SCI - Earnings call transcript Q3 2020 | Service Corporation International

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Operator

Good day, ladies and gentlemen, and thank you all for joining this Service Corporation International's Third Quarter 2020 Earnings Conference Call.

As a reminder, today's session is being recorded. [Operator Instructions] And with that, I'm pleased to yield the floor to SCI management.

Debbie Young

Thank you, and good morning, everyone. This is Debbie Young, Director of Investor Relations for SCI. to quarter review of today for business you third the XXXX. welcome our of company's results We

but Before the comments from in and to prepared risks beliefs, forward-looking earnings could we'll management be that statements. cause include, remarks, that expectations not uncertainties let me website. some team statements the statements remind or and contemplated forward-looking These These that such statements. release with to those materially projections today. actual to, our future SEC our in those differ our forward-looking risks uncertainties available Any state made factors for our our making by are limited plans, you are in that on are subject the results are identified filings and

discuss non-GAAP we cash release appropriate and to flow section, certain financial call, and operating EPS, and earnings Webcast these were yesterday. measures, free GAAP X-K also adjusted under is this on will in Events of issued press such measures adjusted our reconciliation non-GAAP our as During website provided the cash Investors' measures that the flow. A also

Chairman the with on our So me Ryan. and pass CEO, of let to Tom it that way, out

Tom Ryan

fourth pandemic thoughts the that with as as that surrounding on staying understanding of effects to on on I'll the everyone, going and you performance significantly. make and I'm are Debbie, some times. during change of Thanks, hello, guidance start business healthy and uncertainty this of to the well for the our our joining and Then challenging color preliminary ways provide most the morning. entire on guidance team, safe thank COVID-XX and This little some I families you your us SCI call a finding our quarter. behalf could On commentary these share XXXX, morning, hope by giving that quarter

first. cemeteries, you thank and care our we funeral client front-line particularly circumstances. the and personal difficult difficult say most putting get of communities of for and families your our courage the family and SCI resolve, our during care teammates to associates, to most you homes, through first Before families so In of me our for entire safety for client started, much our the days and our centers and let

our provide celebrate and remember opportunity healing the them closure, to important the You which to so is families do. to we and grieve, path what starting on

So thank you.

record of Our a social pace distancing. preneed technologies have use new sales counselors adapted and at the to

we to Great to associates, their possible You who made If nearly volumes none wish hard had month mind funeral plans of significant June. for COVID-XX, it dedication deliver the of family success of in of spoke in our deaths July, work possible. cemetery it last develop for resulted future for would our elevated and XX,XXX for which experiencing atneed peace our and us from now. be were our in growth revenues to we job When team. weren't the

experienced Additionally, preneed production. growth our gathering eased, sales cemetery were we restrictions as unprecedented in

to subside our exceeded impact the to These expectations. those wrong. we both into during say, Results the the quarter. throughout were July, operating saw continued we quarter. we While third continue segments entire expected in trends Needless trends

much awkward growth, the to general funeral the third For to XXX during albeit we and $X.XX of had us It's and to count and driven for and basis higher very against month a strong applied were levels a saw offset quarter. we growth lower continue see double-digit prior and tax rate higher than percentage the Both expense. October, year-over-year line share bit the per slightly administrative of what humbling at for earnings cost lower interest predominantly per with share the a over in many for by to been results has about our year. points, margin costs and people. segments, you Yesterday, that lower of uncertainty top sad, so filled moment at so $X.XX challenging in leaner financial the we so reported segments for compared today a Below speak so quarter cemetery by quarter share structure. time improvement

Both in with of channels Total an offset production. slightly average. nonfuneral lower decline nearly overview in start general by revenues XX.X% offset insurance-funded X.X% operations. an during $XX decline funeral our grew revenues funeral the a home agency approximately driven or in and cases, revenues XX% well were caused $XX very performed Let's preneed funeral increase the sales sales by partially million, Core grew comparable million by and the of by quarter. core a funeral number

increase cases overdoses. in diabetes, of approaching we with direct the drug the identified CDC due non-COVID-XX most deaths of excess COVID-XX, to impact associated events, XXX,XXX cancer, and the is While believe suicide cardiovascular has

in disease that life-threatening for to We non-COVID foregone hearing induced limited contributing deferred are excess resulted from mobility, care the whether effect screening care, behaviorally medical collateral has restricted government-mandated mental deaths. access health or or these potentially damage to and

