Core Insights - Service Corporation International (SCI) has experienced a stock price increase of 28.1% over the past six months, outperforming the industry growth of 26.8% and the broader S&P 500's gains of 4.4% [1] - The company closed at $88.60, nearing its 52-week high of $89.31, with technical indicators suggesting bullish sentiment as it trades above its 50-day and 200-day moving averages [4] Company Performance - SCI benefits from a vast network of funeral homes and cemeteries, providing recession resilience due to the essential nature of its services, which are largely immune to discretionary spending cuts [5] - The company has adopted a disciplined approach to expansion, investing $123 million in acquiring 10 funeral homes and two cemeteries in high-growth metropolitan markets during Q3 2024 [6] - An additional $31 million was allocated for real estate purchases in key states like California, Florida, and Texas, which are experiencing strong demographic growth [6] Strategic Acquisitions - Acquisitions allow SCI to leverage scale advantages, enhancing operational efficiencies and profitability through cost savings in procurement, marketing, and administration [7] - The strategic focus on high-growth areas enables the company to broaden its service capabilities, particularly in urban regions where demand for personalized memorial services is increasing [7] - These moves align with demographic trends, particularly the aging baby boomer population, which is expected to drive demand for funeral and cemetery services over the next two decades [8] Financial Metrics - SCI's forward 12-month price-to-earnings (P/E) ratio stands at 22.82, above the industry average of 21.46, indicating that investors may be paying a premium for the stock [10] - The company faces year-over-year challenges due to the pandemic's pull-forward effects, with a slight decline in funeral volumes reported in Q3 2024 [13] - Cemetery revenues remained flat year-over-year in Q3 2024, with a $5 million increase in endowment care trust fund income offset by declines in core revenues [14] Operational Challenges - Pre-need cemetery sales production fell by 2.5% due to a decline in large sales activity, compounded by development delays in major locations [14] - The funeral segment gross profit margins decreased by 50 basis points to 19.3% in Q3, attributed to inflationary pressures outpacing revenue growth [15] - Persistent inflation and rising fixed costs may further erode margins, limiting the company's ability to grow net income [15] Investment Outlook - SCI's expansive network and recession-proof business model solidify its leadership in the North American deathcare industry, supported by strategic acquisitions and demographic-driven opportunities [16] - However, the stock's premium valuation and near-term challenges, including inflationary pressures and flat revenue growth, may limit momentum [16]

Core Viewpoint - Service Corp International reported better-than-expected third-quarter adjusted EPS results, although quarterly sales slightly missed analyst expectations [1][2]. Financial Performance - The company reported adjusted earnings per share of $0.79, exceeding the analyst consensus estimate of $0.77 [1][2]. - Quarterly sales amounted to $1.014 billion, which was below the analyst consensus estimate of $1.016 billion [1]. - Net cash provided by operating activities, excluding special items, was $269 million [2]. Future Outlook - Service Corp International anticipates a fourth-quarter adjusted loss of $1.00 to $1.10 per share, contrasting with estimates of a $0.77 per share loss [2]. Market Reaction - Following the earnings announcement, Service Corp International shares increased by 0.2%, trading at $81.79 [3]. - Analysts adjusted their price targets for the stock, with Raymond James raising it from $80 to $85 and Truist Securities increasing it from $84 to $92 [3].

