You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: This is Viki Blinderman, the Chief Accounting Officer.
Today, we'll be discussing the company's third quarter results for 2020.
This audio conference is being recorded and an archive will be made available on our website later today through November 2.
On the call today from management are: Mel Payne, Chairman and Chief Executive Officer; Ben Brink, Chief Financial Officer; Peggy Schappaugh, Vice President of Operations & Acquisitions Analysis; and Steve Metzger, General Counsel.
Today's call will begin with formal remarks from management followed by a question-and-answer period.
Today, I won't say a whole lot.
It's all about our company.
And I wanted to simply state that we do a lot of communications beneath the covers of what is reported to the public.
So this went out to every managing partner, every sales manager, every field support leader, directors of support, and every employee and leader in our Houston Support Center.
This went out about 5:24 p.m. yesterday with our quarterly nine month release.
"I have never in my life been more honored and inspired by anyone or any group of people than I have been by the amazing leadership and performance of our managing partners and sales managers and our funeral and cemetery portfolio of businesses over the last nine months and especially the last six months after the coronavirus pandemic shocked our country with both a continuing health and economic crisis.
The same is true for all the support leadership and teams, who enabled all of our frontline coronavirus battle warriors and their courageous teams of employees to remain in the battle of serving their client families and communities when it counting most.
Now when this goes out, it generates a lot of attention.
We do a lot of communication and recognition in the company.
So I know I'm speaking to them as they hear this.
And now they're hearing it, not just reading it.
And I often get many responses to these kinds of communications.
But I'll just read you one.
We have been working hard and keep pushing for revenue enhancement while serving the families with higher flexibility and awareness to each need related to the pandemic.
It has been wonderful to have the support of all members within Carriage Services.
We truly are united.
I am looking forward to the call".
Loren is the daughter of Frank Forastiere.
I'm sure they're on the call.
The Forastiere family business is the business in Springfield, Massachusetts.
They joined Carriage and came our partners in October of '98.
Frank was one of the original standards council members and he had to rotate off a couple of years ago when he passed the leadership managing partner role to his daughter, Loren.
Every Thursday, Loren, we hear about what you and your team is doing, not always on a Thursday.
How much of this is COVID only?
And how much of it is market share?
And I will tell you, Loren and Frank, we know who you're growing the business, how you're growing the business.
And even when the outbreak slowed, you didn't.
We know where the business is coming from.
And I'm not going to mention their name, it's a big business, but it's getting smaller by the month.
Because this is the exact example of what's going on broadly across Carriage.
Our extraordinary third quarter performance is a reflection of a company that is completely aligned at all levels to our 2020 theme of transformative high performance.
And the continued momentum we see in all areas of the company is the Carriage high-performance flywheel in full effect.
These results also demonstrate the strength of our decentralized entrepreneurial standards operating model, the quality of our managing partners and their teams and our ability to rapidly innovate and adapt in the face of unprecedented challenges brought on by the coronavirus crisis.
We are excited to share these results with you today.
For the third quarter and year-to-date results, all of our reported operating and financial performance metrics were records.
As I review our results, it is important to recognize the full impact of the operating and financial and value creation leverage dynamics that allowed Carriage to leverage organic revenue growth into higher growth rates in total Field EBITDA, adjusted consolidated EBITDA and adjusted diluted earnings per share.
For the third quarter, we earned $84.4 million of total revenue, an increase of 27.6%; $37.3 million of total Field EBITDA, an increase of 45% with total Field EBITDA margins improving 530 basis points to 44.2%.
Adjusted consolidated EBITDA improved $10.4 million or 60.1% to $27.7 million.
And our industry-leading adjusted consolidated EBITDA margin improved 670 basis points to 32.8%.
Adjusted diluted earnings per share increased an impressive 82.1% to $0.51 in the quarter.
Year-to-date, total revenue has increased 17.9% to $239.4 million.
Total Field EBITDA has increased 24% to $100.6 million.
Total Field EBITDA margin increased 200 basis points to 42%.
Adjusted consolidated EBITDA increased 32.3% to $75.9 million.
Adjusted consolidated EBITDA margin increased 340 basis points to 31.7%.
And our adjusted diluted earnings per share increased 34% to $1.30 for the first nine months of the year.
