SCI - Earnings call transcript Q1 2019 | Service Corporation International

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Operator

Good morning and welcome to the First Quarter 2019 Service Corporation International Earnings Conference Call. My name is Brandon, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. turn to now management. will I it SCI over And

You begin. may now

Debbie Young

as Young, This you Investor today first everyone. morning Director results. for discuss quarter is us thank Good We Debbie of our SCI. Relations joining we at

statements we the are is flow. materially usual, are now operating on could these language calculated I’ll our and are filings risks Safe are were press expectations actual not reconciliation that, those made cause from and our historical refer differ and as SEC before also As in With SCI’s website. will today accordance but with measurements Tom over filed cash These Today, our comments yesterday. Harbor management Ryan, in with The X-K and customary team adjusted go are begin. include projections. going to measurements to by included, factors adjusted that the certain not measures risks provided on release These our EPS, I’m uncertainties release to the and free press Chairman A website our to and the subject that over and call our in and to we may non-GAAP results such statements appropriate of to turn CEO. identified forward-looking. that to uncertainties in flow, and available cash our GAAP that limited

Tom Ryan

followed analysis funeral little operations, overview finally my our morning. with high Thanks, for comment the us cemetery XXXX. to Today, quarter Debbie. for joining this the I’m on everyone, going by and remarks of Hello call begin outlook and you detailed and a on our more of thank

few a with quarter. of highlights begin the let’s So,

adjusted As same in yesterday, par was which press last on you reported period per with we the our of earnings share year. $X.XX, release saw

purposeful facing a reductions funeral tax growth, flu cemetery consensus segment essentially developed preneed rate, primarily higher and offset of earnings by prior per than season impacted both cost as owned into our a the Comparable lower higher reported a in expectation. milder sales Our production significantly property revenue non-customer analysts’ percentage coupled driven reduced share compared to were year. with already by profits

around shifting some performance funeral operating to Now, more detail the the quarter. for

discussed we revenue challenging much compared anticipated in a revenue as pronounced last reason flat. the volume a towards the million, overhead milder X.X% experienced quarter. period $XX by our you X.X% This at costs As decline and flu Therefore, February managing in this declined season with were about February, teams a Core $XX we location, back March we to and our January was focused market in volumes funeral or most Comparable year. funeral trending on fixed levels. acutely volume. with funeral funeral same million primary core declining was decline case led the comparison over

of soon. result million associates sales channel. be retention operating higher declined it in provide sales fully XX% force growth non-funeral our by months for a right by issues the us This through on-boarding can on shortfall teams, from This X% as we’ll caused of by temporary staff now or contracts sales the $X sold result mix change preneed XXX organic higher Our funeral We XX point in customer impressive saw case level highly of training decrease revenue grew as core resulting absorbed staffing to counselors, and points. rate, path our conversion which the core contractors February puts about March in a per should while at a cremation and before the to to per the benefits I’m in We our we case growth revenue few performance. X.X% average. and confident increase about status. at productivity. a the The from and independent strong revenues challenging take enhanced Recognized followed employee a may almost home and target basis basis conversion just was fewer had back more to over January production

which Finally front, to have to General of quarter, operating points cancellations. with during revenue decline other profit almost implemented commissions basis $XX sales first profits. margin quarter-over-quarter. throughout I decrease due decline believe million the $X operating XXXX. in experienced preneed described. on funeral the increased on partially revenue due reduction This to primarily XX.X% and production benefit to was revenue coupled mitigated is million will insurance higher margin continuing The initiatives just the increased XXX a remainder we We lower cost Agency decreased of primarily funeral by Shifting the

our about our This highlights temporary locations core an is production Direct total from X.X% our come the in large which to percentage sales declined from beneficial that production counselors our interactions, sales us primarily Finally, for which over gets deferred a of our impact impressive down the just approximately was employed. are our sign quarter. locations sales providing. and due production, is leads into SCI core quarter, Preneed sales atneed backlog preneed the X% Beacon particularly from at Preneed for sales X%. the this X% location. issues is considering funeral sales customer encouraging funeral grew production as on-boarding at

cemetery to turning operations. Now,

earnings million the positively $XX team or X% a diving preneed as and strong of team give to as recognized the that some recognition undeveloped or as prior result rates mild performance as to quarter. what the our means season getting sales the Total property, in and a cemetery by production this merchandise production production was larger from in more recognized a single-digit why earnings. share deeper, grew increase the cemetery million general a and is flu for stepped our criteria inclusive nearly atneed or compared by revenue. is Before I of the $XX achieving comparable up strong and the was performance. as I sales year healthy sales developed revenue were X% GAAP sales you XXXX. sales production payment had of almost in This the teams a recognition high well both million to more would production, higher challenge impacted in They million of sales large This the rate. cemetery our pleased sales of the This which property cemetery quarter. function special were of for cemetery sales. season, of their to majority a reason, higher Recall X.X% a operation be the versus during in able increase which preneed with sales in property little higher Cemetery enhanced close $XX our quarter created flu per couldn’t preneed to key we’re core from production thank services. revenue, we X.X%. like is selling is selling revenue grew growth rate growth which percentage came growth $XX of fourth existing well down our Included

