 5,281 7,350 Tax credit carryforwards 51 51 State depreciation 913 1,096 Accrued and other liabilities 7,738 9,787 Amortization of non-compete agreements 803 875 Preneed assets, net 373 312 Lease liabilities 5,726 4,135 Total deferred income tax assets 21,320 24,089 Less: valuation allowance ( 111 ) ( 156 ) Total deferred income tax assets 21,209 23,933 Deferred income tax liabilities: Depreciation and amortization $ ( 68,082 ) $ ( 69,730 ) Right-of-use assets ( 5,964 ) ( 3,670 ) Prepaid assets and other ( 2,572 ) ( 1,962 ) Total deferred income tax liabilities ( 76,618 ) ( 75,362 ) Total net deferred tax liabilities $ ( 55,409 ) $ ( 51,429 ) Our deferred tax assets and liabilities, along with related valuation allowances, are classified as non-current on our Consolidated Balance Sheets at December 31, 2025 and 2024. We record a valuation allowance to reflect the estimated amount of deferred tax assets for which realization is uncertain. Management reviews the valuation allowance at the end of each quarter and makes adjustments if it is determined that it is more-likely-than not that the tax benefits will be realized. We recognized an immaterial net decrease in our valuation allowance during the years ended December 31, 2025 and 2024. For state reporting purposes, we have $ 8.7 million of net operating loss carryforwards that will expire between 2026 and 2043, if not utilized. Based on management’s assessment of the various state net operating losses, it was determined that it is more-likely-than not that we will be able to realize tax benefits on some portion of the amount of the state losses. The valuation allowance at December 31, 2025 was attributable to the deferred tax asset related to a portion of the state operating losses. We analyze tax benefits for uncertain tax positions and how they are to be recognized, measured, and derecognized in financial statements; provide certain disclosures of uncertain tax matters; and specify how reserves for uncertain tax positions should be classified on our Consolidated Balance Sheets. The deferred tax assets recognized for those net operating losses ( “ NOLs ”) are presented net of these unrecognized tax benefits. At December 31, 2025, the Company’s unrecognized tax benefit for uncertain tax positions primarily relates to the uncertainty of receiving audit protection for revenue recognition of cemetery property for the benefit derived from carrying back losses generated in 2018 to tax years with a higher effective tax rate than the current 21.0% rate. Our unrecognized tax benefit for the years ended December 31, 2025 and 2024 was $ 3.6 million and $ 3.5 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Unrecognized tax benefit at beginning of year $ 3,471 $ 3,382 $ 3,294 Gross decreases - tax positions in prior period 162 — 88 Gross increases - tax positions in current period — 89 — Unrecognized tax benefit at end of year $ 3,633 $ 3,471 $ 3,382 Our total unrecognized tax benefits that, if recognized, would affect our effective tax rates were $ 3.6 million, $ 3.5 million, and $ 3.4 million as of December 31, 2025, 2024 and 2023, respectively. 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) We accrued interest of $ 0.2 million during 2025 and in total, as of December 31, 2025, recognized a liability related to the unrecognized tax benefit noted above for interest of $ 0.5 million. During 2024, we accrued interest of $ 0.1 million and in total, as of December 31, 2024, recognized a liability for interest of $ 0.4 million. As of December 31, 2025, tax years 2013 to 2016, 2018, and 2022 to current are subject to examination by taxing authorities. In 2017, we filed amended returns for the tax years ending December 31, 2013, 2014, 2015, resulting in $ 1.9 million in refunds. These amended returns were selected for a limited scope audit. Additionally, losses incurred in the tax years ending December 31, 2018, and 2019 were carried back to the tax years 2015 and 2016, generating refunds exceeding $ 5.0 million, which require Joint Committee approval. In late 2024, the refunds for the tax years 2013, 2014, and 2015 were received; however, the Company continues to be under examination. 