What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 167 added, 67 removed, 160 unchanged (59% of the section changed)

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Funeral Home Operations, which currently accounts for approximately 66% of our total revenue and Cemetery Operations, which currently accounts for approximately 34% of our total revenue.

At March 31, 2026, we operated 155 funeral homes in 24 states and 28 cemeteries in 9 states.

At June 30, 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

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.

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

and Raymond James & Associates, Inc., as sales agents (together, the “Sales Agents”), with respect to an at-the-market equity offering program (the “ATM 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 (“Shares”) through or to the Sales Agents, as sales agents and/or principals.

To date, we have not sold any Shares under our ATM Program.

Board of Directors

On May 12, 2026, upon the recommendation of the Corporate Governance Committee of the Company, the Board of Directors (the “Board”) unanimously elected Douglas Meehan to serve as the Chair of the Compensation Committee, effective on that date.

Meehan has been a director of the Company since 2018.

He succeeds Somer Webb, who continues to serve on the Board and as a member of the Audit, Compensation, and Corporate Governance Committees.

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.

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

We continue to monitor the macroeconomic, geopolitical, and certain policy factors and their potential impact, if any, on our business.

During the first half of 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 continue to be influenced by moderating, but still elevated, inflation, evolving tariff and trade policies, geopolitical developments, and volatility in energy prices.

Although certain indicators suggest that inflation has moderated, these factors continue to create uncertainty regarding future cost trends and broader economic conditions.

Inflation and other macroeconomic conditions may negatively impact consumer discretionary spending, including the amount consumers are able to spend on our services.

To date, these conditions have not materially impacted our business, and our industry has historically demonstrated resilience during similar adverse economic and market environments.

LIQUIDITY AND CAPITAL RESOURCES

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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.

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.

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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”.

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.

We began 2026 with $1.7 million in cash and ended the quarter with $2.6 million in cash.

As of June 30, 2026, we had borrowings of $124.0 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):

Three months ended March 31,

Six months ended June 30,

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

Net cash provided by operating activities 22,450 21,877

Acquisitions of businesses (4,500) —

Capital expenditures (9,223) (6,009)

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Operating Activities

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.

For the six months ended June 30, 2026, cash provided by operating activities was $22.5 million compared to $21.9 million for the six months ended June 30, 2025.

The growth was primarily driven by improvements in working capital.

Investing Activities

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.

Our investing activities resulted in net cash outflows of $13.4 million f or the six months ended June 30, 2026, compared to net cash inflows of $12.8 million for the six months ended June 30, 2025, a decrease of $26.2 million, primarily as a result of the activity described below.

Acquisition and Divestiture Activity

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

During the six months ended June 30, 2026, we acquired one funeral home for $4.5 million.

During the six months ended June 30, 2026, we sold one funeral home for an aggregate of $0.3 million.

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

Additionally, we sold real property for $3.0 million.

Capital Expenditures

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.

For the six months ended June 30, 2026, our capital expenditures (comprised of growth and maintenance spend) totaled $9.2 million compared to $6.0 million for the six months ended June 30, 2025, an increase of $3.2 million.

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

Three months ended March 31,

Six months ended June 30,

$ 4,882 $ 3,469

Total capital expenditures $ 9,223 $ 6,009

$ 3,896 $ 3,163

Financing Activities

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.

Our financing activities resulted in a net cash outflow of $8.2 million for the six months ended June 30, 2026, compared to a net cash outflow of $34.5 million for the six months ended June 30, 2025, a decrease of $26.3 million.

During the six months ended June 30, 2026, we had net payments on our Credit Facility, acquisition debt, and finance leases of $3.0 million, net payments on our employee equity plans of $1.7 million, and paid dividends of $3.6 million.

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

FINANCIAL HIGHLIGHTS

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

Three months ended March 31,

Three months ended June 30,

2026 2025 Inc/(Dec) % Change

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Net income $ 12,272 $ 11,739 $ 533 4.5 %

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;

Revenue for the three months ended June 30, 2026 increased $0.8 million, compared to the three months ended June 30, 2025, primarily due to an increase in acquisition and financial revenue that was partially offset by a decline in divested and comparable revenue.

In our Funeral segment, we experienced a 4.7% increase in the average revenue per funeral contract, and a 21.1% increase in preneed insurance contracts sold;

partially offset by a 4.0% decrease in funeral contract volume.

In our Cemetery segment, we experienced a 5.0% increase in preneed sales production and a 17.3% increase in the average price per interment right (property) sold;

partially offset by a 14.0% 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.

