CSV 10-K & 10-Q changes, risk factors and insider trading

Funeral home and cemetery businesses have built local heritage and tradition through successive generations, providing a foundation for ongoing business opportunities from established customer family relationships and related referrals. We believe these relationships build trust in the community and are a key driver to market share. Our businesses, which tend to serve small local markets, usually have one or a few key employees that drive our relationships. Our ability to attract and retain Managing Partners, sales forceforce, and other personnel is an important factor in achieving future success. We can give no assurance that we can retain these employees or that these relationships will drive market share. Our inability to attract and maintain qualified and productive Managing Partners and sales force employees could have a material adverse effect on our financial condition, results of operationsoperations, and cash flows.

Our Good to Great incentive program rewards our Managing Partners for achieving an average net revenue compounded annual growth rate equal to at least 1% (the “Minimum Growth Rate”) over a five year performance period (the “Performance Period”) with respect to our funeral homes that they operate, which aligns our incentives with long-term value creation. Each Managing Partner that achieves the Minimum Growth Rate during the applicable Performance Period and remains continuously employed as a Managing Partner of the same business throughout the Performance Period will receive a one-time bonus, payable in a combination of cash and shares of our common stock, determined at our discretion. We believe this incentive program will result in improved field-level margins, market shareshare, and overall financial performance.

We have implemented our Standards Operating Model to improve and better measure performance in our funeral and cemetery operations. We developed these standards, which are updated from time to time, according to criteria, each with a different weighting, designed around market share, high-value services and operational and financial metrics. We also incentivize our Managing Partners by giving them the opportunity to earn a fixed percentage of the field-level earnings before interest, taxes, depreciation and amortization based upon the number and weighting of the standards achieved. Our expectation is that, over time, the Standards Operating Model will result in improvingimproved field-level margins, market share, customer satisfaction and overall financial performance, but there is no assurance that these goals will be met. Failure to successfully implement our Standards Operating Model in our funeral and cemetery operations could have a material adverse effect on our financial condition, results of operationsoperations, and cash flows.

There is no assurance that we will be able to continue to identify acquisition candidates that meet our criteria or that we will be able to reach terms with identified candidates for transactions that are acceptable to us, and even if we do, we may not be able to successfully completeclose the transaction or successfully integrate the new business into our existing business. We intend to apply standards established under our strategic acquisition framework to evaluate acquisition candidates, and there is no assurance that we will continue to be successful in doing so or that we will find attractive candidates that satisfy these standards. Due in part to the presence of competitors who have been in certain markets longer than we have, such acquisitions or investments may be more difficult or expensive than we anticipate.portfolio.

As part of our growth strategy, we periodically review our businesses which may no longer be aligned with our strategic business plan and long-term objectives and, as a result of these reviews of our businesses, we may pursue additional divestitures. From time to time, we engage in discussions with third parties about potential divestitures of one or more of our businesses that, if fully consummated, could result in the divestiture of a material amount of assets and contribution to our results of operations that have historically contributed to our results of operations. Divestitures pose risks and challenges that could negatively impact our business, including disputes with buyers or potential impairment charges. For example, when we decide to sell a business, we may be unable to do so on our terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale may be subject to satisfaction of pre-closing conditions, which may not be satisfied, as well as regulatory and governmental approvals, which may prevent us from completing a transaction on acceptable terms. If we do not realize the expected benefits of any divestiture transaction, our financial condition, results of operations, and cash flows could be materially adversely affected.

The funeral and cemetery industry is characterized by a large number of locally owned, independent operations in the United StatesU.S. and a large number of operations owned by publicly and privately held funeral home and cemetery consolidators. To compete successfully, our funeral service locations and cemeteries must maintain good reputations and high professional standards, as well as offer attractive products and services at competitive prices. In addition, we must market ourselves in such a manner as to distinguish us from our competitors. We have historically experienced price competition from independent and publicly held funeral service and cemetery operators, monument dealers, casket retailers, low-cost providers, and other nontraditional providers of merchandise and services. If we are unable to successfully compete, our financial condition, results of operations, and cash flows could be materially adversely affected.

