# Carriage Services Inc. (CSV) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-27  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/CSV/thesis · /stocks/CSV/memo

## Financial Snapshot

---
source: coverage-next-full
step: 04
title: Financial Quality & Adversarial Research Sweep
ticker: CSV
company: Carriage Services Inc.
date: 2026-05-27
---

### Step 04 — Financial Quality & Adversarial Research Sweep: Carriage Services Inc. (CSV)

#### 1. Statement Quality Assessment

##### Income Statement Quality
**Adjustments to GAAP:**
- GAAP net income FY2025: $51.5M vs. Adj. EBITDA $130.7M — ~$79M in adjustments (D&A + non-recurring)
- Management adjustments include: SBC, merger/integration costs, divestiture gains/losses, non-cash items
- **Concern [E]:** The GAAP-to-Adj. gap ($31.8M EBITDA adjustment, ~32% of GAAP EBITDA) is material. For a company with continuous M&A, "non-recurring" integration costs are quasi-recurring. Investors should use GAAP EBITDA (~$99M) as a floor and Adj. EBITDA ($131M) as a ceiling.
- **D&A:** Estimated ~$30M/year — significant goodwill amortization and cemetery property D&A
- **Preneed revenue recognition:** Revenue from preneed contracts is recognized upon fulfillment (at time of death). Trust fund investment returns are recognized over time. This is industry-standard and appropriate.
- **FY2025 GAAP EPS spike (+54.8% to $3.25):** Likely includes non-recurring gains from divestiture proceeds ($44.4M in FY2025). Without seeing the full 10-K income statement, the exact source of this jump is uncertain [E]. Adjusted EPS was $3.20 — close to GAAP, suggesting one-time items may be smaller than the +54% implies.

##### Balance Sheet Quality
- **Goodwill:** $427.9M at Q4 2025 = 31.8% of total assets [$1,346M] [S1]
- **Goodwill / Equity:** $427.9M / $254.8M = 1.68x — goodwill exceeds equity; if impaired >$100M, equity could be significantly impaired
- **Cemetery property:** Not separately detailed in retrieved data; included in fixed assets; represents pre-developed land with long useful lives
- **Preneed receivables / trust funds:** Significant balance (not separately retrieved); these are offset by preneed obligations — essentially pass-through
- **Cash:** Only $1.69M at YE2025 — effectively zero; company operates with minimal liquidity buffer [S1]
- **Equity build:** Healthy — from $128M (2021) to $255M (2025); organic earnings accumulation + GAAP gains

##### Cash Flow Quality
- Operating cash flow vs. Net income reconciliation:
  - FY2025: Net income $51.5M; Operating CF $60.7M — reasonable conversion ratio
  - FY2024: Net income $33.0M; Operating CF $52.0M — better conversion (57.5% to OCF conversion vs. earnings)
  - FY2023: Net income $33.4M; Operating CF $75.6M — exceptional conversion (working capital benefit)
- **Free cash flow trend:** $35.9M → $40.1M → $40.4M (TTM) — modest but consistent improvement [S1]
- **FCF vs. Adj. EBITDA:** ~$40M FCF on ~$130M adj. EBITDA = 30% FCF conversion. This gap (70%) reflects: D&A (~$30M), interest ($27M), taxes ($12M), CapEx ($21M) — all roughly in the right order. No red flags, but FCF conversion is lower than ideal for a debt-reduction story.
- **CapEx:** $16–21M/year — relatively low (<2% of assets/revenue); indicates mature asset base with minimal growth CapEx requirement

#### 2. Adversarial Research Sweep

##### Short Seller Activity
**No active short seller campaign found.** [S2]
- Short interest tracked at Fintel.io/MarketBeat — no major short thesis identified
- SimplyWallSt noted bearish narrative on earnings quality (earnings growing faster than cash); bullish response: margin expansion is real
- CSV is small-cap (~$700M market cap) with limited institutional float — not a primary short target

##### Regulatory / Legal Actions
**No material lawsuits or investigations found in retrieved data.**
- Death care sector faces ongoing FTC scrutiny (price disclosures, bundling)
- State-level cemetery regulatory actions occur occasionally but no company-specific major cases found
- Preneed trust fund compliance: standard ongoing regulatory oversight; no penalties found
- [GAP] Full 10-K legal proceedings section not retrieved — recommend reviewing Item 3 of 10-K for completeness

##### Earnings Quality Concerns Identified
1. **GAAP-Adj. EBITDA gap:** As discussed — ~$32M of adjustments (~32% of GAAP). Worth monitoring.
2. **Revenue recognition of preneed contracts:** Standard for industry (recognize on fulfillment). Appropriate.
3. **Divestiture gains in FY2025:** $44.4M proceeds from divestitures likely generated non-operating gains. The jump in GAAP net income (+56%) should be partially attributed to this. This is one-time, not recurring. [E]
4. **Preneed trust fund returns:** These contribute to financial revenue but are subject to market volatility. In a down market, trust returns decline and can become negative. This creates earnings volatility.
5. **Operating cash flow FY2023 ($75.6M) vs FY2024 ($52M):** Significant step-down. FY2023 may have benefited from favorable preneed trust fund releases or working capital. FY2024's lower OCF despite higher revenue suggests cash costs increased.

##### Potential Balance Sheet Risks
1. **High leverage (4.3x net debt/EBITDA at YE2024):** Most material financial risk. Interest coverage ~3.5x leaves limited cushion [S1]
2. **2029 debt maturity wall:** $400M at 4.25% matures in 2029. Refinancing at current/future rates likely 6–7%+ would increase annual interest by ~$7–11M, reducing FCF meaningfully [A04]
3. **Goodwill impairment:** If funeral volumes decline materially (e.g., COVID reversal, cremation acceleration), goodwill allocated to individual funeral homes could be impaired. $100M impairment would halve book equity.
4. **Near-zero cash balance:** $1.69M in cash with $250M revolver available. Liquidity risk is low given the revolver, but operational disruption would quickly require drawing the revolver.

##### Earnings History — Consistency Check
| Year | GAAP EPS | YoY Change | Notes |
|------|---------|-----------|-------|
| FY2025 | $3.25 | +54.8% | Likely includes divestiture gains |
| FY2024 | $2.10 | -1.9% | Deleveraging year; financing costs impact |
| FY2023 | $2.14 | -18.6% | Post-COVID normalization |
| FY2022 | $2.63 | +45.3% | COVID volume tailwind; pre-restructuring |
| FY2021 | $1.81 | — | COVID recovery |

**Observation:** Earnings volatility is elevated (+/-20-50% YoY swings). Not unusual for a leveraged company with M&A activity and non-cash items, but investors should focus on Adj. EPS ($3.20 in FY2025) for operating trend.

#### 3. Accounting Policies — Key Areas
- **Revenue recognition:** ASC 606 compliant. Preneed contracts deferred; recognized upon fulfillment (event-based)
- **Goodwill:** Annual impairment testing (ASC 350); funeral home + cemetery reporting units
- **Preneed trust funds:** Assets and obligations offset on balance sheet; net presentation
- **Interest rate:** Mix of fixed (4.25% senior notes) and variable (SOFR-based revolver); partial interest rate risk

#### Source Index
[S1] StockAnalysis.com balance sheet, cash flow, statistics (2026-05-27)
[S2] Fintel.io / MarketBeat / Simply Wall Street search results (2026-05-27)
[S3] StockTitan.net 2025 10-K summary (2026-05-27)
[S4] Web search results — management slides, CEO commentary (2026-05-27)

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CSV/fundamental

## Navigation

- Overview: /stocks/CSV
- Financials (this page): /stocks/CSV/financials
- Thesis: /stocks/CSV/thesis
- Investment Memo: /stocks/CSV/memo
- Coverage universe: /stocks