It is truly an honor and a privilege to have the opportunity to share the insight on the hard work, creativity and pure grit of our managing partners, sales managers and their teams.
When COVID started to hit our country, we wanted to, first and foremost, ensure the safety of our people and give them peace of mind so that they were still able to provide outstanding service to our families.
Shawn Phillips, regional partner, led the charge and centrally gathered an abundance of PPE here in Houston to disperse to our funeral homes and cemeteries across the country.
This gave our managing partners and their teams one less thing to be concerned about and more time to focus on serving every family while still maintaining CDC guidelines.
Because our managing partners are true owners of their businesses, they remain focused on high performance as it pertains to not only revenue growth but also EBITDA margin.
In 2019, some adjustments were made to our Being The Best incentives as it relates to margins, further motivating our managing partners to produce higher margins.
So when the uncertainty of COVID hit, there was immediately an acceleration of expense management from our intuitive managing partners.
Funeral Home same-store net revenue was up 3.3% September year-to-date while same-store Field EBITDA was up 9.6%, propelling the September year-to-date Funeral Home same-store margin from 38.4% to 40.7%, an increase of 230 basis points.
Our managing partners and sales managers also made great strides in quarter three on Cemetery sales.
After finishing quarter two behind $1.9 million in Cemetery same-store operating net revenue, largely due to the cancellation of our annual Ching Ming event, we were able to closed the gap in quarter three to within 250,000 operating net revenue and bring our same-store margins from being behind $1.6 million in quarter two to being flat on a year-to-date basis.
In quarter three, we continue to see an increase in sales at our three new Cemetery acquisitions, increasing operating net revenue 28.7% from quarter two, improving margin of 35.4% in quarter two to 44.7% in quarter three, bringing the year-to-date margin to 38.1%.
We continue to see accelerated integration of our four large acquisitions that were made at the end of 2019 and in January of 2020, even among the pandemic, which has proved to make our partnership with these businesses even stronger.
The improving results, since the first quarter, reflects the great work that is being done by the managing partners and their teams at each of these businesses with the continued support from our operational leadership team.
This is just the beginning of the higher performance at these four large strategic acquisitions, which will continue to grow and translate into even higher margins into next year and many years to come.
And the most important thing to note is the power of our decentralized model, which gives our managing partners the ability and freedom to make decisions locally as it relates to each of their markets.
So as guidelines and restrictions were put in place, they were able to quickly adapt and make the necessary adjustments to serve our families in safe and creative ways.
At the beginning of 2019, we rebooted our standards and added two key components: an intense focus on compounded net revenue growth and we introduced a new standard, the service guest experience.
The service guest experience standard was something new to everyone.
But the goal was to truly differentiate ourselves and create even more value and personalization for each of our families.
The creative juices began in 2019.
But the level of creativity that has been stimulated during this pandemic with the CDC guidelines and restrictions in place has been simply remarkable and amazing to witness.
Our people have found more unique ways to give families what they need, a service to honor the lives of their love one, and the important time to agree with their family and friends, even if that meant doing visitations in small groups or having people RSVP for a service or conducting drive-through visitation or holding services outdoors.
In addition, we increased our number of funeral homes that offer live streaming from only 30 to now 125 in an effort to overcome restrictions and give our families, that don't feel safe attending a service in person, an opportunity to participate in the service virtually.
We believe that these creative ideas won't go away but have become the new way we show value to our families.
We knew that our managing partners were true entrepreneurs.
But that spirit has really shined through during this pandemic.
They continue to grow market share above the lift we have seen from COVID cases.
A vast majority of our same-store funeral homes had market share growth on a year-to-date basis and approximately 75% of those businesses had market share growth beyond COVID.
Due to early local restrictions on gatherings, we did see a dip in our Funeral Home averages, starting at the end of March, the lowest point being in April.
But with the inspiring and innovative ideas at our businesses, both our burial and cremation averages have been picking up ever since.
On a same-store basis, we saw an increase in our burial average of 3% in the third quarter versus the second quarter and an increase in cremation average of 6.4%.
We believe this upward trend in average will continue the rest of this year and into next year.
And when talking about cremation average specifically, we saw an increase in our cremation calls with the reboot of standards in 2019, which put more emphasis on net revenue growth.