Preneed sales of funeral and cemetery products and services generally have an initial negative impact on our cash flows, as we are required in certain states to deposit a portion of the sales proceeds into trusts or escrow accounts and often incur other expenses at the time of sale. Furthermore, many preneed purchases are paid for in installments over a period of several years, further limiting our cash flows at the time of sale. Because preneed sales generally provide positive cash flows over the long term, we market the sale of such contracts at the local level. If our efforts to increase such sales are successful, however, our current cash flows could be materially and adversely affected,affected in the near term.

Trust Fund and Life Insurance Funded Contracts

Increasing death benefits related to preneed funeral contracts funded through life insurance contractspolicies may not cover future increases in the cost of providing a price-guaranteed funeral service.

We sell price-guaranteed preneed funeral contracts through various programs providing for future funeral services at prices prevailing when the agreements are signed. For preneed funeral contracts funded through life insurance contracts,policies, we receive in cash a general agency commission from the third-party insurance company. Additionally, there is an increasing death benefit associated with the contract that may vary over the contract life. There is no guarantee that the increasing death benefit will cover future increases in the cost of providing a price-guaranteed funeral service, and any such excess cost could be materially adverse to our future cash flows, revenue, and operating margins.

We make judgments regarding the utilization of existing income tax credits and the potential tax effects of various financial transactions and results of operations to estimate our obligations to taxing authorities. We are also subject to regular reviews, examinations, and audits by the Internal Revenue Service (“IRS”) and other taxing authorities with respect to our taxes. Uncertain tax positions may arise where tax laws or regulations may allow for alternative interpretations, where the timing of recognition of income is subject to judgement, or where the IRS or other taxing authorities issue subsequent guidance or take positions on audits that differ from our interpretations and assumptions. Our tax obligations include, for example, income, franchise, real estate, sales and use, and employment-related taxes and the judgments we make include reserves for potential adverse outcomes regarding our tax positions. Although we believe we have accurately estimated our tax obligations, uncertainty of interpretation by various tax authorities and the possibility that there are issues that have not been recognized by management could each result in additional tax obligations. For example, if a taxing authority disagrees with the positions we have taken, we could face additional tax liability, including interest and penalties. We believe that our tax obligations reflect the anticipated outcome of known uncertain tax positions in conformity with ASC Topic 740 Income Taxes. In addition, our effective tax rate could be adversely affected by changes in the mix of earnings in states with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations, changes to our business structure or operations, including acquisitions or divestitures, or changes in our interpretations of tax laws. Changes in federal, state, or local tax laws, adverse tax audit results, or adverse tax rulings on positions taken could have a material adverse effect on the results of our operations, financial condition, or cash flows.

NewWe may be subject to additional tax lawsliabilities and penalties resulting from new tax legislation or regulationsregulations, which could be enacted at any time, and changes to existing tax laws or regulationsregulations, which could be interpreted, amended, or applied in a manner that has a material effect on us, which could materially impact our business and financial condition.

Declines in the number of deaths could cause atneed sales of funeral and cemetery services, property and merchandise to decline, which could decrease revenue. Although the United StatesU.S. Bureau of the Census estimates that the number of deaths in the United StatesU.S. will increase in the future, longer life spans could reduce the rate of deaths. In addition, changes in the number of deaths can vary among local markets and from quarter to quarter, and variations in the number of deaths in our markets or from quarter to quarter are not predictable. For example, our business can be affected by seasonal fluctuations in the death rate, with number of deaths generally higher during the winter months due to the higher incidences of death from influenza and pneumonia as compared to other periods of the year. Seasonal fluctuations in the death rate may be further affected by epidemics and pandemics, including any new or emerging public health threats. These unexpected fluctuations may not only increase death rates during the affected period, like we saw with the recent COVID-19 pandemic, but also may subsequently decrease death rates following the affected period as a result of an acceleration of death rates. As a result, we are unable to predict or forecast the duration or variation of the current death rate with any certainty, including the potential impact of epidemics and pandemics on the death rate, including any new or emerging public health threats. Any future variations of the death rate may cause our revenue to fluctuate and our results of operations to lack predictability.

The increasing number of cremations in the United StatesU.S. could cause revenue to decline because we could lose market share to firms specializing in cremations and because our average revenue for cremations is lower than that for traditional burials.

