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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation and Interim Condensed Disclosures

Our unaudited Condensed Consolidated Financial Statements include the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. Our interim Condensed Consolidated Financial Statements are unaudited, but include all adjustments, which consist of normal, recurring accruals, that are necessary for a fair presentation of our financial position and results of operations as of and for the interim periods presented.

There have been no material changes in our accounting policies previously disclosed in Part II, Item 8 “Financial Statements and Supplementary Data” in Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition, our unaudited Condensed Consolidated Financial Statements have been prepared in a manner consistent with the accounting principles described in our Annual Report on Form 10-K for the year ended December 31, 2024, unless otherwise disclosed herein, and should be read in conjunction therewith.

Use of Estimates

The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, we evaluate our critical estimates and judgments, which include those related to the impairment of goodwill and the fair value measurements used in business combinations. These policies are considered critical because they may result in fluctuations in our reported results from period to period due to significant judgments, estimates and assumptions about complex and inherently uncertain matters and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Historical performance should not be viewed as indicative of future performance because there can be no assurance the margins, operating income and net earnings, as a percentage of revenue, will be consistent from period to period.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Inventory

Inventory consists primarily of caskets, outer burial containers and cemetery monuments and markers and is recorded at the lower of its cost basis or net realizable value. Inventory is relieved using specific identification in fulfillment of performance obligations on our contracts.

Held for Sale

At September 30, 2025, the assets and liabilities of non-core funeral home and cemetery businesses expected to be sold within the next twelve months, which have met the criteria for such classification, have been classified as held for sale.

Goodwill

The excess of the purchase price over the fair value of identifiable net assets of funeral home businesses and cemeteries we acquire is recorded as goodwill. Goodwill has an indefinite life and is not subject to amortization. As such, we test goodwill for impairment on an annual basis as of August 31st each year. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

Intangible Assets

Our intangible assets include tradenames resulting from acquisitions and are included in Intangible and other non-current assets, net on our Condensed Consolidated Balance Sheets. Our tradenames are considered to have an indefinite life and are not subject to amortization. As such, we test our intangible assets for impairment on an annual basis as of August 31st each year. Under current guidance, we are permitted to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of the tradename is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test.

We performed our most recent annual intangible assets impairment test as of August 31, 2025. We intend to perform a quantitative impairment test at least once every three years and perform a qualitative assessment during the remaining two years. We conducted qualitative assessments in 2023 and 2024; however, we performed a quantitative assessment in 2025. In addition to our intangible assets annual test, we assess the impairment of intangible assets whenever certain events or changes in circumstances indicate that the carrying value of the intangible asset may be greater than the fair value. Factors that could trigger an interim impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results and significant negative industry or economic trends.

Property, Plant and Equipment

Property, Plant, and Equipment

Property, plant, and equipment is comprised of the following (in thousands):


	September 30, 2025		December 31, 2024
Land	$	92,739	$	86,609
Buildings and improvements	266,089		265,231
Furniture, equipment and vehicles	69,244		72,052
Property, plant, and equipment, at cost	428,072		423,892
Less: accumulated depreciation	(143,270)		(145,990)
Property, plant, and equipment, net	$	284,802	$	277,902
Less: Held for sale	(322)		(4,898)
Property, plant, and equipment, net	$	284,480	$	273,004

During the nine months ended September 30, 2025, we acquired $23.3 million of property, plant and equipment related to our business combinations, described in Note 3 to the Consolidated Financial Statements. We sold nine funeral homes and four cemeteries that had a carrying value of property, plant, and equipment of $10.7 million, and we sold real property for $4.1 million, with a carrying value of $2.6 million, resulting in a $1.1 million gain on the sale. The impacts of these transactions are recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operation and more fully described in Note 5 to the Condensed Consolidated Financial Statements. We also recognized an impairment of $1.6 million for the three months ended September 30, 2025 on assets classified as held for sale.

During the nine months ended September 30, 2024, we sold six funeral homes and one cemetery that had a carrying value of property, plant, and equipment of $3.1 million, which was included in the loss on sale and recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations. Additionally, we sold real property for $1.1 million, with a carrying value of $0.8 million and we recognized an impairment related to property, plant and equipment for assets held for sale of $40 thousand, which was recorded in Net loss on divestitures and impairment charges on our Consolidated Statement of Operations.