higher increase continue the strategy. just you $X tiered to in had million impressive trust million walk-in season in and that increases to from operating the perpetual $XX Comparable growth, cost revenue Difficulty] were Fixed the quarter. the offset well helping sales profits a overhead during due top-line growth expenses. there was flu see, from line margins decline generally our trust the an I care helped resulting benefit points income As cemetery as expectations of over care compared fund milder the primarily we fund performance inventory in to grew perpetual [Technical Also in just $X cemetery XX.X%, million as property allocated first atneed segment distributions. can as gain market and the expanded XX%, in quarter to offsetting income Partially described. or revenues the fewer with in capital higher was revenue we prior as costs basis timing year maintenance we XXX strong preneed nearly

in remained a those better three comfortable very our should meantime, to on annual guidance we’ll position quarter. for the up, up times a I’ll best we to the So, over providing challenging focus of focused their the in I our July, for revenue manner want execution with life, environment. of and in core them the their thank thank during it revenues, year. highest client serving three one families our stacking continue the expectations our rankings. leveraging of scale we’re internal rest mind months focus difficult At for our this to the our We shareholders. and annual our and and want continued the congratulate benefit turn some team into wrap client Also capital of evaluate we strategies in we to Eric. and flow first during year. consensus use to to for share own family. how against growing deploying that, preneed and the as to good be With point, our our we execute feel and earnings of in cash were towards really peace for as a and about long-term exceeded Well, analysts our In I company well call moment our the per of pursue discipline only a as

Eric Tanzberger

cash our briefly discussing upon Today, and Thanks by follow touch and in deployment. cash guidance results the plans of as year with terms for year going going then our usual, the deployment Tom. as I’ll I’m flow then capital as forward the quarter on of morning. thoughts rest begin Good for full to our some capital well flow

but quarter. let’s with deployment, So, capital talk the begin about

share $XX million and So, deployed about acquisitions, we new builds, repurchases. location dividends towards

purchased tax components, welcome be the use we funeral during the The We acquisitions with purchases and certainly towards – estate highest we various associates we continued like In to our Ohio Memorial homes and $XX relate family. of acquisitions believe mid-teen these IRRs. to several quarter. Quebec, in in after and acquisitions and to terms these real Dignity million best first develop the deploy

the new on with X% the construction Shreveport, just in both level announced us low was the per double-digit year. by going to several prior that reflects markets. and into new an over board obviously $X.XX representing now two also million share new our in or the funeral February. of over forward This share our invest per of Dividend of desirable should We provide our additional and payments expand increase per $XX homes, returns X% $X.XX Dallas, including the footprint completed $X in dividend great percentage which homes quarter, in quarter builds totaled These build million Texas an in increase Louisiana. first funeral and expansion

of cost share of million purchases $XX.XX capital $XX by to the an share. investors approximately at purchasing XXX,XXX returned in we shares form Finally, average of per

remaining share the over shares just XXX move And $XXX shares of million capacity forward quarter. authorization, is about a XXXX. of gives repurchase outstanding today, this number current have in we Our of at as which million we ample us end

bit little a capital modest a first So, was as you last our quarter during compared as was tell this of deployment the track color I year normal record. quarterly well to quarter can here, the intentional. when somewhat

desired XXXX our our to of backdrop, some towards a higher we leverage leverage acquisitions As times of actively ratio end as shares. absorbed range the repurchasing large and increased during X we’re X.X

XXXX prices season during the be. deployed total the the we quarter remember, So earlier in compelled leverage to recognize want $XX.XX. is a times, observed $XXX towards funeral to to conscious million And where facing which not shares to our share our addition higher guidance delever us first quarter million improve and that in make to to comparison This, we way, we expected four temporarily effort would of we’re a leverage ratio weaker a the approximately million result leverage total a an net investment liquidity. entered brought in to for price to in our maintaining of midpoint by ratios million significant which the that’s quarter, debt as The average range. Since of compared our and down desired closer our while and reduction was by that $XXX we flu $XXX million leverage the we further $XXX due pressure repurchased was XXXX, almost that X.X $XX of towards million. tough at acquisitions

also As a just benefited this, by our increasing $XXX over we by result have $XX million million. liquidity about of to total

capital highest to capital the our quarter So, opportunities including we actions govern purchases. taken the in of desire the levels, this don’t our to we remainder the this return while unilaterally use for ratio year to deploy share relative leverage provide flexibility deployment

a flexibility of that So off am normal, little again, now than we we’re although to I are bit of a well for with remainder this positioned slower a start the year. confident financial

the for here cash flow Now, let’s shift gears talk quarter. about and

operating discussed – over installment recognition of earnings the to generally rating customer of reduction funeral about preneed a net uses due Compared operating use the about down preneed because adjusted in in profit, than We we $XX quarter. particular, this million occurs discussed. are cash production report using expected typically other year, of is past, working at operating primarily from anticipated property operating pleased million which the cash a we’ve to revenue of expected preneed was cash in flow $XX quarter, million higher million had sale in to due working than financing and that flu the recognized growth cemetery capital strong Tom lower better $XX increase $XXX the cemetery weaker of while capital prior the period the time. $X to in the contracts. constructed in was just flow adjusted sales And of an million, higher In performance, sales the season as is received primarily result and associated which from properly,