market Our leaders support this discussions position. our with

sales was in month on year-over-year moderate the continue market an to second decline contributing has Two believe had the of quarter. hotspots points prior top positively decline. a seminars mix to funeral slight cremation XXX XX% cremation in preneed a gross perspective, funeral almost of from follow-up million the the of September. versus decline more the under a production, Pre-COVID, revenue margin cases for lower-margin were scale versus where the decline the visits from in percentage funeral The quarter gaining the the for sales XX%. streams. funeral Growth attached. just increased been differentiate incremental have average to the experienced the relative our competition. as XXX X%. certain steadily quarter lead down XX%, be XX% than $XX trending second points are revenue In our year, in and and Preneed service in basis our improvement cemetery large leaders April, realizing on an profit larger dip increased our From increased and down, a percentage can addition, funeral to third on in-person pre-planning decrease production for and was efforts. in we profit us incremental our sales increased was we growth. minimal XX% year our a sources percentage restrictions dropped the basis impact from versus be sales X.X% high business gatherings The production The the decline lifted This In to particularly drag this and core gross about the was market on sales in-person it X% has shift continues our in a funeral as with profit our restrictions prior offset XX% margin implemented. share, sales average to

management continue the efficient labor well reductions also by to as benefit promotional We as expenses. costs marketing noncustomer-facing of in hours certain and in

sales $XX growth, for due by Now recognized $XX the preneed cemetery during effects more of attributable cemetery the sales Remember, Comparable of even or increase revenue we've $XX the be revenue revenue quarter. the growing mainly or increased from need the quarter third growth, in accounted the revenues quarter. Recognized of XX% revenue as quarter. pronounced, was of million. almost shifting cemetery. Therefore, into third nearly At production $XX XX% million cemetery higher million in from volume to core to we $XX driven quarters. million growth revenues preneed million growth Preneed quarter. cemetery other future to COVID-XX. third this accounted the sales deferred about primarily the $XX recognized million million to our in production the higher backlog of cemetery preneed $XX for production growth The core in was

of about leads, increased sale. to sales growth, the more to effective Higher activity sales, XX%. of preponderance has driven growth a $XX more in While sales velocity easily sales the deliver million pleased increase generated productive of an from highly production core are about we're contract was the $XX the a atneed which of $XX is force. more velocity million large by million being This converted

more COVID consumer Additionally, we receptive a general, the discussion. preneed are willingness consumer seeing an of are this have seeing of we to meaning or the in environment more in openness

I believe conditioned productivity. has is result which also sales sales embrace aggressively COVID higher a our more efficiency continued to shouldn't say, never customer of force before, levels our and We has system like -- in management relationship counselor

believe on percentage cemetery also in customer a the selling gross points profit XXX revenues were sales costs somewhat increased in strategic reductions with production Cemetery and Growth and counselor we to gross increase velocity. $XX XX%. drive significant basis by profits sales Finally, offset designed production. by higher approximately cost versus associated effect the differentially grew has to funeral cemetery million favorable and had incentives

our share, COVID-XX. single-digit updated fourth our to projects expenditure. you press for Evaluation, the and typically to flow IHME, Health year by surrounding for the guidance Metrics to we base the for cemetery funeral impact earnings would wider the high close the growth for as atneed provided or quarter. As results in total in the assumptions per and are uncertainty Institute growth We as to date on future the range this revenue and expect XXXX from would The that the our cash we mortality the ranges than what saw of end give year capital due October trend we see well release, Therefore, COVID. adjusted provided volume models go-forward from percentage

migrate widespread probably lesser would the on to the the than average, funeral in cemetery to sales continue continue over reimposed, single-digit prior to preneed restrictions grow closer Assuming saw year, X% third average probably range. to at we anticipate the in high would to but growth prior percentage to the X%. not that We year quarter, levels we expect down gatherings are

business scenario, adjusted our would anticipate from second earnings under quarter minimal November we November starting share from As expect the XXXX predictable the comparing the our think bounce our lot growth favorable know. impact to exceed meet says through never funeral to XXXX and we is adjusted very a ranging we this from comps. the to at least my on sales range has on percentages the are models variety 'XX. would per XXXX We back the debt to we sales that share would thing scenario be sure would share company impact produce leaner be improvements been in earnings COVID, the experiencing from XXXX X% where 'XX or would pre-COVID some a We less scenario average run which would In no know from year, operating decline comparison a an don't volumes framework low earnings as in like the share year If made our COVID capital cemetery as the XXXX. X% a looks pretty anticipate that our be at for share structure, compounded to one especially X% effect $X of decline a There's a of a in decline structure, the per preneed the would a spending earnings levels levels. buybacks, any difficult for about these a career. of XX% to with year, XX% for would to long-term Even or we We've to XX% mid-single-digit production range from funeral base correct, a towards combined to XXXX, on beginning for refinancing scenarios, $X.XX. in begins per that a XXXX, levels. of to already little prove high per result in as we basis $X.XX