17. STOCKHOLDERS’ EQUITY Share Authorization We are authorized to issue 80,000,000 shares of common stock, $ 0.01 per share par value. We had 27,378,870 and 26,881,355 shares issued and 15,751,052 and 15,253,537 shares outstanding, net of 11,627,818 shares held in treasury at par, at December 31, 2025 and 2024, respectively. Stock Based Compensation Plans During the year ended December 31, 2025, we had two stock benefits plans in effect under which stock, restricted stock, stock options, and performance awards have been granted or remain outstanding: the Second Amended and Restated 2006 Long-Term Incentive Plan (as amended, the “Amended and Restated 2006 Plan”) and the 2017 Omnibus Incentive Plan (as amended, the “2017 Plan”). The Amended and Restated 2006 Plan was terminated upon the approval of the 2017 Plan at the annual stockholders meeting on May 17, 2017. The 2017 Plan expires on May 17, 2027. All stock-based plans are administered by the Compensation Committee appointed by our Board of Directors (the “Board”). At December 31, 2025, we had 2,740,182 shares available to issue under our 2017 Plan. The termination of the Amended and Restated 2006 Plan does not affect the awards previously issued and outstanding. Restricted Stock Restricted stock activity is as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Fair Value Shares Fair Value Shares Fair Value Granted (1) 114,684 $ 4,764 156,630 $ 3,834 142,020 $ 4,634 Returned for payroll taxes 28,656 $ 1,168 16,354 $ 419 1,473 $ 50 Cancelled 10,004 $ 357 55,050 $ 1,623 1,826 $ 61 (1) Restricted stock granted during the year ended December 31, 2025, 2024 and 2023 will vest over a three-year period, if the employee has remained continuously employed by us during the vesting period, at a weighted average stock price of $ 41.54 , $ 24.48 and $ 32.63 , respectively. A summary of the number of unvested restricted stock awards and their weighted average grant date fair values during the year ended December 31, 2025 is presented in the table below: Restricted stock awards Shares Weighted Average Grant Date Fair Value Unvested at January 1 196,480 $ 27.01 Granted 114,684 $ 41.54 Vested ( 75,600 ) $ 27.77 Cancelled ( 10,004 ) $ 35.73 Unvested at December 31 225,560 $ 33.76 We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for restricted stock awards of $ 3.3 million, $ 2.0 million and $ 1.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, we had $ 7.6 million of total unrecognized compensation costs related to unvested restricted stock awards, which are expected to be recognized over a weighted average period of 1.5 years. 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Stock Options Stock option grants and cancellations are as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Fair Value Shares Fair Value Shares Fair Value Granted (1) — $ — 370,590 $ 3,830 214,191 $ 2,506 Cancelled 22,190 $ 273 532,266 $ 6,311 105,150 $ 1,380 (1) Stock options granted during the years ended December 31, 2024 and 2023 had a weighted average price of $ 24.48 and $ 32.69 , respectively. The fair value of these options was calculated using the Black-Scholes option pricing model. The options granted in 2024 and 2023 vest over a three-year period and have a ten-year term. Additional stock option activity is as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Cash Shares Cash Shares Cash Exercised (1) 324,497 $ 584 97,548 $ 1,439 74,200 N/A Returned for option price (2) 191,280 $ 8,547 28,882 $ 1,113 56,957 $ — Returned for payroll taxes (3) 34,969 $ 1,446 4,482 $ 174 5,486 $ 174 (1) Stock options exercised during the years ended December 31, 2025, 2024, and 2023 had a weighted average exercise price of $ 27.46 , $ 26.12 and $ 23.98 , respectively. (2) Represents shares withheld/cash received for the payment of the option price. (3) Represents shares withheld/cash paid for the payment of payroll taxes. Stock