Good day, and thank you for standing by. Welcome to the Carriage Services 4th Quarter 2025 Earnings Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Metzger, President. Please go ahead, sir.

Good morning, everyone, and thank you for joining us to discuss our 4th quarter and year-end results for 2025. In addition to myself, on the call this morning for management are Carlos Quesada, Chief Executive Officer and Vice Chairman of the Board of Directors, and John Enright, Senior Vice President and Chief Financial Officer. On the Carriage Services website, you can find our earnings press release, which was issued yesterday after the market closed. Our press release is intended to supplement our remarks this morning and include supplemental financial information, including the reconciliation of differences between GAAP and non-GAAP financial measures. today's call will begin with formal remarks from Carlos and John will be followed by a question and answer period before we begin I'd like to remind everyone that during this call we'll make some forward-looking statements including comments about our business projections and plans forward-looking statements inherently involve risks and uncertainties and only reflect our views as of today these risks and uncertainties include but are not limited to factors identified in our earnings release as well as in our SEC filings all of which can be found on our website. Thank you all for joining us this morning, and now I'd like to turn the call over to Carlos.

Thank you, Steve, and welcome to everyone joining us for today's fourth quarter and full-year earnings call. As we close out 2025, I am incredibly proud of what our CAREGE team has accomplished. This year reflects discipline execution, cultural alignment, and a relentless commitment to creating premier experiences for the families we serve. Before discussing our financial performance, I want to recognize every managing partner, every team member in the field, and every support member across our organization. You are the heartbeat of courage. Our results are not accidental. They are the result of a clear vision, high expectations, accountability, and a deep passion for this noble profession. Thank you for living our values and for delivering excellence to every family, every time. Today, I will highlight our financial performance for the fourth quarter and the full year and provide an update on the progress of some of our strategic objectives. John will then provide additional detail on our financial metrics, cash from operating activities, balance sheet strength, capital expenditures, overhead, and 2026 guidance. Now to my report. 2025 was a year of defined purpose and intentional value creation. We continued to build a more scalable operating framework, optimize our supply chain processes, enhance our passion for service mindset, and reactivated our discipline growth strategy to high-quality acquisitions. At the same time, we further strengthen our balance sheet and reinforce our capital allocation discipline. We are no longer in the rebuilding phase. We are now firmly in the compounding phase. Let's begin with the numbers. For the fourth quarter, we reported total revenue of $105.5 million, representing a solid 8% increase compared to the same period last year. When we looked at each segment, total funeral operating revenue was $61.1 million, reflecting a 9.6% growth year-over-year. Funeral home operating volume was $10,571, an increase of 6.8% over the same period last year, while average revenue per contract was $5,777, an increase of 2.6% over the previous year's quarter. This performance reflects our continued focus on strategic pricing, new burial information offerings, service mix optimization, and steady execution in our businesses. As you may recall, December 2024 had lower than expected volumes due to a shift in the flu season that pushed volume to January. This December, we experienced a more typical flu season. Moving to total cemetery operating revenue, we finished the fourth quarter at $33.8 million, an increase of $5.3 million, or 18.4 percent, compared to the same quarter last year. This performance was primarily driven by a 25.5 percent increase in pre-need cemetery sales production a 15.6 percent increase in pre-need internment rights sold and a 5.3 percent increase in the average sales per property contract our cemetery performance continues to highlight the power of diverse inventory development a strategic pricing and focused pre-need execution moving to total financial revenue the company ended the quarter at 9.3 million an increase of fifteen point three percent compared to the same period last year primarily driven by the strong performance of our trust fund investments printed insurance contracts sold increased by thirty three point eight percent compared with the same quarter last year reinforcing the continuous strength of our funeral printed insurance sales strategy and the outstanding work of our sales teams who continue to focus on the education of our families on the value of pre-planning turning to profitability adjusted consolidated EBITDA for the fourth quarter was 32.5 million an increase of 3.2 million or 11% an adjusted consolidated EBITDA margin was 30.8% an increase of 80 basis points when compared to the same quarter the previous year. This margin expansion reflects the combined impact of our supply chain initiatives, the strategic pricing, and capital allocation discipline. Adjusted diluted EPS for the fourth quarter was 75 cents per share compared to 62 cents during the same quarter the previous year. An increase of 13 cents per share or 21 percent our fourth quarter of 2025 delivers strong performance and we're pleased with the progress made now let's move to our full year performance total revenue was 417.4 million up from 404.2 million in 2024 representing a 3.3 percent growth While reported revenue growth of 3.3% may appear modest at first glance, it significantly understates the company's underlying performance in the context of our portfolio repositioning. In 2025, the divestiture of non-core businesses negatively impacted revenue by approximately $9 million, and we acquired strategically selected high-quality assets in September, which contributed about $4 million in revenue. We expect these new businesses to reach $16 million in revenue in 2026. Overall, while we felt the top-line impact of the divestitures of non-core businesses in 2025, this portfolio optimization will enhance our ability to grow revenue and margins in the future and showcased our commitment to disciplined capital allocation and return of invested capital. Moving to adjusted consolidated EBITDA, we ended the year at $130.7 million, an increase of $4.4 million, or 3.5%, while adjusted consolidated EBITDA margin finished at 31.3%, an increase of 10 basis points, both compared to the prior year. Adjusted diluted EPS was $3.20 per share compared to $2.65 per share, an increase of $0.55 or 20.8% compared to the prior year. These results demonstrate the execution discipline of our operations and validate the effectiveness of our strategy to turn around the company. Over the past three years, we have rebuilt carriage with intention, purpose, and discipline execution, not simply to improve performance and build credibility, but to create a more sustainable, profitable, and predictable company. We have reshaped our revenue mix toward higher quality earnings, institutionalized rigor with our operating system to reduce volatility, and improved our margin profile through discipline pricing, supply chain optimization, and strategic capital allocation. These actions are designed to generate consistent cash flow, expand profitability over time, and enhance earnings visibility. Most importantly, our leadership teams are fully aligned and executing with accountability to deliver performance that we believe is repeatable and scalable.