a million. note These guidance working our payments had interest of recurring $X a initiative. capital we payables, offset a on working support a our quarter. declined growth cash which of in and for addition, taxes, from expected quick trust remains generally approximately at to source taxes were business. cash $XXX quarter payments capital flat uses result the Cash of working quarter-over-quarter year the $XX modestly funds In partly for million related million the And as the were uses, an cash our largely by in ongoing of tax capital just other unchanged our

with and flow which over generally our than higher calculation, cash that’s spending million the in million quarter, on we Moving just approximately quarter. cemetery in that combined for for as free was flow was to maintenance plan free year CapEx our components the line development prior CapEx $XX two the cash $X define

in So, we the free be calculated flow, deducting $XXX flow cash these to from cash million. recurring CapEx about items quarter

let’s year. the now rest the to shift So, for outlook of the

guidance As million. million in our addition $XXX flow specifically adjusted to XXXX cash our Tom operating mentioned, liquidity, to million we $XXX sets remain existing $XXX in This, of almost range us of confident in of guidance of our purchases. share over the form accretive investing returning course, projects nicely dividend in the capital of the highly to year capital deploy remainder while build and acquisitions to by new in shareholders funding the of and up

think am that proud because I helping our quarter, a thank tough like great this first I associates closing, performance team’s the I’d XX,XXX faced our in season XXXX. off So more results. to start comp all to of these specifically of for despite a mild we’re we’ve in to for flu challenges the the of SCI deliver coming year. into

open and that shift to questions. with we’ll operator, and our to So now this remarks ahead concludes quarter go prepared it that for back to the you call up

Operator

Credit from And Instructions] we [Operator Please sir. you ahead. Suisse, go A.J. have Thank Rice.

A.J. Rice

Hi Thanks. everybody.

the traditional to look towards elevated cases chance I relative just not little historical is quarter, other think there cremation to a fourth the that reason sort might ask case when attribute to there I’m do part is any at and is volume the sure skewed than any market the a comparable be the just there it? your again, some factor. year-to-year why, you’ve would happening way I more to at that wonder to if you norms. if be of you And think but of has in cremations? like look bit X% wondered had there been decline, a or of trending maybe shift First, what about little

Tom Ryan

you. Good Tom. It to is hear from Sure, A.J.

we historically, of changing, the to shift. the changing is we’ve it’s – so if own range obviously, businesses, point and our in know cremation is basis And Let question about change. XXX XX and of talk we velocity it’s that which direction it, call the me mix experienced about what

about The we So, look think would growing thought when historically probably if used market least few we but about last Day, a and as has back XX historically, what been little years. at U.S. XXX the over the you a about years. itself, if points We at talk talk long-term. bit looked rate at points last cremation happen. Investor basis you the consumer about XXX you basis the We’ve the

really Neptune for very competed that consumer reputation. also, consumers bit done of our did, competed we’ve we’ve the I we’ve customers little think ago, value-oriented. really And probably, pricing on missed good to function we served is focused Direct think that’s XX through we some this years think this probably on And well and I about brands. I and a are XX core competing. cremation We’ve and businesses communicating job Day. Investor SCI changes a and the of bit a effectively. done quality our boat think, a we and I through Where very and to They of those the talked

You remember giving Faulk presentation. John this

found in I’ll relates pricing markets last months we’ve XX, have and certain is compete in simple the that call for right our simple as certain we maybe, markets, this that markets where point what We about to the consumer. the locations cremation weren’t in to it at those XX looked over and at XX cremation effectively price that probably

say impacted of will, the test you if volume that case stated say, markets, We essentially in these that’s again, XX% markets network you look our different and that of certain four in saw case at that, were like cremation versus rest test and have out of But if a flat. increases let’s six-month these to in some look back we about of rolled being of the we markets times. they’re I results felt

more locations, by we we but pricing. know through adjusted also those were these making we So, these driving business changes,

more experienced a a change. it’s points pretty a customer. those and basis that for little XX probably So, particular We for markets markets, about believe revenue, less flat in initiating lot those as price by that we with volume those changes when XX responsible

that, probably acquisitions to in thing the XXXX, average another take businesses that cremation is the we’re mid-XX’s addition In required that in looking those the our rate is new we’ve XXXX, just that at. XXXX, in noticed and in markets we’ve

those your think probably points. them for then mix. XX, basis putting XX So, It’s you another into about if on-boarding responsible and

the is, expect that’s national same point would may So, But temporarily. hopefully, out I coming But speculation. about think mix rate on And trends think is I our probably interaction. it which XX% again, preneed time, we’ve consumers. our source to to it, source and lead move is opinion probably would But we’re is lead seeing then helpful, way some think the cremation moves similar A.J. I the that accelerated rate, my I that’s closer basis as changing the XXX is an with time points. of that preneed, thing of on top for the on, about just the from the – the obviously, atneed

as performed a with the package. family you increased same see that select following our So cremation network there’s likelihood simple and pretty simple up were may they that in being good cremations probably

which thing. view it accounting an getting opportunity. that’s change, as that previously of as share we believe we’re this we mix weren’t So, for is We a this some positive that we view capturing and