Our growth and maintenance capital expenditures totaled $2.2 million and $3.0 million for the three months ended September 30, 2025 and 2024, respectively, and $5.2 million and $6.4 million for the nine months ended September 30, 2025 and 2024, respectively. In addition, we recorded depreciation expense of $3.2 million and $3.5 million for the three months ended September 30, 2025 and 2024, respectively, and $10.0 million and $10.7 million for the nine months ended September 30, 2025 and 2024, respectively.

Cemetery Property

When we acquire a cemetery, we utilize an internal and external approach to determine the fair value of the cemetery property. From an external perspective, we obtain an accredited appraisal to provide reasonable assurance for property existence, property availability (unrestricted) for development, property lines, available spaces to sell, identifiable obstacles or easements and general valuation inclusive of known variables in that market. From an internal perspective, we conduct a detailed analysis of the acquired cemetery property using other cemeteries in our portfolio as a benchmark. This provides the added benefit of relevant data that is not available to third party appraisers. Through this thorough internal process, we are able to identify viable costs of property based on historical experience, particular markets and demographics, reasonable margins, practical retail prices, and park infrastructure and condition.

Cemetery property was $116.6 million and $112.9 million, net of accumulated amortization of $76.3 million and $72.6 million at September 30, 2025 and December 31, 2024, respectively. When cemetery property is sold, the value of the cemetery property (interment right costs) is expensed as amortization using the specific identification method in the period in which the sale of the interment right is recognized as revenue. Our growth capital expenditures for cemetery property development totaled $4.5 million and $1.7 million for the three months ended September 30, 2025 and 2024, respectively, and $7.5 million and $5.3 million for the nine months ended September 30, 2025 and 2024, respectively. We recorded amortization expense for cemetery interment rights of $2.8 million and $2.0 million for the three months ended September 30, 2025 and 2024, respectively, and $6.8 million and $6.3 million for the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, we sold four cemeteries that had a carrying value of cemetery property of $3.4 million, which was included in the gain on sale and recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations, more fully described in Note 5 to the Condensed Consolidated Financial Statements.

During the nine months ended September 30, 2024, we sold one cemetery that had a carrying value of cemetery property of $0.8 million, which was included in the loss on sale and recorded in Net loss on divestitures and impairment charges on our Consolidated Statements of Operations.

Income Taxes

Income tax expense was $3.1 million and $5.0 million for the three months ended September 30, 2025 and 2024, respectively, and $13.6 million and $12.9 million for the nine months ended September 30, 2025 and 2024, respectively. Our operating tax rate before discrete items was 35.3% and 33.2% for the three months ended September 30, 2025 and 2024, respectively, and 32.0% and 33.2% for the nine months ended September 30, 2025 and 2024, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA made several key provisions of the Tax Cuts and Jobs Act of 2017 permanent, including 100% bonus depreciation, the immediate expensing of domestic research costs, and the introduction of a favorable modification to the business interest expense limitation. Together, these changes accelerate the timing of certain tax deductions in the current period that allow for reductions in cash taxes. The Company has completed its assessment of the legislation’s impact and determined that it did not have a material effect on the Company's annualized effective tax rate.

Accounting Pronouncements

Income Taxes

In December 2023, the FASB issued ASU, Income Taxes - Improvements to Income Tax Disclosures to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information. The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation; and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). The amendments in this update also require that all entities disclose on an annual basis (1) the amount of net income taxes paid disaggregated by federal and state taxes; and (2) the amount of net income taxes paid disaggregated by individual jurisdictions in which net income taxes paid is equal to or greater than five percent of total net income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, and therefore were effective for us for our fiscal year beginning January 1, 2025, and for interim periods within our fiscal year beginning January 1, 2026. The adoption has no material impact on our consolidated financial statements as it modified disclosure requirements only.

Accounting Pronouncements Not Yet Adopted

Expense Disaggregation

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The amendments in this update require, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We expect the adoption will have no material impact on our condensed consolidated financial statements as it modifies disclosure requirements only.

Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. Under the new guidance, costs associated with software developed for internal use will now be capitalized when management authorizes a project and when it is probable the project will be completed and used to perform the function intended, rather than when a project reaches the application development stage under existing guidance. The guidance is effective beginning January 1, 2028, with early adoption permitted, and can be applied prospectively, retrospectively, or on a modified retrospective basis. We have not determined the transition method, timing for adoption, or estimated the effect on our condensed consolidated financial statements.