Our traditional cemetery and funeral service operations face competition from the increasing number of cremations in the United States.U.S.. Industry studies indicate that the percentage of cremations has increased every year, and this trend is expected to continue into the future. The trend toward cremation could cause cemeteries and traditional funeral homes to lose market share and revenue to firms specializing in cremations. Additionally, our average revenue for cremations is lower than that for traditional burials. If we are unable to continue to expand our cremation memorialization products and services, and cremations remain or increase as a significant percentage of our services, our financial condition, results of operations, and cash flows could be materially adversely affected.

If we are not able to respond effectively to changing consumer preferences, our market share, revenuerevenue, and profitability could decrease.

Changes in U.S. foreign trade policies could lead to the imposition of additional trade barriers and tariffs on the foreign import of certain materials and products. For example, effective FebruaryAugust 4,1, 2025, the U.S. adopted new and increased tariffs on countries and specific goods, subject to evolving exemptions. In October 2025, the U.S. government implementedannounced ana additionalseries tariffof new and expanded tariffs on goods being importedimports from China and other countries, including a 100% tariff on certain categories of goods and increased duties. While these measures were scheduled to take effect beginning November 1, 2025, the U.S. government announced on October 30, 2025 a temporary pause on the implementation of these tariffs, along with China agreeing to pause the implementation of certain retaliatory measures scheduled to take effect in response. These actions have caused substantial uncertainty and volatility in financial markets and may result in additional tariffsretaliatory formeasures goodsor importedcosts intoon theU.S. United States from Mexico and Canada beginning in March 2025.goods. We cannot predict what additional changes to trade policy will be made by the presidential administration or Congress, including whether existing tariff policies will be maintained or modified, what products may be subject to such policies or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business. However, such steps, if adopted, could result in additional inflationary pressures on the U.S. economy and increase the costs of goods we offer our customers and may negatively impact the supply chain on which we depend to supply merchandise to our funeral home and cemetery locations. Although we may take measures to mitigate the effects of these impacts, if these measures are not effective, there can be no assurance that such changes in U.S. trade policy or in laws and policies governing foreign trade would not materially and adversely affect our business, financial condition, results of operations and liquidity.

Based on the results of our annual goodwill and intangible assets impairment test we performed as of August 31, 20242025 and our annual review of long-lived assets and leases atas of December 31, 2024,2025, we determined that there were factors that would indicate the need to perform an additional quantitative impairment test for tradenames for certain funeral home businesses. As a result of this additional quantitative impairment test, we recorded an impairment to the tradenames of certain funeral home businesses of $0.6 million, as the carrying amount of these tradenames exceeded their fair value. We concluded that there were no impairments of our goodwillgoodwill, intangible assets or other long-lived assets and leases.

We rely significantly on information technology systems, software, or information security practices and those of our business partners or third-party providers, and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harmor our abilityactual or perceived failure to operatecomply ourwith any related regulatory requirements, could lead to adverse business effectively.consequences.

In the ordinary course of our business, we receive certain personal information, in both physical and electronic formats, about our customers, their loved ones, our employees, and our vendors. We maintain security measures and data backup systems to protect, store, and prevent unauthorized access to such information, which we are continually assessing and updating, as necessary. Additionally, we take steps to secure our information systems and software and any access provided by our business partners or third-party service providers, including our computer systems, intranet and internet sites, email and other telecommunications and data networks. However, the security measures we have implemented may not be effective and our systems may be vulnerable to theft, loss, damage, and interruption from a number of potential sources and events, including unauthorized access or security breaches, data privacy breaches, natural or man-made disasters, cyber-attacks, computer viruses, malware, phishing, denial of service attacks, power loss, or other disruptive events. Information technology security threats have been increasing in frequency and sophistication. Cyber-attacks may be random, coordinated, or targeted, including sophisticated computer crime threats. For example, following our previously disclosed ransomware attack to our information technology system in January 2021, we have since implemented additional and enhanced security measures to our overall cyber-security posture to mitigate, to the extent possible, future cyberattacks and other similar threats. These measures include, for example, the addition of an advanced security operations center providing proactive threat protection, cloud-based firewall protection across all locations and endpoint protection. While we determined, based on our assessment of the information known to us, that the January 2021 ransomware incident did not have, nor do we expect it will have, a material impact on our business, operations or financial results, if we fail to protect our own information from any future breaches in data security, we could experience significant costs and expenses as well as damage to our reputation. Moreover, it is possible that computer hackers and others (through increasingly sophisticated cyberattacks or by other means) might circumvent our security measures in the future and obtain the personal information of customers, their loved ones, our employees or our vendors.