Gross profit for the three months ended June 30, 2026 decreased $0.9 million compared to the three months ended June 30, 2025, primarily due to an increase in depreciation and amortization.

Net income for the three months ended June 30, 2026 increased $0.5 million, compared to the three months ended June 30, 2025, primarily due to a $0.9 million decrease in general and administrative expenses, a $0.4 million decrease in interest expense, and a $0.2 million decrease in income tax expense;

partially offset by a $0.9 million decrease in gross profit contribution from our businesses.

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

Six months ended June 30,

2026 2025 Inc/(Dec) % Change

Total revenue $ 209,069 $ 209,216 $ (147) (0.1) %

Funeral contracts 21,386 22,761 (1,375) (6.0) %

Average revenue per funeral contract $ 6,049 $ 5,825 $ 224 3.8 %

Preneed insurance contracts sold 6,575 5,724 851 14.9 %

Preneed interment rights (property) sold 6,607 7,252 (645) (8.9) %

Average price per preneed interment right (property) sold $ 6,470 $ 5,669 $ 801 14.1 %

Preneed sales production (M&S and property) 45,769 42,978 2,791 6.5 %

Gross profit $ 73,684 $ 73,777 $ (93) (0.1) %

Net income $ 25,764 $ 32,665 $ (6,901) (21.1) %

Revenue for the six months ended June 30, 2026 decreased $0.1 million compared to the six months ended June 30, 2025, primarily due to a decrease in divested and comparable revenue offset by growth in acquisition and financial revenue.

In our Funeral segment we experienced a 6.0% decrease in funeral contract volume which was partially offset by a 3.8% increase in the average revenue per funeral contract, and a 14.9% increase in preneed insurance contracts sold.

In our Cemetery segment, we experienced an 8.9% decrease in the number of preneed interment rights (property) sold partially offset a 14.1% increase in the average price per interment right sold.

Gross profit for the six months ended June 30, 2026 decreased $0.1 million, compared to the six months ended June 30, 2025, primarily due to the decline in revenue described above partially offset by effective cost management.

Net income for the six months ended June 30, 2026 decreased $6.9 million, compared to the six months ended June 30, 2025, primarily due to a prior year net gain on divestitures, impairment charges, and sale of real property of $7.7 million;

partially offset by a $0.8 million decrease in interest expense and a $0.7 million decrease in income tax expense.

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 March 31, 2026, dated May 6, 2026, 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 June 30, 2026, dated August 5, 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.

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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 March 31,

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

2026 2025 2026 2025

Gross profit $ 35,044 $ 35,935 $ 73,684 $ 73,777

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

Three months ended March 31,

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

2026 2025 2026 2025

Funeral Home 27,180 26,250 $ 58,778 $ 59,429

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Adjusted operating profit margin (1)

43.9% 43.8% 44.8% 44.4%

(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 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 following is a discussion of our results of operations for the three and six months ended June 30, 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 June 30, 2026.

The term “acquired” refers to the funeral homes and cemeteries acquired 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.

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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 March 31,

Three months ended June 30,

2026 2025 Inc/(Dec)

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Cremation rate 60.6% 61.2% (0.6)% (1.0)%

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 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.

Funeral home comparable revenue decreased $1.4 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decline in comparable revenue is primarily driven by a 3.5% decrease in comparable contract volume, which is partially offset by a 1.1% increase in the average revenue per contract excluding preneed funeral trust earnings.

Average revenue per contract, including trust earnings, increased by 3.7%, primarily reflecting higher preneed interest recognized on fulfilled funeral and service and merchandise contracts.

Funeral home comparable adjusted operating profit for the three months ended June 30, 2026 decreased $1.3 million when compared to the same period in 2025.

The decrease was primarily driven by an increase in operating expenses as a percentage of revenue, resulting in a 130 basis points decline in comparable adjusted operating profit margin to 36.5%.

The increase in operating expenses was primarily attributable to higher salaries and benefits, together with higher general and administrative expenses, and promotional expenses.

Ancillary revenue decreased $0.1 million, while ancillary adjusted operating profit increased $0.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decrease in ancillary revenue is primarily attributable to lower activity in our online cremation businesses.

Despite the decline in revenue, ancillary adjusted operating profit improved due to lower operating expenses.

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 $1.8 million each, for the three months ended June 30, 2026, compared to the same period in 2025.

This increase was primarily driven by higher funeral trust income and growth in general agency commission income earned on the sale of preneed insurance policies.

