North America’s largest funeral home and cemetery operator, Service Corporation International, reported 1st Quarter 2019 results last week and you can see their press release on those results here.
The company’s CEO, Tom Ryan, issued the following statement in the report. “We are encouraged as we start of 2019 on par with prior year earnings per share results as we faced a challenging funeral profit comparison driven by a strong flu season in the prior year quarter. Increases in both our cemetery and funeral preneed sales programs, effective management of our fixed costs, and a lower tax rate helped to offset the funeral revenue decline.”
For the quarter the company reported:
- Total revenue of $798.2 million as compared to $794.9 million in 2018
- Operating income down about 10% to $147.0 million from $163,7 million in 2018
As for “Comparable Unit” results the company reported:
- At-need funeral revenue at $253.4 million as compared to $273.1 million in 2018
- Total funeral revenue at $483.9 million as compared to $512.3 million in 2018. A decrease of 5.5%
- Funeral services performed of 81,095 in 2019 as compared to 85,991 in 2018. A decrease of 5.7%
- Average revenue per service of $5,179 in 2019 as compared to 5,251 in 2018.
Funeral Director Daily take: CEO Ryan mentions that the company faced a “challenging profit comparison” with the 2018 1st Quarter. We will take him on face value on that but also be looking towards the 2nd quarter results as we see some troublesome trends, which are indicative of the “traditional funeral business in America” also emerging.
There is no doubt that the consumer’s continued preference of “Direct Cremation with No Services” is having a chilling effect on traditional funeral homes’ bottom lines. And we don’t look for the financial pressures to ease up as we only see a growth in that type of service moving forward, possibly coupled with even more price competition.
Service Corporation International has always proven to be one of the great innovators in our profession and I believe the investor sentiment is to see if they can continue to be. When investors look at “Comparable Unit” results, they want to know if the decrease in funeral revenue and services performed is a quarterly aberration or is it a trend that will continue.