Carriage Services Inc (CSV) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Carriage Services second-quarter 2015 earnings webcast and conference call. (Operator Instructions). As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Chris Jones, representing Carriage Services. You may begin.

Thank you, and good morning, everyone. We are glad you could join us, and we would like to welcome you to the Carriage Services conference call. Today, we will be discussing the Company's 2015 second-quarter results, which were released yesterday after the market closed. Carriage Services has posted a press release, including supplemental financial tables and information, on its website at carriageservices.com. This conference is being recorded, and an archive will be made available on Carriage's website. Additionally, later today, a telephone replay of this call will be made available and active through August 9. Replay information for the call can be found in the press release which was distributed yesterday.

On the call today from management are Mel Payne, Chairman and Chief Executive Officer; Dave DeCarlo, President; and Viki Blinderman and Ben Brink, Chief Financial Officers. Today's call will begin with formal remarks from management, followed by a question-and-answer period.

Please note that during the call, management will make forward-looking statements in accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. I would like to call your attention to the risks associated with the statements, which are more fully described in the Company's report filed on Form 10-Q, and other filings with the Securities and Exchange Commission.

Forward-looking statements, assumptions, or factors stated or referred to on this conference call are based on information available to Carriage Services as of today. Carriage Services expressly disclaims any duty to provide updates to these forward-looking statements, assumptions, or other factors after the date of this call to reflect the occurrence of events, circumstances, or changes in expectations.

In addition, during the course of the morning's call, management will reference certain non-GAAP financial performance measures. Management's opinion regarding the usefulness of such measures, together with the reconciliation of those measures to the most directly comparable GAAP measures for historical periods, are included in the press release and the Company's filings with the Securities and Exchange Commission.

Now I would like to turn the call over to Mel Payne, Chairman and Chief Executive Officer.

Thank you, Chris. Today we will discuss another outstanding quarter of financial performance, but, more importantly, the record results for the first six months; as well as the corporate development, acquisition activity, and senior leadership changes that position Carriage for great success in the future.

After our last conference call, Bill Heiligbrodt gave notice of his intent to retire next March and has since transitioned out of his executive officer duties and responsibilities, although he is still active as an advisor to me and members of our OSGLT and Board of Directors. His duties and responsibilities as Principal Financial Officer and with Investor Relations have been split between two young and highly capable members of our operations and strategic growth leadership team: Viki Blinderman and Ben Brink as co-CFOs. Bill, Ben, and Vicki are all here today, but Vicki will now provide the color commentary on our second-quarter and first-half performance.

Viki?

Thank you, Mel. And thank all of you for joining us on the call today. We are pleased to report more record results for the second quarter of 2015. Carriage achieved second-quarter adjusted diluted earnings per share of $0.34, a slight increase over 2014. For the first six months, the adjusted diluted earnings per share was $0.76, an almost 19% growth, and the largest we've seen in years.

Just to let you know, the earnings per share is impacted by 600,000 shares due to the dilutive nature of our convertible notes and outstanding options. As a reminder with the convertible notes, the actual number of new shares outstanding, when settled in the future, may differ materially from the current technical calculation of EPS, as we have the flexibility to settle conversion requests either with cash or shares, or a combination of both.

I would like to highlight our field performance, as our managing partners continue to demonstrate the earning power of our Standards Operating Model during the first half of 2015. Our funeral home same-store operations generated 2.5% growth in contract volume, which translated into a 4.2% revenue growth and a 9.2% growth in funeral field EBITDA, which is highly accretive to our earnings with nominal additional depreciation and amortization or interest.

The performance of our funeral home acquisition portfolio, which is comprised of businesses acquired since 2011, have been rapidly improving over the first six months, which is reflected by the acquired funeral home EBITDA margin of 39.6% being higher than same-store margin by 120 basis points.

Our cemetery operations also leveraged an 8.4% growth in revenue for the first six months of 2015 into an additional 17.5% growth in field EBITDA; which together, with our higher funeral portfolio performance, has produced a year-to-date total field EBITDA margin of 41.7%, a 140 basis point increase on historically high margins.