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q3 2024 was $0.79, a slight increase from $0.78 in the prior year [6] - Gross profit from both funeral and cemetery segments remained stable, with a net $0.01 increase in earnings per share due to lower share count and tax rate offset by increased corporate expenses [6][20] - Adjusted operating cash flow was reported at $269 million, an increase of over $41 million or 18% year-over-year [20] Business Line Data and Key Metrics Changes - Comparable funeral revenues increased by $7 million, or about 1%, with core average growing by 2% despite a 1% decline in core funeral volume [8] - Comparable cemetery revenue was flat, with a $5 million increase in other revenue offset by a $5 million decrease in core revenue [11] - Pre-need funeral sales production decreased by $22 million or about 7% compared to Q3 2023, primarily due to a transition to a new insurance provider [10] Market Data and Key Metrics Changes - The company invested $123 million in acquisitions during the quarter, adding 10 funeral homes and two cemeteries in major metropolitan markets [7] - The company also invested an additional $31 million in real estate transactions for expanding its footprint in existing markets [7] Company Strategy and Development Direction - The company aims to return to earnings per share growth towards the higher end of its historical guidance of 8% to 12% in 2025, anticipating stabilization in funeral volumes and growth in pre-need cemetery sales [16] - The company is optimistic about capturing incremental value for shareholders due to favorable demographic trends impacting the industry [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in stabilizing funeral volumes and returning to traditional growth levels for pre-need sales in 2025 [31][34] - The anticipated increase in cash taxes in 2025 is expected to revert to a more normalized level, impacting future cash flow [21] Other Important Information - The company returned nearly $65 million to shareholders in Q3 2024 through dividends and share repurchases [24] - The company’s liquidity at the end of the quarter was approximately $1.5 billion, with a slight increase in leverage to 3.78 times net debt to EBITDA [26] Q&A Session Summary Question: Discussion on cemetery pre-need sales and recognized revenue into 2025 - Management indicated that recognized revenue in Q4 would be slightly below last year but expects stabilization and traditional growth levels in 2025 [31] Question: Impact of ongoing construction at Rose Hills on large sales - Management noted that large sales at Rose Hills have decreased due to ongoing construction but expect growth opportunities in 2025 [32] Question: Confidence in flattish volume growth in 2025 - Management anticipates that demographic trends and a decrease in pull-forward effects will support flattish volume growth in 2025 [34] Question: Insights on the new insurance relationship and sales force efficiency - Management acknowledged lower efficiency due to the transition to a new insurance provider but expects stabilization and growth in the sales force in 2025 [36] Question: Pipeline for acquisitions and willingness of sellers to sell - Management expressed excitement about the acquisition pipeline, particularly in major metropolitan areas, and indicated a healthy interest from sellers [37] Question: Clarification on organic funeral volume growth - Management confirmed that the anticipated flattish volume growth is organic and does not include contributions from acquisitions [40] Question: Comparison of large pre-need sales to 2019 levels - Management noted significant growth in large sales production compared to 2019, despite recent year-over-year declines [42] Question: Insights on funeral margins and the impact of the new insurance contract - Management expects improvements in funeral margins in 2025, with the new insurance contract contributing positively [44] Question: Anticipation of positive trends in volumes - Management believes that the diminishing pull-forward effects and demographic shifts will lead to more positive trends in volumes [48] Question: Management changes and succession planning - Management discussed ongoing succession planning and the elevation of responsibilities for executives as part of a long-term strategy [53]

Financial Performance - Consolidated net income attributable to common stockholders for the first nine months of 2024 was $367.3 million ($2.50 per diluted share), down from $398.9 million ($2.60 per diluted share) in the same period of 2023[105]. - Consolidated revenue from funeral operations increased by $6.6 million to $1,736.5 million for the nine months ended September 30, 2024, compared to $1,729.9 million for the same period in 2023[107]. - Comparable revenue from funeral operations decreased by $6.4 million to $1,714.2 million for the nine months ended September 30, 2024, primarily due to a $24.8 million decrease in non-funeral home preneed sales revenue[107]. - Consolidated funeral gross profit decreased by $34.6 million, or 9.2%, to $341.5 million for the first nine months of 2024 compared to the same period in 2023[108]. - Consolidated cemetery revenue increased by $42.8 million, or 3.3%, to $1,356.9 million for the nine months ended September 30, 2024, compared to $1,314.1 million for the same period in 2023[110]. - Comparable cemetery gross profit increased from $430.2 million to $438.6 million, while the gross profit percentage slightly decreased from 32.8% to 32.6%[111]. Cash Flow and Financing - Net cash provided by operating activities increased to $680.8 million for the nine months ended September 30, 2024, compared to $591.5 million for the same period in 2023, reflecting an increase of $89.3 million[72]. - Cash flows from investing activities increased to $484.6 million for the nine months ended September 30, 2024, up from $356.6 million in 2023, primarily due to a $89.3 million increase in cash spent on business acquisitions[73]. - Cash flows used in financing activities decreased to $230.8 million for the nine months ended September 30, 2024, compared to $262.2 million for the same period in 2023[74]. - The company had $1,351.0 million in remaining borrowing capacity under its Bank Credit Facility as of September 30, 2024[68]. - Interest expense increased by $19.6 million to $194.5 million for the nine months ended September 30, 2024, primarily due to higher interest rates and higher average balances on floating rate debt[114]. - Other income, net increased by $4.4 million to $7.0 million for the nine months ended September 30, 2024, primarily due to higher investment income from increased investment balances and new investment products[115]. Revenue and Sales - Total sales production for preneed contracts was $1,314.2 million for the nine months ended September 30, 2024, compared to $1,299.4 million for the same period in 2023[81]. - Preneed insurance-funded sales production for the nine months ended September 30, 2024, was $548.9 million, an increase from $537.4 million in the same period in 2023[80]. - Revenue recognized from backlog for the nine months ended September 30, 2024, was $565.2 million, down from $589.7 million in the same period in 2023[81]. - The backlog of insurance-funded contracts was $8.29 billion, equal to the expected proceeds from associated insurance policies[84]. Operational Metrics - As of September 30, 2024, the company operates 1,495 funeral service locations and 494 cemeteries, with a $16.0 billion backlog of future revenue from preneed sales[66]. - The leverage ratio as of September 30, 2024, was 3.78, within the targeted range of 3.5x to 4.0x, compared to a maximum allowable leverage ratio of 5.00[68]. - Total surety bonds outstanding increased to $453.8 million as of September 30, 2024, up from $296.7 million at December 31, 2023[76]. - The fair value of the total backlog comprised $4.58 billion related to cemetery contracts and $11.41 billion related to funeral contracts[84]. - The SCI trusts had a diversified allocation of approximately 60% equities, 27% fixed income securities, and 9% alternative investments as of September 30, 2024[89]. - The core average revenue per service increased by 2.1%, reflecting a rise in the core cremation rate to 56.8%[93]. Expenses and Taxation - Corporate general and administrative expenses rose to $43.7 million in the third quarter of 2024, compared to $33.2 million in the same quarter of 2023, influenced by long-term incentive compensation plan expenses[99]. - The effective tax rate for the three months ended September 30, 2024 was 21.1%, down from 24.5% for the same period in 2023, primarily due to more excess tax benefits recognized on employee share-based awards[103].

