Carriage Services, Inc. · NYSE:CSV
Carriage Services — Investor Presentation (September 2013)
22 slides from Carriage Services's investor presentation, Sep 4, 2013
Slide 1: Carriage Services Investor Presentation September 2013
Carriage Services Investor Presentation September 2013
Slide 2: Forward-Looking Statements
Confidential 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 Act of 1934, a
Slide 3: Who is Carriage?
Who is Carriage? A national funeral home and cemetery operating company Founded in 1991 and headquartered in Houston, TX Funeral home and cemetery field operations drives success under a decentralized operating framework 165 funeral homes in 26 states – 80% of revenue 32 cemeteries in 10 states – 20
Slide 4: Differentiation in Stable Funeral & Cemetery Industry
Differentiation in Stable Funeral & Cemetery Industry Fourth largest deathcare consolidator in highly fragmented industry, well positioned for growth by acquisition Carriage’s success has and will continue to be defined by three strategic models: Standards Operating Model Strategic Acquisition Model
Slide 5: Geographic Diversification in Attractive Markets
Geographic Diversification in Attractive Markets 5
Slide 6: Attractive Industry Trends
Industry wide funeral home revenues of $13.4 billion representing 1.5% CAGR since 2010 Industry wide cemetery revenue of $4 billion representing a -3.7% CAGR since 2010 Attractive Industry Trends Market share concentration in the industry is low, with the top four consolidators (Carriage, SCI, Stewa
Slide 7: Leveraged Impact Our Growth Strategy
Leveraged Impact Our Growth Strategy Relatively fixed regional and corporate overhead allows for modest increases in Same Store Sales and EBITDA to have greater impact on Free Cash Flow A majority of acquired Field EBITDA falls to Consolidated EBITDA due to operating leverage Adopt a pro-growth
Slide 8: Capital Structure
Capital Structure • Carriage Services, Inc. has raised $255 million through Senior Secured Credit Facilities due 2017 – $125M Revolver + $40 million accordion – $130M Term Loan A (Sept 2013 Balance $122.5M) • Proceeds from the original transaction were used to refinance Carriage’s Revolver and redee
Slide 9: Acquisition Strategy
Acquisition Strategy Our Goal is to acquire $15-$16 million new annual revenue through acquisitions • Target leading performers with the strongest heritage in their local markets • Comprehensive analysis of a candidate’s financial profile and market demographics • Focus on markets that perform bet
Slide 10: Acquisition Targeting Process
Acquisition Targeting Process 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 th
Slide 11: 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 12: Business Integration Process
Business Integration Process 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 (LOI)
Slide 13: Financial Overview
Financial Overview These 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
Slide 14: Historical Revenue 2008-2011
$0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 2008A 2009A 2010A 2011A 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 Histo
Slide 15: Model Revenue Growth at Assumed $40M Acquisition Level
15 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2011A 2012A 2013E 2014E 2015E 2016E 2017E Funeral Acquisition Revenue $14.2 $25.8 $37.7 $62.2 $78.2 $94.2 $110.2 Same Store Funeral $120.8 $120.6 $122.7 $123.3 $123.9 $124.5 $125.1 Cemeteries $38.2 $40.1 $42.2 $44.4 $46.6 $48.9 $51.4 Financial Re
Slide 16: Model Operating Margins & EBITDA at Assumed $40M Acquisitions
16 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 17: Model Free Cash Flow at Assumed $40M Acquisition Level
17 1 2 3 4 5 GAAP Net Income $17.1 $23.2 $26.5 $29.8 $33.0 D&A & NCSC $15.5 $17.4 $19.3 $21.5 $24.0 Tax Adjustment $9.5 $9.4 $2.3 $- $- WTI $1.4 $1.3 $1.3 $1.3 $1.3 Maintenance Capex $(4.0) $(4.0) $(4.0) $(4.0) $(4.0) $(10.0) $(5.0) $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Model Free Cash Flow at
Slide 18: Model Capital Structure at Assumed $40M Acquisitions
18 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2012A 2013E 2014E 2015E 2016E 2017E 33% 36% 40% 43% 47% 51% 22% 21% 20% 18% 17% 16% 44% 43% 41% 38% 36% 32% 2012A 2013E 2014E 2015E 2016E 2017E Long term debt & capital leases 44% 43% 41% 38% 36% 32% Convertible junior subordinated debenture 22% 21% 20%
Slide 19: Mechanics of Earnings Growth at Assumed $40M Acquisitions
19 48% 51% 51% 52% 52% 8% 9% 10% 10% 11% 4% 5% 5% 5% 6% 11% 13% 12% 12% 12% 6% 12% 19% 26% 34% 2.98 2.69 2.45 2.25 2.06 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0% 10% 20% 30% 40% 50% 60% 2013E 2014E 2015E 2016E 2017E Mechanics of Earnings Growth at Assumed $40M Acquisitions Asset Turnover (Sales/Ass
Slide 20: Appendix
Appendix The forward looking numbers in 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 th
Slide 21: Historical Performance and Model Growth Assuming $40M Acquisition Level
21 Carriage Services Inc Historical Performance Model Growth Assuming $40M Acquisition Level ($'s in 000's) 2008A 2009A 2010A 2011A 3 Yr CAGR 2012A 2013E 2014E 2015E 2016E 2017E 6 Yr CAGR Same Store Funeral $124,149 $122,896 $121,892 $120,766 $120,576 $122,653 $123,266 $123,882 $124,502 $125,124 0.6
Slide 22: GAAP Reconciliation
22 GAAP Reconciliation ($'s in 000's) 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 $56,046 $67,414 $74,782 $82,343 $90,045 Withdrawable Trust Income(loss) (546) 236 3,438 4,513 1,916 1,360 1,300 1,300 1,300 1,30
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