Next, I would like to focus on adjusted consolidating EBITDA and adjusted consolidated EBITDA margin, which we believe best defines the cash earnings power of Carriage as an operating and consolidation platform for our industry.

Adjusted consolidated EBITDA for the second quarter increased $900,000 or about 5.4%, primarily from higher revenue and margins in our funeral portfolio; but was up $5.4 million or 17.3% for the first six months, producing a historically high adjusted consolidated EBITDA margin of 30.1%, 210 basis points higher than last year. As a result, our adjusted free cash flow increased 31% to a record $25.4 million, approaching 20% of our revenue. These are important operational and financial milestones for Carriage, which should continue over the balance of 2015.

Along with the continued strong performance in our field operations, our recent senior leadership reorganization has led to a downward trend in our total overhead as a percent of revenue, which should stabilize between 13% to 14% over the near-term. Our adjusted net income for the first six months increased $2.6 million or 22.1% to $14.4 million, equal to an adjusted net income margin of 11.8%, another historic high.

In summary, Carriage is currently well positioned for continued financial success because of our strong operating margins, increasing adjusted free cash flow, low cost of capital with available financing of $155 million under our credit facility, a very active pipeline of quality acquisition candidates, and a management team committed more than ever before to outstanding execution of our models and strategies to enhance shareholder value. Therefore, we are increasing our rolling four-quarter outlook ending June 30, 2016, to a range of $1.57 to $1.61. We look forward to reporting our results to you as we move through the remainder of 2015.

Back to you, Mel.

Great job, Viki. I'm going to turn it over to Dave DeCarlo now. Dave has been very active since joining the Company full-time in March 2014. Initially with me, we spent a lot of time traveling the country together, over 6 to 9 months last year to -- then take a fresh look at where we focus strategically and profile the kinds of businesses that would best fit into our Company.

So I'm very honored to turn this over to Dave and let him explain what he and his team have been doing. Dave?

Thank you, Mel. As you know, our corporate development activity continues at a high level. We continue to develop relationships with those who we feel are the best independent firms in the nation. Our list is now over 50 firms. And many of them now realize that the best-kept secret in the industry is our decentralized partnership model, which is the perfect solution for their succession planning. Please note -- as you know Mel, as well -- that these firms were not for sale when we knocked on their doors. But I can tell you, they are now thinking about it. And let me tell you why.

As I said before, funeral home and cemetery owners are a very proud group in caring about their community. And when it comes to selling their business, they want to make sure they can protect their own legacy, their employees, and maintain and grow the heritage of their families they serve. In fact, three of the four firms we visited last week voiced these same three concerns to us; because, to them, their biggest concern is what happens to their reputation in the community after the sale.

And I can tell you, once I start explaining the model, I can see their eyes light up when I explain our decentralized model, because it is the perfect solution for their concerns. Think about it. Once they partner with Carriage as a managing partner, they keep their name on their signs, not Carriage; they continue to run the business as owners; they are still the boss; they set their own prices, choose their own vendors, and basically determine their own destiny.

And another key item in the model that they love is that Carriage takes care of the back-office work -- IT, HR, legal, et cetera -- things that distracts them from what they do best, and that is serving families. Because they realize by removing these distraction, their life is better. And it allows them more time to serve their families, which means they can grow their business and get rewarded through Carriage's two incentive plans: one, an annual plan for all their employees, including the managing partners; and a very good five-year plan for the managing partner himself.

So with this said, you might be wondering: if the model is so great, why aren't we making more acquisitions? Well, the reasons are simple. First, we are very selective in who we want to partner with. Second, the price has to be fair and reasonable. Third, there has to be opportunity for the partners to grow their business. And, lastly, we want to make sure that the owners and employees will thrive in our decentralized culture.

We have had our share of opportunities to partner with [currents], but decided not to, or were simply outbid. But now we are seeing that once the potential partners understand the model, they are starting to realize that what really matters to them is what happens after the sale. And choosing the highest bidder may not be the best choice for them as a result, especially if they want to stay and continue to run their own business.

