SERVICE CORPORATION INTERNATIONAL ANNOUNCES THIRD QUARTER 2024 FINANCIAL RESULTS
Conference call on
Third Quarter Highlights:
- Revenue grew
$12.1 million over the third quarter of 2023 - Earnings per share was
$0.81 compared to$0.80 in the third quarter of 2023 - Adjusted earnings per share was
$0.79 compared to$0.78 in the third quarter of 2023 - Net cash provided by operating activities grew 16% to
$263.8 million in the current year quarter compared to$227.8 million in the prior year quarter - Net cash provided by operating activities excluding special items grew 18% to
$269.0 million in the current year quarter compared to$227.8 million in the prior year quarter - Comparable core funeral sales average grew 2.1% in the current quarter
- Acquisition spend during the quarter was
$123 million compared to$33 million in the third quarter of 2023
"Today we reported adjusted earnings per share of
We also had a very active quarter on the acquisition front including premier locations in major metropolitan markets. We invested
In 2025, we are targeting a return to the high end of our 8-12% long-term growth framework. We remain committed to our long-term growth strategy to grow revenue, leverage our unparalleled scale, and invest our capital wisely to enhance shareholder value. We would not be able to achieve this without our 25,000 associates and their unwavering commitment to providing excellent service to our client families."
Details of our third quarter 2024 financial results and the unaudited consolidated financial statements can be found in the Appendix at the end of this press release. The table below summarizes our key financial results.
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(Dollars in millions, except for per share amounts) |
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Three months ended |
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Nine months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
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$ 1,014.0 |
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$ 1,001.9 |
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$ 3,093.4 |
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$ 3,044.0 |
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Operating income |
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$ 212.4 |
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$ 223.0 |
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$ 665.5 |
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$ 702.1 |
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Net income attributable to common stockholders |
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$ 117.8 |
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$ 122.0 |
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$ 367.3 |
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$ 398.9 |
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Diluted earnings per share |
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$ 0.81 |
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$ 0.80 |
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$ 2.50 |
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$ 2.60 |
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Earnings excluding special items (1) |
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$ 115.3 |
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$ 119.1 |
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$ 363.1 |
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$ 390.9 |
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Diluted earnings per share excluding special items (1) |
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$ 0.79 |
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$ 0.78 |
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$ 2.47 |
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$ 2.55 |
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Diluted weighted average shares outstanding |
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146.2 |
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152.3 |
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147.0 |
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153.6 |
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Net cash provided by operating activities |
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$ 263.8 |
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$ 227.8 |
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$ 680.8 |
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$ 591.5 |
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Net cash provided by operating activities excluding special items (1) |
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$ 269.0 |
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$ 227.8 |
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$ 709.0 |
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$ 604.8 |
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(1) |
Earnings excluding special items, diluted earnings per share excluding special items, and net cash provided by operating activities excluding special items are non-GAAP financial measures. These items are also referred to as "adjusted earnings per share" and "adjusted operating cash flow". A reconciliation from net income attributable to common stockholders, diluted earnings per share, and net cash provided by operating activities in accordance with generally accepted accounting principles in |
- Diluted earnings per share was
$0.81 in the third quarter of 2024 compared to$0.80 in the third quarter of 2023. The current year quarter was favorably impacted by$3.5 million of net gains on divestitures and impairment charges. The prior year quarter was favorably impacted primarily by$2.5 million of net gains on divestitures and impairment charges. Diluted earnings per share excluding special items was$0.79 in the third quarter of 2024 compared to$0.78 in the third quarter of 2023. Gross profit for both funeral and cemetery were flat, while a lower share count and a lower tax rate more than offset increased corporate general and administrative expense, resulting from changes in our stock price on our long-term incentive compensation plan, and slightly higher interest expense. - Net cash provided by operating activities grew
$36.0 million to$263.8 million in the third quarter of 2024 compared to$227.8 million in the third quarter of 2023. The current year was impacted by payments related to legal matters that were expensed in 2022 of$5.2 million . Net cash provided by operating activities, excluding special items, grew$41.2 million to$269.0 million in the third quarter of 2024 compared to$227.8 million in the third quarter of 2023. Favorable changes in preneed working capital, supported by stronger preneed cash receipts, more than offset an increase in cash interest payments and lower operating income.