Moving to updates on our strategic initiatives.

We continue to invest in systems and infrastructure to support disciplined growth, advancing continuous improvement initiatives, modernize technology platforms, and enhance reporting capabilities. These investments improve our reliability, visibility, and decision-making quality, converting effort into behaviors and repeatable outcomes. For example, we upgraded our sales infrastructure by deploying Sales Edge 2.0, our CRM, achieving approximately 80% adoption by year-end. The platform enhanced funnel visibility, campaign targeting, and reporting precision, contributing $2.6 million in fourth-quarter printing production. In parallel, we fully integrated our printing funeral sales strategy across the sales organization. We expect Sales Edge 2.0 to become our pre-need sales engine in 2026. At the same time, we develop our leadership capability and reinforce a bureaucratic culture aligned with performance expectations. Culture at Carriage is a measurable economic asset that makes execution stronger, reduces risk, and supports sustainable profitability. Our supply chain optimization strategy continues, with our EARN and CASKET core line initiatives now fully embedded across our organization. These strategies are driving purchasing consistency, margin improvement, and a more curated presentation for families. We expect future optimization opportunities and additional national partnerships will allow us to further reduce complexity and enhance our operating leverage. In closing, we're building a best-in-class definite company defined by premier experiences, a high-performance culture, meritocracy, and accountability, all aligned with our three strategic objectives, discipline capital allocation, purposeful growth, and relentless improvement. Our performance in 2025 reflects discipline execution guided by a clear, consistent framework rooted in our purpose to create premier experiences to innovation and power

partnerships and elevated service these are not aspirations they are operating

standards that guide capital deployment operational decisions and long-term value creation our balance sheet is stronger our systems are more robust our acquisition engine is active and disciplined and our culture is aligned with our 2030 vision. We're not chasing growth. We're building durable, predictable, and compounding long-term shareholder value. As we enter 2026, we do so with confidence, clarity, and intention. Thank you for your continued trust and belief in carriage. I will now turn the call over to John.