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

Six months ended June 30,

2026 2025 Inc/(Dec)

Comparable $ 118,866 $ 122,979 $ (4,113) (3.3) %

Acquired 5,368 — 5,368 100.0 %

Divested 97 6,098 (6,001) (98.4) %

Ancillary 1,689 1,935 (246) (12.7) %

Other 11,386 8,854 2,532 28.6 %

Total $ 137,406 $ 139,866 $ (2,460) (1.8) %

Adjusted operating profit

Comparable $ 46,458 $ 50,259 $ (3,801) (7.6) %

Acquired 1,557 — 1,557 100.0 %

Divested 72 1,444 (1,372) (95.0) %

Ancillary 322 220 102 46.4 %

Other 10,369 7,506 2,863 38.1 %

Total $ 58,778 $ 59,429 $ (651) (1.1) %

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

Contract volume 20,289 21,283 (994) (4.7) %

Average revenue per contract, excluding preneed funeral trust earnings $ 5,859 $ 5,778 $ 81 1.4 %

Average revenue per contract, including preneed funeral trust earnings $ 6,094 $ 5,940 $ 154 2.6 %

Cremation rate 60.5% 60.6% (0.1)% (0.2) %

Funeral home comparable revenue decreased $4.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The decline in comparable revenue was primarily driven by a 4.7% decrease in comparable contract volume as well as a 1.4% increase in the average revenue per contract excluding preneed interest.

The decline in contract volume primarily reflects a more normalized mortality environment compared to recent years, contributing to lower funeral case volumes across our comparable funeral homes.

Funeral home comparable adjusted operating profit for the six months ended June 30, 2026, decreased $3.8 million when compared to the same period in 2025.

The decrease was primarily driven by an increase in operating expenses as a percentage of revenue, resulting in 180 basis points decline in comparable adjusted operating profit margin to 39.1%.

The increase in operating expenses primarily reflects higher salaries and benefits, general and administrative expenses, promotional expenses, and facilities and grounds expenses.

Ancillary revenue decreased $0.2 million, while ancillary adjusted operating profit increased $0.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

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

Despite the decline in revenue, ancillary adjusted operating profit increased due to lower operating expenses.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $2.5 million and $2.9 million, respectively, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

This increase was primarily driven by higher funeral trust income and growth in general agency commission income earned on the sale of preneed insurance policies.

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 March 31,

Three months ended June 30,

2026 2025 Inc/(Dec)

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Average price per interment right sold $ 6,950 $ 5,894 $ 1,056 17.9%

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.

Cemetery comparable revenue decreased $0.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decrease was primarily driven by a 17.0% decrease in the number of preneed interment rights (property) sold, which was partially offset by a 17.9% increase in the average price per interment right sold.

Cemetery comparable atneed revenue, which represents approximately 27.9% of our total operating revenue, decreased $0.6 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to a 6.1% decline in atneed recognized merchandise and service revenue and a 6.9% decrease in recognized atneed property revenue.

Cemetery comparable adjusted operating profit decreased $0.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decrease was primarily driven by a 0.4% increase in operating expense with the largest contributor in salaries and benefits, which increased 1.6% relative to recognized revenue.

As a result, comparable operating profit margin decreased 50 basis points to 44.5%.

Other revenue and other adjusted operating profit decreased $0.6 million and $0.7 million, respectively for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decline is primarily attributable to lower perpetual care trust fund earnings, while the greater decrease in adjusted operating profit reflects the timing of certain operating expenses recognized between periods.

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

Six months ended June 30,

2026 2025 Inc/(Dec)

Comparable $ 62,741 $ 61,204 $ 1,537 2.5 %

Acquired 2,497 — 2,497 100.0 %

Divested (1) 1,338 (1,339) (100.1) %

Other 6,426 6,808 (382) (5.6) %

Total $ 71,663 $ 69,350 $ 2,313 3.3 %

Adjusted operating profit (loss)

Comparable $ 27,598 $ 26,367 $ 1,231 4.7 %

Acquired 1,005 — 1,005 100.0 %

Divested (4) 420 (424) (101.0) %

Other 6,239 6,735 (496) (7.4) %

Total $ 34,838 $ 33,522 $ 1,316 3.9 %

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

Preneed revenue as a percentage of operating revenue 70.8% 69.2% 1.6% 2.3 %

Preneed revenue (in thousands) $ 44,393 $ 42,366 $ 2,027 4.8 %

Atneed revenue (in thousands) $ 18,348 $ 18,838 $ (490) (2.6) %

Number of preneed interment rights sold 6,187 7,088 (901) (12.7) %

Average price per interment right sold $ 6,670 $ 5,724 $ 946 16.5 %

Cemetery comparable revenue increased $1.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase was primarily driven by a 16.5% increase in the average price per preneed interment right sold, partially offset by a 12.7% decline in the number of preneed interment rights sold.