Core Insights - Service Corporation International (SCI) reported third-quarter 2024 results with both top and bottom lines showing year-over-year growth [1][4] - The company is optimistic about funeral revenues due to a new marketing partnership with a preferred preneed insurance provider launched in Q3 [1][3] - Total revenues reached $1,014 million, up from $1,001.9 million in the same quarter last year, exceeding the Zacks Consensus Estimate of $1,012 million [5] Financial Performance - Adjusted earnings per share (EPS) were 79 cents, consistent with the Zacks Consensus Estimate and an increase from 78 cents in the prior year [4] - Gross profit was $252.3 million, slightly down from $253.7 million year-over-year, with corporate general and administrative costs rising to $43.7 million from $33.2 million [5][6] - Operating income decreased to $212.4 million from $223 million in the previous year [6] Segment Performance - Consolidated funeral revenues increased to $566 million from $554.8 million, with a 1.3% rise in total comparable funeral revenues [7] - Core funeral revenues grew by 1%, supported by a 2.1% increase in core average revenues, despite a 1.1% decline in core funeral services performed [8] - Consolidated cemetery revenues were $448 million, slightly up from $447.1 million, with total comparable cemetery revenues remaining flat year-over-year [10] Strategic Initiatives - The company invested $123 million to acquire 10 funeral homes and two cemeteries, along with an additional $31 million for real estate transactions [2] - For 2025, SCI aims to return to its long-term growth target of 8-12%, focusing on revenue growth and strategic capital investments [3] Future Outlook - For Q4 2024, management anticipates adjusted EPS of $1-$1.10, indicating an 8-18% growth from the previous year's 93 cents [13] - Full-year 2024 adjusted EPS is expected to be in the range of $3.47-$3.57, revised from the previous guidance [15] - The company raised its full-year 2024 adjusted operating cash flow guidance midpoint from $930 million to $950 million, with total maintenance capital expenditures expected to be around $325 million [16]

Financial Performance - For the quarter ended September 2024, Service Corp. reported revenue of $1.01 billion, reflecting a year-over-year increase of 1.2% [1] - Earnings per share (EPS) for the quarter was $0.79, slightly up from $0.78 in the same quarter last year [1] - The reported revenue met the Zacks Consensus Estimate of $1.01 billion, resulting in a surprise of +0.16% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.79 [1] Key Metrics - Total comparable funeral average revenue per service was $5,669, slightly below the two-analyst average estimate of $5,683.42 [3] - Funeral services performed totaled 85,743, exceeding the average estimate of 84,223 based on two analysts [3] - Cemetery revenues reached $448 million, compared to the three-analyst average estimate of $455.50 million, representing a year-over-year change of +0.2% [3] - Funeral revenues amounted to $566 million, surpassing the three-analyst average estimate of $556.86 million, with a year-over-year change of +2% [3] - Gross profit from funeral services was $107.90 million, exceeding the average estimate of $104.04 million [3] - Gross profit from cemetery services was $144.80 million, below the average estimate of $149.38 million [3] Stock Performance - Shares of Service Corp. have returned -2.4% over the past month, while the Zacks S&P 500 composite has increased by +1.8% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [4]