At the end of '19, we put more focus on converting those cremations into a cremation with some type of service.
We remain dedicated on taking time with each of our families to educate them on what is possible when choosing cremation as a disposition.
And cremation is just that, it's a type of disposition.
It does not mean there is no service or celebration of life.
We have heard so many great stories of how our funeral directors take the time to connect with each family and simply listen as the family share stories and interest about their loved ones.
This allows us to provide unique and creative ways to honor them and share that with everyone that attends the service, transforming a stat occasion into a lasting memory.
I would like to share just a few examples of how our people incorporate unique touches to every service.
One of our businesses organized a parade for someone down Main Street because they always wanted to have a parade in their honor.
We had another business create replicate tickets of their favorite sports teams to hand out at the service.
And another business that made laminated miniature vinyl cards for a former music producer for all who knew him to have a reminder of the life he was so proud of.
And another business that had the unique idea to give a grieving husband the opportunity to apply the insignia of their family brand on a wooden casket that would be the final resting place for the love of his life.
These things may seem small to someone looking in, but they are a touching moment for the family that has just lost someone very close to them.
This is how our people make such an impact and touch not only the family that is grieving but anyone attending the service, leaving a lasting memory so that when they are in the unfortunate position of losing someone close to them, they know who they can rely on to create that customized memorable service.
The third quarter marked the first period of time where the full effect of the successful execution of our trust fund portfolio repositioning strategy was reflected in our reported financial revenue and EBITDA.
The recurring annual income generated from our trust fund portfolio is currently $15.7 million, up from approximately $9.4 million prior to the execution of our strategy.
Initially, this 67% increase in recurring annual income will primarily benefit our recognized revenue through our cemetery perpetual care trust, while increasing the value of preneed funeral and cemetery trust contracts to be recognized over the long term.
For the third quarter, financial revenue increased 44.5% to $5.6 million, driven by a 111% increase in cemetery trust earnings.
Financial EBITDA increased 51.6% to $5.2 million and financial EBITDA margin increased 440 basis points to 93.8% compared to the third quarter of last year.
Next year, we expect financial revenue to be between $22 million and $23 million and financial EBITDA of approximately $21.5 million, an almost 50% increase from our financial EBITDA prior to the execution of our repositioning strategy.
Going forward, this higher level of recurring financial revenue and EBITDA will be significantly accretive to our adjusted consolidated EBITDA and adjusted consolidated -- adjusted free cash flow margins that are reflected in our updated three year milestone scenario.
Overhead increased $1.1 million while overhead as a percentage of revenue, the measure of our ability to leverage our overhead and support platform, fell to 11.8% in the third quarter.
All of the increase in our overhead for the quarter was due to an increase in the incentive compensation accruals, primarily for our Funeral Home and Cemetery Being The Best annual incentive awards.
We are now fully accrued for a higher field incentive compensation at the end of the quarter.
As Peggy mentioned, an important turning point for Carriage was the update to our standards operating model in late 2018 to focus on three year annual compound local revenue growth, driven by market share gains, as we deliver a high-value personal service and sales experience to every family we have the opportunity to serve.
Our managing partners and their teams are able to share in the local profits of their business with no overhead allocations when they achieve at least 50% of their annual standards for our Being The Best incentive program.
I'm looking forward to continued growth in our field incentive compensation accruals in the future.
Our strong operating performance led to an extraordinary free cash flow generation and debt reduction in the third quarter.
For the quarter, our adjusted free cash flow increased 120.3% to $27.6 million and our adjusted free cash flow margin expanded 1,370 basis points to 32.7%.
The continued expansion of our adjusted free cash flow margin represents a greater percentage of revenue generated as cash capital that is available to responsibly grow the intrinsic value of Carriage.
We were able to pay down $37.5 million in debt during this third quarter, equal to 7.4% of our debt outstanding at the beginning of the quarter.
This included the repurchase of $3.6 million of our 2.75% subordinated convertible notes in privately negotiated transactions.
For the year, we have paid down $63 million of debt, which is equal to 11.8% of our total debt outstanding post the close of Oakmont Memorial Park and Mortuary on January 3.
We are currently well ahead of our previous expectations for debt reduction.
And we now expect our total debt outstanding to be approximately $460 million by the end of the year.