A.J. Rice

Okay. That’s interesting. Thanks. Yes.

better rebound ask and is you a than thought thought part trend ended said remarks you of you and comment you’re through change quarters, extrapolate maybe better market prepared the a quarter on I to fund. we that and I’m way your know Second, in also rate it’s think to the a how line? the little the well. might first strategy up guys care the being like of and but that the it to probably and sort sense as part the but certainly, say little perpetual three would run any trust trust what as on of, was look next that fund, don’t in assuming just alluded than managing of about a I way you Any just to,

Eric Tanzberger

Hey is A.J. This Eric.

and extrapolate up, capital performance, different the ECF portfolio and I lot back we out over assets we some of that of was is majority a first that little control, level I’ll quarter-over-quarter obviously But capital, example, the you I maybe of return, funds. the total come wouldn’t going versus by it timing, really some ECF by lack a distributions think created quarter-over-quarter return comment. $X I artificially shifted moved So, moving just is particular of that year, last of managers $XX area. should that that’s those traditional because income to of correctly back market. income managers. do noted, when that really agree. and somewhat because and our from refresh And by of lot And just controlled noise such little revenues, memory as maybe the that what and is of to out that, XXXX, of to set around the be the gains. bit million, XXXX underlying really this, assets a is $XX And But funds timing vast to million happened capital quarter low, total in and million that into considered of portfolio the with $XX by do a distributions your of million gain our gains the for the of to has ECF maybe

year. more looks the this a so is but to this be I you And look year, when will at of it up, rest purposes kind full think of variance although it back the of normalized comparison throughout rate, give

again, are that managers in of capital outside normal gains trustees, from type years that any of distributed of to be predict the being the games in good enabled to The XXXX are those million the are so having equal as $XX whether the during And activities, choose that that the occurring proxy. without market, a else volatility not. us what we’ll to would crystal could ultimately last or a year though their is portfolio realized our is be revenues it created control, pretty but in are ECF well. All ball

that gives more a So, you bit little color. hope I

A.J. Rice

and to for second, was easier not to the you Thanks. we quarter. – know quarter, But not that, of than year third bit a the year, maybe I ready flu-related or tougher for to – good. back I the any tough somewhat first and last you’d now. still you And Is give to pull quarterly, forward want third just last fourth of is normally relative comp, fourth the of question particularly now how That’s comp last have way quarter like characterize comps you do, comp do a and know since signal a happened half something a that second the ago for the quarter don’t lot easier because making you? Yes. do you’re cases going quarter second, went probably comps? which series a little of in one little did a presumably outlook.

Tom Ryan

this A.J. have what back. again, goes we April a is got lot drives vision really do We’ve really that can I Yes, us. of believe, that, all history but sort is for into we data obviously of

last kind XXXX. of year So, was one look the you like this

now in finished up quarter We’re January. We X% down year. for ended XX% than we and less down X% the the

could you experienced to for look to it somewhere say to that unlike are that probably flat, pretty and to getting X% And X.X% of another. towards that’s to that again, previous there, things you generally that that back tend for one tell even gravitate that? is lot the happening us the of would or I’d down. between probably So, you expect that year. up move would and push quite but good. rest be looks we slightly April not flat not were trends a That’s what what But in would direction and

be. what to trends back snapping we’d as expect to far As normal

that’s hopefully, So Thank helpful. you.

A.J. Rice

Great. Yes.

a lot. Thanks Okay.

Operator

Scott we have ahead. Schneeberger. From go Please Oppenheimer,

Scott Schneeberger

higher Thanks. that first seeing Good then on about factored you follow basis in I morning. others. bit that discuss into what factor did guidance of to – have up based the Could year? did XXX elevation a you on you points the or we’re you high you Could A.J.’s cremation. for fourth something factor I just – Was the mentioned two you wanted question talk and quarter?

Tom Ryan

We of variety run models. a

tell exact know, think range believe points, So, it’s I normal. new I a XXX points basis wouldn’t But more points would have generally from, again, that we we we you tell scenarios. I’d we XXX basis to to ran think They common basis don’t guys perfect that don’t United that – belief we that’s don’t we this I you of you you that and – XXX is XXX the and States revert you guidance we’ve provided for the should earnings And push saying we in norm our we’re points. what the well we’re toward – if will customers and flow. within that about basis range competing all you cash tell

Scott Schneeberger

from quarter quarter, how you wanted impact better a get funeral, its the understanding certainly, update All penetration, right, think to first in fourth progress on should there? progression – thanks. the just funeral going Beacon forward, Appreciate to that. Beacon Could the on a we and quarter given about impact on preneed of preneed growth sales