OUTLOOK FOR 2024
Our current outlook for the fourth quarter of 2024 for adjusted earnings per share is
In conjunction with our expectation of continued strength in our operating cash flow and coupled with the strong fourth quarter growth anticipated in adjusted earnings per share stated above, we are raising the midpoint of our full year 2024 adjusted operating cash flow guidance from
Our full year 2024 outlook for maintenance capital expenditures remains unchanged at approximately
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(Dollars in millions, except per share amounts) |
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Q4 2024 Outlook |
2024 Outlook |
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Diluted earnings per share excluding special items (1) |
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Net cash provided by operating activities excluding special items and cash taxes (1) |
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Cash taxes |
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Net cash provided by operating activities excluding special items (1) |
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Capital improvements at existing field locations |
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~ |
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Development of cemetery property |
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~ |
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Digital investments and corporate |
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~ |
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Total maintenance, cemetery development, and other capital expenditures (Maintenance capital expenditures) |
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~ |
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(1) |
Diluted earnings per share excluding special items and net cash provided by operating activities excluding special items are non-GAAP financial measures. We normally reconcile these non-GAAP financial measures from diluted earnings per share and net cash provided by operating activities; however, diluted earnings per share and net cash provided by operating activities calculated in accordance with GAAP are not currently accessible on a forward-looking basis. Our outlook for 2024 excludes the following because this information is not currently available for 2024: Expenses net of insurance recoveries related to weather events and hurricanes, gains or losses associated with asset divestitures, gains or losses associated with the early extinguishment of debt, potential tax reserve adjustments and |
CONFERENCE CALL AND WEBCAST
We will host a conference call on
ABOUT
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For additional information contact: InvestorRelations@sci-us.com |
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Investors: |
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(713) 525-9088 |
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(713) 525-3454 |
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Media: |
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(713) 525-3468 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
The statements in this press release that are not historical facts are forward-looking statements made in reliance on the "safe harbor" protections provided under the Private Securities Litigation Reform Act of 1995. These statements may be accompanied by words such as "believe," "estimate," "project," "expect," "anticipate," "predict," or other similar words that convey the uncertainty of future events or outcomes. The absence of these words, however, does not mean that the statements are not forward-looking. These statements are based on assumptions that we believe are reasonable; however, many important factors could cause our actual results in the future to differ materially from the forward-looking statements made herein and in any other documents or oral presentations made by us, or on our behalf. Important factors, which could cause actual results to differ materially from those in forward-looking statements include, among others, the following:
- Our affiliated trust funds own investments in securities, which are affected by market conditions that are beyond our control.
- We may be required to replenish our affiliated funeral and cemetery trust funds to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow.
- Our ability to execute our strategic plan depends on many factors, some of which are beyond our control.
- We may be adversely affected by the effects of inflation.
- Our results may be adversely affected by significant weather events, natural disasters, catastrophic events, or public health crises.
- Our credit agreements contain covenants that may prevent us from engaging in certain transactions.
- If we lost the ability to use surety bonding to support our preneed activities, we may be required to make material cash payments to fund certain trust funds.
- The financial condition of third-party life insurance companies that fund our preneed contracts may impact our future revenue.
- Unfavorable publicity could affect our reputation and business.
- Our failure to attract and retain qualified sales personnel could have an adverse effect on our business and financial condition.
- We use a combination of insurance, self-insurance, and large deductibles in managing our exposure to certain inherent risks; therefore, we could be exposed to unexpected costs that could negatively affect our financial performance.
- Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future impairments to goodwill and/or other intangible assets.
- Any failure to maintain the security of the information relating to our customers, their loved ones, our associates, and our vendors could damage our reputation, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating results, financial condition, or cash flow.
- Our Canadian business exposes us to operational, economic, and currency risks.
- Our level of indebtedness could adversely affect our cash flows, our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and may prevent us from fulfilling our obligations under our indebtedness.
- A failure of a key information technology system or process could disrupt and adversely affect our business.
- The funeral and cemetery industry is competitive.
- If the number of deaths in our markets declines, our cash flows and revenue may decrease. Changes in the number of deaths are not predictable from market to market or over the short term.
- If we are not able to respond effectively to changing consumer preferences, our market share, revenue, and/or profitability could decrease.
- The continuing upward trend in life expectancy and the number of cremations performed in
North America could result in lower revenue, operating profit, and cash flows. - Our funeral and cemetery businesses are high fixed-cost businesses.
- Risks associated with our supply chain could materially adversely affect our financial performance.
- Regulation and compliance could have a material adverse impact on our financial results.
- Unfavorable results of litigation could have a material adverse impact on our financial statements.
- Cemetery burial practice claims could have a material adverse impact on our financial results.
- The application of unclaimed property laws by certain states to our preneed funeral and cemetery backlog could have a material adverse impact on our liquidity, cash flows, and financial results.