In summary, we have worked hard over the past year to develop these relationships that we have today. And we are optimistic that our average will be producing results, and that's why we have included acquisitions in our rolling four-quarter outlook. And we are going to continue knocking on doors, attending state conventions, participating in the speaker circuit, and also launching a marketing campaign to expose the best-kept secret in the industry: our decentralized model.

We are also pleased to announce that we have added a true industry veteran to our team, Ken Stephens, who spent 20 years with Stuart Enterprises in senior executive roles in operation and sales, and who SCI appointed to manage and work with the FTC in divesting the firms they had to sell in 2014. I've known Ken and his family for over 30 years, and we are pleased to have him as a part of our corporate development team. He will be joining another seasoned veteran, Michael Cumby, whose firm we purchased in 2012. Thank you.

Thank you, Dave. I will only say that I've been doing this a long time, and I've been out with Dave and his entire team over the last 6 to 9 months, and it's a green team. And I expect great not only activity, but results over the next -- not just short-term, but for the next 3 to 5 years.

When we launched the Carriage Good To Great journey 3 1/2 years ago at the beginning of 2012, it literally would have been impossible to predict the amazing industry and Company-specific attractive position that we find ourselves in today. Some of what happened was not under our control: for example, SCI buying Stewart Enterprises, leaving SCI and Carriage as the two similar profile funeral-versus-cemetery companies that are in the consolidation and operation business today.

To better educate and inform investors on why Carriage has become, in addition, a superior value creation investment platform, we are updating our investor presentation and Company investment profile, which will be filed later this month; after which, Viki, Ben, and I will be selectively traveling to personally visit with and update our largest institutional investors and others interested in Carriage as an investment with little downside risk and much upside reward over the next five years.

Speaking personally, I sold 100,000 shares in the second quarter, with the proceeds used to pay off all of my margin debt for the first time. I do not plan to sell shares anytime soon, and frankly, wish I owned a lot more, especially right now.

We have created a wonderfully efficient operating and consolidation platform for the best funeral homes and cemeteries in the country, and are now positioned to grow more rapidly -- but as Dave said, very selectively -- by acquisition over the remaining 1 1/2 years of our first five-year phase of the Carriage Good To Great journey, which will then continue into a second five-year phase and should create huge amounts of shareholder value over time.

With that, I would like to get into questions, Chris.

(Operator Instructions). James Fronda, Sidoti & Company.

I guess I just had a question on the gross margin for the quarter. Is it the scenario where if you don't have enough same-store sales growth that margin won't expand as much as we think? Or are there other issues going on just specifically this quarter that dragged that down a bit?

Are you looking at the GAAP margin?

Yes I am.

I don't know what the GAAP margin even is, because I don't know how we looked at it. But if you will spend more time -- I don't think I've met you -- spend more time with me, Vicki, and Ben, you'll learn that we didn't have a problem in the second quarter. I'm not exactly sure what you're talking about, but I don't see a problem. And the way I look at this, in our trend reports over five quarters and five years, is completely different than GAAP numbers.

Right. Okay, that's fine.

Unless you can understand how we think about it, operate it, and report it internally, you and I won't be on the same page.

Okay, thank you.

And I look forward to that.

(Operator Instructions). Joe Janssen, Barrington Research.

Listen, I apologize; I missed all the prepared remarks. I was dealing with multiple calls here. But I am assuming Dave maybe talked about the -- maybe just a quick commentary on the acquisition pipeline. I know you've been financially disciplined. Anything you see there that kind of piques your interest? Any color on that would be helpful for my perspective, thanks.

There was a lot of color you missed, Joe. (laughter) All I can tell you is it's good and it's getting better, and Dave went over quite a bit of that.

Yes. I mentioned that over the past year, we have developed relationships with over 50 -- what we think some of the best firms in the nation; and that we are pretty optimistic about the next -- in that 6 to 12 months, and that's why we put some acquisitions into the rolling four quarters. So these are relationships that people now understand our decentralized model, and most of them can't believe it.

