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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 97 added, 184 removed, 130 unchanged (68% of the section changed)

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Funeral Home Operations, which currently accounts for approximately 68% of our total revenue and Cemetery Operations, which currently accounts for approximately 32% of our total revenue.

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

At March 31, 2026, 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.

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COMPANY DEVELOPMENTS

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

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

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

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

Macroeconomic, Inflationary, and Borrowing Costs

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

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

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

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

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

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

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

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

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

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

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

More broadly, the U.S.

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

ATM Offering Program

On May 6, 2026, the Company announced it has entered into an Equity Distribution Agreement with Oppenheimer & Co.

and Raymond James & Associates, Inc., serving as sales agents (together, the “Sales Agents”), with respect to its at-the-market offering program under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $100.0 million through the Sales Agents.

Macroeconomic and Inflationary Factors

During 2026, consumer discretionary spending has reflected mixed trends, with higher-income consumers appearing more resilient and moderate-income consumers exhibiting more cautious behavior, which could result in an overall reduction in consumer spending and demand for products and services.

These trends are also influenced by moderating but still elevated inflation.

Although certain indicators suggest that inflation has moderated, we continue to monitor potential impacts due to ongoing geopolitical tensions and evolving tariff and trade policies.

These pressures, along with volatility in energy prices, interest rates, and ongoing tariff developments, may result in certain costs remaining elevated and contribute to broader economic uncertainty.

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

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

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

To date, these conditions have not materially impacted our business.

LIQUIDITY AND CAPITAL RESOURCES

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

For additional details related to our debt and lease obligations, including our Credit Facility, Acquisition Debt and Senior Notes, refer to Notes 10 and 11 to our unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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

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

For additional details related to our debt and lease obligations, including our Credit Facility, Acquisition Debt and Senior Notes, refer to Notes 10 to our unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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

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

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

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

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

We believe that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our

anticipated working capital requirements, capital expenditures, scheduled debt payments, commitments, potential growth acquisitions, and dividends for the next 12 months, as well as our long-term financial obligations.

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

Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected.

For additional information regarding known material factors that could cause cash flow or access to and cost of finance sources to differ from our expectations, please read Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

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

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

We began 2026 with $1.7 million in cash and ended the year with $2.9 million in cash.

As of March 31, 2026, we had borrowings of $120.5 million outstanding on our Credit Facility compared to $126.7 million as of December 31, 2025.

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

Nine months ended September 30,

Three months ended March 31,

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

Net cash provided by operating activities 14,898 13,792

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

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

Proceeds from insurance claims — 403

Capital expenditures (3,896) (3,163)

Proceeds from divestitures and sale of other assets 16 18,660

Net cash (used in) provided by investing activities (3,880) 15,497

Net payments on our credit facility, acquisition debt, and finance lease obligations (6,314) (17,148)

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

Net payments on employee equity plans (1,712) (6,941)

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Operating Activities

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

For the three months ended March 31, 2026, cash provided by operating activities was $14.9 million compared to $13.8 million for the three months ended March 31, 2025.

Investing Activities

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

Our investing activities resulted in net cash outflows of $3.9 million f or the three months ended March 31, 2026, compared to net cash inflows of $15.5 million for the three months ended March 31, 2025, a decrease of $19.4 million.

Acquisition and Divestiture Activity

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

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

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

Additionally, we sold real property for $4.1 million.

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

During the three months ended March 31, 2025, we sold two funeral homes and three cemeteries for an aggregate of $15.8 million.

Additionally, we sold real property for $2.9 million.

Insurance Proceeds

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

Capital Expenditures

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

For the three months ended March 31, 2026, our capital expenditures (comprised of growth and maintenance spend) totaled $3.9 million compared to $3.2 million for the year ended March 31, 2025, an increase of $0.7 million.

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

Nine months ended September 30,

Three months ended March 31,

$ 1,696 $ 1,753

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Financing Activities

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

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

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

Our financing activities resulted in a net cash outflow of $9.8 million for the three months ended March 31, 2026, compared to a net cash outflow of $25.8 million for the three months ended March 31, 2025, a decrease of $16.0 million.

