I’m a James Bond movie fan and in 1977 the 10th movie of the series came out. . . “The Spy Who Loved Me” was the 3rd movie of the series to feature Roger Moore as James Bond and it also featured what became a #2 hit on the Billboard charts feature song performed by Carly Simon entitled, “Nobody does it Better.”

 

For whatever reason, I thought about that while I was researching the 4th Quarter 2023 and Year End 2023 Results for Service Corporation International (SCI) that were released last week (and you can access here).  When I do that research, I’m always on the lookout for interesting items to the positive or negative of the companies I research.

 

When I did that last week for SCI, I realized that there was both positive news. . . such as the Average Revenue per Service going up over 2% for the 2023 year.  And, there was also some not so positive news such as Total Revenue for the 2023 year dropping from $4.10 billion in 2022 to $4.09 billion in 2023 or Net Income dropping down from $563.30 million in 2022 to $537.30 million in 2023.

 

There’s also the fact that interest expense had risen and that what SCI calls “Funeral Services Performed” dropped from 373,186 in 2022 to only 358,873 in 2022 — that’s a drop of about 3.9%.

 

However, when I started looking for reasons for this performance I noticed in the company’s Earnings Call Transcript (access it here) that you can probably trace the performance to one indicator. . . .that being that the management of Service Corporation International still believes that there is a continuing “pull forward” effect of the pandemic still causing what they call “headwinds” in the business.  And, in comparison to the pre-covid time they mention that current numbers are about 10% higher than those reported in 2019.

 

Here’s what CEO Thomas Ryan said during prepared statements in the opening exchange of the Earnings Call relating to this situation:

“Now let’s take a deeper look into the funeral results for the quarter. Total comparable funeral revenues declined $13 million or about 2% over the prior year quarter primarily due to an expected decrease in core funeral volume. Although core funeral volume declined 6% compared to the prior year quarter, we believe due to the COVID pull-forward effects volumes were in line with what we’d anticipated. Notably, funeral volumes were about 10% higher than fourth quarter 2019 levels.”

 

CEO Ryan also made these comments about the future:  “We believe that in 2025, we should return to our normalized earnings per share growth expectation of 8% to 12%. We expect to capitalize on opportunities during 2024 by further utilizing our scale that should enhance the margins in both our funeral and cemetery segments into 2025 and beyond.”

 

Funeral Director Daily take:  From my point of view, SCI is telling us that there is a reason that 2023 numbers are what they are and they seem to also be telling us that those numbers should be getting better simply by moving into a time period where the “pull-forward” effect of the pandemic will be declining.

 

Hearing that made me want to look at “SCI’s history” of looking forward and giving advice as to the company getting better.  What has been SCI’s history as to delivering increasing value to its shareholders’ investment in the company?  Because, in my opinion, that is the eventual measuring stick that public, for-profit companies must measure themselves against.

 

I’m a long-term investor with specific goals in mind for each investment.  I have a group of companies that I have invested in with the idea of owning the stock and then just leaving those companies alone because in my mind “they will be worth more in ten years than they are today”.  My largest holdings in that group of equity investments are Mastercard, Berkshire Hathaway, Apple, Microsoft, and McDonalds.  I wanted to see where would SCI fit into that, “elite group” of what I refer to as “matured, yet continual growth” companies.

 

Using Friday’s stock closing price and prices, taken from Seeking Alpha, from exactly ten years ago. . . .

Here’s what I found:

 

Company		Price 2014	Price 2024	Price Gain Appreciation
Microsoft		37.90	402.56	964%
Apple		18.76	182.31	872%
Mastercard		77.72	468.13	518%
SCI		18.08	71.87	298%
Berkshire B		113.18	405.94	259%
McDonalds		96.45	292.02	203%

 

Somewhat to my surprise, SCI, from a value appreciation perspective, was right in the middle of that group of what I consider “Buy and Hold Forever” companies.  Again, from my perspective, that is not what you would expect to hear from people in the Death Care world that might compete against SCI establishments.  But, SCI from this investor’s perspective, more than holds its own as a long-range investment option.

 

I know that many people in Death Care have this “Love/Hate” relationship with SCI.  It’s kind of like cheering against the Yankees, or the Patriots, or the Crimson Tide because they seem to “win” all the time.

 

So, I get that attitude, but when you look at companies in the Death Care realm – at least in the public markets. . . . “Nobody does it Better” at delivering returns to its stockholders than SCI. . . at least for the last decade.

 

Disclaimer –– The author of this article holds stock postions in Service Corporation International, Berhshire Hathaway, McDonalds, Mastercard, Apple, and Microsoft.

 

More news from the world of Death Care:

• Environmental concerns stall bid for water cremation in Sand Springs.  SAnd Springs Leader (OK)
• Ex-Goldman exec finds value in Japan funeral parlors, day care centers.  Yahoo Finance
• “Sickening”:  Brass markers stolen from military graves in local cemetery.  Fox 8 – Cleveland (OH)
• Minnesota man pleads guilty for role in trade of human body parts.  Kare 11 – NBC – Minneapolis (MN)

 

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