Carriage Services: Can Its Preneed Model Scale to Capture a Growing Market?

The foundation for Carriage's growth thesis is a market that is both large and expanding. The global Funeral and Cemetery Services market was valued at over $90 billion in 2025 and is projected to more than double to nearly $168 billion by 2034, growing at a robust 7.15% annual rate. In the United States, the engine is steady: approximately 3.1 million deaths occur each year, driving recurring demand. This overall market includes a critical, growing sub-segment: preneed death care. Valued at $27.7 billion in 2023, this market is expected to reach $40.9 billion by 2031, growing at a 4.4% compound rate. The demand driver is clear: an aging population, particularly the Baby Boomer cohort, is increasingly seeking to plan ahead, control costs, and ease the burden on families.

Carriage's position is defined by its scale within a deeply fragmented industry. The company operates a network of 155 funeral homes and 28 cemeteries. This gives it a significant footprint, but it is still a small player in a vast landscape. The U.S. funeral home industry is estimated to have roughly 11,000 funeral homes, with independent operators making up the vast majority. Carriage is a mid-tier chain, far from the largest corporate players that manage hundreds or even thousands of locations.

This fragmentation is the core of the opportunity. It means there is no dominant national player, and consolidation is an ongoing trend. Carriage's strategy hinges on its ability to leverage its existing network to scale its preneed model more effectively than smaller, local competitors. The company's model-selling preneed contracts and cemetery plots-directly taps into the growing market for advance planning. Its success, therefore, is not just about capturing a share of the overall market growth, but about converting its 155-location footprint into a larger share of the fragmented industry. The thesis is that Carriage can outpace the 7%+ market growth by executing a more scalable, institutionalized preneed sales approach across its network.

The Scalability Test: Preneed Growth vs. Market Growth

Carriage's recent results provide a clear snapshot of its growth engine in action. In the third quarter, the company's preneed sales surged, delivering a 21.4% growth in cemetery preneed sales. This figure is a standout performance, significantly outpacing the overall market's projected 7.15% compound annual growth rate. More importantly, this preneed strength directly translated into financial momentum, driving a 12.6% year-over-year increase in cemetery operating revenue.

This is the core of the scalability test. The company is demonstrating that its institutionalized sales approach can accelerate growth within its core segment. The 21.4% preneed sales growth is not just a number; it represents the model converting its 155-location network into a more powerful sales force than the fragmented local operators it competes against. The financial impact is tangible, with preneed-driven revenue growth far exceeding the company's overall top-line expansion.

Yet, this success is set against a backdrop of a much slower-growing total business. For the same quarter, total revenue grew just 2.0% year-over-year. This stark contrast highlights the central challenge. While the preneed segment is firing on all cylinders, the rest of the funeral home and cemetery operations are essentially flat. The company's mature funeral services, where the number of contracts dipped slightly, are not contributing to the growth story. This creates a tension between a high-growth, high-margin preneed business and a low-growth, lower-margin core.

The bottom line is that Carriage is executing well on the scalable part of its strategy. The preneed sales growth is a powerful indicator that its model can capture market share faster than the market itself is growing. However, the overall revenue figure shows that this high-growth engine is not yet large enough to lift the entire company. For the 2030 Vision to materialize, Carriage must not only sustain this preneed acceleration but also find a way to scale its other operations or integrate the preneed success more broadly across its footprint. The test now is about leverage: can the preneed growth be scaled to become the dominant revenue driver?

Execution and Competitive Enablers

The strategic leadership changes at Carriage signal a deliberate pivot toward scaling its growth engine. The promotion of Steve Metzger to President & COO, effective in February, is a clear catalyst. His expanded mandate to oversee Sales, Marketing, and M&A directly targets the preneed model's expansion. This move, part of a broader leadership overhaul, aims to align the company's structure with its 2030 Vision and long-term growth strategy. By centralizing these functions, Carriage is building the institutional muscle needed to replicate its successful preneed sales approach across its network and pursue strategic acquisitions that accelerate market share gains.

This focus is well-timed, as preneed contracts offer a powerful competitive advantage in a capital-intensive industry. These agreements provide revenue visibility and inflation protection, locking in future service costs at today's rates. For a company with a 155-location footprint, this creates a predictable, high-margin revenue stream that can fund further growth and reinforce its balance sheet. It's a structural benefit that smaller, local operators often lack, giving Carriage a financial and operational edge as it scales.

Yet, the primary long-term risk to this scaling thesis is demographic. The industry is undergoing a profound shift, with cremation rates projected to rise to 81.4% by 2045. This trend, driven by cost and environmental factors, directly challenges the traditional cemetery business that underpins the preneed model. While Carriage can adapt its offerings, the core growth engine for cemetery preneed sales faces a headwind from a changing consumer preference. The company's ability to capture market share will increasingly depend on its agility in diversifying its preneed portfolio to include more cremation-related services and memorialization options, ensuring its scalable model remains relevant in a future where most Americans choose to be cremated.

Catalysts, Risks, and What to Watch

The path to validating Carriage's scalability thesis hinges on a few clear milestones. The most immediate catalyst is the successful integration of its new leadership structure. The promotions announced last week, effective in February, are designed to centralize control over the growth levers: Sales, Marketing, and M&A now fall under the expanded purview of President & COO Steve Metzger. For the preneed model to scale, this team must translate the company's institutional approach into consistent execution across all 155 locations and drive the strategic acquisitions that can rapidly expand its footprint. The next earnings report will be the first real test of this new alignment.

Investors should monitor three key metrics to gauge progress. First, the pace of preneed sales growth must remain robust and continue to outpace the overall market's 7% growth. A deceleration here would signal execution challenges. Second, the trend in total revenue needs to show more than just the 2% quarterly growth seen last quarter. The goal is for the preneed engine to start lifting the entire top line, indicating broader operational leverage. Finally, watch for any updates on capital allocation for expansion. The company has demonstrated its ability to redeploy capital from divestitures, but the next phase of growth will require disciplined investment in both organic expansion and targeted acquisitions.

The critical long-term risk, however, is a structural constraint on the core business. The industry faces a growing challenge of cemetery land scarcity, a key restraint identified for the sector. As urban areas develop and land becomes more expensive and harder to acquire, the physical capacity to sell new interment rights is limited. This directly pressures the growth potential of the cemetery preneed model. Carriage's strategy must therefore evolve beyond simply selling more plots; it needs to diversify its preneed offerings and find ways to monetize its network in a land-constrained future. The scalability thesis is strong in the near term, but its ultimate success depends on the company's ability to adapt its model to this fundamental industry shift.