During the three months ended March 31, 2026, we had net payments on our Credit Facility, acquisition debt, and finance leases of $6.3 million, net payments on our employee equity plans of $1.7 million, and paid dividends of $1.8 million.

During the three months ended March 31, 2025, we had net payments on our Credit Facility, acquisition debt, and finance leases of $17.1 million, net payments on our employee equity plans of $6.9 million, and paid dividends of $1.7 million.

FINANCIAL HIGHLIGHTS

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

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

2025 2024 2025 2024

Three months ended March 31,

2026 2025 Inc/(Dec) % Change

Total revenue $ 106,120 $ 107,069 $ (949) (0.9) %

Funeral contracts 11,218 11,319 (101) (0.9) %

Average revenue per funeral contract excluding preneed interest $ 5,651 $ 5,540 $ 5,665 $ 5,557

Average revenue per funeral contract $ 6,051 $ 5,869 $ 182 3.1 %

Preneed insurance contracts sold 2,927 2,711 216 8.0 %

Preneed interment rights (property) sold 3,153 3,236 (83) (2.6) %

Average price per preneed interment right sold $ 6,257 $ 5,360 $ 5,863 $ 5,408

Average price per preneed interment right (property) sold $ 6,017 $ 5,419 $ 598 11.0 %

Preneed sales production (M&S and property) $ 23,900 $ 21,731 $ 2,169 10.0 %

Gross profit $ 38,640 $ 37,842 $ 798 2.1 %

Net income $ 13,492 $ 20,926 $ (7,434) (35.5) %

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

We experienced a 5.5% decrease in funeral contract volume;

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

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

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

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

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

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

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

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

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

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

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

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

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

Revenue for the three months ended March 31, 2026 decreased $0.9 million compared to the three months ended March 31, 2025, primarily due to a decrease in divested revenue that was partially offset by growth in acquisition revenue.

In our Funeral segment, we experienced a 0.9% decrease in funeral contract volume;

partially offset by a 3.1% increase in the average revenue per funeral contract, and an 8.0% increase in preneed insurance contracts sold.

In our Cemetery segment, we experienced a 10.0% increase in preneed sales production (M&S and property) and an 11.0% increase in the average price per interment right (property) sold;

partially offset by a 2.6% decrease in the number of preneed interment rights (property) sold.

Gross profit for the three months ended March 31, 2026 increased $0.8 million compared to the three months ended March 31, 2025, primarily due to effective cost management.

Net income for the three months ended March 31, 2026 decreased $7.4 million compared to the three months ended March 31, 2025, primarily due to a prior year net gain on divestitures, impairment charges, and sale of real property of $7.8 million and a $1.0 million increase in general and administrative expenses;

partially offset by a $0.8 million increase in gross profit contribution from our businesses, a $0.4 million decrease in interest expense, and a $0.4 million decrease in income tax expenses.

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

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REPORTING AND NON-GAAP FINANCIAL MEASURES

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

We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended March 31, 2026, dated May 6, 2026, and discussed in the corresponding earnings conference call.

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

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

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

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

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

2025 2024 2025 2024

Three months ended March 31,

Gross profit $ 38,640 $ 37,842

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

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

2025 2024 2025 2024

Three months ended March 31,

Funeral Home $ 31,598 $ 33,179

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Adjusted operating profit margin (1)

45.1% 44.6% 44.6% 45.2%

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

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RESULTS OF OPERATIONS

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

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

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

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

The following is a discussion of our results of operations for the three months ended March 31, 2026 and 2025.

The term “comparable” in the funeral home and cemetery segments refers to all funeral homes and cemeteries that we owned for the entire period beginning January 1, 2025 and ending March 31, 2026.