- Changes in taxation, or the interpretation of tax laws or regulations, as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows.
For further information on these and other risks and uncertainties, see our
APPENDIX: RESULTS FOR THE THIRD QUARTER OF 2024
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Consolidated Statement of Operations (Unaudited) |
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(Dollars in thousands, except per share amounts) |
Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
$ 1,013,958 |
|
$ 1,001,859 |
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$ 3,093,356 |
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$ 3,043,982 |
|
Cost of revenue |
(761,319) |
|
(748,176) |
|
(2,308,589) |
|
(2,239,737) |
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Gross profit |
252,639 |
|
253,683 |
|
784,767 |
|
804,245 |
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Corporate general and administrative expenses |
(43,732) |
|
(33,213) |
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(124,055) |
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(112,294) |
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Gains on divestitures and impairment charges, net |
3,515 |
|
2,542 |
|
4,755 |
|
10,187 |
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Operating income |
212,422 |
|
223,012 |
|
665,467 |
|
702,138 |
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Interest expense |
(65,804) |
|
(61,512) |
|
(194,540) |
|
(174,904) |
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Losses on early extinguishment of debt |
(25) |
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— |
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(25) |
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(1,114) |
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Other income, net |
2,815 |
|
128 |
|
7,002 |
|
2,647 |
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Income before income taxes |
149,408 |
|
161,628 |
|
477,904 |
|
528,767 |
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Provision for income taxes |
(31,547) |
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(39,585) |
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(110,549) |
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(129,543) |
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Net income |
117,861 |
|
122,043 |
|
367,355 |
|
399,224 |
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Net income attributable to noncontrolling interests |
(34) |
|
(72) |
|
(61) |
|
(302) |
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Net income attributable to common stockholders |
$ 117,827 |
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$ 121,971 |
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$ 367,294 |
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$ 398,922 |
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Basic earnings per share: |
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|
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Net income attributable to common stockholders |
$ 0.81 |
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$ 0.81 |
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$ 2.53 |
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$ 2.63 |
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Basic weighted average number of shares |
144,706 |
|
150,630 |
|
145,421 |
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151,654 |
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Diluted earnings per share: |
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Net income attributable to common stockholders |
$ 0.81 |
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$ 0.80 |
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$ 2.50 |
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$ 2.60 |
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Diluted weighted average number of shares |
146,223 |
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152,289 |
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146,978 |
|
153,554 |
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Consolidated Balance Sheet (Unaudited) |
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(Dollars in thousands, except share amounts) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 185,420 |
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$ 221,557 |
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Receivables, net |
80,955 |
|
97,939 |
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Inventories |
34,571 |
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33,597 |
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Income tax receivable |
52,487 |
|
122,183 |
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Other |
35,661 |
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23,010 |
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Total current assets |
389,094 |
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498,286 |
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Preneed receivables, net and trust investments |
6,766,755 |
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6,191,912 |
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Cemetery property |
2,113,801 |
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2,020,846 |
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Property and equipment, net |