In addition, we maintain insurance coverage for various cybersecurity risks, which covered substantially all of the costs associated with our January 2021 ransomware attack, but it is possible that such insurance coverage may not fully insure all future costs or losses associated with other cybersecurity incidents. As the sophistication and frequency of attacks increase, our information technology security costs, including cybersecurity insurance, which are significant, may rise.

Additionally, legislation relating to cybersecurity threats could impose additional requirements on our operations. Various state governments, notably California, New York, Nevada and Virginia, have enacted or enhanced data privacy regulations, including data breach notification requirements, consumer protection laws, and personal data privacy laws, and other state governments are considering establishing similar or stronger protections. These regulations impose certain obligations for securing, and potentially removing, specified personal information in our systems, and for apprising individuals of the information we have collected about them. We have incurred costs in an effort to comply with these data privacy risks and requirements, and our costs may increase significantly as risks become increasingly complex or if new or changing requirements are enacted, and based on how individuals exercise their rights. For example, in NovemberJune 2020,2018, the State of California votersenacted approvedthe PropositionCalifornia 24Consumer Privacy Act of 2018 (Consumer Personal Information Law and Agency Initiative“CCPA”), which went intotook effect as ofon January 1, 20232023, and hasexpanded consumer rights related to sharing of personal data, granted additional personal-data rights to consumers, removed the exceptions for business-to-business and employment data, and removed the 30-day window to cure alleged noncompliance before being subject to administrative enforcement. With respect to CCPA and CPRA, both have increased the data privacy requirements and costs for our business. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage.

Factors affecting our funeral operating results include: demographic trends relating to population growth and average age, which impact death rates and number of deaths; establishing and maintaining leading market share positions supported by strong local heritage and relationships; effectively responding to increasing cremation trends by selling complementary services and merchandise; controlling salary, merchandisemerchandise, and other controllable costs; exercising pricing leverage related to our atneed business to increase average revenue per contract; and our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, which would offset lower pricing power as preneed contracts mature. InOverall, simplevolume, terms,as volumefuneral services performed, and pricepricing fluctuations impacting our average revenue per contract are the two variables that primarily affect funeral revenue. The average revenue per contract is influenced by the mix of traditional and cremation services becauseas our average cremation service revenue is approximately one-third of the average revenue earned from a traditional burial service. Funeral homes have a relatively large fixed cost structure.

Factors affecting our cemetery operating results include: the size and success of our sales organization; local perceptions and heritage of our cemeteries; our ability to adapt to changes in the economy and consumer confidence; controlling salary, merchandise, and other controllable costs; exercising pricing leverage related to our atneed business to increase average price per interment right sold; and our response to fluctuations in capital markets and interest rates, which affect investment earnings on trust funds, finance charges on installment contracts and our securities portfolio within the trust funds.

WhileWe wealso arecontinue encouragedto bymonitor the stabilizationimpacts of inflationary costs thatto weour business. While inflationary pressures appear to have experiencedmoderated throughoutand 2024,stabilized, we are unable to forecast or predict with any certainty whether inflationary costs will remain stable and continue to moderate in future periods, as the ultimate scope and duration of these impacts could change as a result of the impact of increased tariffs and remain unknown at this time. More broadly, the U.S. economy continues to experience the impact of several years of higher rates of inflation, which has impacted a wide variety of industries and sectors, with consumers facing rising prices. Such inflation may negatively impact consumer discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced any material impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past. Although such conditions have not materially impacted our business to date and we expect these trends to continue in 2025, we will continue to assess these impacts and take the appropriate steps, if necessary, to mitigate any changes in consumer preferences or additional cost increases, if possible.

For 2025,2026, our plan is to remain focused on executing our strategicgrowth objectivesstrategy and growthother strategy.strategic objectives. This includes prioritizing our capital allocation for potential strategic growth acquisitions, capital expenditures, debt repayments, the payment of dividendsdividends, and debt obligations, internal growth capital expenditures, andother general corporate purposes,purposes as allowed under our Credit Facility. We expect to fund these payments using cash on hand and borrowings under our Credit Facility. We believe that our existing and anticipated cash resources, including, as needed, additional borrowings or other financings that we may be able to obtain, will be sufficient to meet our anticipated working capital requirements, capital expenditures, scheduled debt payments, commitmentscommitments, potential growth acquisitions, and dividends for the next 12 months, as well as our long-term financial obligations.

