Carriage Services, Inc. · NYSE:CSV
Carriage Services — Investor Presentation (May 2014)
24 slides from Carriage Services's investor presentation, May 22, 2014
Slide 1: Carriage Services, Inc. Investor Presentation Q2 2014
1 Carriage Services, Inc. Investor Presentation Q2 2014
Slide 2: Forward-Looking Statements
2 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,
Slide 3: Who is Carriage Services Inc.?
3 $3,080 $246 $214 Service Corp International Stonemor Carriage Who is Carriage Services Inc.? • A national funeral home and cemetery operating company • Founded in 1991 by Mel Payne and headquartered in Houston, TX • Funeral home and cemetery field operations drives success under a decentralized op
Slide 4: Geographic Diversification in Attractive Markets
4 Geographic Diversification in Attractive Markets 4
Slide 5: Attractive Industry Trends
5 Attractive Industry Trends 2006 2013 Consolidators Independent Source: Center for Disease Control and Prevention, U.S. Census Bureau Large Market Highly Fragmented Secular Trend 5 88.2% 11.8% 88.0% 12.0% Source: Center for Disease Control and Prevention, U.S. Census Bureau. • In 2013, the deathcar
Slide 6: Differentiation in Stable Funeral & Cemetery Industry
6 Differentiation in Stable Funeral & Cemetery Industry • Carriage’s success has and will continue to be defined by three strategic models: • Standards Operating Model • Focuses on growing market share and employing high performance people which together drive long term operating and financial perfo
Slide 7: Our Growth Strategy
7 Our Growth Strategy • Adopt a pro-growth business model within an industry that is characterized by its low growth, low technology, and stable earnings • Modest growth in sales of our base businesses resulting in improved margins • Relatively fixed regional and corporate overhead allows for modest
Slide 8: Disciplined and Targeted Acquisition Strategy
8 Disciplined and Targeted Acquisition Strategy 8 • Our Goal is to acquire $15-$16 million new annual revenue through acquisitions • Target leading performers with strong heritage in their local markets • Comprehensive analysis of a candidate’s financial profile and market demographics • Focus on ma
Slide 9: SCI Acquisition closed May 15, 2014
9 SCI Acquisition closed May 15, 2014 • On May 15, 2014, we closed the acquisition of six businesses from Service Corporation International (“SCI”) • Enter two new large strategic markets • New Orleans • Acquired 4 businesses • Improving demographics • Low cremation rates compared to industry averag
Slide 10: Track-record of Growing Profitability
10 $40.6 $44.8 $48.9 $53.1 $56.1 $0 $20 $40 $60 $80 2009A 2010A 2011A 2012A 2013A Adjusted Consolidated EBITDA Note: Dollars in millions. Track-record of Growing Profitability Note: Dollars in millions.
Slide 11: Stable, Diversified Revenue Profile
11 Note: Dollars in millions. Stable, Diversified Revenue Profile Note: Dollars in millions. Funeral Acquisition $0.3 $5.7 $14.2 $25.8 $35.9 Same Store Funeral 120.3 119.8 118.8 118.6 118.8 Cemeteries 39.3 37.8 36.5 38.3 40.5 Financial Revenue 9.7 14.2 14.0 16.7 18.8 $9.7 $14.2 $14.0 $16.7 $18.8 $39
Slide 12: FY 2013 Earnings Summary
12 FY 2013 Earnings Summary Key Highlights FY 2013 Performance Revenues Adjusted EBITDA Note: Dollars in millions. $199.4 $214.0 $180 $200 $220 2012A 2013A $53.1 $56.1 $40 $45 $50 $55 $60 2012A 2013A • Outstanding financial performance in twelve months ended 12/31/13 • Revenues grew by 7.3% to $214.