One of the things -- and I will give Dave a little more immodest kudos than he's willing to give himself and his team. I've spent a lot of time in this industry over the last 24 years doing corporate development. Certainly the first 10 years, I was pretty much gone all the time, learning it and doing it. And I've done selectively quite a bit from that time in 2007. We started growing it again by strategic acquisitions and I did seven personally in that year. So this is an area that I have a lot of love for, a lot of passion about.

And I've been out with Dave and his team, Ken Stephen now, who he talked about a long time better under Stuart. Michael Cumby, who is on his team; they are a dream team. And I've been with them a lot with individual candidates over the last 3 to 6 months. They are going around to state conventions. They are presenting the Company directly to candidates who are not for sale, but who may have a succession issue at some point in the near term, but not now. And the activity has been deep, very selective, and with quality businesses in what we consider strategic areas and markets.

The activity is beginning to bear fruit. These seeds are growing in lots of places. So I don't think you're going to have long to wait to see some of the fruits being harvested. And we look forward to reporting that, but I don't think you'll be disappointed.

Great, I appreciate that. And then -- this is more just a comment, not really question -- and just looking at the stock today, giving it's down; and I think it's a bit of an overreaction, and I think you are doing all the right things. You're focusing on the business. You are improving the margin. You're going to make the acquisitions; you're going to make them at the right price. And you have maintained financial discipline. So I think in the long run, shareholders are going to be rewarded here. So congrats, and I will go back in queue. Thank you.

Well I haven't looked at the stock price recently. But as you know, I'm a student of Warren Buffett. And I remember the famous article he wrote, Mr. Market, in 1986. I am fine with that, because I have an inner scorecard, 100%. I don't let other people put scores on what we are doing in the Company, or how I feel about it. I will only tell you that in my comments -- and I don't know if you were on the call -- I said, I sold 100,000 shares in the second quarter to pay off my remaining margin debt; but at this point right now, I wish I owned a lot more Carriage, and nothing else. Because it's a dangerous world out there. (laughter) So thank you for your comments. We will do the right thing, don't worry.

Matt Sherwood, Cooper Creek Partners.

Hey, congrats on the succession plans and for Bill's role. Just had a quick question on the outlook. So just trying to understand, the previous outlook did not include -- the rolling four quarters -- did not include acquisition, and this one does?

Yes, it did. We didn't put any more in there; but it did, yes.

So what was the delta in terms of acquisition? Did the rolling four-quarter outlook change, excluding the change in acquisitions included in that?

It did a little bit. All we did was just put in there a little bit of overhead savings on this recent reorganization. But we didn't change the -- we may have changed it a little bit, but same-store up a little bit, yes. But really, we didn't change any -- we didn't add any more acquisitions that had some in there. We would rather harvest the fruit and show it and close it, and then talk about it more. And I think as we go along, and Dave's team gets more of these pipeline activity really surfacing with LOIs and more predictability on timing, quarterly, annually, we will revisit the outlook and make that more clear for you.

Okay, so just broad brush, is there sort of a range of EBITDA maybe, because you don't know what (multiple speakers)?

Well I would say we're certainly going to be adding revenue in the $12 million $16 million range. It's like that (multiple speakers)

Do you mean like mid-30s EBITDA? Or like 30% of that?

No, I think we are buying bigger, better places than that. Field EBITDA will be higher than that, so it will be higher than that. If you look at our field EBITDA now in the acquisition portfolio, it's almost 40% six months. And we are buying bigger, higher-margin places. So over time, that acquisition portfolio -- that's why we show it for five years -- we will have a higher revenue growth profile and margin profile, which should follow that right down through the overhead transparency and our reporting to adjusted consolidated EBITDA, adjusted consolidated free cash flow, and EPS.

So it sounds like (multiple speakers).

We are in a sweet spot right now, and it's about to get sweeter.

That's great. So it sounds like you are suggesting $3 million or $4 million of EBITDA from acquisitions in the outlook. Yes, if you say (multiple speakers).

