Carriage Services, Inc. · NYSE:CSV
Carriage Services — 2005 Merrill Lynch Deathcare Conference
36 slides from Carriage Services's conference presentation, Apr 20, 2005
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Slide 10: Cremation as percentage of total funerals increasing
(Cremation as 4 percentage of total funerals increasing and trend will continue — Higher margin versus burial services, but lower revenue per service — Carnage rolling out innovative, high quality cremation packages to offer client families choices and to capitalize on rising cremation trend fase 20
Slide 11: Company Overview
Company Overview
Slide 12: Company history and restructuring
©) Fesieded in 1994) ital public offering in 1896 © pagarassive growth, spending $400 milion at peak of market to acquire businesses Acquisions curtailed and Corporate Development saves eased Fresh Start nancial retructuring Tmpraved or depoted of Under performing businestes Reduced dabt by $34 mili
Slide 13: Operations in states: funeral homes and cemeteries
13 = Operations in 28 states = Focus on attractive suburban markets = 134 Funeral Homes = 30 Cemeteries (includes 5 Combos) = Market leader (#1 or #2) in over 70% of locations = 2™\most profitable funeral and cemetery operations among FUNERAL Locarion: 4 public companies CEMETERY LOCATIONS Carriage
Slide 14: Mission and guiding principles
14 “We are committed to being the most professional, ethical and highest quality funeral and cemetery service organization in our industry.” To achieve our mission, we are committed to the following principles: Honesty, Integrity and Quality in all that we do Hard work, pride of accomplishment and s
Slide 15: Decentralized and entrepreneurial operating model
15 Decentralized and entrepreneurial operating model Alignment of incentives and chivers of success Fools on upgrading people and effective ube of teclinology Stroma local leadership will arow etket share and improve profitability, Strateale standards model 1 elles coquisition candidates
Slide 16: Standards model weighting
= Market Share Weighting — Increase families servediover time 30% = Take away market share from competttors 5% = Quality and Structure of Staff = Right quality personne! 10% = Upgrade staff continuously, 10% = Manage salary and benefits costs 1256 = Financial and Operating — Grow average revenue per
Slide 17: Financial Overview
Financial Overview
Slide 18: Outlook for 2005
| Outlook for 2005 Prior Estimates Revised Estimates Fiscal Year Revenue $29 - $44 milion Approx $42.0 milion $151 - $155 milion Adjusted Eamings Per Diluted Share $0.14- $017 $0.18- $019 $0.31 - $0.28 Adjusted EBITDA $11.8- $128 milion Approx $12.2 milion $400 - $41.6 milion $120- $138 milion Adjus
Slide 19: Revenue, EBITDA and FCF
280% gisa2 $1530 woe 270% 285% 260% 255% 8 a 8 2 265% 260% 250% zone 0320042005 Revenoe _FBITOA m FCF 2008
Slide 20: Funeral operations performance
[PSRERENGE™ « geestenerrerresr $teao 0% = pe erence cr at veca business gino | 0% = Lower cremation rate = Flat organization = Future upside from new operating model implemented 2004 ‘00% = Increasing market share = Higher productivity and|lower 0% People costs) Ee. ee ne = Improved|merchandise stra
Slide 21: Cemetery operations performance
$600 $000 $00 $200 109 $00 Bt Stable cemetery EBITDA margins = Shifted focus to a lower cost customer referral model — Gommission structure and incentives: aligned to emphasize property sales Interment rights approximate 5096 of revenlies — Emphasis on maximizing current heritage: = Strengthens ties
Slide 22: Financial Strategy to Facilitate Growth
Financial Strategy to Facilitate Growth
Slide 23: Pro Forma Capitalization
pitalization) an Pro Forma Capitalization Actual As Adjusted sa/34/2004 sa/s1/2004 Tash and Equivalents Senior Debt Exiting Unsecured Credit Facility 9258 3 Existing Senior Notes 708 New Senior Notes 1200 ‘Acquéition Debt 87 ar Capital Leas es 55 55 Total Senior Debt EIDE} wiaaz Subordinated Dabt: S
Slide 24: Income Deferrable Equity Securities (TIDES)