Our net debt to pro forma adjusted consolidated EBITDA fell to 4.8 times at the end of the quarter due to the accelerating growth in our adjusted consolidated EBITDA, combined with a large amount of debt reduction through the quarter.
We were able to reduce our leverage on an absolute basis by over one full turn during the third quarter.
The rapid and substantial decrease of our leverage ratio demonstrates not only our ability but our commitment to operate Carriage at a lower leverage profile now and into the future.
We expect our leverage ratio to be approximately 4.5 times by year-end and below four times by year-end 2021.
During the third quarter, we divested six businesses for total proceeds of $7.3 million.
We currently expect to sell approximately 20 businesses or excess real estate for total proceeds of around $17 million and be substantially complete by the time we look to execute a refinancing transaction in the second quarter of next year.
These transactions will be accretive to our leverage profile and will incrementally improve the organic growth rates and field margin profile of our same-store Funeral Home segment.
Our debt repayment in the quarter was also helped by the receipt of a $7 million federal tax refund related to tax law changes made in the recently passed CARES Act.
We expect to receive an additional $1 million refund prior to the end of the year and we will be a full cash taxpayer again in 2021.
As we have previously stated, our primary focus for capital allocation over the next three quarters will be the continuation of the significant progress we have made to reduce total debt outstanding and reduce our debt-to-EBITDA leverage ratio.
Our rapidly improving credit profile positions Carriage to execute a refinancing transaction of our existing 6.625% unsecured high-yield notes when they become callable on June one of next year.
We expect this transaction to reduce our interest cost by a minimum of 200 basis points, reduce our cash interest cost by a minimum of $8 million and add a minimum of $0.29 of earnings per share on an annual basis.
This transaction will also lead to a material improvement in our cost of capital.
These assumptions are conservatively included in our updated three year milestone scenario and in our updated rolling fourth quarter outlook.
After the completion of this refinancing transaction, Carriage will have a maximum financial flexibility to pursue a range of value creation and capital allocation opportunities, including partnering and acquiring the best remaining funeral home and cemetery businesses in the country, who will look to Carriage as the succession planning solution of choice within our industry; invest in strategic growth projects throughout our portfolio; opportunistically repurchase our shares, all while remaining at a more modest leverage profile as the vast majority of these will be funded by our growing and recurring free cash flow.
The final piece of our capital allocation strategy will be to steadily increase our dividend over time.
We are pleased and excited to announce the decision by our Board of Directors to increase our annual dividend by $0.05 to $0.40 per share.
This increase marks the second $0.05 increase in our dividend since the onset of the coronavirus crisis and should be viewed as an additional sign of confidence in our future performance.
At $0.40 per share, our annual dividend payments will be $7.2 million per year and represent approximately 10% of our projected 2022 adjusted free cash flow.
Beyond 2022, we will target a dividend policy of approximately 10% of our adjusted free cash flow and a 1% dividend yield on the market price of Carriage shares.
We're also pleased to announce an updated rolling 4-quarter outlook and updated three year milestone Roughly Right Scenario that both show a significant increase in our performance expectations through 2022 and beyond.
We expect to achieve important company performance milestones of over $100 million in adjusted consolidated EBITDA and industry-leading 32% adjusted consolidated EBITDA margin and earn over $60 million of adjusted free cash flow this year whereas we previously expected those milestones to be met in 2021 and 2022.
We also now expect to earn between $1.80 and $1.85 in adjusted diluted earnings per share this year, growing to between $2.15 and $2.25 in 2021 and growing further to $2.48 to $2.60 in 2022, when we have the full year effect of a lower cost capital structure.
We have increased our performance expectations in all major categories as we see continued growth in local market share in both our Funeral Home and Cemetery segments at higher and sustainable margins, improved preneed cemetery property sales, continued performance improvement from our four recent strategic acquisitions and the full impact of the increase in financial revenue and EBITDA from our preneed trust fund portfolio repositioning strategy.
We view these performance expectations as readily attainable through 2022 and believe we have multiple opportunities to exceed these expectations through continued improvement of our existing portfolio and through savvy and disciplined capital allocation post a refinancing transaction.
And finally, I'd like to take this opportunity to echo the sentiments of our entire leadership team, that while the coronavirus crisis impacted our results in a variety of ways, our third quarter and year-to-date results are the byproduct of the tremendous work by dedicated leaders and teams across our entire company over the past two years.
