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Risks

• The success of our businesses is typically dependent upon one or a few key employees for success because of the localized and personal nature of our business.
• Our “Good To Great” incentive program could result in significant future payments to our Managing Partners.
• Improved performance in our funeral and cemetery segments is dependent upon successful execution of our Standards Operating Model.
• Our ability to execute our growth strategy is highly dependent upon our ability to successfully identify suitable acquisition candidates and negotiate transactions on favorable terms.
• Divestitures could negatively impact our business and retained liabilities from businesses that we sell could adversely affect our financial results.
• The funeral and cemetery industry is competitive.
• Marketing and sales activities by existing and new competitors could cause us to lose market share and lead to lower revenue and margins.
• Price competition could also reduce our market share or cause us to reduce prices to retain or recapture market share, either of which could reduce revenue and margins.
• Our ability to generate preneed sales depends on a number of factors, including sales incentives and local and general economic conditions.
• Increased preneed sales could have a negative impact on our cash flows.
• Our funeral and cemetery trust funds own investments in equity securities, fixed income securities, and mutual funds, which are affected by market conditions that are beyond our control.
• Earnings from and principal of trust funds could be reduced by changes in financial markets and the mix of securities owned.
• We may be required to replenish our funeral and cemetery trust funds in order to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow.
• Increasing death benefits related to preneed funeral contracts funded through life insurance contracts may not cover future increases in the cost of providing a price-guaranteed funeral service.
• The financial condition of third-party insurance companies that fund our preneed funeral contracts may impact our future revenue.
• Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows.
• New or revised tax regulations could have a material effect on our financial statements
• Unfavorable results of litigation could have a material adverse impact on our financial statements.
• Declines in the number of deaths in our markets can cause a decrease in revenue. Changes in the number of deaths are not predictable from market to market or over the short term.
• The increasing number of cremations in the United States 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.
• If we are not able to respond effectively to changing consumer preferences, our market share, revenue and profitability could decrease.
• Because the funeral and cemetery businesses are high fixed-cost businesses, changes in revenue can have a disproportionately large effect on cash flow and profits.
• Changes or increases in, or failure to comply with, regulations applicable to our business could increase costs or decrease cash flows.
• We are subject to environmental and worker health and safety laws and regulations that may expose us to significant costs and liabilities.
• Covenant restrictions in our debt instruments may limit our flexibility to operate and grow our business, and if we are not able to comply with such covenants, our lenders could accelerate our indebtedness, proceed against certain collateral or exercise other remedies, which could have a material adverse effect on us.
• Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations.
• Despite our current levels of indebtedness, we may still incur additional indebtedness. This could further exacerbate the risks associated with our indebtedness.
• Unfavorable economic conditions, including those resulting from health and safety concerns, could adversely affect our business, financial condition or results of operations.
• Economic, financial and stock market fluctuations could affect future potential earnings and cash flows and could result in future goodwill, intangible assets and long-lived asset impairments.
• We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents could harm our ability to operate our business effectively.
• Failure to maintain effective internal control over financial reporting could adversely affect our results of operations, investor confidence, and our stock price.