2,564,241 |
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2,480,099 |
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|
2,084,790 |
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1,977,186 |
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Deferred charges and other assets, net |
1,324,768 |
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1,247,830 |
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Cemetery perpetual care trust investments |
2,162,902 |
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1,939,241 |
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Total assets |
$ 17,406,351 |
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$ 16,355,400 |
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LIABILITIES & EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$ 658,837 |
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$ 685,759 |
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Current maturities of long-term debt |
84,349 |
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63,341 |
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Total current liabilities |
743,186 |
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749,100 |
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Long-term debt |
4,743,679 |
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4,649,155 |
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Deferred revenue, net |
1,750,755 |
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1,703,509 |
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Deferred tax liability |
655,486 |
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638,106 |
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Other liabilities |
506,388 |
|
464,935 |
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Deferred receipts held in trust |
5,225,878 |
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4,670,884 |
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Care trusts' corpus |
2,153,178 |
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1,938,238 |
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Equity: |
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Common stock, |
144,979 |
|
146,323 |
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Capital in excess of par value |
972,511 |
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937,596 |
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Retained earnings |
492,294 |
|
432,454 |
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Accumulated other comprehensive income |
17,391 |
|
24,891 |
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Total common stockholders' equity |
1,627,175 |
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1,541,264 |
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Noncontrolling interests |
626 |
|
209 |
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Total equity |
1,627,801 |
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1,541,473 |
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Total liabilities and equity |
$ 17,406,351 |
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$ 16,355,400 |
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Consolidated Statement of Cash Flows (Unaudited) |
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(Dollars in thousands) |
Nine months ended |
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2024 |
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2023 |
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Cash flows from operating activities: |
|
|
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Net income |
$ 367,355 |
|
$ 399,224 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
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Loss on early extinguishment of debt |
25 |
|
1,114 |
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Depreciation and amortization |
153,932 |
|
141,228 |
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Amortization of intangibles |
12,759 |
|
14,158 |
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Amortization of cemetery property |
70,431 |
|
71,892 |
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Amortization of loan costs |
5,365 |
|
5,133 |
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Provision for expected credit losses |
9,693 |
|
6,997 |
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Provision for deferred income taxes |
15,243 |
|
166,786 |
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Gains on divestitures and impairment charges, net |
(4,755) |
|
(10,187) |
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Share-based compensation |
12,042 |
|
11,786 |
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Change in assets and liabilities, net of effects from acquisitions and divestitures: |
|
|
|
|
Decrease in receivables |
11,366 |
|
11,781 |
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Decrease (increase) in other assets |
12,464 |
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(161,687) |
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Increase (decrease) in payables and other liabilities |
20,768 |
|
(21,961) |
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Effect of preneed sales production and maturities: |
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|
|
|
Increase in preneed receivables, net and trust investments |
(139,876) |
|
(162,087) |
|