We look forward to a strong finish to this year and achieving the goals we've set out before us in the future.
These materials will detail Carriage's almost 30-year evolutionary journey and the key concepts that drive our high-performance culture.
Then give us a call, or better yet, come for a visit in Houston for a deeper dive into the fastest-growing, highest-margin and second-longest tenured funeral home and cemetery consolidator based in the U.S. We're happy to host, socially distanced, of course.
When Mel first asked me to participate in today's earnings call, admittedly, I was a bit surprised.
It isn't exactly standard practice for your General Counsel to actively participate in these calls.
However, I know that with Mel, there's always a longer-term goal to an idea that, at the time, may seem a bit unorthodox.
So with that in mind, it is a real privilege for me to have the opportunity to talk about our support center teams generally and our legal team more specifically.
Now on preparing my remarks, I asked Mel if there's anything in particular that he'd like me to cover.
And those of you listening, who routinely follow Carriage, will not be surprised by Mel's direct response.
He said, "Steve, I only have three things for you to consider.
First, talk about anything at all as long as it has to do with the company".
And then he simply said, "Say what you mean and mean what you say".
That response, as short and direct as it is, pretty well exemplifies a mindset that I believe is at the heart of our performance.
There are no prepackaged playbooks or one-size-fits-all scripts to follow but rather trust in our people to generate good ideas and then go out and perform.
The results from that approach are often viewed in terms of financial metrics, like EBITDA and EPS.
However, behind those numbers and trends is a team of uniquely talented individuals.
Managing partners and their teams, who we reference often, absolutely lead that performance.
And whatever they -- and what they do in the non-pandemic environment is special to watch.
Now behind the scenes, supporting those managing partners and their teams is an equally impressive group, who have also risen to numerous challenges this year.
Whether it's our IT team quickly rolling out live streaming tools and remote document execution options to help keep our families and employees safe; or our field operations support team, jumping in to assist our businesses with around-the-clock administrative support when those businesses become shorthanded; or our HR, risk management and legal professionals, partnering together to oversee and manage a 24-hour hotline to ensure any question our frontline professionals have had during this pandemic is answered immediately, the collaboration, selflessness and problem solving demonstrated by these teams have put the work of each one of these behind-the-scenes professionals front and center within Carriage.
Now most public companies have some version of a support center.
Whether it's referred to as headquarters or simply corporate, the idea of a single location, where traditional back-office functions take place, is certainly not a novel one.
With that said, what makes Carriage's support team stand out is the fact that the same philosophy of entrepreneurship and autonomy that drives our decentralized model and the approach and success of our managing partners extends to our support center teams.
The formula is simple, find the very best talent and then put them in a position to do what they do best.
This includes allowing leaders at all levels to act quickly with authority and without the need for time-consuming meetings and layers of approvals, which, at best, delay and, at worst, destroy progress, improvement and growth.
As it relates to our legal team, I have the privilege to work with professionals who bring much more than impressive and diverse legal backgrounds to the table.
I often tell Mel that our in-house attorneys take great pride in being consulted on business matters, not just legal issues.
We intentionally provide our attorneys with financials, weekly performance updates by business, weekly cash debt balance activity and other critical financial metrics.
The goal behind providing all this data, that some may believe is reserved for operations, finance and accounting teams, is so our attorneys can continuously dig deeper into learning more about our businesses and understand what ultimately drives the results we release each quarter and then apply that knowledge to how they provide guidance and make decisions.
That purposeful financial focus and ownership mindset truly result in our attorneys serving much more as business partners, who just happen to have a legal background, than simply as lawyers.
We frequently have discussions about big-picture strategic objectives and capital deployment.
And their feedback and thinking not only contribute to ultimate decision-making, but just as importantly further enhance and guide the support they provide each day.
Our legal team and many of their support center colleagues invest a significant amount of time in proactive, continuous learning about not only the business but the financial drivers.
And as a result, they have great awareness and ownership in the financial health and growth of their company.
For example, in explaining the financial impact of a proactive matter one of our attorneys has been working on for some time, he recently briefed me by saying, "Steve, that recovery is going to come in around $0.01 a share".
His reference to our earnings per share metric was not unusual, it's a language and a perspective that is used often.