Slide 13: Strong and Improving Capitalization Profile
13 Strong and Improving Capitalization Profile Historical Total Capitalization Note: Dollars in millions. Total Capitalization $339 $350 $356 $403 $405 31.9% 34.2% 35.6% 33.4% 38.5% 27.7% 26.5% 25.2% 22.3% 22.1% 40.4% 39.2% 39.2% 44.3% 39.4% 0% 25% 50% 75% 100% 2009A 2010A 2011A 2012A 2013A Sharehol
Slide 14: Strong Cash Flow and Balance Sheet
14 Strong Cash Flow and Balance Sheet Adj. Consol. EBITDA / Interest Coverage (2) Free Cash Flow (1) Adjusted EBITDA Note: Dollars in millions. Net Debt / Adj. Consol. EBITDA Debt / Adj. Consol. EBITDA Note: Dollars in millions. (1) Defined as cash flow from continuing operations less maintenance ca
Slide 15: Historical Trust Performance
15 Historical Trust Performance Trust Growth in $’s Compounded Returns Adjusted EBITDA Note: Dollars in millions. Gains & Income (3/31/09 – 2013) Asset Allocation Fixed Income 50% 50% 82% 87% 75% Equity 48% 47% 16% 11% 20% Cash / Other 2% 3% 2% 2% 5% 50% 50% 82% 87% 75% 48% 47% 16% 11% 20% 2% 3% 2%
Slide 16: Dilution: 2.75% Convert vs TIDES
16 0.0% 0.0% 5.7% 10.3% 13.6% 16.2% 18.2% 19.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 2.75% Convert March 2014 Stock Price Shares as % O/S VS. 24% dilution with TIDES
Slide 17: March 2014 TIDES Refinanced, SCI Acquisition Financed
17 $- $50.00 $100.00 $150.00 TIDES New Convert Purchased Acquisition $54.85 Instruments $90.00 $143.75 $90.00 New 2.75% Cash Coupon Convert March 2014 - TIDES Refinanced - SCI Acquisition Financed ($ millions) $90M $143.75 $90M SCI Acquisition $54.85 $144.85 $- $2.00 $4.00 $6.00 $8.00 TIDES Cash Int
Slide 18: Forward-looking model disclosure
18 The forward looking 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 (i) $26 million in assets in 2014 (in addition to the successful integration
Slide 19: Model at Assumed $40M Acquisitions
19 Note: Revenue & EBITDA in millions. Financial, $19 Cemetery, $44 Same Store, $121 Acquisitons, $125 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2013 2014 2015 2016 2017 2018 Model Revenue at Assumed $40M Acquisitions (millions) Acquisitions $ 35.9 Same Store $118.8 Cemetery $40.5 Financial
Slide 20: Modeled Earnings Growth Impact
20 Higher level of acquisition purchases would result in higher leverage and higher return on equity. Note: Leverage calculation includes current assets 46.7% 48.3% 7.7% 9.5% 3.6% 4.6% 11.3% 13.0% 3.1 2.8 2.7 2.7 2.8 2.8 2.9 2.9 3.0 3.0 3.1 3.1 3.2 3.2 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2014 2
Slide 21: Capital Structure at Assumed $40M Acquisitions
21 2014 2015 2016 2017 2018 34% 38% 41% 44% 48% 31% 29% 27% 26% 24% 27% 23% 20% 16% 13% 8% 10% 12% 13% 15% Capital Structure at Assumed $40M Acquisitions Equity Convert LT Debt Revolver
Slide 22: Appendix
22 Appendix
Slide 23: Historical Financials
23 Historical Financials Carriage Services Inc. Historical Performance ($'s in 000's) 2009A 2010A 2011A 2012A 2013A Same Store Funeral $120,309 $119,799 $118,801 $118,571 $118,813 Funeral Acquisition Revenue 310 5,705 14,210 25,801 35,891 Cemeteries 39,316 37,797 36,481 38,279 40,479 Financial Reven
Slide 24: GAAP Reconciliation to Adjusted EBITDA
24 GAAP Reconciliation to Adjusted EBITDA GAAP Reconciliation 2009A 2010A 2011A 2012A 2013A Consolidated EBITDA $40,325 $41,164 $39,542 $48,806 $51,587 Special Items Affecting EBITDA Withdrawable Trust Income(loss) $236 $3,438 $4,513 $1,916 1,454 Acquistion Expenses - 667 1,237 1,340 752 Severance C