options are granted with an exercise price equal to the closing price of our common stock on the date of grant. All of the options granted and outstanding under this plan have either a seven or ten-year term. We utilized the Black-Scholes option pricing model for estimating the fair value of our stock options. These models allow for the use of a range of assumptions related to volatility, risk-free interest rate, expected holding period and dividend yield. The expected volatility utilized in these valuation models is based on the historical volatility of our stock price. The dividend yield and expected holding period are based on historical experience and management's estimate of future events. The risk-free interest rate is derived from the U.S. Treasury yield curve based on the expected life of the option in effect at the time of grant. The fair value of the options granted using the Black-Scholes option pricing model was estimated on the date of grant with the following assumptions: Years Ended December 31, 2024 2023 Grant date February 21 February 22 Expected holding period (years) 6.0 4.0 Awards granted 370,590 214,191 Dividend yield 1.79 % 1.38 % Expected volatility 43.59 % 43.68 % Risk-free interest rate 4.31 % 4.27 % Black-Scholes value $ 10.34 $ 11.70 A summary of the number of stock options and their weighted average exercise prices during the year ended December 31, 2025 is presented in the table below (shares in thousands): Shares Wtd. Avg. Ex. Price Outstanding at January 1 1,344 $ 32.39 Exercised ( 324 ) $ 27.46 Forfeited or expired ( 23 ) $ 36.97 Outstanding at December 31 997 $ 33.89 Exercisable at December 31 556 $ 34.08 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) A summary of the number of stock options and their weighted average grant date fair values during the year ended December 31, 2025 is presented in the table below (shares in thousands): Shares Wtd. Avg. Fair Value Non-vested at January 1 727 $ 11.98 Vested or exercised ( 268 ) $ 11.35 Forfeited ( 18 ) $ 11.45 Non-vested at December 31 441 $ 12.34 A summary of the intrinsic value of stock options exercised and the fair value of stock options vested for the three years ended December 31, 2025 is presented in the table below (in thousands): Years Ended December 31, 2025 2024 2023 Intrinsic value of options exercised $ 5,053 $ 647 $ 538 Fair value of stock options vested 6,258 5,825 6,003 The following table further describes our outstanding stock options at December 31, 2025: Options Outstanding Options Exercisable Actual Ranges of Exercise Prices Number Outstanding at 12/31/25 Weighted-Average Remaining Contractual Life Weighted-Average Exercise Price Number Exercisable at 12/31/25 Weighted-Average Remaining Contractual Life Weighted-Average Exercise Price $ 18.02 - $ 18.02 13,333 4.48 $ 18.02 13,333 4.48 $ 18.02 $ 20.06 - $ 26.54 353,520 7.10 $ 24.75 145,220 5.61 $ 25.14 $ 31.58 - $ 31.58 12,600 6.74 $ 31.58 12,600 6.74 $ 31.58 $ 32.69 - $ 49.48 617,945 5.88 $ 39.51 385,246 5.77 $ 38.08 $ 18.02 - $ 49.48 997,398 6.31 $ 33.89 556,399 5.72 $ 34.08 The aggregate intrinsic value of the outstanding and exercisable stock options were both $ 10.0 million and $ 5.3 million, respectively, at December 31, 2025. We had $ 3.0 million of unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted average period of 2.1 years at December 31, 2025. We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for stock options $ 2.9 million, $ 2.5 million, and $ 2.9 million, for the years ended December 31, 2025, 2024, and 2023, respectively. Performance Awards During the year ended December 31, 2025, we granted performance awards to our executive leadership team payable in shares. These awards will vest, if at all, provided that certain predetermined performance metrics related to the Company's adjusted consolidated EBITDA (adjusted earnings before interest tax depreciation and amortization) are achieved during the period commencing on the grant date, March 7, 2025, through March 31, 2028, subject to certification by the Compensation