Eric Tanzberger

one take Sure, ahead go that Scott. I’ll This up. and Eric. is

little it’s last Let bit of quarter’s me level of set to, because a out. rolled call where in terms confusion there’s on

in United working is going of force in funeral we’re first it’s out all, terms What in is beacon funeral, the and don’t of states, ultimately, sales cemetery. most First yet States. from language handful have Canada perspective, of laws because perspective. a trust of the complex it differential states terms a We have in certain have English. don’t we rolled in funeral rolled prearranged set in is level to to the it eligible on it our of geographic out? rolled network remember in with We So, be a a also beacon? rolled don’t out and from some used What from out out of rolled

example, in in consumers don’t we Spanish, Chinese rolled for out as West we well. rolled for So our don’t Coast Asian have have out

all eligible managing So, are that about really contracts about that one we’re sales okay, is beacon Then just interaction also perspective, the being mentioned, platform I that prearranged contracts of by client that we U.S., should One what is beacon. it? force? the it’s is that right to sold that reasons, eligibility in it various metric for that how from And are two For everything use is we use another the we when many a XX%. like is by the mean software, family think about think with That we all there’s how XX%. about and metrics for beacon and much is usage. how to used eligible, our is now, that funeral

XXXX Ultimately, go number that to metrics our to managing usage proficiently it. from and are in sales increase from sales those and ahead XX% a usage are management is So, XXXX. during to what and increase our that goal two how working management teams we’re a to our perspective higher

to it that’s complex it, merchandise the the every terms is also what to One scenarios along in we very building that XXXX of way. cemeteries. reasons more that’s in the of the as and products that – two of of be they in And getting on a merchandise from in the our are to selling bit little those is of interacting – harder the build. the that cemetery numerous we’re the we that all it’s one different cemeteries. that latter is the Now, in we front really believe the cemetery you terms well. of little really and two each knew bit This and use one and itself uniqueness There’s with a vendors complex. to not, property each when more earlier of itself vendors numerous one really XXX module talk or selling working pivoted is the individually And team

from continuing push – work And point, we’ll I cemetery. get to last hopefully away on you really with it’s to hopefully in later given resources don’t We an some in we’re funeral But in at this the particular, said, late very some for of update with of – effect in we and possible now, proficiently. terms technical So, early to year thereafter. terms work pivoted year progress a cemetery. like – cemetery, in right XXXX, a

Scott Schneeberger

how comments for understanding relating during Could at All the is involved? the XXXX. review, will that question period some you Thanks. Appreciate to It’s the the will FTC the My FTC’s final comment and right, request rule. point thanks. process that. SCI funeral be our please discuss pending

Tom Ryan

I to Sure. everybody give set for because the them table a it’s topic. flavor for Maybe this, – think give

funeral we’re that price valid Some this the Commission funeral essentially and a they very past are every complaints Last it’s or did rule At XXXX XX Federal the to But Federal years. wishing Trade it under to the at people Commission was of we X.X concerned actually been and of groups over XXXX recognize X.X to online. from are million changes has how in years put number for to Trade require reviewed have educated increasing not time, so sure pushing the consumer XXXX. point, industries on. rule the in complaints that our these funeral-specific and customer all to few consumer complaints million total groups XXXX XXXX across understanding declined the because complaints certain about from has

like process in already the of less industry into, quite We to and at relationships our XXXX preneed being with general begins funeral anticipate work first at working this priority, continuing to said, is them providing that implemented. the and been for takes got XXX,XXX think available us a That that families service because will when it as each So, look to look and about XXX,XXX been locations, sell to a we that’s list funeral and and to our the you particularly that around we providing atneed FTC price forward insights XXXX. rule customers. with groups we happen rule families we’ve year. may look a since one. was the We’ve be This available pricing when honestly, think I

within we’ve industry. dialogues so the ongoing had And

they’re concerned actually things when about Power Today, of service and not and we’ve the surveys; pieces XXX,XXX groups we that had have gathering Trade with the of they’re period, but consumers, Federal about And them pricing help data over to Commission quality those. three helping those of primary initiate, and concerned and almost convenience. our and it interactions process – may about reputation interactions a And a rate comes the our things in again, than receive take industry of we’re time prepared J.D. that quite a bit providing input. We the higher already of in should send back the to are it. variety XX,XXX out provider it of things, with

without Today, this way, for So, could providing I misleading. at about locations. actually think the be direct price consumers reputation I many think pricing online is and many cremation quality we provide of our

the a is top pricing We’re for consumer. priority

the to think about that better we So, way think it.

numerous initiatives in data. certain with believe and websites approaches where pricing at evaluating customer got We the addressing underway these including in once conjunction our consumer, markets, several information other through that preferences. even we today starting have We

we really and ultimately, we’re those provide to believe online obviously So, selling cases, you where pricing voluntary in the be should prices you’re putting except consumer. online,

to again some industry when to and continue time within we in to ready groups, and the XXXX. we’ll happen stand funeral review the funeral the rule that is FTC anticipate ready So, work we

Scott Schneeberger

turn it I’ll that. for thanks right, over. All

Operator

James, From Please go ahead. John we Raymond Ransom. have

John Ransom

Hey, good morning.

quarters, that two and where three on over funeral cremation? to looking blended other stuff basis ASP has preneed and your the has growing pick from kind the the but was you all to mix, Just over apart do strands, hazard ASP hard to flattened acquisition of it matured eight out. funeral how much hundred were guess of years, your last atneed that the percentage dropped of next bucks from the is couple you I here much peak a is know How a see if here?

Tom Ryan

you’re Thanks John. Hope well.

John Ransom

Yes sir.