However, if our capital allocations and expenditures or acquisition plans change, we may need to access the capital markets or seek further borrowing capacity from our lenders to obtain additional funding and we may not be able to obtain such funding on terms and conditions that are acceptable to us. Further, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected. For additional information regarding known material factors that could cause cash flow or access to and cost of finance sources to differ from our expectations, please read Part I, Item 1A, “Risk Factors.Factors”.

We began 20242025 with $1.5$1.2 million in cash and ended the year with $1.2$1.7 million in cash. AtAs of December 31, 2024,2025, we had borrowings of $137.0$126.7 million outstanding on our Credit Facility compared to $179.1$137.0 million atas of December 31, 2023 and $190.7 million at December 31, 2022.2024.

For the year ended December 31, 2024,2025, cash provided by operating activities was $52.0$60.7 million compared to $75.6$52.0 million for the year ended December 31, 2023 and $61.0 million for the year ended December 31, 2022.2024.

Our investing activities resulted in a net cash outflowoutflows of $35.2 million for the year ended December 31, 2025, compared to net cash inflows of $3.6 million for the year ended December 31, 20242024, compareda todecrease $57.0of million$31.5 for the year ended December 31, 2023 and $52.5 million for the year ended December 31, 2022.million.

WeDuring alsothe year ended December 31, 2024, we received proceeds of $1.4$0.4 million from our property insurance policy for the reimbursement of renovation costs for certain of our funeral businesses damaged by Hurricane Ian that occurred during the third quarter of 2022 and a fire that occurred during the first quarter of 2023.2022.

For the year ended December 31, 2024,2025, our capital expenditures (comprised of growth and maintenance spend) totaled $16.1$20.6 million compared to $18.0$16.1 million for the year ended December 31, 2023,2024, andan $26.1increase millionof for$4.5 the year ended December 31, 2022.million.

The following tables present our growth and maintenance capital expenditures (in thousands):

Our financing activities resulted in a net cash outflow of $25.0 million for the year ended December 31, 2025, compared to a net cash outflow of $48.7 million for the year ended December 31, 2024, compared to a net cash outflowdecrease of $18.2$23.7 million for the year ended December 31, 2023, and a net cash outflow of $8.5 million for the year ended December 31, 2022.million.

ForDuring the year ended December 31, 2023,2025, we had net payments on our Credit Facility, acquisition debtdebt, and finance leases of $12.8$11.4 millionmillion, net payments on our employee equity plans of $6.6 million, and paid dividends of $6.7$7.0 million.

ForDuring the year ended December 31, 2022,2024, we had net borrowingspayments on our Credit Facility, acquisition debtdebt, and finance leases of $34.4 million, offset by the following payments: i) $36.7$43.2 million forand thepaid purchasedividends of treasury stock; ii) $6.8 million in dividends; and iii) $0.9 million for debt issuance and transition costs related to our Credit Facility.million.

Credit Facility, Lease ObligationsObligations, and Acquisition Debt

At December 31, 2024,2025, we had outstanding borrowings under the Credit Facility of $137.0$126.7 million. We also had one letter of credit for $2.2 million under the Credit Facility. The letter of credit will expire on November 25, 2025,2026 and is expected to automatically renew annually and secures our obligations under our various self-insured policies.annually. At December 31, 2024,2025, we had $110.8$121.1 million of availability under the Credit Facility.

Acquisition debt consists of deferred purchase price and promissory notes payable to sellers. At December 31, 2024,2025, acquisition debt obligations were $8.3$6.2 million, with $0.9$0.6 million payable within 12 months. See Note 12 of Part II, Item 8,8. Financial Statements and Supplementary Data,Data Notefor 12additional information related to ouracquisition Consolidateddebt. FinancialThe Statementsinformation fordiscussed furthertherein detailis incorporated by reference into this Part I, Item 1 of ourthis debtAnnual payments.Report.

We operate in two business segments: Funeral Home Operations, which currently accounts for approximately 68%66% of our total revenue and Cemetery Operations, which currently accounts for approximately 32%34% of our total revenue. At MarchJune 31,30, 2026, we operated 155 funeral homes in 24 states and 28 cemeteries in 9 states.