Committee of the Board of Directors (“Board”) and the individual remaining continuously employed by us through such date. Performance award activity is as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Fair Value Shares Fair Value Shares Fair Value Granted 90,894 $ 3,508 — $ — — $ — Returned for payroll taxes 142,070 $ 5,662 — $ — — $ — Cancelled 58,013 $ 2,423 80,276 $ 871 54,229 $ 1,565 75 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) A summary of the number of performance awards and their weighted average grant date fair values during the year ended December 31, 2025 is presented in the table below: Performance Awards Shares Weighted Average Grant Date Fair Value At January 1 297,531 $ 22.23 Granted 90,894 $ 38.59 Vested ( 239,518 ) 17.50 Cancelled ( 58,013 ) $ 41.77 At December 31 90,894 $ 38.59 At December 31, 2025, we had $ 3.5 million of total unrecognized compensation costs related to performance awards, which are expected to be recognized over a weighted average period of 2.2 years. We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for performance awards of $ 1.0 million, $ 1.1 million, and $ 1.6 million during the years ended December 31, 2025, 2024, and 2023, respectively. Employee Stock Purchase Plan We provide all employees the opportunity to purchase common stock through payroll deductions in our ESPP. Purchases are made quarterly; the price being 85 % of the lower of the price on the first day of the plan entry date (beginning of the fiscal year) or the actual date of purchase (end of quarter). ESPP activity is as follows: Years Ended December 31, 2025 2024 2023 Shares Price Shares Price Shares Price ESPP 34,208 $ 33.09 55,850 $ 21.26 63,372 $ 23.58 We recorded stock-based compensation expense, which is included in Regional and unallocated funeral and cemetery costs and General, administrative and other expenses, for our ESPP of $ 0.3 million, $ 0.4 million, and $ 0.6 million during the years ended December 31, 2025, 2024, and 2023, respectively. The fair values of the right to purchase shares under the ESPP are estimated at the date of purchase with the four quarterly purchase dates using the following assumptions: Years Ended December 31, 2025 2024 2023 Dividend yield 1.05 % 1.51 % 1.30 % Expected volatility 28.8 % 41.2 % 53.5 % Risk-free interest rate 4.36 %, 4.25 %, 4.21 %, 4.17 % 5.46 %, 5.24 %, 5.02 %, 4.80 % 4.53 %, 4.77 %, 4.75 %, 4.72 % Expected life (years) 0.25 , 0.50 , 0.75 , 1.00 0.25 , 0.50 , 0.75 , 1.00 0.25 , 0.50 , 0.75 , 1.00 Expected volatilities are based on the historical volatility during the previous twelve months of the underlying common stock. The risk-free rate for the quarterly purchase periods is based on the U.S. Treasury yields in effect at the time of purchase. The expected life of the ESPP grants represents the calendar quarters from the beginning of the year to the purchase date (end of each quarter). 76 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Common Stock Former Employee Common stock activity is as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Fair Value Shares Fair Value Shares Fair Value Granted (1) — $ — — $ — 30,000 $ 826 Returned for payroll taxes — $ — — $ — 1,001 $ 28 (1) During the year ended December 31, 2023, we issued 30,000 shares of common stock to a former executive at a stock price of $ 27.54 , in accordance with his Separation and Release Agreement pertaining to his resignation from his position as the Company’s Executive Vice President, Chief Financial Officer & Treasurer effective January 2, 2023. We recorded stock-based compensation expense, which is included in General, administrative, and other expenses, for common stock awards of $ 0.8 million, for the year ended December 31, 2023. Good to Great Incentive Program Common stock issued to certain employees under this incentive program is as follows (in thousands, except shares): Years Ended December 31, 2025 2024 2023 Shares Fair Value Shares Fair Value Shares Fair Value 11,958 $ 497 31,470 $ 790 8,444 $ 276 (1) Common stock granted during the year ended December 31, 2025, 2024, and 2023 had a grant date stock price of $ 41.54 , $ 25.08 , and $ 32.69 , respectively. Share Repurchase Program 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. No shares were repurchased during the years ended December 31, 2025, 2024,and 2023. At December 31, 2025, our share repurchase program had $ 48.9 million authorized for repurchases. 