Tom Ryan

you’re between mix XX that fade simple consumer think as that. you we I We’ve effectively mentioned is two number it think I’ve the as also, temporary XX that. the point things. tell I the that atneed, one between will reason and another think right, price having mix do plus, for call to acquisition that’s on would Cremation those the the from again, by average points primary reason. price, earlier, we’ve right we’ve that more competing sales view experienced cremation basis I particularly put I Those – somewhat

than the years down belief And going atneed few point. is down. next again, of on speculating front, because to at But to you be, I’d this the slightly that to I’m as get when I X% flat think out slightly look So, that’s you less cremation say, that our mix that the we’d point. anticipate,

of the our on very slight atneed, grow is that’s preneed level. kind the opposite. going think, I at It anticipation can that

mix, of two between So, think once about type where blended as blend work in through I you a the growth and the this, your you’re X% average you’re together. you’re in when probably position, X%

it’s could picture, a I get paint to things I don’t think but want the better. competitive. Now,

going to value. to find that think we’re ways enhance I

and will hope can have I volumes going streams you side. to capture we really and historically probably good think reality you more that we’ve additional I is that do to as it continue done allow the up think revenue work that’s through when the But then to you our that growth on. we’ll revenue we’re tick these see share and funeral some about think

John Ransom

side ago income Thanks. – would an may into struggled you revenue. And unfair in I and and relative a – but the the this elevated do funeral question one, cemetery be trust of your kind this math that obviously, had in here bleed with of math Florida, to down some some year to

of for is how the would work or quarter say would to here we investment representative something. much at that with versus how through how and year P&L of had How P&L? income the from of flowing quarter, the the looking the the capital year? the the think you Let’s through gains? should rest the flat outsized And kind flowing market the was year sequential from about of if So, trust assume trends the – markets

Tom Ryan

it already way question the ECF I John, earlier is especially; the on to I think think in the about really answered call. Okay. this,

John Ransom

Yes.

Tom Ryan

and it XX% have mentioning as preneed down XX%. three the months. to of But And you the up now, funeral talk let’s So, release was fourth about terms cemetery. quarter preneed in and you was remember saw you’re in the

just breaking peels trailing over of and this about know to you’re well a So, really it even, you years. the kind how remember, think this of you almost way as out XX very

we is way then that’s about been lot and a $X.X has of think trust $X kind about is of the statement general holding our X.X% about the talked a X.X%. that an So, nominal very things before metric frankly, that’s that been to equal on trailing a annual what about that we’ve to funds basis. if X% of about And EBITDA million return as XX-year and million it these increased

flow in or of you peel you these EBITDA for this in again, a really out moving as bunch million is, a take goes at fund is down go asking it. of very that were said both of XX-year is certain down it X% so to a earnings. certain for But XX-year that trust statement, XX%, quarters a almost believe trailing direction return, volatility really look it affect that with you And need And And just a go a $X.X period in see that it about I when is simple time rule general trust and all one it’s you being this about equal. else up, of away not volatile. thing that to it’s really when income we’ve before, lack the that that cash long-term affects a if

Eric Tanzberger

John…

John Ransom

ahead. just go be to And clear, that’s –

Sorry.

Eric Tanzberger

is in trust. I point other the cemetery all would is to say mind keep

volatility product an XX% of So, it’s come maybe, this it the where what’s with XX% fixed probably funeral of or in insurance a little of got a out return. the is contract, more versus backlog

So, even there’s probably when about less backlog rollout. funeral you think volatility the

John Ransom

statement general for generally the Right. about, I worry market really certain you color Last there I obviously rate. you one and but – get volumes that think segment, it’s comparable hard so and U.S. probably are the overall the me don’t market for appreciate I lagged of us true that death to it’s have realtime is, share your a parts know

investors So, how that? about on about you how think should and do think market realtime basis share a

Tom Ryan

jurisdiction. inconsistent by John, national did, you and I I on we way reporting look so at the we agree hear too. the Well, is those the is and it’s, statistics

more effectively we So, it by think market. to for is, track try I us

programs. got tell you market regional leadership to generally this. putting you’ve leadership reacting markets happened would at or these And so what’s effectively teams, proactively in in and teams, I just looking those

we today, every grow. obviously particularly relative of, this more say the we’re believe, we to to better we We are is because to market continue more reach different. markets, I simple historically our effective to I’d capture way to beginning going that’s in than out relevant that market a have consumer to think beginning and consumer cremation the that in believe

products, we it’s So, right important of the have effectively service that think very more for tools mix customer to that interactive compete we consumer. and

better. So, I better we’re and think getting

competitors. than preneed be because our continue will the more aggressively it for think we’re advantage I selling an to us,

comparison. even income they’re So, I’d is, enhanced put I track in. tracking level should that statistics, you And national talking markets. markets the guess, you talking or may with that about we I’m compete about markets; may I again, an expect not on And that see would I’m geographic

we the So, getting feel search it’s over our consumers moving effective tell We’ve more really in sales to force. engine sales up criteria opportunities, sales your hard lead side. utilizing as don’t generally I through to by we’re paid leads interactions on would and say tool. of you, and to a force competitive get put I preneed would competing effective unless commission effectively preneeds, over follow a was position particularly for interactions you we’re the our embraced, together. optional them ways and more websites, now an it really it’s

flex and we say So, on enhanced little I’d to, our compete positive I things performance more think beginning there’s market share. effectively a lot more think, to muscle of a that drive scale we’re