Yes, yes, that's probably right. And at this point, Dave and his team have been doing this for a pretty short amount of time. And it takes time to build these relationships. So what I would say, and this is how I feel, I can't tell you exactly how it's going to roll out by quarter, even by year. But I can tell you what's going to happen, in my view, over 3 to 5 years, and why I am more excited than ever about our future. My anticipation is that once -- as Dave said, this best-kept secret in the framework in the models are presented directly to owners -- not through brokers -- they get excited because it's the best of both worlds. They have financial security, and they have the ability to run their business.

We're just looking at a business right now. I won't say where it is, but we will probably buy this business pretty soon. And they were ready, but they didn't have a managing partner and they were tired. So it took us literally one day after meeting with that family to find the right managing partner, which they approved along with us.

And so it's that kind of collaboration on the front end that leads to a very good long-term outcome. And that kind of reputation -- that that is the kind of company we are -- will lead to other people wanting to join the Company without being auctioned off by an intermediary. That's where we want to be, much like Warren Buffett did with Berkshire Hathaway, and that's about where we are.

That's great. No, it seems like obviously since you are more focused on the long-term, but the stock reacted to a short-term difference with Street expectations. As you look at the past 12 months, and the flu seasons you had and all that, how are you modeling things going forward just so there's less discrepancy between --?

Okay. You asked, and I'm going to tell you. And your questions are the right kind of questions. I don't look at it quarterly. I never have. I made that mistake in the 1990s. I got on a treadmill and I learned to regret it, because this is not a quarterly business. You don't build a great company and have some kind of scorecard at the end of every quarter.

So if you look at the last five years -- which is the way I look at the Company in the past, and the way I look at it in the future -- let's just take 2011. We did a major transformation of our Board and leadership on November 4 of 2011, because I was very unhappy that the framework, and the models were not being properly executed or understood by the Board or the team I had in place at the time. So I swept them out.

Now what has happened since then? We've gone from $182 million in revenue for 2011 to $236.5 million in the rolling four quarters ending June 30. That's about a 7.5%, 7.7% compounded revenue growth. Now what has happened in the funeral field EBITDA margin? We've gone from 35% in 2011 -- this is acquisitions and same-store -- to 37.8% in the four quarters ending June 30.

And if you come -- it's the same in the cemetery. It's been getting better over the last five years. It will continue to get better, not every quarter, but over time. We're getting better talent, sales managers, product; and we have much higher financial revenue because we made some unbelievable moves during the 2008, 2009 crisis. But we can't keep growing it extraordinarily, but it keeps recurring. That earning power is not going anywhere, and it won't go down even if we have another Black Swan event.

And then you come down to the adjusted consolidated EBITDA, which is the right way to look at it because when you have a dynamic, transformative, high-performance culture, you change out what is not high-performance in the leadership. So there's been a lot of noise. I will tell you as of right now, we have the best field leadership across the portfolio, the best regional leadership, and the best home office leadership we have ever had. It will only get better on execution as we go forward.

So what has happened to the adjusted consolidated EBITDA margin over the last five years? We went from 25.2% -- and I adjusted that because we had $4.5 million withdrawable trust income. We were so overfunded with our cemeteries in California. We still have that. We pull it out every year. We went from 25.2% on an adjusted basis to 26.5% in 2012, to 26.3%. We dropped a little bit to 27.3%, 100 basis points, to 28.4% for the last four quarters.

We are headed towards a normalized adjusted consolidated EBITDA margin of 30%, which we already achieved in the first six months. This Company is wired as a platform to create shareholder value, with revenue growth from new acquisitions, same-store; and to add a lot of value for shareholders who see this other than a quarterly business.

It cannot get better than what is right now, and I've been doing this kind of thing for a very long time. Sorry for the prolonged answer to your question, but I did it because it was such a good question.

(technical difficulty)

I can't hear you.

So I was asking -- sorry -- do you think these EBITDA margins are good on a go-forward basis, and could go up, even in light of the fact that the flu season was pretty favorable and --?