Increase in deferred revenue, net |
83,331 |
|
105,923 |
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Increase in deferred receipts held in trust |
50,652 |
|
11,358 |
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Net cash provided by operating activities |
680,795 |
|
591,458 |
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Cash flows from investing activities: |
|
|
|
|
Capital expenditures |
(276,837) |
|
(267,752) |
|
Business acquisitions, net of cash acquired |
(161,865) |
|
(72,535) |
|
Real estate acquisitions |
(53,329) |
|
(41,084) |
|
Proceeds from divestitures and sales of property and equipment |
21,632 |
|
22,713 |
|
Payments for Company-owned life insurance policies |
(3,009) |
|
(8,050) |
|
Proceeds from Company-owned life insurance policies and other |
2,673 |
|
10,119 |
|
Other investing activities |
(13,864) |
|
— |
|
Net cash used in investing activities |
(484,599) |
|
(356,589) |
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from issuance of long-term debt |
1,336,137 |
|
737,433 |
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Debt issuance costs |
(15,246) |
|
(7,471) |
|
Scheduled payments of debt |
(18,421) |
|
(16,402) |
|
Early payments and extinguishment of debt |
(1,210,024) |
|
(490,973) |
|
Principal payments on finance leases |
(27,524) |
|
(25,678) |
|
Proceeds from exercise of stock options |
42,898 |
|
16,106 |
|
Purchase of Company common stock |
(197,511) |
|
(340,279) |
|
Payments of dividends |
(130,811) |
|
(125,543) |
|
Bank overdrafts and other |
(10,253) |
|
(9,362) |
|
Net cash used in financing activities |
(230,755) |
|
(262,169) |
|
Effect of foreign currency |
(1,566) |
|
(298) |
|
Net decrease in cash, cash equivalents, and restricted cash |
(36,125) |
|
(27,598) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
224,761 |
|
204,524 |
|
Cash, cash equivalents, and restricted cash at end of period |
$ 188,636 |
|
$ 176,926 |
|
Consolidated Segment Results |
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(See definitions of revenue line items later in this appendix.) |
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(Dollars in millions, except funeral services performed and average revenue per service) |
Three months ended |
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Nine months ended |
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2024 |
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2023 |
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2024 |
|
2023 |
|
Consolidated funeral: |
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|
|
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|
|
|
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Atneed revenue |
$ 289.1 |
|
$ 283.0 |
|
$ 887.8 |
|
$ 884.8 |
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Matured preneed revenue |
173.8 |
|
172.3 |
|
542.5 |
|
533.7 |
|
Core revenue |
462.9 |
|
455.3 |
|
1,430.3 |
|
1,418.5 |
|
Non-funeral home revenue |
23.2 |
|
21.9 |
|
69.8 |
|
63.7 |
|
Non-funeral home preneed sales revenue |
26.9 |
|
32.0 |
|
85.1 |
|
109.1 |
|
Core general agency and other revenue |
53.0 |
|
45.6 |
|
151.3 |
|
138.6 |
|
Total revenue |
$ 566.0 |
|
$ 554.8 |
|
$ 1,736.5 |
|
$ 1,729.9 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ 107.9 |
|
$ 109.7 |
|
$ 340.2 |
|
$ 374.8 |
|
Gross profit percentage |
19.1 % |
|
19.8 % |
|
19.6 % |
|
21.7 % |
|
|
|
|
|
|
|
|
|
|
Funeral services performed |
85,743 |
|
85,139 |
|
266,140 |
|
268,414 |
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Average revenue per service |
$ 5,669 |
|
$ 5,605 |
|
$ 5,637 |
|
$ 5,522 |
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(Dollars in millions) |
Three months ended |
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Nine months ended |
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2024 |
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2023 |
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2024 |
|
2023 |
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Consolidated cemetery: |
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|
|
|
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Atneed property revenue |
$ 34.7 |
|
$ 35.5 |
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$ 105.0 |
|
$ 105.9 |
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Atneed merchandise and service revenue |
72.3 |
|
74.7 |
|
219.4 |
|
222.5 |
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Total atneed revenue |
107.0 |
|
110.2 |
|
324.4 |
|
328.4 |
|
Recognized preneed property revenue |
203.4 |
|
214.6 |
|
628.2 |
|
626.0 |
|
Recognized preneed merchandise and service revenue |
103.6 |
|
93.1 |
|
301.8 |
|
269.1 |
|
Total recognized preneed revenue |
307.0 |
|
307.7 |
|
930.0 |
|
895.1 |
|
Core revenue |
414.0 |
|
417.9 |
|
1,254.4 |
|
1,223.5 |
|
Other cemetery revenue |
34.0 |
|
29.2 |
|
102.5 |
|
90.6 |
|
Total revenue |
$ 448.0 |
|
$ 447.1 |
|
$ 1,356.9 |
|
$ 1,314.1 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ 144.8 |
|
$ 143.9 |
|
$ 444.6 |
|
$ 429.5 |
|
Gross profit percentage |
32.3 % |
|
32.2 % |
|
32.8 % |
|
32.7 % |
Comparable Funeral Results
The table below details comparable funeral results of operations ("same store") for the three months ended
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(Dollars in millions, except average revenue per service and average revenue per contract sold) |
Three months ended |
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|