John Ransom

but I’m Neptune something revenue. how number big of when think, and Last mean, little of now that channel of, rate we relative your much just at how a much much the how should then it’s in a one growing $XXX I me. – I growing small, core of outsized think assume general and to future? abated it’s much growing a about how though Neptune, give us it’s I you even a you I on like for bought it, how million Can and is idea remember out

Tom Ryan

Yes.

to have we’ve First in of about everything. to see got more area. But all, your if you I and talk one want can counselor a you know can you it

memory I would tell don’t all, it’s in last growth me, my I around have front the revenues say would of second The of year’s million. rate, you $XXX

would – experienced the relates business growing over the what $XXX about in is, temporary few see What XXXX, What’s pause related as we call to that pause years. and XXXX a to a had revenues. most rates to contract. we’ve think been XXXX the last in we what million we’ve it you your is tell was a it going John mid-to-high – So, part as sell and I the single-digit for on

trusted deferrable a recognized revenues to because took versus we temporary items pause, allocated the got So, GAAP a recognized. product more service that

few additional So, next but like XXXX, about kind and revenues we’ve rate on the we And years. of should good feel grow temporary a that, doing took and lot, you of growth the We distraction. a bottom any with business little that, less like as will over line, the XXXX talked it’s then high $X that that force. our have a that business. dip we’re and that again grow seen beginning on-boarded that’s million a we in an put change, than the little we’ve our path probably, on single-digit be sales in belief a to

John Ransom

Thanks Okay. lot. a

Tom Ryan

Okay.

Operator

go ahead. Gajuk. Joanna Please From have Bank of we America,

Joanna Gajuk

questions remaining. morning. of Good couple A here

guess, mentioned – you funeral so cost the the in though top-line. weaker the the of anticipation in I you on that So, pressure costs, initiated from cutting segment fixed

had your feel in you you been guidance after and you So, occurred that full can do in this what guidance your – year about number much efforts QX? in how QX? help currently of us the for for initiating previously those quantify how And assuming

Tom Ryan

in have what to you what into we to of providing every scale this, do the a way value for – the clearly, well. the normal year our we’re ways went that’s we reduce is And our you’re think we guys. about to we costs. at shareholders that drive like year, Hope hard I the think And and Joanna. Sure, doing part things leverage looking to we’re guidance

to level a say, facing employee I’m everybody convey an non-customer I that’s say we I’ll sure to think to to trying make to me had here to about the it effective line every at this is very focused as now and choking, tried we’re effective is, important we about think more and effort what effective more talked we on to And cost. coach, we’ve a ways people. more ways find lot, ways listening meet, right that develop

customer be into you employees about not, sometimes meeting, let’s to a for mode funding revenues. every of having it can effort having XX,XXX back development a of the to opportunities collective we fund on we’ve things. want like this. leads. was And these grow or to cut at a think really I about things dinner because mechanism. way And level our is, And we create saying, that talk a let’s effort smarter the as we think this about facing the pitched get want say, of to And that’s a concept let’s instance, conscious

of so And group I thought. think what we’re that’s as would more with there’s great maybe that tell with, you’re finding I than over-performed, you just and get normally people seeing, happens I originally that this there to work they we then

to it probably it’s see a bit you even But to was little I did going think believe baked in plans. we when continue. an already our what of we round so about And impact do wouldn’t think a I into $X.XX QX.

That’s we’re deliver. $X.XX the for way that performance as think of $X.XX piece. so when year structured think to that the about guidance And we you set a to there think or a you, about, could be better we I now

Joanna Gajuk

just the lot do you least helpful and ago, mentioned in you in starting some online, minutes terms there. in terms of base That’s I that Okay. this here, markets. provide – pricing, that the of some rule at And where FTC two guess already funeral your discussion the was review then of of a happening a of prices

the is you how then that from where that would that. guess was like there market, market quantify share, experience terms in do be to for So, that’s a make affect things a what to a say, and there the maybe to you your there does I way of something decision concern because

what general us? experienced does I when you you – you In might what terms other market affect that of talk in or how had able you share terms in to do terms had with pricing specifically, share metrics of that online your want provide but be or and to don’t if just any

Tom Ryan

that in certain done, at itself. markets. wasn’t so already on we’ve Internet. Joanna. rolled online, locations was page. have Sure, What in we of It starting had the and form then prices referenced we’re out website the certain online it out in a landing And rolling the available That on existed actually I

I a to, searched could want and or find you and If said, term pricing it whatever you it so isn’t get new.

know. And ad. there sense by utilizing you. it in But this a and people think service we liked sorts array we it provide there and should can your big the that want what wide is I makes about differences the big we understand consumer choices There’s all of gives doing differences what of There’s concept reason product a that means, quality. price of make. of is the things you all if we’re some starting discussion, is in to is reputation. is ad, starting There’s we help

what’s that. anymore having with, that the the Sizzler to locations. is We against I the think consumer. at may in restaurant? the end be ambiance misleading – comparison a to So, to of two rest. What’s that’s that really provide we’re not is, exist get of can we a probably But what’s – steak pricing by want it taking, the It’s you price shopping price to high backing have convey said at what like the the and – safety itself bunch provide, Sizzler Where hard if and information point without and you located? it’s is up with the to, house

the ad they the them more to data consumer they starting great to It products or can ad to and a more up starting point. grow So, discussion to of can and provide make robust move selection allows services. a that choice is to buy

Joanna Gajuk

that coming That’s markets. of would of in around the of at be terms in numbers can Great. in I you But two year. point, terms seasonality I guess helpful. by helpful. thing, some last guess give one performance the some point, just you, proved those just sort if of us

last the – we it So, holiday last year, there versus some about was Easter around year, issues Chinese that. was timing talked and

this we are So, already around on I can what where about guess those and that seen you talk front you’ve year events?