18. EARNINGS PER SHARE The following table sets forth the computation of the basic and diluted earnings per share (in thousands, except per share data): Year ended December 31, 2025 2024 2023 Numerator for basic and diluted earnings per share: Net income $ 51,507 $ 32,953 $ 33,413 Less: Earnings allocated to unvested restricted stock ( 687 ) ( 432 ) ( 306 ) Income attributable to common stockholders $ 50,820 $ 32,521 $ 33,107 Denominator: Denominator for basic earnings per common share – weighted average shares outstanding 15,428 14,971 14,803 Effect of dilutive securities: Stock options 206 56 55 Performance awards — 416 597 Denominator for diluted earnings per common share – weighted average shares outstanding 15,634 15,443 15,455 Basic earnings per common share: $ 3.29 $ 2.17 $ 2.24 Diluted earnings per common share: $ 3.25 $ 2.10 $ 2.14 77 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Stock options excluded from the computation of diluted earnings per share because the inclusion of such stock options would result in an antidilutive effect are as follows (in thousands): Year ended December 31, 2025 2024 2023 Antidilutive stock options 223 1,143 1,208 Share-based awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and included in the computation of both basic and diluted earnings per share. Our grants of stock awards to our employees are considered participating securities and we have prepared our earnings per share calculations to exclude earnings allocated to unvested restricted stock awards, using the two-class method, in the basic and diluted weighted average shares outstanding calculation. 19. SEGMENT REPORTING Our Chief Operating Decision Maker (the “CODM”), who is the Chief Executive Officer, utilizes segment operating income (loss) for resource allocation across segments, particularly during the annual budgeting and forecasting processes. The CODM examines variances on a monthly basis to make informed decisions regarding capital and personnel distribution among segments. The tables below present revenue, disaggregated by major source for each of our reportable segments, as well as, significant segment expenses, other segment expenses, operating income (loss), depreciation and amortization, interest expense, income (loss) before income taxes, income tax expense (benefit), total assets, long-lived assets, goodwill, capital expenditures and number of operating locations by segment as follows, (in thousands, except number of operating locations) for the years ended December 31, 2025, 2024, and 2023, respectively: 78 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Year Ended, December 31, 2025 Funeral Cemetery Corporate Total Revenue Services $ 171,118 $ 20,160 $ — $ 191,278 Merchandise 76,649 17,100 — 93,749 Cemetery property — 94,754 — 94,754 Other revenue 21,445 16,214 — 37,659 Total revenue 269,212 148,228 — 417,440 Less: Salaries, benefits, and commission expenses 70,414 42,147 — 112,561 Cost of merchandise 21,160 8,194 — 29,354 Allocated overhead costs (1) 12,658 5,127 — 17,785 Facilities and grounds expenses 11,316 6,204 — 17,520 General and administrative expenses (2) 11,176 3,840 — 15,016 Other segment expenses (3) 57,744 21,155 48,648 127,547 Operating income (loss) $ 84,744 $ 61,561 $ ( 48,648 ) $ 97,657 Interest expense $ 1,318 $ 17 $ 27,030 $ 28,365 Depreciation and amortization $ 11,252 $ 11,303 $ 1,952 $ 24,507 Income (loss) before income taxes $ 85,874 $ 64,413 $ ( 80,024 ) $ 70,263 Income tax expense (benefit) $ 22,924 $ 17,195 $ ( 21,363 ) $ 18,756 Total assets $ 786,968 $ 534,403 $ 24,534 $ 1,345,905 Long-lived assets $ 634,568 $ 228,898 $ 10,816 $ 874,282 