ATM Offering Program

On May 6, 2026, the Company announced it hashad entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Raymond James & Associates, Inc., serving as sales agents (together, the “Sales Agents”), with respect to itsan at-the-market equity offering program (the “ATM Program”) under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $100.0 million (“Shares”) through or to the Sales Agents.Agents, as sales agents and/or principals. To date, we have not sold any Shares under our ATM Program.

We continue to monitor the macroeconomic, geopolitical, and certain policy factors and their potential impact, if any, on our business. During the first half of 2026, consumer discretionary spending has reflected mixed trends, with higher-income consumers appearing more resilient and moderate-income consumers exhibiting more cautious behavior, which could result in an overall reduction in consumer spending and demand for products and services. These trends arecontinue alsoto be influenced by moderatingmoderating, but still elevatedelevated, inflation.inflation, evolving tariff and trade policies, geopolitical developments, and volatility in energy prices. Although certain indicators suggest that inflation has moderated, wethese factors continue to monitorcreate potentialuncertainty impactsregarding duefuture tocost ongoing geopolitical tensionstrends and evolving tariff and trade policies. These pressures, along with volatility in energy prices, interest rates, and ongoing tariff developments, may result in certain costs remaining elevated and contribute to broader economic uncertainty.conditions. SuchInflation inflationand other macroeconomic conditions may negatively impact consumer discretionary spending, including the amount that consumers are able to spend on our services, although we have not experienced any material impacts to date and our industry has been largely resilient to similar adverse economic and market environments in the past.services. To date, these conditions have not materially impacted our business.business, and our industry has historically demonstrated resilience during similar adverse economic and market environments.

We began 2026 with $1.7 million in cash and ended the yearquarter with $2.9$2.6 million in cash. As of MarchJune 31,30, 2026, we had borrowings of $120.5$124.0 million outstanding on our Credit Facility compared to $126.7 million as of December 31, 2025.

For the threesix months ended MarchJune 31,30, 2026, cash provided by operating activities was $14.9$22.5 million compared to $13.8$21.9 million for the threesix months ended MarchJune 31,30, 2025. The growth was primarily driven by improvements in working capital.

Our investing activities resulted in net cash outflows of $3.9$13.4 million for the threesix months ended MarchJune 31,30, 2026, compared to net cash inflows of $15.5$12.8 million for the threesix months ended MarchJune 31,30, 2025, a decrease of $19.4$26.2 million.million, primarily as a result of the activity described below.

During the threesix months ended MarchJune 31,30, 2025,2026, we soldacquired twoone funeral homes and three cemeterieshome for an aggregate of $15.8$4.5 million. Additionally, we sold real property for $2.9 million.

For the threesix months ended MarchJune 31,30, 2026, our capital expenditures (comprised of growth and maintenance spend) totaled $3.9$9.2 million compared to $3.2$6.0 million for the yearsix months ended MarchJune 31,30, 2025, an increase of $0.7$3.2 million.

Our financing activities resulted in a net cash outflow of $9.8$8.2 million for the threesix months ended MarchJune 31,30, 2026, compared to a net cash outflow of $25.8$34.5 million for the threesix months ended MarchJune 31,30, 2025, a decrease of $16.0$26.3 million.

During the threesix months ended MarchJune 31,30, 2026, we had net payments on our Credit Facility, acquisition debt, and finance leases of $6.3$3.0 million, net payments on our employee equity plans of $1.7 million, and paid dividends of $1.8$3.6 million.

During the threesix months ended MarchJune 31,30, 2025, we had net payments on our Credit Facility, acquisition debt, and finance leases of $17.1$24.3 million, net payments on our employee equity plans of $6.9$6.6 million, and paid dividends of $1.7$3.5 million.

Revenue for the three months ended MarchJune 31,30, 2026 decreasedincreased $0.9$0.8 millionmillion, compared to the three months ended MarchJune 31,30, 2025, primarily due to aan decreaseincrease in divestedacquisition and financial revenue that was partially offset by growtha decline in acquisitiondivested and comparable revenue. In our Funeral segment, we experienced a 0.9% decrease in funeral contract volume; partially offset by a 3.1%4.7% increase in the average revenue per funeral contract, and ana 8.0%21.1% increase in preneed insurance contracts sold.sold; partially offset by a 4.0% decrease in funeral contract volume. In our Cemetery segment, we experienced a 10.0%5.0% increase in preneed sales production (M&S and property)a and an 11.0%17.3% increase in the average price per interment right (property) sold; partially offset by a 2.6%14.0% decrease in the number of preneed interment rights (property) sold.