分组1 - Service Corp. reported quarterly earnings of $0.79 per share, matching the Zacks Consensus Estimate, and showing a slight increase from $0.78 per share a year ago [1] - The company posted revenues of $1.01 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.16%, compared to $1 billion in revenues a year ago [2] - Service Corp. shares have increased approximately 11.7% since the beginning of the year, while the S&P 500 has gained 22.3% [3] 分组2 - The earnings outlook for Service Corp. is mixed, with the current consensus EPS estimate for the coming quarter at $1.05 on revenues of $1.09 billion, and $3.52 on revenues of $4.18 billion for the current fiscal year [7] - The Funeral Services industry, to which Service Corp. belongs, is currently ranked in the bottom 11% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Core Insights - Service Corporation International (SCI) reported a revenue increase of $12.1 million in Q3 2024 compared to Q3 2023, reaching $1,014.0 million [2][6] - The diluted earnings per share rose to $0.81 from $0.80 year-over-year, while adjusted earnings per share increased to $0.79 from $0.78 [2][8] - Net cash provided by operating activities grew by 16% to $263.8 million, up from $227.8 million in the prior year [2][8] Financial Performance - Revenue for the nine months ended September 30, 2024, was $3,093.4 million, compared to $3,044.0 million in the same period of 2023 [6] - Operating income for Q3 2024 was $212.4 million, down from $223.0 million in Q3 2023 [6] - Net income attributable to common stockholders was $117.8 million in Q3 2024, compared to $122.0 million in Q3 2023 [6] Cash Flow and Investments - Net cash provided by operating activities excluding special items increased by 18% to $269.0 million in Q3 2024 [2][8] - The company spent $123 million on acquisitions during the quarter, significantly higher than $33 million in Q3 2023, acquiring 10 funeral homes and 2 cemeteries [4][5] - The company also invested $31 million in real estate transactions for the expansion of funeral homes and cemeteries [4] Market Outlook - For Q4 2024, the company expects adjusted earnings per share to be between $1.00 and $1.10, indicating growth of approximately 8-18% compared to $0.93 in Q4 2023 [9] - The full-year 2024 adjusted operating cash flow guidance has been raised to a range of $940 million to $960 million, up from the previous range of $900 million to $960 million [10][11] - The company aims to return to the high end of its long-term growth framework of 8-12% in 2025 [5]

Company Overview - Service Corporation International (SCI) is North America's leading provider of funeral, cemetery, and cremation services, serving over 600,000 families annually [2] - As of September 30, 2024, SCI operates 1,495 funeral service locations and 494 cemeteries across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico [2] Upcoming Financial Results - SCI is set to release its financial results for the third quarter of 2024 on October 30, 2024 [1] - A conference call will be held on October 31, 2024, at 8:00 a.m. Central Time to discuss these results [1] Conference Call Details - Dial-in numbers for the conference call are (888) 317-6003 for domestic callers and (412) 317-6061 for international callers, with the code 8508625 [1] - A replay of the call will be available until November 7, 2024, and the webcast will be accessible for at least 90 days on SCI's website [2]

Core Insights - SCI Capital Partners LP has closed a structured continuation vehicle transaction with Apollo Funds to support the growth of Morton Salt and Reddy Ice, with SCI maintaining control over both companies [1][2] Group 1: Company Overview - Morton Salt is the largest pure-play salt company globally, with a 175-year history and strong positions in various end markets and salt categories [3] - Reddy Ice is the largest packaged ice manufacturer in the U.S., with diversified sales channels and a significant installed base of machines across different geographies [3] - Reddy Ice has made its first international acquisition of Fábrica de Hielo Apodaca, S.A. de C.V., the largest ice manufacturer in Mexico [3] Group 2: Strategic Partnerships - Apollo Funds provided support through a syndicate of new institutional investors, enhancing the strategic and operational expertise available to SCI [2][4] - SCI's Managing Partner expressed optimism about collaborating with Apollo to execute long-term strategic plans for Morton Salt and Reddy Ice [4] - Apollo representatives highlighted the potential for long-term growth in Morton Salt and Reddy Ice, emphasizing a partnership-oriented approach to capital solutions [4] Group 3: Financial Advisory and Support - PJT Partners acted as financial advisor, while Gibson Dunn and Ernst & Young provided legal and tax advisory services to SCI [4] - UBS Investment Bank and Proskauer Rose LLP served as financial and legal advisors to the Apollo Funds [4] Group 4: Company Profiles - SCI Capital Partners LP focuses on market-leading companies in essential industries, aiming to build industrial companies with high barriers to entry [5] - Apollo is a global alternative asset manager with approximately $696 billion in assets under management as of June 30, 2024, providing innovative capital solutions for growth [6]