It is earnings time for public companies and today we are reporting on what Service Corporation International reported in their 1st  Quarter report of 2018.  You can see their complete press release, including financial information, here.

In essence, Tom Ryan, SCI’s CEO, made the following statements:

1. “. . .earnings per share growth of 9 cents (to 47 cents total) or about 24% over last year. . .about half of this increase was. .  attributable to improved operating performance in our funeral and cemetery operations. . . .”
2. “Preneed funeral sales production was in line with our expectations increasing just under 3% while cemetery preneed sales experienced a tough quarterly comparison.”
3. “Lastly, we look forward to continuing our focus in 2018 on growing our revenues by remaining relevant with the consumer, increasing future market share by growing our preneed sales, continuing to leverage our increasing scale, and deploying capital to enhance shareholder value.”

Funeral Director Daily take:  As we did yesterday with the earnings report for Carriage Services we will give you our opinions on some numbers, taken from SCI’s reported financials that we see as interesting.

• Funeral Revenue was up 3.1% – We believe this is a function of doing more services.
• Cemetery Revenue was up, but by less than 1%
• Funeral services performed in the 1st quarter jumped 4% from 82,918 in 2017 to 86,285 in 2018.
• Average Revenue per Service, a metric kept by SCI, actually dropped $1. . . . from $5257 reported in 2017 to $5256 reported in 2018.

The most interesting number we see here is the Average Revenue per Service.  Having that number drop, is not a surprise to funeral service, but it is an ominous sign for the industry.  I’m virtually certain it is a function of more low cost cremation services as compared to funeral services with caskets and vaults sold.  Funeral home owners need to know that, in our opinion, this number will continue to drop as the consumer continues to shop.  Those funeral home owners who can figure out how to make a profitable margin between that number as it drops and their cost of operation will be the funeral homes that succeed and thrive in the next 15-20 years.

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