Four Carriage Services Acquisitions Signal Positive Two-Year Performance Outlook
The fourth quarter of 2019 was a busy one for Carriage Services, Inc. In October and December Carriage announced the acquisition of four entities:
- Lombardo Funeral Homes in Buffalo, New York,
- Rest Haven Funeral Home and Cemetery in Rockwall, Texas,
- Oakmont Memorial Park and Mortuary in Lafayette, California, and
- Fairfax Memorial Park and Funeral home in Fairfax, Virginia.
The company also announced the addition of William “Bill” Goetz to the Carriage leadership team. Goetz joins Carriage as President and Chief Operating Officer as well as a member of the Board of Directors. In the same release, Carriage shared performance forecasts for 2020 and 2021.
Lombardo Funeral Homes
The October 2019 acquisition of Lombardo Funeral Homes marks Carriage’s entry into the Buffalo, New York strategic market. With Lombardo, Carriage gains four funeral chapels serving about 2,000 families each year.
Founded in 1907 by Joseph Lombardo, Sr., Lombardo Funeral Homes is the largest funeral home provider in Western New York. Joseph, Sr.’s grandson and the firm’s current president, Joseph P. “Joe” Lombardo, negotiated the partnership with Carriage.
“I spoke with four different companies and decided a partnership with Carriage Services was the best fit for me and my business,” Lombardo said in a press release. “Carriage understands my local operating strategy which allows me to continue to focus on growing my business and still give back to my community that has supported me for so many years.”
Rest Haven Funeral Home and Cemetery
Carriage entered another strategic market, the Dallas-Fort Worth Metroplex, in October with the acquisition of Rest Haven Funeral Home and Cemetery, which is based in Rockwall, Texas.
Since 1970, founder Dewayne Cain has grown Rest Haven to include funeral home locations in Rowlett and Royse City, Texas. The company also owns Northeast Texas Crematory, The Flower Box, Pet Memories, and Care Center. More than 3,000 Texas families choose Rest Haven for services each year.
“My wife, Ann, and I feel immensely blessed and proud of reaching this 50-year milestone,” Cain said in a press release. “Rest Haven has been a part of our lives since shortly before we were married. By choosing to partner with Carriage Services, we are confident that the level of excellent service and the reputation of outstanding personalized care for which Rest Haven is known will be seamlessly ensured for our community today and for generations to come.”
Oakmont Memorial Park and Mortuary
Carriage Services entered into a definitive agreement to acquire the assets of Lafayette, California’s Oakmont Memorial Park and Mortuary in early December 2019. They completed the purchase and transfer of ownership from StoneMor Partners in the first days of January 2020.
Oakmont, which was founded in 1956, is well-known to several of Carriages field leaders whose careers included stints at the East Bay Area property. “We have long known about Oakmont being a uniquely beautiful cemetery, which has a lush mountainside landscape and provides spectacular views of nearby Mount Diablo and Briones Regional Park,” wrote Carriage Chairman and CEO Mel Payne in a December 4, 2019 press release.
“Oakmont is best known for its beautifully designed and constructed high-end cemetery projects to satisfy the burial and memorialization needs of the affluent area markets that it serves,” continued Payne. “The upside performance potential of Oakmont, when realized over the next several years under Carriage’s framework of leadership and support, is expected to generate high returns on the premium price we are paying for what our people describe as an A+++ property.”
Fairfax Memorial Park and Funeral Home
In December 2019, Payne announced Carriage’s acquisition of Fairfax Memorial Park and Funeral Home in Fairfax, Virginia from the Doherty family.
Four men, including Cornelius H. Doherty and his son Cornelius H. “Neil” Doherty Jr., founded the enterprise in 1957 as Calvary Memorial Park, a Catholic cemetery. In 1976, Calvary acquired the adjacent non-sectarian Fairfax Memory Gardens and combined both properties under the name Fairfax Memorial Park. The funeral home on the property was completed in 2003.
Now under the leadership of third-generation funeral director Michael H. “Mike” Doherty, Fairfax performs about 850 cemetery interments and 900 funerals annually. According to a statement by Payne, the combined revenue of Fairfax’s annual services “represents the largest single business acquired in the 28-year history of Carriage.”
New Carriage President, Chief Operating Officer, and Board Member
Carriage CEO Mel Payne announced the selection of William “Bill” Goetz as President, Chief Operating Officer, and member of the firm’s Board of Directors in December 2019.
Goetz, who was selected from nearly 200 candidates, comes to Carriage from Sysco Corporation, where he served as Senior Vice President of Sales and Marketing. He also spent 23 years at Cintas Corporation, where he started as a management trainee driving a route truck and progressed into the roles of Chief Marketing Officer, President, and COO.
“Bill is a first class human being both personally and professionally and has a proven record of being an exemplary leader of people,” shared Payne. “He comes with extraordinary references as to his character and natural leadership abilities and has a long history of success with only three other companies. [ … ] Bill is as good as it gets regarding a high performance cultural fit for Carriage, and on behalf of our Board and all of our leadership and employees, I am honored to have him as a leadership partner for our company.”
Positive two-year outlook for Carriage
Following these four major fourth-quarter acquisitions and new leadership, Payne predicts a positive outlook for Carriage’s performance in 2020 and 2021. These performance milestones include:
- Total revenue of over $325 million,
- Adjusted consolidated EBITDA of about $100 million,
- Adjusted consolidated EBITDA margin of over 30%,
- Adjusted diluted EPS of almost $2 per share,
- Adjusted free cash flow of over $51 million, and
- Total debt-to-EBITDA ratio of less than 4.5 times.
“We have a strong conviction that being bold now will pay huge performance and valuation dividends later,” shared Payne in the December announcement. “We are planning to finance the four acquisitions with our existing bank syndicate through an increased bank revolving credit facility. We can now pause our acquisition growth for a year or two while we integrate, operate, and optimize our newly acquired earnings and free cash flow power.”
Houston, Texas-based Carriage Services operates 187 funeral homes in 29 states and 30 cemeteries in 11 states.