Carriage Services, Inc. Manik Malhotra Quintus Yang 18th April, 2017

AGENDA Stock Market Prospects Industry Overview and Analysis Macroeconomic Overview and Drivers Company Overview Financial Analysis Comparable Valuation DCF Valuation Technical Analysis Recommendation

STOCK MARKET PROSPECTS INDUSTRY OVERVIEW MACROECONOMIC OVERVIEW COMPANY OVERVIEW

Stock Market Prospects Share Price Performance March 2012 March 2013 March 2014 March 2015 March 2016 March 2017 $7.55 $27.08 5-Year Return – 30% Portfolio Weightage By Cost Market Trading Multiples Current Stock Price $27.5 Market Capitalization $454 million Total Enterprise Value $820 million P/E Ratio 24.5x 52 Week Range $21.7 –$29.1 Source: Google Finance: https://www.google.com/finance?q=NYSE:CSV As of 17th April 2017

Stock Market Prospects Cumulative Returns since March 2012 Source: Google Finance: https://www.google.com/finance?q=NYSE:CSV As of 17th April 2017

Industry Overview Industry Major Players in Industry Estimated to be a $18 billion industry 2.7 million deaths in an year currently Average life expectancy in USA is 78.8 years 47.8 million Americans aged 65+ 56.4 million Americans aged 65+ by 2020 65+ population growing at a faster rate than total population Direct Competitors Service Corporation International (SCI) StoneMor Partners Limited (STON) Indirect Competitors Hillenbrand (HI) Matthews International Corporation (MATW) SCI, STON and CSV combined have a market share of 20% Role of Heritage & Tradition Role of Acquisition in Industry Traditionally been a family-owned business built around local heritage Runs on established client family relationships and related referrals Relationships fostered at local level build trust and are a driver of market share A lot of time and resources required to build local heritage and tradition Mostly acquired companies name & management not changed Carriage Services acquired 6 funeral home businesses in 2016 Service Corporation International as well as StoneMor also expand through acquisitions Most of the funeral homes are independently owned Some independent companies have also grown through acquisitions Source: 10K reports https://www.sec.gov/Archives/edgar/data/1016281/000101628117000018/csv-20161231x10k.htm

Macroeconomic Overview Aging Population Trend (65+) % Increase in Deaths per Year % Change in Burial/Cremation Rate Current Burial & Cremation Rate Source: 10K reports https://www.sec.gov/Archives/edgar/data/1016281/000101628117000018/csv-20161231x10k.htm US Census Board

Company Overview Business Overview Financial Snapshot Provider of Funeral and Cemetery services Co-founded in 1991 in Houston, Texas Publicly traded on NYSE under symbol “CSV” in 1993 Operates 170 funeral homes in 28 states & 32 cemeteries in 11 states The mission statement of the company is “Being the Best” Corporate strategy defined by three models Standards Operating Model 4E Leadership Model Strategic Acquisition Model Geographic Presence Investors FMR LLC 13.0% Dimensional Fund Advisors 8.3% Melvin Payne (CEO) 8.2% BlackRock 6.1% Royal Bank of Canada 5.2% Institutional Ownership 85.5% Insider Ownership 8.9% Source: 10K Reports https://www.sec.gov/Archives/edgar/data/1016281/000101628117000018/csv-20161231x10k.htm

10 Year Vision and Strategy Company Overview Products and Services Ceremony and tribute, in the form of memorial service Disposition of remains, either through burial or cremation Memorialization, general through monuments, markers or inscriptions 10 Year Vision and Strategy To be recognized by institutional investors and those in industry as a superior consolidation, operating and value creation investment platform Affiliate with best remaining independently owned funeral and cemetery business Source: Investor relation reports http://www.carriageservices.com/

SWOT Analysis Strengths Weakness Opportunities Threats 1) High performance, decentralized, partnership culture 2) Market leader in existing markets 3) Proven leadership team Weakness 1) Highly fragmented industry 2) Dependence on economic conditions 3) Dependence on relationships Opportunities 1) Growing death rates 2) New acquisitions 3) New markets Threats 1) Increasing cremation rates 2) Growing competition 3) Price changes

FINACIAL ANALYSIS COMPARABLE ANALYSIS DCF VALUATION TECHNICAL ANALYSIS RECOMMENDATION

Historical Financial Results Demonstrated ability to leverage single digit Revenue growth rates into larger increases in Adjusted Consolidated EBITDA and Adjusted Diluted Earnings Per Share. 2012-2016 Growth: Revenue CAGR: 4.6% Adj. Consolidated EBITDA CAGR: 6.7% Adj. Diluted EPS CAGR: 15.7% Source: Investor relation reports http://www.carriageservices.com/

Financial Analysis Profitability Ratio Efficiency Ratio Liquidity Ratio Solvency Ratio Source: Capital IQ

Improved Consolidation Platform Financial Analysis Greenblatt Ratios Improved Consolidation Platform Source: 10K reports & Investor relation reports http://www.carriageservices.com/

Comparable Valuation Comparable Companies Service Corporation International (SCI) North America's largest provider of funeral, cremation and cemetery services More than 2,000 funeral homes and cemeteries in 45 states, eight Canadian provinces, the District of Columbia and Puerto Rico. StoneMor Partners (STON) 316 cemeteries and 100 funeral homes in 27 states and Puerto Rico Bad operation performance recently and heavy in debt Matthews International Corporation (MATW) Around 40% of the revenue come from funeral and cemetery services business Largest percent of revenue comes from bronze plaques (27%, 2011 data) Hillenbrand (HI) Sells 45% of caskets sold in the United States (2011 data) Source: http://247wallst.com/investing/2011/01/13/the-ten-companies-that-control-the-death-industry/

Stock Market Prospects Cumulative Returns since March 2012 Source: Google Finance: https://www.google.com/finance?q=NYSE:CSV As of 17th April 2017

Comparable Analysis Profitability Ratio Efficiency Ratio Liquidity Ratio Solvency Ratio Source: Capital IQ

The price range using comparable analysis is between $31.2 and $34.6 Comparable Valuation The price range using comparable analysis is between $31.2 and $34.6

DCF Valuation Assumptions – Revenues & Cost of Sales Forecasts provided by Carriage Services Source: Investor relation reports http://www.carriageservices.com/

DCF Valuation Assumptions – Discount Rate

DCF Valuation Valuation – Perpetuity Growth Method Discount Rate – 10% Terminal Discount Rate – 8% Terminal Growth Rate – 3%

DCF Valuation Sensitivity Analysis

Technical Analysis The moving averages are on an upward trend Source:http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=csv&insttype=&time=8&freq=1

Best Margins in the Industry Potential target for SCI Recommendation Aging Population Best Margins in the Industry Potential target for SCI BUY 200 Shares @ Market Price