Service Corp 3Q revenue rockets up

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Service Corporation International (SCI) 3rd Quarter 2020 revenue jumped almost 20% (19.37% actual) over the same period from 2019.  In a statement issued yesterday, October 28, here is what SCI’s President and CEO Tom Ryan said of the results:

” . . . the impact of COVID-19 has increased the number of funeral services performed as well as the number of burials in our cemeteries. As community restrictions lifted over the last few months, we have experienced unprecedented growth in our preneed cemetery sales as well as a significant improvement in the number of families who are desiring memorial services.”

You can access a press release from Service Corporation International on the 3rd Quarter results here.  One of the highlights for the company was that 3Q revenues grew to $918.2 million as compared to $769.2 million from 3Q 2019.  Some analysts were expecting much more modest growth. . . somewhere around the $800 million mark.

Here are some other highlights we noticed from the press release:

  • “Same store” funeral services performed increased to 88,812 for the quarter as compared to 74,628 for 3Q 2019
  • Comparable funeral gross profit grew 63%
  • Comparable cemetery gross profit grew 64%
  • Revenue per service dropped only 3.6% as compared to last year’s 3rd Quarter.  It dropped from $5208 per service in 3Q 2019 to $5022 per service in 3Q 2020.

Funeral Director Daily take:  We all saw what happened with death care establishments that have what I call “the law of large numbers” size to them during the 2nd Quarter of 2020.  In that quarter, which was the first full quarter of COVID-19 deaths in the United States, we saw large funeral operators gain death calls, but struggle with the amount of revenue brought in per service due to the social distancing rules that restricted large funerals.

It’s obvious from this report, where SCI shows only a 3.6% decline in service average, that they figured out a way to wring more revenue out of each service.  During the 2nd Quarter public companies reported that revenue decline per service in the 8-12% range and we have heard of private operators talk of the decline being 15% or more.

Obviously, SCI’s soaring revenue is there because they did approximately 20% more cases than last year for the same time period, but from our point of view, the revenue per service decline of only 3.6% is a most amazing statistic given the circumstances that they operated under in many states.

Funeral Director Daily will continue to analyze the Service Corporation International 3Q report and monitor the Earnings Call to bring you more information in the next week to 10 days.

Disclaimer–The author of this article holds a stock position in Service Corporation International.

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