Goodwill $ 355,752 $ 72,145 $ — $ 427,897 Capital expenditures $ 3,826 $ 13,600 $ 3,202 $ 20,628 Number of operating locations at year end 155 28 — 183 (1) Allocated overhead costs include: property insurance costs, property tax expenses, and corporate overhead fees allocated to the field, such as information technology, human resources, legal, and finance. (2) General and administrative expenses include: professional services, travel and meals expenses, computer software expenses, and office supplies. (3) The Corporate segment’s other segment expenses primarily include general, administrative, and other expenses, net loss on divestitures and impairment charges and amortization and depreciation expenses. The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures and impairment charges, and amortization and depreciation expenses. 79 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Year Ended December 31, 2024 Funeral Cemetery Corporate Total Revenue Services $ 163,696 $ 19,355 $ — $ 183,051 Merchandise 81,036 17,482 — 98,518 Cemetery property — 88,414 — 88,414 Other revenue 18,382 15,833 — 34,215 Total revenue 263,114 141,084 — 404,198 Less: Salaries, benefits, and commission expenses 69,552 37,958 — 107,510 Cost of merchandise 27,831 8,058 — 35,889 Allocated overhead costs (1) 13,135 4,883 — 18,018 Facilities and grounds expenses 10,561 6,527 — 17,088 General and administrative expenses (2) 10,324 3,616 — 13,940 Other segment expenses (3) 47,454 23,459 59,041 129,954 Operating income (loss) $ 84,257 $ 56,583 $ ( 59,041 ) $ 81,799 Interest expense $ 947 $ 27 $ 31,101 $ 32,075 Depreciation and amortization $ 11,736 $ 10,161 $ 993 $ 22,890 Income (loss) before income taxes $ 83,945 $ 56,933 $ ( 90,798 ) $ 50,080 Income tax expense (benefit) $ 28,709 $ 19,471 $ ( 31,053 ) $ 17,127 Total assets $ 781,006 $ 477,487 $ 21,087 $ 1,279,580 Long-lived assets $ 628,681 $ 207,427 $ 10,232 $ 846,340 Goodwill $ 356,869 $ 57,990 $ — $ 414,859 Capital expenditures $ 5,724 $ 8,814 $ 1,560 $ 16,098 Number of operating locations at year end 162 31 — 193 (1) Allocated overhead costs include: property insurance costs, property tax expenses, and corporate overhead fees allocated to the field, such as information technology, human resources, legal, and finance. (2) General and administrative expenses include: professional services, travel and meals expenses, computer software expenses, and office supplies. (3) The Corporate segment’s other segment expenses primarily include general, administrative, and other expenses, net loss on divestitures and impairment charges and amortization and depreciation expenses. The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures and impairment charges, and amortization and depreciation expenses. 80 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Year Ended December 31, 2023 Funeral Cemetery Corporate Total Revenue Services 163,600 18,566 — 182,166 Merchandise 85,795 16,385 — 102,180 Cemetery property — 67,310 — 67,310 Other revenue 15,381 15,483 — 30,864 Total revenue 264,776 117,744 — 382,520 Less: Salaries, benefits and commission expenses 72,210 33,962 — 106,172 Cost of merchandise 29,387 7,445 — 36,832 Allocated overhead costs (1) 12,767 4,147 — 16,914 Facilities and grounds expenses 10,063 5,578 — 15,641 General and administrative expenses (2) 10,301 3,253 — 13,554 Other segment expenses (3) 48,742 21,436 42,250 112,428 Operating income (loss) 81,306 41,923 ( 42,250 ) 80,979 Interest expense 783 8 35,475 36,266 Depreciation and amortization 12,197 8,008 912 21,117 Income (loss) before income taxes 82,453 42,208 ( 78,232 ) 46,429 Income tax expense (benefit) 23,115 11,833 ( 21,932 ) 13,016 Total assets 802,368 448,018 17,666 1,268,052 Long-lived assets 648,253 209,401 5,732 863,386 Goodwill 364,639 59,004 — 423,643 Capital expenditures 7,483 10,061 495 18,039 Number of operating locations at year end 171 32 — 203 (1) Allocated overhead costs include: property insurance costs, property tax expenses and corporate overhead fees allocated to the field, such as