CSV Carriage Services, Inc.

Management Discussion

• The term “divested” when discussed in the Funeral Home Segment, refers to a business sold in December 2017 that had trailing expenses in 2018. The term “divested” when discussed in the Cemetery Segment, refers to three cemetery businesses that we ceased to operate on September 30, 2018, as a result of an expired management agreement. Cemetery property amortization, Field depreciation expense and Regional and unallocated funeral and cemetery costs, are not included in Operating profit, a non-GAAP financial measure. Adding back these items will result in Gross profit, a GAAP financial measure.
• Funeral home same store operating revenue for the three months ended June 30, 2019 increased $1.5 million, primarily due to a 3.8% increase in same store contract volumes, while the average revenue per contract remained flat compared to the three months ended June 30, 2018.
• Same store operating profit for the three months ended June 30, 2019 increased $1.1 million when compared to the three months ended June 30, 2018 and the comparable operating profit margin increased 140 basis points to 36.5%. The increase is primarily due to the increase in same store revenue coupled with better management of controllable expenses. The higher operating profit margin is a result of the company wide changes implemented in the fourth quarter of 2018 to refocus on operational leadership and high performance operating standards.