The term “acquired” refers to the funeral homes and cemeteries acquired as discussed in Note 12 to our unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The term “divested” refers to the funeral homes and cemeteries sold and/or merged as discussed in Note 11 to our unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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

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

Three months ended September 30,

Operating $ 55,853 $ 56,606

Three months ended March 31,

2026 2025 Inc/(Dec)

$ 63,276 $ 66,054 $ (2,778) (4.2) %

2,726 — 2,726 100.0 %

Divested 3 3,451 (3,448) (99.9) %

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Adjusted operating profit

Operating $ 20,558 $ 21,590

$ 26,220 $ 28,701 $ (2,481) (8.6) %

823 — 823 100.0 %

Divested (10) 959 (969) (101.0) %

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Total $ 31,598 $ 33,179 $ (1,581) (4.8) %

The following measures reflect significant metrics from continuing operations over the comparative period:

The following measures reflect significant metrics from comparable operations over the comparative period:

Contract volume 10,663 11,319 (656) (5.8) %

Average revenue per contract, excluding preneed funeral trust earnings

$ 5,934 $ 5,836 $ 98 1.7 %

Average revenue per contract, including preneed funeral trust earnings $ 6,099 $ 6,002 $ 263 4.5 %

Cremation rate 60.5% 60.1% 0.4% 0.7%

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

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

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

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

Funeral home comparable revenue decreased $2.8 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The decline in comparable revenue is primarily driven by a 5.8% decrease in contract volume.

Funeral home comparable adjusted operating profit for the three months ended March 31, 2026 decreased $2.5 million when compared to the same period in 2025, primarily due to the increase in operating expense relative to revenue.

The comparable operating profit margin decreased 210 basis points to 41.4%.

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

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

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

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

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

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

Nine months ended September 30,

Operating $ 179,962 $ 176,650

Divested 6,320 9,416

Ancillary 2,794 3,375

Other 13,568 9,687

Total $ 202,644 $ 199,128

Adjusted operating profit

Operating $ 71,021 $ 70,953

Divested 1,494 2,199

Ancillary 394 522

Other 11,428 8,292

Total $ 84,337 $ 81,966

The following measures reflect significant metrics from continuing operations over the comparative period:

Contract volume 31,264 31,039

Average revenue per contract, excluding preneed funeral trust earnings $ 5,756 $ 5,691

Average revenue per contract, including preneed funeral trust earnings $ 5,922 $ 5,862

Cremation rate 60.7% 59.5%

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

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

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

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

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

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

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

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

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

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

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

Operating expenses as a percentage of revenue increased 2.0%, with the largest increases attributable to salaries and benefits expenses, facilities and grounds expenses, and general and administrative expense.

Ancillary revenue decreased $0.2 million, while ancillary adjusted operating profit increased $2.0 thousand for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The decrease in ancillary revenue is primarily driven by a decline in our online cremation business.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $0.8 million and $1.0 million, respectively, for the three months ended March 31, 2026, compared to the same period in 2025.

This increase is primarily driven by growth of $0.5 million in general agency commission income for the first quarter of 2026 compared to the same period in 2025, reflecting continued growth in preneed funeral sales through our strategic partnership with a national insurance provider.

Cemetery Segment

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

Three months ended September 30,

Operating $ 35,586 $ 31,604

Divested 46 1,384

Other 4,332 3,997

Total $ 39,964 $ 36,985

Adjusted operating profit

Operating $ 17,242 $ 15,490

Divested 13 390

Other 4,156 3,966

Total $ 21,411 $ 19,846

The following measures reflect the significant metrics from continuing operations over this comparative period:

Preneed revenue as a percentage of operating revenue 73.1% 71.7%

Preneed revenue (in thousands) $ 26,018 $ 22,662

Atneed revenue (in thousands) $ 9,568 $ 8,942

Number of preneed interment rights sold 3,567 3,410

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

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

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

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

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

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

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

Nine months ended September 30,

Operating $ 96,790 $ 91,481

Three months ended March 31,

2026 2025 Inc/(Dec)

$ 29,574 $ 27,895 $ 1,679 6.0%

1,235 — 1,235 100.0 %

Divested — 1,196 (1,196) (100.0)%

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Adjusted operating profit

Operating $ 43,608 $ 43,777

$ 12,829 $ 11,390 $ 1,439 12.6%

492 — 492 100.0 %

Divested (1) 360 (361) (100.3)%

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Total $ 16,836 $ 15,048 $ 1,788 11.9%

The following measures reflect the significant metrics from continuing operations over this comparative period:

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

Preneed revenue as a percentage of operating revenue 69.2% 67.8% 1.4% 2.1%

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Average price per interment right sold $ 6,346 $ 5,504 $ 842 15.3%

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

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

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

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

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

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

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

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

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

Cemetery comparable revenue increased $1.7 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, as we experienced a 15.3% increase in the average price per interment right sold;

partially offset by a 7.1% decrease in the number of preneed interment rights (property) sold.