Thank you, Carlos, and thanks everyone for joining us today. Before I start, I'd like to look back on my first year of care and services. I knew stepping into a new industry would bring professional growth, but what stood out most was the dedication and commitment throughout the organization. Our teams are truly unmatched in their focus on enhancing the care and service we provide for the families who choose us. I appreciate both our field and support center teams for everything we do each day. My comments today will primarily focus on performance in the fourth quarter of 2025 compared to the fourth quarter of 2024. After that, I will share our outlook for 2026. We reported consolidated adjusted EBITDA of $32.5 million, representing 30.8% of revenue, an increase from $29.3 million or 30% of revenue in the fourth quarter of last year. The increase, both in absolute terms and percentage, were driven by improved performance across our field operations, resulting in a $5.5 million increase in field EBITDA. However, this progress was partially offset by an unanticipated employee benefit expense of approximately $1.2 million, which stemmed from a few high-cost claimants during the quarter, as well as higher volume of medical insurance claims filed in December of this year compared to previous year. Additionally, overhead expenses rose, which I'll discuss. For the fourth quarter of 2025, our adjusted diluted EPS rose to $0.75, representing a 21% increase from $0.62 in the prior year. The previously mentioned unanticipated employee benefit expense in the fourth quarter of 2025 impacted diluted EPS by approximately $0.05 to $0.06. On a gap basis, diluted EPS for the fourth quarter was $0.77, compared to $0.62 in the same period last year. For the full year, GAAP diluted EPS increased by $1.15, or 54.8%, while adjusted diluted EPS grew by $0.55, or 20.8%. Moving to cash from operating activities, we saw an increase of $4.8 million over the prior year quarter, or a 52.2% increase, primarily a result of year-over-year improvement in operating results. Adjusted free cash flow in the quarter was down $400,000, or 5.4%, from the prior year fourth quarter, primarily due to higher capital expenditures. Due to our ongoing commitment to discipline capital allocation, our banks leveraged 4.3 times. In recent years, we've concentrated on enhancing operations and deploying capital. Please defend the year within our long-term leverage ratio target of 3.5. Capital expenditures for the quarter totaled $7.9 million in the fourth quarter of 2025, compared to $4.4 million in the prior year's fourth quarter. The $3.5 million increase was predominantly associated with growth capital, specifically investment in cemetery development, which allows us to continue to drive strong cramied cemetery sales production. For the quarter, we spent $5.2 million on growth capital and $2.7 million on maintenance capital. Overhead expenditures for the quarter totaled $15.2 million, or 14.4% of revenues, compared to $12.9 million, or 13.2% of revenues in the fourth quarter of 2024. The increase was predominantly associated with higher incentive pay for the field based on performance for the year. On a full-year basis, overhead expenses totaled $56.6 million, or 13.6% of revenues, which aligns with our long-term target. Moving on to our 2026 outlook. In forming an outlook for the upcoming year, we have shifted toward a growth-oriented approach, along with incorporating the projected full-year benefits from our 2025 acquisitions. Additionally, we have factored in the expectation of certain potential acquisitions that we believe may be completed in 2026. Reveues are planning to be in the $440 million to $450 million range compared to $417.4 million in 2025, which represents a growth rate of approximately 5.5 to 8.0 or funeral growth in the low single digits and 70 growth in the high single digits. Pre-need cemetery sales production should remain within our 10% to 20% target. Adjusted consolidated EBITDA is forecasted at $135 to $140 million for 2026, up from $130.7 million in 2025. Margin are expected to range between 30.5% to 31.5% compared to 2025 margin of 31.3%. Overhead is projected to be 13.5% to 14.5%. A bit higher than a long-term goal of 13% to 14%, mainly due to expected increases in IT investments, ongoing project training rollout expenses, and continued investment in talent. Based on these targets, we anticipate adjusted diluted EPS of $3.35 for $3.55, compared to $3.20 in 2025. Our adjusted diluted EPS will be somewhat impacted by our expected full-year effective tax rate moving to a range of 28.5% to 29% compared to 26.7% in 2025. Finally, we anticipate our adjusted free cash flow to be in the range of $40 to $50 million, which assumes total capital expenditures in 2026 of $25 to $30 million, reflective of the continued investment in our core business. That concludes our prepared remarks, and I will turn it over to the operator to open them up for questions.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first question from Alex Paris with Barrington Research.