2024 |
|
2023 |
|
Var |
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% |
|
Comparable funeral revenue: |
|
|
|
|
|
|
|
|
Atneed revenue (1) |
$ 283.3 |
|
$ 280.2 |
|
$ 3.1 |
|
1.1 % |
|
Matured preneed revenue (2) |
172.1 |
|
170.8 |
|
1.3 |
|
0.8 % |
|
Core revenue (3) |
455.4 |
|
451.0 |
|
4.4 |
|
1.0 % |
|
Non-funeral home revenue (4) |
22.3 |
|
21.8 |
|
0.5 |
|
2.3 % |
|
Non-funeral home preneed sales revenue (5) |
26.5 |
|
32.0 |
|
(5.5) |
|
(17.2) % |
|
Core general agency and other revenue (6) |
52.7 |
|
45.1 |
|
7.6 |
|
16.9 % |
|
Total comparable revenue |
$ 556.9 |
|
$ 549.9 |
|
$ 7.0 |
|
1.3 % |
|
|
|
|
|
|
|
|
|
|
Comparable gross profit |
$ 107.4 |
|
$ 108.9 |
|
$ (1.5) |
|
(1.4) % |
|
Comparable gross profit percentage |
19.3 % |
|
19.8 % |
|
(0.5) % |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable funeral services performed: |
|
|
|
|
|
|
|
|
Atneed |
44,978 |
|
45,761 |
|
(783) |
|
(1.7) % |
|
Matured preneed |
25,163 |
|
25,189 |
|
(26) |
|
(0.1) % |
|
Total core |
70,141 |
|
70,950 |
|
(809) |
|
(1.1) % |
|
Non-funeral home |
13,663 |
|
13,520 |
|
143 |
|
1.1 % |
|
Total comparable funeral services performed |
83,804 |
|
84,470 |
|
(666) |
|
(0.8) % |
|
Comparable core cremation rate |
56.8 % |
|
56.5 % |
|
0.3 % |
|
|
|
Total comparable cremation rate (7) |
63.7 % |
|
63.3 % |
|
0.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable funeral average revenue per service: |
|
|
|
|
|
|
|
|
Atneed |
$ 6,299 |
|
$ 6,123 |
|
$ 176 |
|
2.9 % |
|
Matured preneed |
6,839 |
|
6,781 |
|
58 |
|
0.9 % |
|
Total core |
6,493 |
|
6,357 |
|
136 |
|
2.1 % |
|
Non-funeral home |
1,632 |
|
1,612 |
|
20 |
|
1.2 % |
|
Total comparable average revenue per service |
$ 5,700 |
|
$ 5,597 |
|
$ 103 |
|
1.8 % |
|
|
|
|
|
|
|
|
|
|
Comparable funeral preneed sales production: |
|
|
|
|
|
|
|
|
Total preneed sales |
$ 292.3 |
|
$ 314.5 |
|
$ (22.2) |
|
(7.1) % |
|
Core contracts sold |
34,573 |
|
36,862 |
|
(2,289) |
|
(6.2) % |
|
Non-funeral home contracts sold |
22,991 |
|
25,294 |
|
(2,303) |
|
(9.1) % |
|
Core average revenue per contract sold |
$ 6,435 |
|
$ 6,417 |
|
$ 18 |
|
0.3 % |
|
Non-funeral home average revenue per contract sold |
$ 3,037 |
|
$ 3,081 |
|
$ (44) |
|
(1.4) % |
|
|
|
|
(1) |
Atneed revenue represents merchandise and services sold and delivered or performed once death has occurred. |
|
(2) |
Matured preneed revenue represents merchandise and services sold on a preneed contract through our core funeral homes, which have been delivered or performed as well as the related merchandise and service trust fund income and other insurance benefits. |
|
(3) |
Core revenue represents the sum of merchandise and services sold on an atneed contract or preneed contract, which were delivered or performed once death has occurred through our core funeral homes. |
|
(4) |
Non-funeral home revenue represents services sold on a preneed or atneed contract through one of our non-funeral home sales channels (e.g. SCI Direct) and performed once death has occurred. |
|
(5) |
Non-funeral home preneed sales revenue represents travel protection, net and merchandise sold on a preneed contract that is delivered before death has occurred and general agency revenue from our non-funeral home sales channel. |
|
(6) |
Core general agency and other revenue primarily comprises core general agency revenue, which is commissions we receive from third-party insurance companies for life insurance policies sold to preneed customers for the purpose of funding preneed arrangements and core travel protection preneed sales, net. |
|
(7) |
Total comparable cremation rate includes the impact of cremation services through our non-funeral sales channel (e.g. SCI Direct). |
- Total comparable funeral revenue increased by
$7.0 million , or 1.3%, as an increase of$4.4 million in core funeral revenue and a$7.6 million increase in core general agency and other revenue was offset by a$5.5 million decrease in non-funeral home preneed sales revenue. - Core funeral revenue increased by
$4.4 million , or 1.0%, primarily due to a favorable 2.1% increase in core average revenue per service partially offset by a 1.1% decrease in core funeral services performed. The core cremation rate increased 30 basis points to 56.8%. - Non-funeral home preneed sales revenue decreased by
$5.5 million , or 17.2%, primarily due to a decline of non-funeral home preneed sales production decrease of$8.1 million , or 10.4%, impacted by our transition from trust to insurance-funded contracts. - Core general agency and other revenue grew
$7.6 million , primarily due to growth in general agency revenue from higher commission rates, primarily as a result of our new preneed insurance marketing agreement. - Comparable funeral gross profit decreased by
$1.5 million to$107.4 million and the gross profit percentage decreased 50 basis points from 19.8% to 19.3%. The stability in gross profit, in light of modest revenue growth, reflects our continued focus on managing our fixed cost structure. - Comparable preneed funeral sales production decreased by
$22.2 million , or 7.1%, in the third quarter of 2024 compared to 2023. Core preneed sales production decreased by$14.1 million , or 6.0%, primarily due to the transition to our new preneed insurance provider. Non-funeral home preneed sales production decreased$8.1 million , or 10.4%, primarily due to our transition from trust to insurance-funded contracts.
