Service International(SCI) - 2024 Q3 - Quarterly Report

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].