We don't look at the flu season. This is all noise. And other people might want to talk about it. It's an excuse for somebody either doing bad; or when they do good, they give it some credit. But look, we are in the business of getting more business from somebody else who has got it, and not requiring something we cannot control to lead to higher deaths. Whenever that shows up with the demographic boom bubble I hear is going to happen someday, we will benefit from it. And then everybody will say oh, that's great. But we don't -- our same-store contracts in funeral are the same in the last four quarters through June 30 as they were in 2011. No one else can say that factually. No one.

Yes. Great. Well congrats on (multiple speakers)

Now we are focused on getting the average revenue per contract same-store up, which you saw on the first six months. You will continue to see that.

Great. Well, thanks so much for your answers.

(Operator Instructions). David Woodyatt, Keeley Asset Management.

It seems to me the nature of your business is such that it should be much more predictable and controllable than most of (technical difficulty) businesses.

That is absolutely true.

And yet, we have these high level of volatility in year-over-year earnings; with 35% or whatever was in the first quarter gain, and then only a 3% this year -- this quarter. Isn't there something more you can do internally to produce more consistent earnings? Because that influences the valuation investors are willing to put on the stock.

When they see this inconsistency in earnings per share, they tend to put a lower valuation on it. And that has implications on how you can finance your growth going forward.

Well, I don't know long you have been here --.

Can your accounting people talk to you about using more standardized costs, or something to produce more consistent year-over-year gains?

What I would say, David -- and I look forward to getting to know you personally, which I have not been able to do -- but we're coming to the Chicago market soon, and I look forward to visit.

Yes, I will be meeting with you; but I met with you about three times in the past.

No, you haven't met with me. I promise you, it will be a different experience. I hope it will be good one, because we appreciate your investment in our Company.

The first quarter -- when I got in this business in 1991, I thought it was highly predictable, and all that. Well it is, on an annual basis, but it's not on a quarterly basis. The seasonality is much more extreme than you would imagine. And you can't cause people to die to make more predictable quarters. What that does is when you try to manage it to more predictable performance on a quarterly basis, it leads to pretty dangerous thinking and behavior that can have negative consequences on the underlying health of your business.

I don't know another company that has the same long-term volume -- same-store volume in the funeral business history that we do with our models. I would say the same thing about the margins that we're getting -- the field EBITDA margins are very transparent. But the first quarter was the best quarter we ever had in the history of the Company, and it was influenced by the flu season.

But I remember famously in 2007, the first quarter was similar. And an analyst asked me on the call -- well, I guess we can assume that the first quarter will be annualized on the funeral results. I said, well, you can assume that; but, believe me, it will be wrong. But the way to look at this -- and we can go over this when we visit -- is more long-term and not quarterly.

We didn't have a bad quarter. We had a good second quarter last year, and we had a fantastic first quarter. So if you look at the six months or the last 12 months, I don't know -- I don't understand why people would react the way apparently they are reacting today, because it is a wonderful business. It's highly predictable on an annual basis, but not so much quarterly. And it's an amazing thing.

You'll see a market -- and I've been doing this long time. One out of every five years, in every market is either up materially or down materially on death rate, and there is no reason for it. And it could be very different in California than it is in Connecticut. But on a consolidated basis, throughout the entire portfolio, it's very consistent. So I look forward to exploring that and having that discussion with you.

Okay.

Thank you. And our last question --.

Do you have any others, David?

No. I'll let someone else ask a question.

Alan Weber, Robotti & Company.

Picking up from the previous comments, I gather you are still bullish on the Company, huh?

I've never been more bullish.

I know.

Hey look, I can't change the market. I've learned the hard way; Mr. Market has a mind of his own.

Now I have kind of a little bit different question. Capital spending in the quarter was substantially higher than normal. Can you remind us what was on when you (multiple speakers) returns from that spending?

Yes. We have completions of two major new funeral homes, both one in College Station and one in -- which is a really rapidly growing market and we already had a great business and brand. Another one is in Katy, Texas, west of Houston, which is the fastest-growing community; or at least it was in America. I'm assuming that is still the case with the decline in energy prices. And then we are building two new places, one up in -- near Middletown, Ohio, that's been a fabulous business -- demographics change; we have a great managing partner. And we are building a new one down on -- near Destin called the Emerald Coast. It's a fabulous business. So a lot of capital expenditures in the second quarter on these projects that are funeral home expansions to grow those businesses with great leadership and a lot of great demographics.