Gross profit for the three months ended MarchJune 31,30, 2026 increaseddecreased $0.8$0.9 million compared to the three months ended MarchJune 31,30, 2025, primarily due to effectivean costincrease management.in depreciation and amortization.

Net income for the three months ended MarchJune 31,30, 2026 decreasedincreased $7.4$0.5 millionmillion, compared to the three months ended MarchJune 31,30, 2025, primarily due to a prior year net gain on divestitures, impairment charges, and sale of real property of $7.8$0.9 million and a $1.0 million increasedecrease in general and administrative expenses; partially offset by a $0.8 million increase in gross profit contribution from our businesses,expenses, a $0.4 million decrease in interest expense, and a $0.4$0.2 million decrease in income tax expenses.expense; partially offset by a $0.9 million decrease in gross profit contribution from our businesses.

We also present our financial performance in our “Condensed Operating and Financial Trend Report” (“Trend Report”) as reported in our earnings release for the three months ended MarchJune 31,30, 2026, dated MayAugust 6,5, 2026, and discussed in the corresponding earnings conference call. This Trend Report is used as a supplemental financial statement by management and investors to compare our current financial performance with our previous results and with the performance of other companies. Additionally, management employs segment gross profit for product pricing evaluation and uses segment adjusted operating profit to assess each segment’s performance by comparing results. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP. The Trend Report is a non-GAAP statement that also provides insight into underlying trends in our business.

The following is a discussion of our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025.

The term “comparable” in the funeral home and cemetery segments refers to all funeral homes and cemeteries that we owned for the entire period beginning January 1, 2025 and ending MarchJune 31,30, 2026.

Funeral home comparable revenue decreased $2.8$1.4 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decline in comparable revenue is primarily driven by a 5.8%3.5% decrease in comparable contract volume.volume, which is partially offset by a 1.1% increase in the average revenue per contract excluding preneed funeral trust earnings. Average revenue per contract, including trust earnings, increased by 3.7%, primarily reflecting higher preneed interest recognized on fulfilled funeral and service and merchandise contracts.

Funeral home comparable adjusted operating profit for the three months ended MarchJune 31,30, 2026 decreased $2.5$1.3 million when compared to the same period in 2025,2025. The decrease was primarily duedriven toby thean increase in operating expense relative to revenue. The comparable operating profit margin decreased 210 basis points to 41.4%. Operating expenses as a percentage of revenuerevenue, increasedresulting 2.0%,in witha the130 largestbasis increasespoints decline in comparable adjusted operating profit margin to 36.5%. The increase in operating expenses was primarily attributable to higher salaries and benefitsbenefits, expenses,together facilitieswith and grounds expenses, andhigher general and administrative expense.expenses, and promotional expenses.

Ancillary revenue decreased $0.2$0.1 million, while ancillary adjusted operating profit increased $2.0$0.1 thousandmillion for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decrease in ancillary revenue is primarily drivenattributable byto alower declineactivity in our online cremation business.businesses. Despite the decline in revenue, ancillary adjusted operating profit improved due to lower operating expenses.

Other revenue and other adjusted operating profit, which consists of preneed funeral insurance commissions and earnings from delivered preneed funeral trust and insurance contracts, increased $0.8$1.8 million and $1.0 million, respectively,each, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. This increase iswas primarily driven by higher funeral trust income and growth of $0.5 million in general agency commission income forearned on the first quartersale of 2026 compared to the same period in 2025, reflecting continued growth in preneed funeral sales through our strategic partnership with a national insurance provider.policies.

Cemetery comparable revenue increaseddecreased $1.7$0.1 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025,2025. asThe wedecrease experiencedwas aprimarily 15.3% increase in the average price per interment right sold; partially offsetdriven by a 7.1%17.0% decrease in the number of preneed interment rights (property) sold, which was partially offset by a 17.9% increase in the average price per interment right sold. Cemetery comparable atneed revenue, which represents approximately 30.8%27.9% of our total operating revenue, increaseddecreased $0.1$0.6 million for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, primarily due to a 9.6%6.1% increasedecline in theatneed averagerecognized pricemerchandise perand service revenue and a 6.9% decrease in recognized atneed contract.property revenue.