Cemetery atneed revenue, which represents approximately 29.2% of our total operating revenue, decreased $0.5 million for the six months ended June 30, 2026, compared to the same period of the prior year, primarily due to a 6.8% decline in atneed property sold across our cemetery portfolio.

Cemetery comparable adjusted operating profit increased $1.2 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase was driven by a 0.9% decrease in operating expenses as a percentage of operating revenue, primarily reflecting lower promotional expenses and facilities and grounds insurance costs as a percentage of revenue.

As a result, comparable operating profit margin increased 90 basis points to 44.0%.

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.

Other revenue and other adjusted operating profit, which consist of preneed cemetery trust revenue and preneed cemetery finance charges, decreased $0.4 million and $0.5 million, respectively, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Cemetery property amortization.

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.

Cemetery property amortization totaled $3.1 million and $5.1 million for the three and six months ended June 30, 2026, respectively, an increase of $0.9 million and $1.1 million compared to the three and six months ended June 30, 2025, respectively.

The increases were primarily driven by a higher mix of mausoleum property sales, which carry significantly higher associated property costs than traditional cemetery property sales.

Field depreciation.

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.

Depreciation expense for our field businesses totaled $3.4 million and $6.8 million for the three and six months ended June 30, 2026, respectively, an increase of $0.1 million and $0.2 million compared to the three and six months ended June 30, 2025, respectively.

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 $4.4 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.

Regional and unallocated funeral and cemetery costs totaled $3.7 million and $3.3 million, respectively, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, an increase of $0.4 million, primarily driven by an increase in salaries and benefits.

For the six months ended June 30, 2026, Regional and unallocated funeral and cemetery costs were $8.0 million and $8.5 million, respectively, compared to the six months ended June 30, 2025, a decrease of $0.5 million, primarily driven by a decrease in leadership and development expenses offset by increases in salaries and benefits and transportation costs.

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 $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.

General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $11.0 million for the three months ended June 30, 2026, a decrease of $0.9 million compared to the same period in 2025, primarily driven by lower incentive compensation coupled with an increased focus on cost management across all aspects of our business.

For the six months ended June 30, 2026, general, administrative, and other expenses totaled $24.1 million, an increase of $0.1 million compared to the six months ended June 30, 2025.

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,

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

2026 2025 2026 2025

Impairment of goodwill, intangibles, and PPE $ 100 $ — $ 336 $ 117

Net loss (gain) on divestitures 51 (5,937)

Net (gain) loss on divestitures (4) (1) 47 (5,938)

Net (gain) loss on disposals of fixed assets (6) — (15) 50

Total $ 90 $ (1) $ 368 $ (5,771)

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.

During the three months ended June 30, 2026, we sold one funeral home for a loss of $47.0 thousand.

We also recognized an impairment of $0.1 million and $0.3 million during the three and six months ended June 30, 2026, respectively.

During the six months ended June 30, 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 six months ended June 30, 2025.

Interest expense .

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

Three months ended March 31,

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

2026 2025 2026 2025

Senior Notes $ 4,437 $ 4,429 $ 8,874 $ 8,857

2 unchanged sentences

Acquisition debt 112 93 262 187

Other 2 7 2 8

Total $ 6,683 $ 7,034 $ 13,567 $ 14,332

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.

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

We did not record any gain or loss activity during the six months ended June 30, 2026.

Income taxes.

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.

Income tax expense including discrete items totaled $4.9 million for the three months ended June 30, 2026, a decrease of $0.2 million compared to the three months ended June 30, 2025.

Our effective tax was 28.5% and 30.4% for the three months ended June 30, 2026, respectively, primarily related to a decrease in non-deductible officer compensation.

Income tax expense including discrete items totaled $9.8 million for the six months ended June 30, 2026, a decrease of $0.7 million compared to the six months ended June 30, 2025.

Our effective tax rate was 27.5% and 24.2% for the six months ended June 30, 2026 and 2025, respectively, primarily related to a decrease in excess tax benefits recognized on the settlement of employee share-based awards and non-deductible officer compensation.

CRITICAL ACCOUNTING ESTIMATES

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What changed 10-Q

Item 2. Management’s Discussion and Analysis