Thanks for taking my question, and congrats on the strong finish to the year and the guide. My questions are in three parts. First, on the quarter, you beat on revenue pretty handily. And I think you said the acquisitions of the third quarter added around $4 million for the year. How much for the fourth quarter did they add?

They added about $3 million, generally speaking.

Adjusted EBITDA was in line despite that increase in overhead that you mentioned and that unanticipated insurance cost. Are those insurance costs included in overhead or no?

So they're spread between overhead as well as field margins. So predominantly they're in field margins, but, yes, there's an impact to overhead as well as we allocate.

Okay, and then adjusted EPS was a little bit lower than our expectations, but versus my model, you had a higher interest expense and a higher tax rate than I had modeled. Anything else in there?

No, no, that's, I mean, if you think about our expectations and how we guided to, really if we didn't have that unanticipated employee benefit expense, we would have fallen right within where we expected.

That's true, okay, thank you on that. And then moving to guidance, revenue growth 5% to 8%, adjusted EBITDA 3% to 7%, adjusted EPS growth 5% to 11%. My question is, what are the underlying assumptions for the low end and the high end? In other words, what would it take to get to the high end of guidance?

So, from a high end of guidance, you would need to, you know, the impact of the new acquisition would have to be at our high end. So, we're estimating that the acquisitions would be between $5 and $10 million of impact to performance in 2026. So, we would get the high end of that. We would be at a little bit of higher end of our impact. So, if you think about our funeral You know, we expect low single-digit growth. That could be between 1% to 3%. We'd be at the high end of that, and then in Cemetery, really, between 6% and 8% would be at the high end of that.

That's helpful. And then you said that that guidance included an assumption for acquisitions that have not yet been announced. Can you quantify it? Perhaps you did in the comments, but I missed it. And what's the methodology for including or not including? You know, for example, are you at, you know, letter of intent stage by the time you increase it? What's the methodology for factoring in future acquisitions?

Yeah, so the acquisitions, you know, the impact to the guide is about $5 million or $10 million full. We expect it to range within that. You know, I can let Steve speak to kind of the perspective. But we – both Carlos and I spoke in our prepared morocs to be more focused on growth and being growth-oriented. And ultimately, based on that, as we are more proactive in our M&A program, we felt it appropriate to apply something this year.

Yeah, I'll just – go ahead. This is Carlos. I just want to, you know, reinforce. So, as you remember, we spent, you know, the most part of the last three years trying to get all the systems, you know, updated, the foundation for growth for the company, and really focusing on paying down our debt to a range that we feel comfortable, which is that 3.5 to 4 times. We achieved the 4 times as we closed 2025, and we truly believe now, you know, At its core, it's a consolidation company, so really trying to advance and make some rapid moves on growth from an M&A perspective, in organically speaking. And I truly believe this is why we want to signal to our investors within the guidance that we're ready for that.

And the point of clarification, though, the high-end guidance includes $5 to $10 million impact year over year from, I assume, the third quarter acquisitions. And then you're saying there's potentially another $5 to $10 million in acquisitions that you expect to make in 2026.

And so that's great clarification. So, for 2026 results, we expect the acquisitions that happened in 2025 to generate about $16 million worth of revenue. You have to net that against, you know, the $4 million that they had in 2025, as well as the divested revenue that we had in 2025 of about $9.7 million. So, the impact of just that program is probably an increment of about $4 million, right, roughly. In 2026, we're estimating new acquisitions that we believe will have $5 million to $10 million of impact to revenue.

Okay, good. Thank you for that. And then in terms of new acquisitions, I don't know if I fully heard the answer. Are these specific acquisitions that you're talking about or just a methodology to include some sort of number for acquisitions since you're a consolidator?