come Deferrable E: = Carriage Issued $93.75 million of 7% convertible preferred securities in 1999 = Matures in 2029 = Subordinated to all indebtedness = Distributions may be deferred for up to 5 years at Garriage’s option = By bringing distributions current, deferral period can be reset unlimited n
Slide 25: Acquisition environment and criteria
25 No meaningful acquisitions for the last five years = Inventory of potential sellers with succession issues is building = Sellers are extremely wary of operating style and reputation of buyer = Carriage Services — excellent reputation re: operating style = Staller size and new operating model| giv
Slide 26: Growth Strategy and five-year goals
26 Growth Strat 2005-2006 = Continue to improve existing portfolio free cash flow = Build cash to $36 — $40 million by December 2006 assuming no acquisitions = Using cash, acquire new operating assets selectively and cautiously 2007-2009 = Accelerate acquisition pace if quantity and quality of acqui
Slide 27: Valuation Analysis
Valuation Analysis
Slide 28: Dominant Market Presence and investment highlights
28 Dominant Market Presence - Carriage has #1 or #2 market share positions in over 70% of its: markets Superior Profitability - Carriage has the second highest gross profit and EBITDA margins of the public death care companies Strong and Flexible Capital|Structure - With low cost, long-term liabilit
Slide 29: PE Multiple Comparison
PE Multiple Comparison (1) Merrill lynch diluted EPS estimate @) Closing price on Avril 18, 2005 6) 2005 EPS estimate is midyoint of commany outlook 29 EPS Symbol FYE Price® 2005E__PE Multiple Service Corp. Intl Sci Dec. $7.04 $0.32 22.0% Stewart Enterprises STEI Oct, $5.71 $0.44 13.0% Peer Average
Slide 30: EBITDA Multiple Comparison
EBITDA Multiple Comparison Enterprise EBITDA EBITDA Symbol FYE Value” 2005E Multiple Service Corp. Intl, Be Dec. $3,280.0 $381.0 8.6K Stewart Enterprises © STEI Oct. $1,030.0 $162.0 6.4K StoneMor Patners LP STON Dec $255.5 $20.8 12.3X Peer Average $1,521.83 $187.93 9.1K (2) Enterprise value data fro
Slide 31: FCF Yield & Multiple Comparison
FCF Yield & Multiple Comparison Equity 2005E FCF FCF Symbol__ FYE Market Cap FCF Yield Multiple Service Comp. Intl. @ SCI Dec. $2,180.0 $169.0 718% 12.9% Stewart Enterprises © STEL Oct. $627.0 $319 51% 19.7% StoneMor Patners LPO STON Dee. $184.9 $13.8 15% 13.4% Peer Average $997.30 87157 6.8% 153X (
Slide 32: Bond Yields & Spread
Bond Yields & Spread O4/isms 04/18/05 issuer Coupon __Maturi Rating Yield Sy Service Corp. Intl. 675% n4/0isi6 Bai/BB 715% 295 Stewart Enterprises 6.25% 02/15/13 BL/BB- 6.79% 266 Peer Average 6.50% 7.02% 281 FOF Yields & Spreads vs. Bond Yields & Spreads 2005FCF FCF Yidd Bond Equity Yield Spread” Bo
Slide 33: Dominant Market Presence and investment highlights
3 Dominant Market Presence - Carriage has #1 or #2 market share positions in over 70% of its: markets Superior Profitability - Carriage has the second highest gross profit and EBITDA margins of the public death care companies Strong and Flexible Capital|Structure - With low cost, long-term liabiliti
Slide 34: Disclosure of Non-GAAP Performance Measures
34 ‘Disceare cf CAAY Pecermance Meremet We pat ow foci ress i xccrdnce wih amenity cated accomsing wracinks (GAAP). Henene, ‘naagen at bleves at coum rev GAWD pafanaaee mewunee td tos, Wich MaBgmaL oes MB WMNE Os (snare muy prov uote o fhe Shore Herma addtional menage eonprkae beteen rite MEGA, peat
Slide 35: Reconciliation of Financial Measures
tion) Of Financial Feconciiation of Grane Profit from cemetery operations to EBITDA from continuing cemetery cperations: —2002_ _2003__2004__2005E_ Ghoss profit from cemeteryoperations $ g21$ Bs 8g 5 889 Depevietion® emantization $__2837 $__2937 $__3187 $__3507 EBITDA fromcemeteryoperations $ L058 $
Slide 36: Searchable text section
Searchable text section of graphics shown above [ L OGO] Carriage Services (NYSE: CSV) 2005 Merrill Lynch Deathcare Conference April 21, 2005 F orward-Looking Statements The statements in this presentation that are not historical facts are forward-looking statements made in reliance on the “safe har
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