Service Corporation International's Q4 2024: Key Contradictions in Cremation Rates, Funeral Volumes, and COVID-19 Impact

These are the key contradictions discussed in Service Corporation International's latest 2024Q4 earnings call, specifically including: Cremation Rate Expectations, Funeral Volume Stability, Funeral Volume Trends and COVID-19 Impact, and Cremation Mix Impact:



Funeral Revenue and Pricing Trends:
- For Q4, comparable funeral revenues increased over $5 million, about 1% over the prior year quarter, with core revenues decreasing by $9 million or 2%.
- The increase in revenues was due to strong core general agency revenue growth and higher average revenue per service, despite a 4.4% decrease in core funeral services performed.
- The decrease in funeral services and impact of cremation mix on pricing were offset by growth in general agency commissions and higher value contracts maturing from the backlog.

Cemetery Revenue Growth:
- Comparable cemetery revenue increased by $20 million, or 4%, with core revenue growing by $21 million.
- Growth was attributed to higher recognized preneed property revenues and increased preneed cemetery sales production, particularly from large sales.
- The increase in revenue was driven by higher preneed cemetery sales recognition rates and contracts with higher sales averages being delivered from the backlog.

Preneed Sales Transition and Commission Structure:
- Preneed funeral sales production decreased by $27 million, or 9%, primarily due to the transition to a new preneed insurance provider, which impacted sales temporarily.
- Core preneed funeral sales production decreased by $14 million, attributing to the transition, but increased underwritten insurance product sales are expected to stabilize later in the spring.
- The company anticipate returning to low to mid-single-digit percentage growth in preneed funeral sales production by 2026.

Capital Expenditure and Shareholder Returns:
- The company invested $268 million in adjusted operating cash flow for Q4 and returned $100 million to shareholders through dividends and share repurchases.
- Investments included $140 million in current locations and $19 million in business acquisitions, with plans to invest $75 million to $125 million in acquisitions for 2025.
- The focus on capital expenditures and shareholder returns reflects strong cash flow management and strategic investments in growth opportunities.