Yeah, more to Alex. So it's a combination of both. So at this point, last year we talked a little bit about investing in more resources internally to make sure we can be more proactive on sourcing deals. And so we are talking to more owners, quite frankly, than at any time during my eight years at Carriage. We still balance that with looking for a very particular type of business. So at this point, you know, we've got more that we will be able to report next quarter on some ongoing discussions with owners who are ready. So we're excited to talk about that when the time is appropriate. But parallel to that, we're talking with a number of owners who are getting comfortable, and we're getting comfortable with them for some potential opportunities this year. So it's a little bit of both. We've got some that are closer to, you know, call it seventh or eighth inning, and then some that are, you know, earlier innings.

And then the last question is I wonder if we can get an update on the Q3 acquisitions. They had roughly $15 million in revenue in 2024. That's what you had announced at the time of the acquisition. and you're saying that they're going to be $16 million in 2026 after having contributed a partial year of $4 million in 2025. So now that we're back in the M&A business after the hiatus, what is the integration process for acquisitions once closed? You know, what is step one, step two, step three, and where are we on the integration process for those Orlando-based acquisitions?

That's a great question, and I would reframe it a little bit. So the integration process really for us begins before close. So we've giled in with our continuous improvement team a more structured management approach to systems, employment, onboarding, policies, and procedures, and we begin all of that before close, obviously in partnership with the sellers. so we can hit the ground running on day one. As it relates to these two acquisitions, very different acquisitions, although both in really strong markets. So starting with Osceola, as we talked about before, Osceola is unique in that it allows for a holistic operation in the Kissimmee market. So between the cemetery and the opportunities on cemetery development, I think we're really excited there. So we will have some new development, significant development available for the folks in Kissimmee here in just a few months. We've been working on that development before close. The pre-need opportunity for both Kissimmee and then Faith Chapel in Pensacola is significant. So we've got our pre-need teams ramped up there to try and take advantage of that as well. But I would say, you know, both businesses are pretty mature, but both have a lot of opportunity. And we're seeing steady progress from, call it day one, back in late September to where we are now. January was the strongest month by far for both businesses. So we're seeing kind of that pre-planning on the integration side paying off for us based on kind of historical approach and look forward to seeing what they'll do this year.

Thank you. That'll do it for me. I'll get back into the queue. Thank you, Rob.

We'll take our next question from John Fransrapp with Sidoti & Company.

Good morning, everyone, and congratulations on a good year, and thanks for taking the questions. I'd actually like to start the fourth quarter, Carlos, you mentioned that flu activity returned to normalcy, if you will, in the December period, specifically in December, and of itself was very active. I'm curious what you saw in January, we're seeing a secondary resurgence to the flu. I'm curious about the comps on a year-over-year basis and how they could play out, considering last year was so particularly strong.

That's a great question, John. Thank you for the question, and good morning. And so, as you know, and I mentioned on my prepared remarks, December 2024 came, you know, pretty light as a consequence, we believe, to the push of the flu season into January of 2025. This last year, 2025, December came as a normal flu season. So, we saw that activity, volume increase on a comparable basis, December 25 to 24. And then January, it came out, you know, quite light on a couple of bases on volume. However, you know, I still feel pretty strong of our performance because we're able to make up that loss of volume on a couple of bases because the flu season came earlier, and we still end up, you know, having a pretty decent night. I don't want to disclose too much, but January looks good. even after the alignment of the flu season between December and January over the, you know, last year.

And what are the prospects of growth in the first quarter versus last year's first quarter, given the tough comp? You want some volume?

Yeah, I think the first quarter will be a little bit tougher this year from a comparable perspective because the first quarter was strong throughout the whole quarter because the flu season are in January, February, and a little bit into March. So, to Carlos' earlier point, you know, we're not going to disclose exactly how we're performing, but we're happy with the performance, and it'll be a tougher call to come. Got it, got it.

And where do you stand in the supply chain optimization process at this point? You know, can you give us an update there?

