Carriage Services, Inc. · NYSE:CSV
Carriage Services — Investor Presentation (March 2013)
25 slides from Carriage Services's investor presentation, Mar 19, 2013
Slide 1: Carriage Services Investor Presentation 2013
Carriage Services Investor Presentation 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements made herein or elsewhere by, or on behalf of, the Company that are not historical facts are intended to be forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Slide 3: Who is Carriage?
Who is Carriage? • A national funeral home and cemetery operating company • Founded in 1991 by Chairman and CEO Mel Payne • Carriage operates 167 funeral homes and 33 cemeteries in 26 states • Funeral home and cemetery field operations drives success under a decentralized operating framework • Carri
Slide 4: Map of Operations
Map of Operations Focus on 10 – 15 geographically diverse markets with attractive demographic profiles
Slide 5: Leveraged Investment Returns
Leveraged Investment Returns • Operating Leverage – Relatively fixed regional and corporate overhead allows for modest increases in Same Store Sales to a have greater impact on Consolidated EBITDA – A majority of Acquired Field EBITDA (Gross Profit excluding Depreciation & Unallocated Expenses) fall
Slide 6: Capital Structure
Capital Structure • Carriage Services, Inc. has raised $235 million through Senior Secured Credit Facilities due 2017 – $105 million 5-year Revolver with a $40 million accordion – $130 million 5-year Term Loan A • Proceeds from the transaction were used to refinance Carriage’s Revolver and redeem it
Slide 7: Our Growth Strategy
Our Growth Strategy • Adopt a pro-growth business model within an industry that is characterized by its low growth • Modest growth in sales of our base businesses • Make targeted and strategic acquisitions to accelerate growth while maintaining financial discipline 7
Slide 8: Industry Key Statistics
Industry Key Statistics • Industry wide funeral home revenue of $13.4 billion representing 1.5% CAGR since 2010 • Industry wide cemetery revenue of $4 billion representing -3.7% CAGR since 2010 • Highly fragmented industry with a majority of the more than 24,000 funeral homes represented by small lo
Slide 9: Growth in Highly Fragmented Market
Growth in Highly Fragmented Market Market share concentration in the industry is low, with the top four consolidators (Carriage, SCI, Stewart & StoneMor) accounting for an estimated 13.7% of total industry revenue in 2011 which has grown from 11.8% in 2006 9 2006 2011 Consolidators Independent 11.80
Slide 10: Numbers of Deaths in the US (% Change)
(1.50%) 1.18% 1.99%2.04% (2.04%) 0.48% 1.08% 2.10% 2.31% 2.35%2.25% 0.25% 0.67% 1.75% (0.94%) (0.50%) (0.11%) (0.89%) (0.01%) 0.15% 2.35% 0.04% 1.47%1.45% 0.46% 4.27% 0.28% 0.98% (0.09%) (0.81%) 0.85%0.91% 1.00% (0.16%) (3.00%) (2.00%) (1.00%) 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 19 81 19 82 19 83 19
Slide 11: Acquisition Strategy
Acquisition Strategy • Our goal is to acquire $15-$16 million new annual revenue through acquisitions – Target only the best performing businesses with the strongest heritage in their local markets – Conduct a comprehensive analysis of a candidate’s financial profile and market demographics – Focus
Slide 12: Acquisition Targeting Process
Acquisition Targeting Process 12 Source Acquisitions Through Three Primary Channels: Utilize Our Proprietary Strategic Acquisition Model (SAM) to Prequalify a Potential Target's Merits By Prequalifying with the SAM, Financial and Human Resources can be Directed Only to Those Targets that will Create
Slide 13: Pricing Discipline
Pricing Discipline • Value of business under Normalized Earnings vs. Value as a CSV business • Discipline of staying within cost of capital to ensure value addition 2-Stage Valuation Model Forecasts Forecast call volume and average revenue utilizing both regressions and the CAGR on historical data N