Cemetery comparable adjusted operating profit increaseddecreased $1.4$0.2 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025,2025. The decrease was primarily driven by highera property0.4% salesincrease in operating expense with the largest contributor in salaries and benefits, which increased deliveries1.6% of merchandise and service items bothrelative to preneedrecognized and atneed customers, while costs remained relatively stable.revenue. As a result, comparable operating profit margin increaseddecreased 26050 basis points to 43.4%.44.5%.

Other revenue and other adjusted operating profit increaseddecreased $0.2$0.6 million each,and $0.7 million, respectively for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025,2025. The decline is primarily dueattributable to prior year activity in ourlower perpetual care trust fund thatearnings, didwhile notthe recurgreater decrease in 2026.adjusted operating profit reflects the timing of certain operating expenses recognized between periods.

Cemetery property amortization. Cemetery property amortization totaled $2.0$3.1 million and $5.1 million for the three and six months ended MarchJune 31,30, 20262026, respectively, an increase of $0.9 million and $1.1 million compared to the three and six months ended June 30, 2025, respectively,respectively. The increases were primarily driven by thea increasehigher inmix of mausoleum property soldsales, acrosswhich ourcarry significantly higher associated property costs than traditional cemetery portfolio.property sales.

Field depreciation. Depreciation expense for our field businesses totaled $3.4 million and $6.8 million for the three and six months ended MarchJune 31,30, 2026, respectively, an increase of $0.1 million and $0.2 million compared to the three and six months ended MarchJune 31,30, 2025, primarily driven by our business decision to lease vehicles rather than purchase them.respectively.

Regional and unallocated funeral and cemetery costs. Regional and unallocated funeral and cemetery costs consist of salaries and benefits for regional management, field incentive compensationcompensation, and other related costs for field infrastructure. Regional and unallocated funeral and cemetery costs totaled $4.4$3.7 million and $3.3 million, respectively, for the three months ended MarchJune 31,30, 2026, compared to the three months ended June 30, 2025, an increase of $0.4 million, primarily driven by an increase in salaries and benefits. For the six months ended June 30, 2026, Regional and unallocated funeral and cemetery costs were $8.0 million and $8.5 million, respectively, compared to the six months ended June 30, 2025, a decrease of $0.8$0.5 million compared to the same period in 2025,million, primarily driven by a decrease in leadership and development expenses.expenses offset by increases in salaries and benefits and transportation costs.

General, administrative, and other. General, administrative, and other expenses, which include salaries and benefits and cash and equity incentive compensation for our Houston support office, totaled $13.1$11.0 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $1.0$0.9 million compared to the same period in 2025, primarily driven by alower $0.5incentive compensation coupled with an increased focus on cost management across all aspects of our business. For the six months ended June 30, 2026, general, administrative, and other expenses totaled $24.1 million, an increase of $0.1 million increase in salaries and wages, a $0.3 million increase in depreciation and amortization, primarily driven by amortization of costs relatedcompared to the developmentsix ofmonths ourended digitalJune transformation30, project, and a $0.2 million increase in facilities and grounds, primarily as a result of an increase in property taxes.2025.

During the three months ended MarchJune 31,30, 2025,2026, we sold twoone funeral homes and three cemeterieshome for a gainloss of $5.9$47.0 million.thousand. We also recognized an impairment of $0.1 million onand land$0.3 held for salemillion during the three and six months ended MarchJune 31,30, 2025.2026, respectively.

Other, net. During the threesix months ended MarchJune 31,30, 2025, we recorded a $2.0 million gain on the sale of other real property not used in business operations. We did not record any gain or loss activity during the threesix months ended MarchJune 31,30, 2026.

Income taxes. Income tax expense including discrete items totaled $4.9 million for the three months ended MarchJune 31,30, 2026, a decrease of $0.4$0.2 million compared to the three months ended MarchJune 31,30, 2025. The current quarter's lower effective tax rate before discrete items, was partially offset by higher excess tax benefits recognized on the settlement of employee share-based awards in the prior year first quarter. Our effective tax rate before discrete items was 28.1%28.5% and 31.2%30.4% for the three months ended MarchJune 31,30, 2026 and 2025,2026, respectively, primarily related to a decrease in non-deductible officer compensation.