Yeah, I would say, and you can see, please jump in if you have anything different to say. I would say we're still in early innings of that program. We really started in 2024 with one individual kind of running that program. And in 25, we got the program up to a little bit more speed. But I would say we still have opportunity there, and we'll see some more opportunity as we see 2026 results and age 27 results.

John, it's also a good question. I want to give you a little more context to that. You know, it's a new department we started probably about two years ago, the beginning of two years ago. And as a low start, just to be honest with you, we were able to deliver the caskets, the urns, a couple of other things. but there's so much opportunity. And part of the challenge was that we're trying to change a lot of things operationally and system-wise at carriage. And at the time, as you may remember, it was really just from a senior leadership perspective, still me driving those initiatives. And so this year, we have realigned with the changes we made and the promotions we made to allow for more focused work. So now supply chain actually reports to John, and John can place a more, you know, a specific emphasis to supply chain and accelerate the journey on that side. At the same time, Steve can put more focus on the operational side moving forward and continue to grow our organic strategy through M&A activity.

Got it. Next slide. One last question on the M&A. It seemed like the last conference call that the expectation was there's going to be a lot of closure activity in the first quarter. leading between the lines, it sounds like now that that's been extended maybe a little bit. Is that a function of multiples have gone up, or is it something else that, you know, we should be aware of?

Yeah, John, I don't think it's a product of multiples going up. Yeah, I think we're seeing those remain pretty steady, and obviously we remain disciplined in how we approach it. It really is a matter of sellers, you know, being ready and, you know, us respecting their timelines, but also us being pretty selective. So, you know, again, the type of business we're looking for, it's a smaller group of businesses that are going to fit that profile. So there's a number of folks out there, but their timeline is just as important as ours.

Got it. Thanks for taking the questions. Thank you. Thanks, Jeff.

We'll take our next question from George Kelly with Roth Capital Partners.

Hey, everyone. Thanks for taking my questions. First one on your guide for 2026, there's a CapEx step up versus what you've been doing in recent years. So, I was wondering if that's related to a specific project or more maintenance related or just any kind of context around your CapEx guide.

Yeah. So, over the last couple of years, as we've been very disciplined in our capital allocation, we've pulled back in a little bit of maintenance. So there's going to be more maintenance in 2026 than there was in 25 and 24. And we're thoughtful on what we're going to do, but there's some just needed to be done. Also, there is still some additional growth capital, right, for us to continue to deliver 10 to 20 percent in pre-need cemetery sales. We have to develop some cemeteries, and there's also some incremental capital associated with that.

And is that 25 to 25 to 30? I'm hearing feedback. But is that a good sort of go-forward number to use beyond 26, or is this kind of a one-year maintenance catch-up?

Yeah, I would use, I think I would use, yeah, 25 to 30 is probably a good going-forward number.

Yeah, George, a good number, even you go back to 20, 21, 22, we're doing 22, 24, 26, and we don't know just maintenance and growth Catholics at the time. And we did ask our managing partners to give us an opportunity to use some of that, so we can you know pay down our debt and they did they were very patient for a little bit over three years and now it is really time to give back to them some of that and I think the 25 to 30 is

really the right range going forward. Okay sounds good and then just a couple other ones for you. On Trinity can you walk through the expectations for the year the rollout testing what you're most excited about? Just an update on that front would be helpful.

Yeah, so from a rollout perspective, you know, we still anticipate a rollout in the, call it, second quarter. So, right now, we're still in pilot phase. So, we have a location in pilot phase. We're looking to move to the pilot phase for a second location shortly. And if successful, we expect to roll out our funeral homes into basically the beginning of the third quarter, ultimately maybe at the end of the fourth quarter. And then what would we do after that? is the center locations or the combos is really where we think the rollout. So there will be some rollout into 2027.

Yeah. And just to give more context, George, you know, the truth is that we are behind with Trinity. That's the bad news. The good news is Trinity became so much more robust in terms of system integrations, you know, API connectivity, reporting capability, our ability to track, you know, loved ones and chain of custody, our ability to increase our sales average per contract based on inventory and core lines and things of that nature. So the excitement is very, very high. The frustration is that we're a little behind in terms of time, you know, time frames. But the solution has become a lot more robust with automation, AI, and other components that initially were not part of the scope. So there is a lot of excitement. There is a lot of good energy going into 2026 because of all that Trinity means, which which is the collectively – so Trinity means all of the systems that basically tap into our ERP system.