Comparable Cemetery Results
The table below details comparable cemetery results of operations ("same store") for the three months ended
|
(Dollars in millions) |
Three months ended |
||||||
|
|
2024 |
|
2023 |
|
Var |
|
% |
|
Comparable cemetery revenue: |
|
|
|
|
|
|
|
|
Atneed property revenue |
$ 34.5 |
|
$ 35.5 |
|
$ (1.0) |
|
(2.8) % |
|
Atneed merchandise and service revenue |
72.1 |
|
74.6 |
|
(2.5) |
|
(3.4) % |
|
Total atneed revenue (1) |
106.6 |
|
110.1 |
|
(3.5) |
|
(3.2) % |
|
Recognized preneed property revenue |
202.8 |
|
214.4 |
|
(11.6) |
|
(5.4) % |
|
Recognized preneed merchandise and service revenue |
103.3 |
|
93.0 |
|
10.3 |
|
11.1 % |
|
Total recognized preneed revenue (2) |
306.1 |
|
307.4 |
|
(1.3) |
|
(0.4) % |
|
Core revenue (3) |
412.7 |
|
417.5 |
|
(4.8) |
|
(1.1) % |
|
Other revenue (4) |
33.9 |
|
29.1 |
|
4.8 |
|
16.5 % |
|
Total comparable revenue |
$ 446.6 |
|
$ 446.6 |
|
$ — |
|
— % |
|
|
|
|
|
|
|
|
|
|
Comparable gross profit |
$ 144.9 |
|
$ 144.3 |
|
$ 0.6 |
|
0.4 % |
|
Comparable gross profit percentage |
32.4 % |
|
32.3 % |
|
0.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable cemetery preneed and atneed sales production: |
|
|
|
|
|
|
|
|
Property |
$ 232.2 |
|
$ 244.3 |
|
$ (12.1) |
|
(5.0) % |
|
Merchandise and services |
186.8 |
|
185.4 |
|
1.4 |
|
0.8 % |
|
Discounts and other |
— |
|
(4.8) |
|
4.8 |
|
100.0 % |
|
Preneed and atneed sales production |
$ 419.0 |
|
$ 424.9 |
|
$ (5.9) |
|
(1.4) % |
|
|
|
|
|
|
|
|
|
|
Preneed sales production |
$ 314.1 |
|
$ 322.0 |
|
$ (7.9) |
|
(2.5) % |
|
Recognition rate (5) |
98.5 % |
|
98.3 % |
|
|
|
|
|
|
|
|
(1) |
Atneed revenue represents property, merchandise, and services sold and delivered or performed once death has occurred. |
|
(2) |
Recognized preneed revenue represents property, merchandise, and services sold on a preneed contract, which were delivered or performed as well as the related merchandise and service trust fund income. |
|
(3) |
Core revenue represents the sum of property, merchandise, and services that have been delivered or performed as well as the related merchandise and service trust fund income. |
|
(4) |
Other revenue is primarily related to endowment care trust fund income, royalty income, and interest and finance charges earned from customer receivables on preneed installment contracts. |
|
(5) |
Represents the ratio of current period core revenue stated as a percentage of current period preneed and atneed sales production. |
- Total comparable cemetery revenue in the third quarter of 2024 was flat to prior year at
$446.6 million as a decrease in core revenue of$4.8 million was offset by an increase in other revenue of$4.8 million . - Core revenue was lower by
$4.8 million primarily as a result of a$3.5 million decline in atneed revenue combined with a$1.3 million decrease in total recognized preneed revenue. Growth in recognized preneed merchandise and service revenue of$10.3 million from higher quality sales averages maturing out of the backlog was offset by a decline of$11.6 million in recognized preneed property revenue. - Other revenue was higher by
$4.8 million , or 16.5%, compared to the prior year quarter primarily from an increase in endowment care trust fund income related to the expansion of our total return investment strategy in certain states. - Comparable cemetery gross profit increased slightly by
$0.6 million to$144.9 million , and the gross profit percentage increased from 32.3% to 32.4%. This growth in gross profit on relatively flat revenue reflects our continued focus on managing our fixed cost structure. - Comparable preneed cemetery sales production decreased
$7.9 million , or 2.5%, primarily due to a decline in large sales, while our core production was relatively flat.
Other Financial Results
-
Corporate general and administrative expenses were
$43.7 million in the third quarter of 2024 compared to the third quarter of 2023 of$33.2 million . The current year third quarter was pressured by long-term incentive compensation plan expenses that were impacted by the growth in our stock price. Conversely, during the prior year third quarter we saw a decline in our stock price benefiting our long-term incentive compensation plan expenses. -
Interest expense increased
$4.3 million to$65.8 million in the third quarter of 2024 primarily due to higher average balances quarter over quarter on our floating rate debt. - The GAAP effective income tax rate for the third quarter of 2024 was 21.1%, down from 24.5% in the prior year quarter. Our adjusted effective tax rate was 20.9% in the third quarter of 2024 compared to 25.1% in the prior year quarter. The lower effective tax rate in the current period was primarily due to more excess tax benefits recognized on the settlement of employee share-based awards.
