Last week the largest public company in the death care space, Service Corporation International, reported their 2022 2nd Quarter and Half-Year financial results. For the quarter which encompasses the April thru June 2022 calendar dates, company wide revenue rose to $990.9 million as compared to the same period of last year which totaled $987.5 million. . . that’s an increase of about 3.4 million or just 0.3% over the 2021 number.
In addition, Operating Income for the quarter dropped from $245.8 million in 2021 to this year’s 2Q Operating Income of $221.2 million — a drop of about 10.1%. Finally, moving down the Statement of Operations, Income before Taxes dropped to about $173.3 million for the quarter as compared to about $203.8 million in Q2 2021.
Other items of interest in the report include:
- The “Total Comparable funeral services performed” dropped for the quarter to 84,521 as compared to 85,296 for the same period last year. . . a decrease of about 1%
- “Comparable Average Revenue per Service” increased to $5,457 per service . . .a 1.8% increase from the previous year
- SCI’s “Total comparable cremation rate” rose to 61.2% over last year’s 2Q number of 59.2%
- SCI’s “Total Comparable Preneed Sales” rose 2.5% over the same period of last year.
You can see the SCI 2nd Quarter 2022 Financial Report Press Release here.
Funeral Director Daily take: There’s a lot of numbers in this report, but I view them as what they are. . . a three-month picture into how the company operated. I also think it is interesting to note, that with this quarter and the public companies it is difficult to read a lot into the numbers considering that we are in this moving period of slowing down Covid deaths, interest rates rising, and operational costs increasing due to the inflation we are seeing at present.
In my opinion, companies are “managing through” this period and some of the decisions they make may not be validated until further reports. For instance, it is interesting to note that that SCI’s “Comparable Core Average Revenue per Preneed Contract Sold” increased 5.1% per contract. That indicates to me that some strategies are being developed to increase revenues in the future. As a matter of fact, here’s what SCI CEO Thomas Ryan said in the Earnings Presentation call regarding that, “Our percentage of families selecting to have funerals and Celebrations of Life services has essentially return(ed) to pre-COVID levels. In conjunction with the rollout of our Celebration of Life initiative, we have seen families selecting upgraded facilities and higher propensity to select catering and flowers.”
Ryan continued with an answer on what they are seeing and some strategies associated with that, “. . .one of the strategies that we were already putting into place is upgrading a lot of our facilities to have some differential opportunities for, let’s say, facility charges. So, as you go into a place, you could get the premium room in one price, you get the middle room or the lower room, we’re seeing a lot of people buying up into that premium room, we’re seeing a lot of people buying more flowers, more catering for their specific services.”
So, as I see these 2nd quarter reports I see an industry in flux, maybe more so than any time since the rise of cremation. We are seeing companies try to get back to a sense of normalcy from the Covid years and at the same time they are looking to see what the new realities will be with wages and expenses. And then, they are working on getting a handle on what the new consumer choice realities will be going forward in an industry that can now offer full service traditional, cremation with services, direct cremation, and growing environmental friendly options. In addition, I think death care companies are also wondering and trying to fit in to meet the consumer more and more often in an online world rather than the tradition funeral home in-person mode.
It all makes for an exciting time in funeral service.
Disclaimer— The author of this article holds a stock position in Service Corporation International
More news from the world of Death Care:
- 7 things you need to know about new pre-paid funeral rules (in Great Britain). Which Money News (United Kingdom)
- Local funeral homes offer alternative for cremated remains. Kokomo Tribune (IN)
- Funeral home director hoping to save lives with gun buyback. Pittsburgh Post-Gazette (PA)
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