Okay, maybe just one more on Trinity. Is there much of an uplift to the contract, the average price per contract that's baked into your guide? And if not, Carlos, are you still – maybe on what you're seeing in the pilot, Or just generally, are you still optimistic that it can really drive a lot of pricing growth per contract?

I'm still very optimistic that we can continue to grow our self-savage revenue per contract. We have been able to achieve that and absorb the cost and then pass on the cost into the consumer. However, you know, it's a faith approach. And what I mean by that is right now we have thinking of more in manual presentation. We have offerings, we have materials that we present to the families that they can see. As Trinity rolls out, it will still be a combination of a mental process with the system process, and the space that follows to that is integrated into a full digital experience to Trinity that embeds the presentation and the contract, you know, in the same moment. And so it will be a phased approach. Now, that space approach will not slow us down from the point of view of still presenting the full story with all of the options to all families,

regardless of whether you choose very low information. And then to answer the question on whether or not we factored in any increases in sales performance into the guide, we did not, right? So, there's no expected impact of Trinity in 2026.

Okay, thank you. And then the last one for me is just about the M&A that's contemplated in your guide. How much do you factor in or how much do you expect to pay for those transactions? What's, like, the value, and where do you expect to end the year on a net leverage basis? And that's all I have.

Yeah. So, again, from a multiple perspective, we're going to be disciplined. So, it depends on the asset that we get because they're not all identified asset, but you can think about from an EBITDA multiple perspective, and you're between seven and nine is probably a fair way to think about that. And from a debt leverage perspective, we expect to end the year based on hitting performance between 3.9 and 4 times. Thank you. Thank you. We'll take our next

question from Parker Sinner with Raymond James. Hey, good morning, and thanks for bringing me on

to ask a question. Just kind of drilling down on the first quarter, I know you mentioned it's a tough comp. Are you seeing any impact from the first quarter, the winter storms, or just generally the poor weather that we're seeing across the country? I guess more so on the pre-need side, is that affecting any sales activity, and also just more broadly on the entire business?

If I give you a little bit of – well, first, good morning, Parker. Thanks for the question. But if I give a little bit of an insight on January 2026, going into our full first quarter for the year. You know, from a comp perspective on volume, we do see a decline because January of 2025 was so strong because of that push back of the flu season from December. However, we're very pleased, as John mentioned, on our performance because our continuous cemetery performance, you know, made up and then some of that loss, our self-service for contract continues to remain very strong. Our ability to convert reclamation into commission, it's an era of focus for us. But cremation mix continues to be within our range and is not growing at any fast rate as we have seen in some other, you know, consolidators out there. And so it's really exciting that even with a bad comp from a blogging perspective, you still have very positive results as a financial, you know, from a financial perspective overall in January of 2026.

Okay. And then I guess just more of a bigger picture question. I like the comments you said you're moving out of the rebuilding phase into the compounding phase. And, Carlos, you've undertaken a fair amount of strategic changes since taking the seat. I guess what is the next strategic frontier in your view for the business? What's the next initiative? And maybe there isn't one. Maybe it's just executing on kind of the good work that you guys have done so far. But maybe just kind of speak high level on just kind of your views on the forward-looking kind of strategic initiatives for the business.

That's a great question. So, not wrong. There's been a lot of work where there is continuous improvement strategies and departments that are now leading and guiding our decisions that carriage, our framework for decision-making within our three strategic objectives, all the focus on margin expansion for supply chain strategy, and, of course, all the different changes we have made over the last probably three years with leadership. We have now a new structure within an executive rank. And so for us right now is really to capitalize, maximize, and really optimize all those changes we have made. I don't really have more changes that I'm having in my head other than deliver Trinity and really maximize and optimize the field engagement and opportunity to increase our opportunity with families to that solution, to help and support Steve on the operational side and continue to grow sales that are 10% to 20% year-to-year, you know, premium production rates. But most important, our main focus now, other than optimizing what we have done over the last few years, is really our focus on M&A.

