So with all of that said, we’ve identified some businesses that fit that profile, but we’re also reviewing some others that might help us to key on point, accelerate our deleveraging focus over the next 12 months.
Carlos Quezada: And Alex, just to add a bit more to that. These are assets that we would sell either way, regardless of our debt condition situation, even if we didn’t have the debt we have today, we will divest from those assets because we have become more disciplined with their capital allocation, focused on return on investment of that capital, we would reinvest that capital in ways that are marketed to the company. So this strategy is not as a consequence of the debt. It is something that Carriage has done for years in terms of pruning the lower performing or lower assets in terms of the strategy that we have designed for Carriage going forward.
Operator: [Operator Instructions]. We’ll go next to Liam Burke with B. Riley.
Liam Burke: On the cemetery, you had a slight — I understand that the EBITDA margins will bounce around from quarter-to-quarter. But — and year-over-year, you’re down slightly, which would be normal. But looking sequentially, you were down from the 40% range in the second quarter. What created — was it just entirely input costs or raw material — I mean, product costs?
Carlos Quezada: No. I would say, Liam, that the main reason why this is happening. We have included 2 new cemeteries, Forest Lawn and Green Lawn into our mix. And those were cemeteries at the time when we acquired them that had lower averages. Since then we have made increases to the sales average and to the Preneed sales impacting that performance. Over time, I do believe the margins will come back to where it should be. From a same-store basis, we have experienced a little bit of cost in the maintenance area from our cemeteries, hitting a little bit of those margins. We’re working through efficiencies to make sure that our maintenance cost is in alignment with our expectations to make sure from a same-store basis, we can improve the margins as well. But I do expect the cemetery margins to continue to rise up as we continue to integrate the businesses and as we continue to work on our maintenance expense.
Liam Burke: Great. And you mentioned a 5% volume decline in funeral home as it normalizes from the high COVID mortality rates. But you also mentioned higher average per customer [indiscernible]. Are you just getting back your higher product costs? Are you able to get any kind of margin out of that?
Carlos Quezada: Yes. We’re trying to catch up with cost increase, right? We have experienced several price increases from vendors throughout 2023, actually began at the end of 2022. And sometimes it’s difficult to continue to increase your prices every month or every 2 months, once you get an increase. Since then, we have met with most of our vendors come to agreements to put some caps into cost increases and making sure that we’re able to catch up to that expectation from a price increase perspective to the families that we serve, passing those costs into the families and making sure we don’t lose volume, while we do it. As we mentioned on other calls, there’s a very fine balance between keeping the price up and getting to a point when you start to lose volume.
And so we’re trying to find that where that point of inflection is to make sure that we don’t lose volume, but we also capture as much price as we can in every single transaction. As it relates to the volume decline, what I do want to add to — and I did put that in my remarks, is that the CDC data shows that the states we operate dropped 9%. That’s a very significant drop for the third quarter 2022 to the third quarter of 2023. However, we only dropped 5% in those same states in their businesses. And so that tells me that we have been able to not only sustain and make up the death rate, but also gain some market share in the same states that I just mentioned — so the states that I just relate.
Liam Burke: That was my other follow-up on the funeral home. You’re not seeing sticker shock, I guess, yet, and I’m presuming that you just have to manage through the balance there.
Carlos Quezada: That is correct. Yes, I agree with that.
Operator: And we’ll take our next question from J.P. Wollam with ROTH MKM.
J.P. Wollam: Just a couple of questions for me. Maybe one, just kind of talking about the difference that you experienced in terms of your volume that 5% relative to kind of the average in the area. It sounds like you had taken some market share. I think you made that comment. I’m just curious if you can maybe expand on that a little bit? And just kind of give us a sense of at the operating level, what is really driving that market share? Or what are you — and what did the partners attribute those share gains to?
Carlos Quezada: We — as you know, JP, we are very decentralized, and that allows and empowers a managing partner to make decisions locally that really matters in the community that they serve. They’re able to build the relationships and the connections that truly drive volume in that specific business. Those relationships have been built up over the years, especially to COVID-19, there were many instances where all their businesses were not able to serve families through that period. And I do believe we gained tremendous preference in a lot of our businesses because we were able to serve those families when they needed to be served. So that goodwill, if you will, is really making a significant difference as we continue to move forward throughout.
In addition to that, there has been a lot of work done from our marketing team regarding presence online, digital strategies to be able to make sure that we direct traffic from our website into the funeral home, capture that — call and capture that family, making sure we address questions and keep that family, if we can, and that’s including social media and other digital mediums. And so I do believe that in addition to the rates or the scores really we have from SAR review perspective and Google and Facebook and other mediums are making also a significant impact.
J.P. Wollam: Understood. And then maybe if we could just talk about the Guardian and Pricoa partnership. I think you said that it was fully integrated in the Western region. And I think you gave some stat in there. But just curious if you can kind of quantify what the benefit has been in the Western region now that it’s been rolled out.