And it's a great example of the work they do to understand our financials in the mindset applied to spending and decision-making throughout our company.
Now I share all of this regarding the Carriage entrepreneurial philosophy and ownership mindset extending to our support teams to tie back to the incredible work performed during this pandemic for a couple of reasons.
First, when things initially became uncertain and the challenges unprecedented back in March, our teams in the field and here at the support center were already well-equipped, prepared and most importantly empowered to act quickly, responsibly and wisely.
And second, the ownership mindset shared by leaders here in the support center creates an environment where they're encouraged to not just fill a function but to ask questions, think strategically and act confidently when a time-sensitive pivot may be called for.
This pandemic has required the full complement of collective talent within our team.
And they have exceeded the already high expectations that they set for themselves.
As a company, we talk a lot about the entrepreneurial spirit that drives our business.
And I have the good fortune to see it in action every day, not only in the work performed by our frontline professionals but also by our support center team.
I know I speak for our legal team as well as our support center colleagues when I say it is an absolute privilege for all of us to have the opportunity to work with and support our managing partners and each of the frontline leaders who serve our families every day during the most challenging of circumstances.
So if anybody out there takes Ben up on his invitation to come and visit, we'll introduce you to some of Steve's dragon slayers.
And you'll see exactly what we mean by that.
So two days ago, Shawn Phillips and I got an email.
We got that email from Dewayne Cain.
Dewayne is the founder of Rest Haven in Dallas.
And it reads as follows, "Wednesday, October 28, marks our one year anniversary".
So he's referencing one year ago today, when we closed the day before the acquisition of Rest Haven, which was founded 50 years ago by Dewayne.
The email said as follows, "My decision to form a partnership with Carriage was the third-best decision I ever made.
The two that preceded it were: one, asking Jesus into my life; and two, asking Ann to marry me.
Last October, no one could have predicted what 2020 would bring.
But I can truthfully say that in these last 12 months, my belief in Carriage as well as my admiration and respect for you and Shawn has grown.
May God continue to bless our great country, our wonderful families, our successful company and our continued friendship".
So I emailed Dewayne back yesterday.
Now for those of you who've been around a while and might have been on that call a year ago, Dewayne was my guinea pig.
I wanted him to do a testimonial, the first one that would have ever been done by a former owner, one 12-hour period after he wasn't the owner.
But we made it clear to Dewayne that he never will not be the owner.
And he still uses the same parking spot and he doesn't pay me any rent.
It's OK, Dewayne, I forgive you.
This is what I've sent Dewayne back, "Dewayne and Ann, amen, partner, to your prayer.
May God continue to bless our great country, our wonderful families, our successful company and our continued friendship.
Happy one year anniversary.
So my dear friend and partner, if you don't mind, I might take the liberty of reading your email instead.
Stay safe and healthy".
And Dewayne emailed me back last night, 7:21 p.m., "You definitely have my permission because it's so very true".
Now what we couldn't have known one year ago, when we invited Dewayne to do his testimonial, is that Mike Doherty, the third-generation member of Fairfax Memorial Park and Funeral Home in Fairfax, Virginia, was on that call and listening carefully to what Dewayne had to say about Carriage being a family succession solution, which Fairfax was looking for at the time.
He later called Dewayne personally to ask him about Carriage.
That led to Carriage being the winner for Fairfax, which I've known about a long time.
And it put this big business in Carriage.
It was founded 62 years ago by Mike's grandfather.
And we have promised Mike, and when we went and presented to Mike and the other members of the Board, Dave Dodrill was a big owner, had come in to help the family.
So you have -- you never know in this business who's listening and they're paying attention to what is said by not those of us in the company always, but by those of us who -- by those of you who joined the company, especially owners of great businesses.
You are known by the company you keep and the reputation they have will also build your own reputation.
This is who we are.
The best years of our company are in front of us.
We will get through this coronavirus as a country, I hope soon.
But I have never been more proud of our people than I am now.
And our future has never looked so bright.
So we look forward to reporting that future performance to you as it occurs.

user
q3 adjusted earnings per share $0.51.
q3 revenue rose 27.6 percent to $84.4 million.
sees q4 adjusted free cash flow of $56 million - $60 million, up from $50 million - $55 million.

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