Cash Flow and Capital Spending
|
(Dollars in millions) |
Three months ended |
|
Nine months ended |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Net cash provided by operating activities |
$ 263.8 |
|
$ 227.8 |
|
$ 680.8 |
|
$ 591.5 |
|
Payments for certain legal matters |
5.2 |
|
— |
|
28.2 |
|
13.3 |
|
Net cash provided by operating activities excluding special items |
$ 269.0 |
|
$ 227.8 |
|
$ 709.0 |
|
$ 604.8 |
|
Cash taxes included in net cash provided by operating activities |
$ 4.0 |
|
$ 3.8 |
|
$ 15.8 |
|
$ 79.7 |
Net cash provided by operating activities excluding special items grew
|
(Dollars in millions) |
Three months ended |
|
Nine months ended |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Capital improvements at existing field locations |
$ 37.0 |
|
$ 28.1 |
|
$ 91.3 |
|
$ 82.7 |
|
Development of cemetery property |
43.8 |
|
40.8 |
|
122.4 |
|
111.8 |
|
Digital investments and corporate |
7.6 |
|
12.9 |
|
32.0 |
|
47.5 |
|
Total maintenance, cemetery development, and other capital expenditures (Maintenance capital expenditures) |
$ 88.4 |
|
$ 81.8 |
|
$ 245.7 |
|
$ 242.0 |
|
Growth capital expenditures/construction of new funeral service locations |
12.6 |
|
8.9 |
|
31.1 |
|
25.8 |
|
Total capital expenditures |
$ 101.0 |
|
$ 90.7 |
|
$ 276.8 |
|
$ 267.8 |
Total capital expenditures increased in the current quarter by $10.3 million, primarily due to higher capital improvements at existing field locations and spend on development of cemetery property, slightly offset by expected lower spend on digital investments and corporate.
Trust Fund Returns
Total trust fund returns include realized and unrealized gains and losses and dividends and are shown gross without netting of certain fees. A summary of our consolidated trust fund returns as of
|
|
Three Months |
|
Nine Months |
|
Preneed funeral |
5.8 % |
|
12.7 % |
|
Preneed cemetery |
6.1 % |
|
13.2 % |
|
Cemetery perpetual care |
6.1 % |
|
12.4 % |
|
Combined trust funds |
6.0 % |
|
12.8 % |
Non-GAAP Financial Measures
Earnings excluding special items and diluted earnings per share excluding special items shown above are non-GAAP financial measures. We believe these non-GAAP financial measures provide a consistent basis for comparison between quarters and years, and better reflect the performance of our core operations, as they are not influenced by certain income or expense items not affecting operations. We also believe these measures help facilitate comparisons to our competitors' operating results.
Set forth below is a reconciliation of our reported net income attributable to common stockholders to earnings excluding special items and our GAAP diluted earnings per share to diluted earnings per share excluding special items. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.
|
(Dollars in millions, except diluted EPS) |
Three months ended |
||||||
|
|
2024 |
|
2023 |
||||
|
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
Net income attributable to common stockholders, as reported |
$ 117.8 |
|
$ 0.81 |
|
$ 122.0 |
|
$ 0.80 |
|
Pre-tax reconciling items: |
|
|
|
|
|
|
|
|
Gains on divestitures and impairment charges, net |
(3.5) |
|
(0.02) |
|
(2.5) |
|
(0.02) |
|
Tax effect from significant items |
1.1 |
|
— |
|
0.5 |
|
0.01 |
|
Change in uncertain tax reserves and other |
(0.1) |
|
— |
|
(0.9) |
|
(0.01) |
|
Earnings excluding special items and diluted earnings per share excluding special items |
$ 115.3 |
|
$ 0.79 |
|
$ 119.1 |
|
$ 0.78 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
|
146.2 |
|
|
|
152.3 |
|
(Dollars in millions, except diluted EPS) |
Nine months ended |
||||||
|
|
2024 |
|
2023 |
||||
|
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
Net income attributable to common stockholders, as reported |
$ 367.3 |
|
$ 2.50 |
|
$ 398.9 |
|
$ 2.60 |
|
Pre-tax reconciling items: |
|
|
|
|
|
|
|
|
Gains on divestitures and impairment charges, net |
(4.8) |
|
(0.03) |
|
(10.2) |
|
(0.07) |
|
Losses on early extinguishment of debt |
— |
|
— |
|
1.1 |
|
0.01 |
|
Tax effect from significant items |
1.6 |
|
— |
|
2.5 |
|
0.02 |
|
Change in uncertain tax reserves and other |
(1.0) |
|
— |
|
(1.4) |
|
(0.01) |
|
Earnings excluding special items and diluted earnings per share excluding special items |
$ 363.1 |
|
$ 2.47 |
|
$ 390.9 |
|
$ 2.55 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
|
147.0 |
|
|
|
153.6 |
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