SCI execs give some insight to the “state of the business” in quarterly earnings call
Service Corporation International (SCI) reported 3rd Quarter financial numbers for 2023 last week which we highlighted in Monday’s edition of Funeral Director Daily. Today, we perused the company’s earnings call of last week to try to find some insight into the questions those in the profession are asking at this point in time.
You can see the entire transcript of the earnings call here. Here are some exerpts from it that we though you might find meaningful. These questions were answered either by SCI CEO Thomas Ryan or SVP/CFO Eric Tanzberger:
Ryan seems to think lower “core” funeral revenue is, at least in part, still due to the pandemic’s “pull forward” effect on deaths. Here’s a comment from his opening statement:
CEO Thomas Ryan: “Total comparable funeral revenues declined $7 million or about 1% 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 had anticipated.”
Again, from Ryan’s opening statement, here are some thoughts on “pull-forward” and “pricing” moving forward
CEO Thomas Ryan: “Now as we look at 2024. On the funeral side, we would expect fewer COVID and excess deaths as well as a moderating impact from the pull-forward effect, resulting in slightly lower comparable funeral volumes as compared to 2023 levels, still an improvement from mid-single-digit decline in 2023. We would anticipate achieving inflationary increases in funeral average pricing, slightly offset by the effect of the cremation mix change.”
In response to a question about funeral volume expectations and when funeral volume “normalization” will occur.
Answer — CEO Thomas Ryan: “. . . but I’d say philosophically, the way we’re thinking about this, that pull-forward effect diminishes each year. So we do think there’s a pull forward effect of ’24. We think it’s going to be in ’25 and ’26, but it becomes pretty de minimis as you get further out.
So in that regard, year-over-year, it’s actually an improvement when you think about 2024. Having said that, in 2023, we continue to see some COVID deaths, we continue to experience some excess deaths. And so as we think about those trends, those are beginning to go away as you get into ’24 to ’25.”
In response to a question about putting prices online and the Federal Trade Commission working on the Funeral Rule.
Answer — CFO Eric Tanzberger: “. . .I would say right now of our 1,500 funeral homes, we probably have 1,000 to 1,100 of those with prices online. We have different levels of pricing, whether it’s starting at or just the absolute full-blown premium experience, drill down into what exactly the pricing is, pick menus of — for celebrations, all kinds of things, and it’s going to move and fluctuate because we’re learning.
We like it. We love interacting with our consumers using our very powerful Dignity Memorial website. And we’ll continue to invest digitally into those websites and more to come. But from an FTC perspective to come full circle, whatever they decide, as I’ve said, moving forward, I think we’re well ahead of the curve, and I just don’t see it having a material effect to our company in one way or the other.”
In response to a question on the “pipeline” for acquisitions moving forward and the questioner wondering if there is an increase or decrease in this activity.
Answer — CEO Thomas Ryan: “I think the pipeline is really good. . . . So we feel very positive as we look forward over the next, call it, 12 months, the deals that are out there. The timing is the tough part, right? So we’re working on some deals now that may or may not close in the fourth quarter, but highly likely they will close in the first quarter.
So I think the way to think about the next 12 months were very positive. It’s just tough sometimes deals slip as far as timing can go. But yes, seeing deals, seeing good deals and good activity.“
More news from the world of Death Care:
- Foundation Partners Group appoints new Chief Financial Officer. Cision PR Newswire
- From morgue to medical school: Cadavers of the poor, black, and vulnerable can be dissected without consent. The Conversation
- Popular catacomb tours at New York Cathedral offer lesson’s in city’s Catholic history. Detroit Catholic (MI)
- Suspect arrested in theft of body parts from Colorado cemetery. Video story and print article. KUSA Channel 9 NBC – Denver (CO)
- What to do with the body. City Magazine (NY)
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