Tom Ryan

Yes.

issue. Ching wasn’t most is will out quarterly – one’s Ming, offset Joanna a in obviously, holiday so think much referencing. So, good, There to that is that a And the about. helpful. between between part, market but Joanna, this which by the biggest a quarters as and it’s talk of is when was the mix point I a for one’s in Ching our the not I about much Ming. amount an good and Ming not mix report, saw the reduction of sales, that’s you we Vancouver With think particularly Ching market, months,

implemented has, it to things selling economy local pause I’d little it’s to wanting people if land. look foreign as things, about finally the in couple happening it real relates As which and market, buying they the see may market, being of at the those because cemetery slowed of influenced people a and in And change roots that’s estate estate they bit that buyer’s property, conduct you’ll it probably, Vancouver a as relates a even opinion by similar real a in say, in you buying puts markets. where tax

Chinese presence implemented the a has Kong to China, them country ability to from Hong The and is restrictions citizens have again, other thing we in Vancouver their over some bring its on and and withdraw invest. big and

it a market. about those hope so ability those on carrier but effect excel We that. We dampening Vancouver to as the we negative two that things was we better. get in did a still well, our really believe And had think things very

Ching The I taken transferred positive in into Rose learnings because California, of that we’ve Vancouver think relates the those a presence. over We it this variety is, quarter, believe, we’ve in we new knowledge Ming in impacted done never Ching out as six that were first in $X and that the before most and great and I markets Hills to of million, markets. new year markets. rolled the Ming sold

were performers big Vegas. Houston, the Seattle, of Some Las

going to continue We’ve we work to temporary I is to and encouraged great Ming our forward. hope really So, push It’s is, And Ching people, pause. stabilize. think for variety this very a by initiative new properties, markets got hard grow. as move great into just ability a Vancouver of our we’ll we’re to

So, the the rest about things looking the year. are I’d good. We really good feel of say

through force We better utilizing sales which up will universally, leads there. we believe, higher quality have a embracing by think we think, the process. be tool I leads, followed with

hopefully So, we’re excited rest for Joanna the look the reporting, quarter. to and of results good next forward year

Joanna Gajuk

And your color. to just great That’s it comments. to wrap

production for in say So, you preneed where the you terms still of the year? expect outlook, digits sales mid-single

Tom Ryan

And hopefully this Yes, a there’s change as report that wouldn’t quarter, point, in we something any into with again, concern, think positive but compare can I we’ll first forward we were and that there’s pleased very we behind At will. six about this, months too. opinion expect, Joanna. the still if you and to better if report, we moving annual guidance

Joanna Gajuk

much. so Thanks Great.

Operator

go Brown. ahead. have we Fargo, Wells Please From Duncan

Duncan Brown

morning. good Hey,

one of you Just G&A. is highlighted any in time you leak In color into or release, should this could me. provide and and future quick press million this one one quarter if on then wonder see the quarters? the that expenses from more legal I $X confirm we just of

Eric Tanzberger

Hey Duncan, Eric. it’s

Duncan Brown

Eric. Hey,

Eric Tanzberger

to litigation still in on. in hard legal are it’s environment discuss active those going while Obviously, calls a cases positive

Maybe as quarter, to our to obviously, was – cases. I that to us our way; good don’t to I this that want each on process, quarter amount could I say we’ve that specific. is best is part in first see we legal So, any accrual some in caused movement active our believe review I organization. I’ll mean referring There Well, and that try seen answer you’re based as quarter you’re $X it I’ll to. obviously anything movement across this don’t that this each to try to that of a can. that talk million movement of isolate going I anything $X situation million related systemic

very that vast majority well of it’s caused as somewhat and movement. matter think I that isolated the matter specific

active little that, systemic probably terms that’s may a all terms you with could any being in comfort commenting time. of point on that at and so bit give not and And in I of litigation in of that’s say

So hopefully, that’s helpful to you.

Duncan Brown

That’s fair. Thank you.

Eric Tanzberger

Thanks, Okay. Duncan.

Operator

now are callers in no management. right. All there It call back the to will I SCI appears turn more queue.

Tom Ryan

Thank you look week. We for late July. which the everyone will call, great on Thank a sometimes to being call. talking you, everyone. quarter on be you forward Have to in our second

Operator

gentlemen, Thank joining. Thank this you. concludes conference. today’s for and Ladies you

You may now disconnect.

Service Corporation International (SCI) 25 Apr 192019 Q1 Earnings call transcript