information technology, human resources, legal, and finance. (2) General and administrative expenses include: professional services, travel and meals expenses, computer software expenses, and office supplies. (3) The Corporate segment's other segment expenses primarily include general, administrative, and other expenses, net loss on divestitures, disposals, and impairment charges and amortization and depreciation expenses. The Funeral and Cemetery segment's other segment expenses primarily include transportation costs, other funeral costs, non-payroll related promotional costs, net loss on divestitures and impairment charges, and amortization and depreciation expenses. 81 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 20. SUPPLEMENTARY DATA Balance Sheets The following table presents the detail of certain balance sheet accounts (in thousands): December 31, 2025 December 31, 2024 Prepaid and other current assets: Prepaid expenses $ 3,528 $ 3,987 Federal income tax receivable 1,709 — State income tax receivable 600 — Other current assets 141 136 Total prepaid and other current assets $ 5,978 $ 4,123 Current portion of debt and lease obligations: Acquisition debt $ 607 $ 571 Finance lease obligations 605 533 Operating lease obligations 3,084 2,810 Total current portion of debt and lease obligations $ 4,296 $ 3,914 Accrued and other liabilities: Incentive compensation $ 11,020 $ 12,860 Insurance 2,876 3,584 Unrecognized tax benefit 3,633 3,471 Vacation 2,808 2,803 Interest 2,490 2,288 Salaries and wages 2,853 4,867 Employee meetings and award trips 1,366 1,550 Income tax payable 8 208 Commissions 1,244 1,218 Perpetual care trust payable 357 2,143 Ad valorem taxes 2,378 2,314 Other accrued liabilities 2,889 1,300 Total accrued and other liabilities, including HFS $ 33,922 $ 38,606 Less: Held for sale — ( 146 ) Total accrued and other liabilities $ 33,922 $ 38,460 Other long-term liabilities: Incentive compensation $ 1,496 $ 996 Deferred compensation 358 — Other long-term liabilities — 183 Total other long-term liabilities $ 1,854 $ 1,179 82 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Held for Sale The table below presents the carrying amounts of the assets and liabilities included in held for sale (in thousands): December 31, 2025 December 31, 2024 Accounts receivable, net $ — $ 833 Inventories — 302 Current assets held for sale $ — $ 1,135 Preneed cemetery trust investments $ — $ 4,876 Preneed funeral trust investments — 2,197 Preneed cemetery receivables, net — 1,671 Property, plant, and equipment, net 322 4,898 Cemetery property, net — 3,362 Intangible and other non-current assets, net — 215 Cemetery perpetual care trust investments — 2,234 Non-current assets held for sale $ 322 $ 19,453 Accounts payable $ — $ 94 Accrued and other liabilities — 146 Current liabilities held for sale $ — $ 240 Deferred preneed cemetery revenue $ — $ 3,517 Deferred preneed funeral revenue — 1,018 Deferred preneed cemetery receipts held in trust — 4,876 Deferred preneed funeral receipts held in trust — 2,197 Care trusts’ corpus — 2,234 Long-term liabilities held for sale $ — $ 13,842 Property, plant, and equipment Property, plant, and equipment is comprised of the following (in thousands): December 31, 2025 December 31, 2024 Land $ 92,739 $ 86,609 Buildings and improvements 268,647 265,231 Furniture, equipment, and vehicles 71,832 72,052 Property, plant, and equipment, at cost 433,218 423,892 Less: accumulated depreciation ( 146,086 ) ( 145,990 ) Property, plant, and equipment, net including HFS 287,132 277,902 Less: Held for sale ( 322 ) ( 4,898 ) Property, plant, and equipment, net $ 286,810 $ 273,004 Cemetery property Cemetery property is comprised of the following (in thousands): December 31, 2025 December 31, 2024 Cemetery property, at cost $ 194,549 $ 185,518 Less: accumulated amortization ( 78,904 ) ( 72,580 ) Cemetery property, net including HFS 115,645 112,938 Less: Held for sale — ( 3,362 ) Cemetery property, net $ 115,645 $ 109,576 83 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.