Okay. Yeah, and just maybe just a – I know this question's been asked kind of a few times in a different way, but just broadly on capital allocation priorities, you know, you expect to do $40 million to $50 million of free cash flow this year. There's some deals that are built into 2026 guidance, more focused on growth. Your leverage is around four. I think you kind of want to keep it in that range, but just how should we think more broadly about the split of how you're going to spend your free cash flow going forward? Are we kind of, you know, is it going to be kind of 50-50, more levered towards M&A? And just how do you think broadly about that whole kind of dynamic moving forward?

You know, we want to take an opportunistic view of the deals that we come, right? So we have our plan. We have an idea of how that could be structured from a guidance perspective. And John did mention some of the ranges there. But they have flexibility, right? So, for example, if you have a deal, let's just say another Fairfax comes through, and we may be willing to pay a little more multiple for something like that, and then we will have to move some of the flexibility we have within our balance sheet to decide if that's the right deal to do or not. If, you know, the stock were to, you know, for some lax to an event, you know, we would consider that and put our numbers and make the best decision on behalf of the shareholders. We will look at all of the opportunities as they come from a very opportunistic point of view within our discipline capital allocation framework. Does that make sense?

Yeah, absolutely. Thank you. Thank you, Parker.

For our next question, we'll return to John's Friends Rath with Sidoti & Company.

Yeah, I'm actually a little curious about the $1.2 million of medical insurance costs that occurred in the quarter. How unusual is that on a year-to-year basis? I mean, was the four-year number much bigger than that or, you know, just contextualized for us maybe?

Yeah, so I can speak to the actual activity, and, you know, I've only been here a year. But we've done a really nice job from an employee benefits perspective over the last few years. There's, you know, being a smaller company, there's a large claim that happened. When you have large claimants that happen, ultimately that can impact results. We haven't had a significant claim over the last few years. So I would say that was a call one-off in the last couple of years. The activity associated with December results versus the December of the last two years, I can't really speak to why that happened, but it was just, I mean, it can happen. So I would say, you know, we have planned for it in the guide. We have planned for what we believe is the appropriate expense associated with employee benefits, taking into consideration what happened in 2025.

You know, we typically look at three years to figure out what the right reserve should be for claims and things like that. And we are a self-insured company in front of you, right? And so we also have a tremendous focus on health benefits for the employees. We have a tremendous focus on making sure that all of our employees are active, are keeping their numbers within the range and helping in any way we can to drive that health performance of the company overall. But sometimes, you know, even we haven't seen it in a long time, you get an event. And in this case, it was one major event and then maybe a couple of other events that add up to that number that you cannot really expect. It just happened. These are major things. I can't really disclose much, but, you know, you have hard events, main situation events, and we just have to be responsive to the employee when those happen.

Got it. I just appreciate the clarity and the frequency of it all. So that's what I was kind of looking for. Thank you, gentlemen. I appreciate it. Thank you.

For our next question, we'll return to George Kelly with Roth Capital Partners.

Hey, everyone. Thanks for taking the follow-up. Just a quick one. How much EBITDA contributions from the 2026 M&A is baked into your guys?

So we basically, in the 2026 guys, are you asking about the new acquisition, in the five to 10? Correct. Okay. Yeah, so we basically have them at the average margin roughly called 30 percent. Okay. Okay, good. Thank you. Thank you. Thank you, George. It appears there

are no further questions at this time. I'd like to turn the conference back over to Carlos for

any additional or closing remarks. Thank you, Prater, and thank you for your trust, your partnership, and your continued belief in courage. We are building a disciplined high performance company with a clear purpose, a focus strategy, and the intention to execute the next slides. We look forward to updating you next quarter as we continue creating long-term value for our shareholders, our teams, and the

families we serve. Have a great day. This concludes today's call. Thank you again for your participation. You may now disconnect and have a great day.