And then we had some cemetery projects that we completed in the second quarter as well. It should bear some earnings -- recognize revenue and earnings in the third quarter and fourth quarter of the year. So it was ahead of the quarter.

And how do you view the return compared to acquisitions?

Well, the -- in a lot of ways, where you have a great business, it's a little different. The two businesses -- let's say the one in Middletown and the one on Emerald Coast near Destin -- were both facilities that had grown old. One was in a shopping center, one was downtown Middletown, and the demographics had moved out to another area. If you do not make strategic moves in this business, you will lose the great business that you have. And these were businesses producing amazing amounts of revenue, field EBITDA, and free cash flow. So we had to do those both to get in front of a growing market with great leadership and a great brand, but also from a defensive point of view.

The Katy -- and so I -- the return on that may not be as high as the return on Katy and the one in College Station, because those markets are just so rapidly growing, and we look at that over a five- or 10-year period. If you get out in front of those kind of markets, you're going to dominate it, and demographics are really awesome, it's kind of a no-brainer. You have to do that kind of thing, plus acquisitions, or you start making acquisitions to make up losses from businesses you didn't grow in, and you start to shrink.

Okay, great, thanks an awful lot.

Thank you. I'm not showing any further questions at this time.

I would now like to turn the call back to Mr. Payne for any closing remarks.

It's been an interesting call, a little different. I want to end like we always do. We had second-quarter performance heroes, even though we don't try to manage our Company on a quarterly basis for a specific outcome.

We nevertheless recognize performance, by quarter, of what we call high-performance heroes: in the Eastern region, Ken Duffy with Sidun Group and John E. Day Funeral Home in Red Bank, New Jersey; Chad Woody, Watson-King Funeral Homes, Rockingham, North Carolina; Chris Chetsas, Cataudella Funeral Home, Methuen, Massachusetts.

And then in the East, we have three managing partners from the SCI divestiture packages after the acquisition of Stuart: Scott Sanderford, Everly-Wheatley Funeral Home in Alexandria, Virginia; Patrick Schoen, Jacob Schoen & Son, New Orleans; David Rogers, Garden of Memories Funeral Home, Metairie, Louisiana.

In the Central region, Roger Allen, LaGrone-Blackburn-Shaw Funeral Directors, Amarillo Texas; Andy Shemwell, Maddux-Fuqua-Hinton Funeral Home, Hopkinsville, Kentucky; Bob Thomas, Malone Funeral Home, Grayson, Kentucky; and Cindy [Houtz], Schmidt Funeral Home, Katy, Texas. Cindy is also in a relatively new acquisition in Katy, Texas. And that's where we are building one of the premier places that I mentioned earlier, as far as CapEx.

In the West region, Dorn Rademacher, Relyea Funeral Chapel, Boise, Idaho; Matt Simpson, Deegan Funeral Chapel, Escalon, California; Justin Luyben, Evans Brown Mortuary, Sun City, California; Steve Mora, Conejo Mountain Memorial Park, Camarilla, California; and Adam Mills, Austin Funeral Home, Columbia Mortuary, in the area of Kalispell, Montana. Four of these high-performance heroes in the second quarter were also high-performance heroes in the first quarter: that's Chris Chetsas, Patrick Schoen, and Andy Shemwell and Steve Mora.

We also have -- and we are starting to recognize how important people here in our home office support teams are to the success of our people, as Dave mentioned. Acquisition candidates cannot believe the support they get from the home office support teams, because we view them as our customers. And I would just like to mention three high-performance heroes here in our home office for the second quarter: for legal, Whitney Fibich; HR, payroll, and risk management, Anna [Trejo]; and IT, Jeff Parker.

And with that, I want to thank everyone for their attention and support. And we look forward to reporting our future success, which we anticipate will be very good. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.