Cemetery atneed revenue, which represents approximately 30.8% of our total operating revenue, increased $0.1 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to a 9.6% increase in the average price per atneed contract.

Cemetery comparable adjusted operating profit increased $1.4 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by higher property sales and increased deliveries of merchandise and service items both to preneed and atneed customers, while costs remained relatively stable.

As a result, comparable operating profit margin increased 260 basis points to 43.4%.

Other revenue and other adjusted operating profit increased $0.2 million each, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to prior year activity in our perpetual care trust fund that did not recur in 2026.

Cemetery property amortization.

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

Cemetery property amortization totaled $2.0 million for the three months ended March 31, 2026 and 2025, respectively, primarily driven by the increase in property sold across our cemetery portfolio.

Field depreciation.

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

Depreciation expense for our field businesses totaled $3.4 million for the three months ended March 31, 2026, an increase of $0.1 million compared to the three months ended March 31, 2025, primarily driven by our business decision to lease vehicles rather than purchase them.

Regional and unallocated funeral and cemetery costs.

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

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

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

Regional and unallocated funeral and cemetery costs totaled $4.4 million for the three months ended March 31, 2026, a decrease of $0.8 million compared to the same period in 2025, primarily driven by a decrease in leadership and development expenses.

Other Financial Statement Items

General, administrative, and other.

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

General, administrative, and other.

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

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

Net loss on divestitures and impairment charges.

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

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

2025 2024 2025 2024

General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $13.1 million for the three months ended March 31, 2026, an increase of $1.0 million compared to the same period in 2025, primarily driven by a $0.5 million increase in salaries and wages, a $0.3 million increase in depreciation and amortization, primarily driven by amortization of costs related to the development of our digital transformation project, and a $0.2 million increase in facilities and grounds, primarily as a result of an increase in property taxes.

Net (gain) loss on divestitures and impairment charges.

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

Three months ended March 31,

Impairment of goodwill, intangibles, and PPE $ 236 $ 117

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Total $ 278 $ (5,770)

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

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

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

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

During the three months ended March 31, 2025, we sold two funeral homes and three cemeteries for a gain of $5.9 million.

We also recognized an impairment of $0.1 million on land held for sale during the three months ended March 31, 2025.

Interest expense .

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

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

2025 2024 2025 2024

Three months ended March 31,

Senior Notes $ 4,437 $ 4,427

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Acquisition debt 150 94

Other — 55 8 80

Total $ 6,884 $ 7,298

Net gain on property damage, net of insurance claims.

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

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

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

Income taxes.

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

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

During the three months ended March 31, 2025, we recorded a $2.0 million gain on the sale of other real property not used in business operations.

We did not record any gain or loss activity during the three months ended March 31, 2026.

Income taxes.

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

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

Income tax expense including discrete items totaled $4.9 million for the three months ended March 31, 2026, a decrease of $0.4 million compared to the three months ended March 31, 2025.

The current quarter's lower effective tax rate before discrete items, was partially offset by higher excess tax benefits recognized on the settlement of employee share-based awards in the prior year first quarter.

Our effective tax rate before discrete items was 28.1% and 31.2% for the three months ended March 31, 2026 and 2025, respectively, primarily related to a decrease in non-deductible officer compensation.

CRITICAL ACCOUNTING ESTIMATES

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Our critical accounting policies are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data” in Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2025.

We have identified Goodwill as an accounting policy that requires significant judgments, assumptions and estimates and has a significant impact on our financial condition and results of operations.

This policy is considered critical because it 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.

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

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis