Carriage Services, Inc. (CSV) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for your patience. You've joined Carriage Services Third Quarter 2013 Earnings Webcast. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, representing Carriage Services, Mr. Chris Jones [ph]. Sir, you may begin.

Thank you, and good morning, everyone. We're glad you could join us and would like to welcome you to Carriage Services' conference call. Today, we will be discussing the company's 2013 third quarter results, which were released yesterday after the market closed. Carriage Services has posted the press release, including supplemental financial tables and information on its website at carriageservices.com. This audio conference is being recorded and an archive will be made available on Carriage's website. Additionally, later today, a telephone replay of this call will be made available and active through November 10. Replay information for the call can be found in the press release distributed yesterday. Speaking on the call today from management are Mel Payne, Chairman and Chief Executive Officer; and Bill Heiligbrodt, Vice Chairman. Today's call will begin with formal remarks from management, followed by a question-and-answer period. Please note that during the call, management will make forward-looking statements in accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. I'd like to call your attention to the risks associated with these statements, which are more fully described in the company's report filed on Form 10-Q and other filings with the Securities and Exchange Commission. Forward-looking statements, assumptions or factors stated or referred to on this call are based on information available to Carriage Services as of today. Carriage Services expressly disclaims any duty to provide updates to these forward-looking statements, assumptions or other factors after the date of this call to reflect the occurrence of events, circumstances or changes in expectations. In addition, during the course of the morning's call, management will reference certain non-GAAP financial performance measures. Management's opinion regarding the usefulness of such measures, together with the reconciliation of such measures to the most directly comparable GAAP measures for historical periods, are included in the press release and the company's filings with the Securities and Exchange Commission. Now, I'd like to turn the call over to Mel Payne, Chairman and Chief Executive Officer.

Thank you, Chris. I'm delighted to just say a few things about the third quarter and the year-to-date results. I would categorize this quarter as a good quarter, not one of our greatest quarters, but there is one thing that stood out for me and continues to stand out for this company. The company is a consolidation and operating company. We view ourselves as an operating company, first, and we consolidate the vast remaining independents in the country and we're very selective. For that reason, we have not made any acquisitions this year. Bill will speak to that later. When we don't make acquisitions and we operate to the best of our abilities according to our Standards Operating Model, the company has become a free cash flow machine and produced so much cash this year and the impact has been de-leveraging the company's balance sheet, improving the credit profile and financial flexibility. It has been surprising to me and there are very few things that surprise me after 23 years. So I'm very proud of our people and what they continue to be doing. And, as always, there are some that are extraordinary in their local performance and I would like to call them out by name. In the Eastern region, where the regional partner is Mark Bruce and we are a partnership-type company at every level; Frank Forastiere, Forastiere Funeral Homes Group, Springfield, Massachusetts. A little editorial comment, Frank was 1 of the original 17 members that designed the Standards Model and served on the first Standards Council where he still serves. Chris Chetsas, Cataudella Funeral Home, Methuen, Massachusetts; Robert Maclary, Kent-Forest Funeral Lawn Funeral Home, Panama City, Florida; Chris Duhaime, Funk Funeral Home, Bristol, Connecticut. Chris and his dad, Ron, were also part of the original council and designers of the Standards Operating Model. Jim Terry, James J. Terry Funeral Home, Downingtown, Pennsylvania. In the West, which has Paul Elliott as the regional partner: Matt Simpson, Fry Memorial Chapel, Tracy, California; Justin Luyben, Evans-Brown Mortuaries, Sun City, California; Steve Mora, Coneho Funeral Home & Memorial Park, Camarillo, California; Kristi AhYou, Franklin & Downs Funeral Homes, Modesto, California, way to go Kristi; and Doug Reinke, Dakan Funeral Home in Caldwell, Idaho. And in the Central, last but not least. In the Central, which has Shawn Phillips as regional partner: Mark Cooper, Seaside Funeral Home and Corpus Christi Funeral Home, Corpus Christi, Texas; Johnny Garcia, Ceballos-Diaz Funeral Home, Edinburg, Texas; Jim Pitts, Buck Ashcraft Funeral Home, Harlingen, Texas; Bob Thomas, Malone Funeral Home in Grayson, Kentucky; and Phil Zehms and Jim Sheridan, Dwayne R Spence Funeral Homes, Pickerington and Canal Winchester, Ohio. Dwayne Spence is still involved with Jim and Phil, and was also one of the original members that designed the Standards Model and served on our council. Way to go. These are the performance heroes for this quarter, and I know our company is very excited about bringing in this year, which we have themed "Carriage Services 2013, Raising the Standard All In to a Strong finish" and I look forward to reporting on that finish early next year. I'll turn it over to Bill.

Thank you, Mel. Today, we will be discussing our third quarter 2013 and 9-month year-to-date earnings release. I think our earnings release carefully explains especially well all elements of performance and results through the third quarter and 9-months. Therefore, I am only going to discuss 6 key points related to that performance. My first point is revenue. Revenue for the quarter was approximately $50 million, a 3.3% growth over 2012. This number reflects weak funeral volumes for the quarter, as reflected as well by other entities in the funeral industry during the same time period. Since business cycles in this industry tend to run in periods longer than 3 months, our year-to-date revenue is much more reflective of Carriage's performance. At $161 million in revenue or 9.4% growth, this performance exceeds again the revenue growth of 8% that we have mentioned every reporting quarter this year and is necessary for Carriage to produce solid double-digit high-performance results. Second point, earnings per share. GAAP earnings per share for both the 3-month and 9-month periods were up significantly. Adjusted diluted earnings per share were flat at $0.16 for the quarter, but were up over 28% at $0.73 per share for our year-to-date numbers. These results do not totally tell the complete story as explained in the third paragraph of Page 2 of our press release. Our adjusted diluted earnings per share for both the quarter and 9-months in 2012 benefited from a one-time charge of $3 million, $2 million after taxes, shown as special items net of tax in the trend statement. The $2 million special charge after-tax represents $0.11 per share, therefore adjusting the quarter and the 9-month 2012 numbers down for that one-time charge. 2013 adjusted diluted earnings per share comparisons would be up over 2% -- 200%, excuse me, for the quarter and over 50% year-to-date, 9-months. Incidentally, that refinancing and change in 2012 and charge has contributed to a reduction in interest expense of $4.1 million year-to-date 2013. Third point, cash flow. Our cash flow and cash flow per share were up significantly for both the quarter and year-to-date numbers. For 9 months, our free cash flow was $27 million. Since we have done no acquisitions this year, we are in an extremely good credit position with at least $100 million of availability under our line of credit, at rates slightly over 2.5% and good opportunity to add more availability if needed. Also worth noting, we have received, for the tax year 2012, approximately $57 million in tax benefits resulting from an accounting change related to income recognition. While these benefits are nowhere reflected in earnings per share, they are estimated to produce cash shaving -- cash savings to Carriage of approximately $22 million through 2014. The estimated savings are $6 million in 2012, $9 million in 2013 and $7 million in 2014. The numbers have and will continue -- these numbers will -- have and will continue to benefit and add growth to our free cash flow. Fourth point, company expenses shown as overhead on our trend statement. Operational leadership support team consisting of all senior management in Carriage has just completed a solid 45-day review of all expenses and overhead in the company. Their goal was to make sure we remain a lean high-performance company and for any increases in expenses, we obtain a return or benefit to Carriage. The review has concluded with 14 separate areas in Carriage, and I want to repeat that, 14 separate areas within Carriage, contributing an estimated $2 million reduction in corporate overhead, including both costs and headcount. This represents about $0.11 per share, with approximately $0.01 to be realized in the fourth quarter and the remaining $0.10 throughout 2014. Fifth, something we've been waiting to discuss, acquisitions. Every quarter this year, we have reported to you that we were looking at a lot of possible acquisitions and that we have remained committed to our standard acquisition model. Therefore, we have completed no acquisitions for the 9 months of 2013. That is changing. We currently have 3 letters of intent, representing 3 businesses that were obtained in the third quarter and October. These are again letters of intent, therefore, there are chances that all or some may not close. On all 3, however, we are currently preparing closing documents and expect to close all 3 before year end, assuming all regulatory requirements can be obtained. All 3 properties represent strategic markets for Carriage, 2 are in existing markets and 1 is in a new growth market. Two are in the South and one is in New England. They represent approximately $22.5 million in purchase price, approaching $8.5 million in revenue and approximately $3.4 million in EBITDA. We possibly could pick up $0.07 per share or more on these 3 acquisitions. In addition, we are continuing to view a large number of additional acquisition opportunity. This is, of course, before any potential divestitures resulting from the possible SCI/Stewart merger. Stay tuned. Sixth and finally, rolling-4-quarters Outlook. Because of these 5 previously discussed points and our expectations for more normal funeral volumes, we're increasing our rolling-4-quarters outlook for just adjusted earnings per share by $0.02 to a range of 100 -- $1 -- I wish it was a $100, $1.20 to $1.22 per share. Thank you, and I'm going to turn it back over to you, Mel.

Thank you, Bill. To sum up, it's been a great year, but the year will finish and we'll start another year that we'll -- it's hard to clarify what the opportunity will turn out to be. And I think the company, including the process we just went through on overhead -- and just so our investors who are not familiar with our thinking could understand it a little better, we -- and any of you would be invited, we have a Friday morning meeting at 10:00 to end every week. In that meeting is the head of every support department, that Bill mentioned, that has gone through this overhead process plus the 3 regional partners. So you have the head of the operations in each region, myself, Bill and our lead directors typically on the call, Dave DeCarlo, and these 14 heads of our support departments. This lasts an hour, we do have guests, any of you are invited to be a special guest, and you'll see how these high-performance culture works in action. We believe every business has to carry its own high performance to support the total company high performance and every dollar of overhead is no different. So we're all owners of every part of the company, including other people's overhead and productivity of their people. It's a fun thing to see. None of it's so easy, but it is a wonderful thing to be a part of, and I'm very proud of what our people are doing and will continue to do. I don't know what the acquisition landscape will be over the next 3 to 6 months, that's hard to predict because we don't know what the divestitures will be or whether we would have any interest when we do know. We do know that we have a good pipeline and we're building wonderful relationships with the top independents in the country. So we're not worried about growing by acquisition, we're only concerned about growing the right way with the right acquisitions in the right markets. The company has never been better-positioned for success and we have never been more excited as a total company, employee and leadership base. And with that, I'd like to open it up for questions.

[Operator Instructions] Our first question comes from Alex Paris of Barrington Research.

I'd first like to talk a little bit about organic growth in the Funeral Services business. The same-store revenues were down 3.5% in the first -- in the third quarter, not unlike your big competitor, SCI, which also reported lower Funeral Services revenue. Can you discuss that anomaly? I realize it's just a 3-month period, is it still your expectation that, that line item grows anywhere from flat to 1% on an ongoing basis?

Alex, this is Bill. There's certain things that a funeral company can and cannot control. With funeral, I think when you look at that number, and it's like what I said in my remarks, you have to look at our year-to-date number, we're up 1.5%. The number that we've given you and other people of our performance on same-store growth, and this represents the history of myself in this industry, going back to 1967. I mean, we've continually stated that 0.5% is fantastic, especially when you look at it over long periods of time. Therefore, we continue on a year-to-date basis, to defy even our own expectations in that regard. And as long as we're not losing market share, which I'm convinced we are not, then we -- it's not like a candy store selling candies, it doesn't all run out, everything comes back to you in market share, and that's the way Mel has run this business. I'm convinced that, that's one of our standards that we look at very closely, and so that's the condition on that. So none of us can say what's going to happen with death rate or what, in the short period of time, and for someone like me that has participated in this industry for a very long time, it's going to defy what you think on every occasion. So we'll just have to stay tuned, as I said, and see what happens. However, for the year, on a -- coming off of a weak quarter, our numbers, year-to-date, are especially good. And I don't think there's anybody close to us in the industry in that regard. Thank you.

Yes, Alex, just to add to that. When I first got in this business, and I still remember it well, we bought a group of businesses in and around Chattanooga in the middle of '93, North Georgia. And in that January, first time we had any critical mass, there was an incredible snowstorm and flu season, and I remember the -- looking at it in January, which was the first January we'd had all these businesses in any critical mass, and the field EBITDA that what we call field EBITDA now was like 50% and I'm going, "Oh my god, we're rich." But what I found, over the last 20 years, is that it is seasonal, that amazes a lot of people. It's not only seasonal, it's related to different areas at different times. But what's strange, and I've following this so long, we have 10 years of data on every business that we follow, and we've been doing this for years and years and years by competitor, we track the L [ph] bits and while the digital area has eliminated some of that on a relative basis, it's still valid. So we know how the market share moves around over 5-, 10-year periods, and you can see these trends. We're not losing market share. I know the businesses and I know our people. Year-to-date, we're up on same-store volumes, 3.7%. I don't know another company that can say that. And if you look at the rolling 12 months through September, we are higher in volumes than we were in 2009 same-store. I don't know another company that can say that. Now what has hurt us in the third quarter, and it's only a quarter, is the mix. And we are working on that and we already know where the issue is. We had over-discounting in the third quarter, discretionary discounts, and we're all over it, don't worry, we've been doing this a long time. And I agree with Bill, year-to-date, we're up same-store revenue, 1.3%. Robert had modeled out 0.5%. So right now, we're ahead of the master modeler and I would expect we'll stay ahead of him, I hope, and he'll have to revise it up. So we've got a great model. We have entrepreneurial people out in the communities wanting more business, needing to take it away from their competitors. The whole industry is fighting the secular trends of higher cremation. But death rates, no. In fact, I had someone, who's a wonderful independent, send me yesterday demographic projections over the next 40, 50 years. And if they're right, and I've been not trying to wonder whether that's right or not, the death rate in America is going to go up by 1%, 1.2%, 1.3% over the next 30 years, starting right now. But that's what I was told in the early '90s too, so I wouldn't put it in the bank yet.

Got you. That's very helpful. And again, going to Bill's opening comments, it's tough to predict on a 3-month basis, it's a little easier on a 12-month basis. So if you have a quarter of outperformance, it's not unreasonable to think that the Funeral Services revenue would be a little lower the next quarter or the quarter after that, and that's sort of a little bit of a zigzag.

One of the reasons we went to trend reports, 5 year and 5 quarter, was that very reason. It's not a quarterly business. It is more seasonal than most people outside the industry could possibly imagine. And what you don't want to be is reactionary because that causes you to do really stupid things in the short term, to try to manage a result, that wind up hurting the inherent health of your business over the long term. And we just learned not to get on that treadmill and we over-managed some businesses and we ruined them. And once you get the trend not being your friend, it's hard to turn it otherwise. So we learn from our mistakes.

Got you. And then a quick question on the acquisition pipeline. Bill, you mentioned 3 LOIs. What does the balance of the pipeline look like beyond those LOIs? Not including SCI and Stewart opportunities.

Well, we've been getting new opportunities to look at. We probably, in-house today with financials, have another 7 top businesses that we're looking at. That doesn't mean we're going to do any of those, it doesn't mean that they'll meet our criteria. But we have 7 that are good enough that we're looking at or so. And that number could have changed while I've been sitting in this room. But we have not hurt for opportunities to look at. But we have some special criteria, we are interested in strategic markets, we are in businesses that defy some of the criteria in terms of growth that you're talking about in terms of same-store earnings. There are economic environments that, for funeral operations, continue to produce good growth. We're trying to single out, as Mel said, those best independents that do present that kind of opportunity. That's tough and it's tough to stay out of the market when you've had opportunity to buy. But for 9 months, we've done that. And I think, as Mel mentioned, I think that has exhibited a very good point to our shareholders. And in the time when we didn't have the shareholders, we've made up for it with what we've done within the company, with what we could operate with and with the other criteria and the other 6 points that I mentioned to you. So our performance, in my mind, is very well and very good in that we are positioned very well for the future. If death rate or funeral volume strengthen up and we expect, at some point in time, they will, when you haven't lost market share, those funerals are going to come back to you, and that's a great thing about the funeral industry. That's why it's a good investment and that's why I enjoy very much working in it and explaining what goes on here. And it's all combined with this tremendous word "cash" and "cash flow" and "cash benefits to the shareholder". And so, I think if you measure and look at those 6 points that I mentioned, I think you will get a pretty good fix on what the business acumen was for the quarter and how Carriage should be considered.

Alex, on the pipeline and the criteria and selectivity, other than the seasonality of the business, people outside this industry are a little bit surprised to -- if they get a close look underneath the covers to see how clubby it is and class-oriented it is. And by that, I mean, in the States, in particular, and even nationally, the biggest and the best operations know each other. They associate with each other formally in different groups. They compare notes on a regular basis. And so what our strategy is, since we don't have many shares outstanding, we don't need to buy a lot, even things that are accretive from a financial point of view where it doesn't enhance your reputation and cause other great businesses, independents that are out there to say, "Wow, that company is building an elite group of the best remaining businesses in America." Maybe that's something I might be interested in when I have an issue related to my succession, because they notice who you're affiliating with, both the businesses and the talent. And if you build your reputation of affiliating with only the best and you have that kind of discipline, it will lead to higher, better growth, over time. And I fully expect that to happen in the next 12 months.

Great and then last one and then I'll hang up. The pipeline that we're discussing is -- has nothing to do with the SCI/Stewart likely divestitures, I'm assuming. Number one and number two, has there been any action on that front? Are they starting to market properties?

No. We have not heard anything. We haven't looked at anything. We know nothing. We're busy in our company and we don't need to do anything, but whenever something surfaces, we'll take a look at it. And everything we talked about is -- has nothing to do with that transaction. We're only talking about what we're working on and the relationships we're building in the industry.

[Operator Instructions] Our next question comes from Nicholas Janice (sic) [Jansen] of Raymond James. Nicholas Jansen - Raymond James & Associates, Inc., Research Division: Taking a look at the balance sheet, you've done an excellent job de-levering this year and putting you in a prime position to kind of capitalize on what could be a pretty good next 12 months on the M&A side. How do we look about the TIDES? I know there were some discussions back in, I think, the May time frame, where you're looking to perhaps change your balance sheet composition. Has that changed today? How should we think about your ability to address those longer term?

Well, Nick, obviously, that's something we're addressing everyday. What we've decided is, with the opportunities that we begin to see in the second quarter of 2013, this past second quarter, in terms of acquisitions and the fact that the SCI/Stewart merger was announced, with that kind of potential acquisitions entering the market, we thought it best for us to wait and consider our whole capital structure, rather than to individually identify one segment of our financial statement. When we were looking at that in the first quarter of 2013, that was not the case. Now there's no question, and we will get no argument from anyone here, that there is a benefit to the company from doing such a transaction. However, when you take it in the long run and look at it over a period of time, we don't want to be in the market refinancing every quarter. And so we're a small company and we felt it best, with what we were seeing happening, to wait and take a look at our whole capital structure during that particular period of time. That also combines with the fact that we did a refinancing that was extremely beneficial, earnings-per-share-wise, the savings year-to-date has been worth $0.11. But more than that, we currently -- again according to one of my points today, we have $100 million of availability in this company at extremely attractive financing rates to continue to build value for our shareholders and accumulate these properties. We probably could add an additional $50 million, $60 million to that credit without changing the credit terms. Therefore, we didn't need to do the TIDES to enhance our ability to finance our operations, we were simply looking at the TIDES as a smart move. The smart move today is to do what we did, which is to wait and take a look at the whole package once we know what our financial requirements are for this company so that we can do a much better job of capital planning. And Mel and I discuss this all the time, I've got a memo from him and a projection in my office that when I get time, we're going to analyze. We're continuing to look and poke at all elements of -- in that regard. So we have a -- we still have the opportunity to take advantage of maybe a refinancing of the TIDES, but bigger than that, we have a chance to make this company a really bigger, smarter company if we do what's right.

Yes, just to add a little bit to the point Bill made, and I thought he described it beautifully. We have learned, over time, that patience is a virtue. And when the transaction of SCI/Stewart was announced, we figured patience and virtue was appropriate. Not a tactical move just to refinance because we could in a low-rate environment. You won't find anybody more savvy than Bill and I about financials and accretive and earnings per share and outstanding shares and all that. We've been there and done that. So we got our attention on this but we don't want to move before we have a little more clarity on the capital structure, permanent capital needs. And when we have that, believe me, it won't take us long to figure out what we should do. But in the meantime, and I'm going to do 2 more performance heroes. Last week, we paid down another $3 million. And I got this memo from Jennifer Flores, our Cash Supervisor. She sent it to Ben Brink and a group of us. $3 million in one week. So I sent a memo back saying, "$3 million, one way to think about that, that's over $0.16 a share. And since we're trading at 3x book, one way to think about it further is $0.16 a share of debt reduction is analogous to $0.50 a share of book value. So maybe someone will give us credit for it at our price." Way to go, Jennifer and Ben. This is what we're doing here on a weekly basis and it's every part of the company and it's a lot of fun when the cash is gushing. Couldn't agree with Bill more. I hope that answers your question. Nicholas Jansen - Raymond James & Associates, Inc., Research Division: Yes, certainly a very well-thought-out answer. And then maybe, secondly, in terms of your trust funds, I know you've done a major repositioning over the last 12 months to really capitalize on nice financial revenue and EBITDA growth. I was just wondering how should we think about that growth going forward? Should it be more normalized relative to what the big outsize gains that we've seen or how should we think about modeling that line item?

Yes. It's hard to continue a phenomenal result likely obtained in our trust funds since we started that program October of '08. I will say that I do think we are constantly trying to get out ahead of the market while de-risking the portfolio so that we have high continuing income that can be reported, especially on our cemetery perpetual care and through fees that we are -- we have a registered investment advisor now, so we're actually getting compensated for the result that we've created. And we're continuing to bill unrealized gains in the portfolio. At some point, we might go ahead and realize those gains but, right now, we don't need to and don't intend to, so just stay tuned. But it's not going to go down, I just can't guarantee you that it will continue to grow at the rate it has been, because it's been phenomenal.

[Operator Instructions] Our next question comes from Clint Fendley of NewBridge Group.

Very nice work here on the tax savings that you guys have outlined through 2014. And I wondered what kind of growth outlook do you have for your free cash flow for the next couple of years, given these savings that you've now quantified? I know, obviously, you've got the guidance for the rolling 4 quarters, but I wondered, since you've quantified the savings for the next few years, could you maybe give us your thoughts on the longer-term growth outlook here?

Look, Clint, that number's going to continue to grow. I think the number that I mentioned for -- that would be extra or above the operational growth was something in the range of $7 million for 2014. So our operational modeling, I'm not going to try to give you an exact number, but we will be looking at that free cash flow and it's significantly going to add to Carriage's benefit, supposing that we can continue to identify good acquisition project -- properties, as you well know. So right now, we know those tax increases are -- appear to be worth at least $7 million next year, and that's what I'm giving you. So worst-case scenario, we should be at least where we were this year plus $7 million, but I think it's going to be much higher.

Okay. That's helpful, and nice work on that. I wondered, if we switch over to the trust for just a second, a little bit more specifically. I wondered what you guys were thinking just on your allocation to some of the fixed-income securities there in the trust going forward? Do you still currently have a higher allocation there? And any thoughts on changing that?

We have a much higher allocation there. We did pare it back some to build our core equities, what I would call secular-growth companies that're buying in their stock and being very successful. A few of those would be Las Vegas Sands, Discovery Communications and others like that, we've owned for a while but we've built our share count. We have begun to have quite meaningful unrealized gains in our core equities. But what we also did was hedge the fixed-income portfolio, as well as we could, with too-big-to-fail warrants that came out of banks like PNC, Wells Fargo, Zions, and one insurance company, American International Group. It's turned out that, that hedge is a wonderful hedge, these were all long-term calls on stock, they're all in the money, some substantially. And actually, what's happened is we've had large unrealized gains in the warrant portfolio of those 4 entities because the banks themselves have begun to buy-in their stock because they're over-capitalized, in this case, not the international big ones that you read about every day in the paper. And what they find is that they can buy-in these warrants at a much more leveraging impact on their EPS than they can in common shares. So we expect those to have less liquidity over time as these institutions buy-in their warrants that were issued during the crisis and then put on the public exchange. In the meantime, our unrealized gains in the warrant portfolio have far exceeded, as rates have gone up and down over the last 6 months, the change in the value of our fixed income portfolio, while we're still bringing in the high rents related to the recurring income. So, so far, our thinking on this is working, when our thinking ceases to work, then we'll change the allocation.

Got it. That's very helpful. And last question here, Mel, you mentioned 1 minute ago that, year-to-date, your volumes are up 3.7%, that's great, relative to what we've seen from some of the others in the industry. You did say you've been hurt some, though, by your mix, and I'm wondering, obviously, your acquisition standards have changed a lot since the management reorg. Have you been hurting relatively more or less when you look at some of those recent acquisitions on an individual basis, relative to the whole, for those properties that you've done since the management reorg? How have they fared?

The acquisitions and the planned way that we were doing our selection process has worked. We have shown that to many investors. And Mel and I, when we first discussed this point, agreed that if we were going to have a Standards Operating Model and we were going to have a high-performance company, we had to have unidentified businesses that somewhat defied normal funeral trends, and that's what we did, and those businesses have continued to exhibit it. One such good example was the gentleman that Mel mentioned in terms of his performance in Pennsylvania.

Downingtown.

Yes. Downingtown, Pennsylvania. That business continues to totally defy what you're seeing in the market in terms of funeral expectation. So I believe it's working. And certainly, as a whole, that group is working. So we're trying to do that and continue with that format since it's been so worthwhile for us.

And we're doing some things, Clint. It's been 2 years since we had a major management reorganization. And we're taking a fresh look at how we do some things at the end of the year. That's a normal thing we do every year, but this year, in particular, because we've had these challenges. But these are not challenges that the entire industry is facing. We just came back from an NFPA conference at Austin and talked to a lot of big independents there and everybody is facing these challenges. But I think our company is leading in how we think about it and how we deal with it through higher-quality people on the front lines and what we do with that issue, over time, is the key to Carriage. And I'm very confident in our ability to improve some of what you see in terms of weakness in average revenue.

And as there are no further questions in queue, I'd like to turn the call over to Mel for any closing remarks.

Really, I think we've covered it all. It's been a great call and some great questions. And Bill and I and the rest of our team and employees look forward to reporting the full year, raising the standard all in, we are, and we'll be back to you. Thank you very much.

Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude your program. You may disconnect your line at the time. Have a great day.