Slide 14: Business Integration Process
Business Integration Process 14 Integration Committee: Key Members of Carriage's Operations Group Meet Prior to Acquisition to Identify Challenges and Execute Procedures to Integrate the New Business The Integration Process Begins Immediately After the Seller and Carriage Sign a Letter of Intent (LO
Slide 15: Financial Overview
Financial Overview 15
Slide 16: Hypothetical acquisition model assumptions
16 The following slides are solely intended to demonstrate the possible impact on our financial results of the successful implementation of our growth strategy by the hypothetical acquisition of businesses aggregating $40 million in assets per year for each of the next five years (including 2013). T
Slide 17: Carriage Services Inc. financial model 2008A-2017E
17 Carriage Services Inc. ($'s in 000's) 2008A 2009A 2010A 2011A 3 Yr CAGR 2012A 2013E 2014E 2015E 2016E 2017E 5 Yr CAGR Same Store Funeral $124,149 $122,896 $121,892 $120,766 $120,576 $121,781 $122,183 $122,586 $122,991 $123,397 0.5% Funeral Acquisition Revenue - 310 5,705 14,210 25,802 44,190 60,1
Slide 18: GAAP Reconciliation
18 GAAP Reconciliation 2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E Consol EBITDA from Continuing Ops $36,763 $41,706 $42,321 $40,781 $50,645 $59,357 $65,889 $72,673 $78,972 $85,295 Special Items Affecting EBITDA Withdrawable Trust Income(loss) -546 236 3,438 4,513 1,916 1,300 1,300 1
Slide 19: Historical Revenue 2008-2011
19 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 2008 2009 2010 2011 Funeral Acquisition Revenue $0.00 $0.31 $5.71 $14.21 Same Store Funeral $124.15 $122.90 $121.89 $120.77 Cemeteries $37.96 $41.40 $39.56 $38.15 Financial Revenue $11.67 $10.15 $14.65 $14.55 Histor
Slide 20: Model Revenue Growth at Assumed $40M Acquisition Level
20 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 2011A 2012A 2013E 2014E 2015E 2016E 2017E Funeral Acquisition Revenue $14.21 $25.80 $44.19 $60.19 $76.19 $92.19 $108.19 Same Store Funeral $120.77 $120.58 $121.78 $122.18 $122.59 $122.99 $123.40 Cemeteries $38.15 $40.07 $42.07 $44.00 $46.0
Slide 21: Model Operating Margins & EBITDA at Assumed $40M Acquisitions
21 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 $100.00 2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E Adjusted EBITDA % of Revenue Model Operating Margins & EBITDA at Assumed $40M Acquisitions ($'s millions) Improving Acquisition Margins
Slide 22: Model Free Cash Flow at Assumed $40M Acquisition Level
22 $(10.0) $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 Maintence Capex $(4.0) $(4.0) $(4.0) $(4.0) $(4.0) WTI $1.3 $1.3 $1.3 $1.3 $1.3 D&A $13.6 $14.4 $15.3 $16.2 $17.2 GAAP Net Income $19.4 $22.7 $26.0 $29.1 $32.1 Model Free Cash Flow at Assumed $40M Acquisition Level ($'s millions) 2013E 2014E 2015E 20
Slide 23: Model Capital Structure at Assumed $40M Acquisitions
23 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2012A 2013E 2014E 2015E 2016E 2017E 33% 36% 40% 43% 46% 49% 22% 21% 20% 18% 17% 16% 44% 43% 40% 39% 37% 35% 2012A 2013E 2014E 2015E 2016E 2017E Long term debt & capital leases 44% 43% 40% 39% 37% 35% Convertible junior subordinated debenture 22% 21% 20%
Slide 24: Mechanics of Earnings Growth at Assumed $40M Acquisitions
24 49.3% 50.4% 50.4% 50.6% 50.8% 8.6% 9.3% 9.9% 10.3% 10.7% 4.2% 4.7% 5.0% 5.2% 5.4% 13.5% 13.5% 13.2% 12.8% 12.3% 6.4% 13.2% 20.4% 28.1% 36.3% 2.95 2.69 2.49 2.31 2.14 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2013E 2014E 2015E 2016E 2017E Mechanics of Earning
Slide 25: Summary
25 SUMMARY * The Industry * Carriage Services Inc position in the Industry * Future
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