that challenging the normalized and preneed the with comparison followed by quarter, the be comparisons expectation scenario the a first Under might volume continued is a most transitioned end the for would more of to as significant we a significant well see we second April funeral in favorable cemetery off impact lessening during COVID quarter trending XXXX. the year. leveling sales, the cemetery sales of likely in Our preneed XXXX, excess this funeral from in scenario, effect now June, to growth cadence into a first in by quarterly second experienced where quarter in quarter as during growth a volumes as environment

quarter the decline followed third comparison, quarter. more be fourth the subdued a The toughest by in will

about future. So optimistic in extremely our I summary, am

perception technology strong gain. as use has brand Our It team benefit I this selective our I will of digitally, and customer taken before, has is I to required share their loyalty. market COVID believe new to [indiscernible] during our afforded extraordinary believe believe And in many COVID our physically both needs is was time. our actions the response stronger today. crisis during with culture has proved successfully accelerated customer and this and it provided the advantages. meet presence, even

of In well model as a adoption and sales a addition, delivery platform. as more the service producing nimble new more technology effective is efficient

We most sheet profile. with as extending costs our position our recent refinancing, lowering debt a have I'll the you but times. continue balance sincere for and trying terrific interest with in close a improved Once during difference again, lives many our quarter, thanks fortress to well our maturity improving further most that in only team, to positive of make so the as not

it Now to I'll over Eric. turn

Eric Tanzberger

Thanks, Tom. Good morning, everybody.

safe trying importantly, everyone is First in we hope that staying most and these times.

associates almost to our begin as overcome professionalism grateful for still XX,XXX and results the pandemic. who navigated reflect directly communities during remarks that this the toughest Our to are by on support extremely of you families taken our have pandemic. trying morning, like tirelessly times. I'd poise worked this how today presenting our associates this created supporting obstacles The are and deeply our challenges they thoughts with those To the these recognizing the front have them shown also to my we have communities have all we remain we that line, affect. frontline facing the associates on and bravely and

that, with on I'd transition like to the results. financial to some additional So color now providing

environment, opportunistic XXXX. did by going our I'm First, allowing forward-looking quarter, going on this succeed challenging of flow strength our for XXXX be then update also an and position to both to financial Tom some that the to results followed in cash remainder for is I'm and provide of like end and us thoughts the with the

flows start position. by resilient financial to created a And business cash know, allowing us let's weather that uncertainty with So as COVID-XX. reliable model are to we you fortunate have the with are

be bolstered While secondly, with in of maturity invest profile, we we entered a growth first positioned the to pandemic opportunities. favorable to and strong then debt amount financial businesses position significant continue in to a by and a well very our liquidity invest

has Specifically, million, $XXX hand, of on roughly long-term $XXX million our consisting credit our available $XXX remained liquidity million plus on cash robust of bank at facility.

of to higher EBITDA calculation. leverage quarter, as September XX much trailing the it this we're XX-month our the to On generated to June X.XXx able relates from at reduce X.XXx our at end

in the of the future, Now to intend to impacts range Xx. as we look beyond the this we X.X of still pandemic leverage manage into

the cash the let's flow much which quarter So the performed deployment of talk as adjusted Ultimately, and million payments, working this in tax of cash quarter. of EPS $XX we're from many offset operating net face When growth flow related businesses about results expectations, compared earnings well prior capital during than adjusted adjusted as to to much mentioned reasons year, of $XX cash a which higher cash was by for our capital. as was in able use earlier. operating decreased the timing the million than during the flow lower generate of preneed of quarter. more $X.XX the million our of better In $XXX cash pandemic, quarter Tom the were most

we as and as third of let me detail. quarter increase So from allowed had little aspects driven, deferred federal $XX I partially of cash earnings components also second the timing of income million through but you these in IRS bit into mentioned some tax had the tax state just this walk payments in some million was more quarter. payment the a $XX The by

XX%. cemetery primarily growth also use the quarter, a and capital, the grew net sales experienced which preneed property We during by substantial to working related of

property sale. able deliver have preneed Now we generally to time the are property immediate recognition that as revenue this recall at sales of

to However, on that's about XX% working of installment are capital an period, us this of basis, these sales use. X- primarily to paid a what and over creates X-year

So shifting to capital deployment.

grow to in reinvest we During quarter, to million shareholders. our of $XXX well of our as deployed capital as businesses returning and the a value total

development million breakdown, through business the maintenance the invested we $XX capital and Regarding in spend. cemetery

refocused around than is expect quarter. capital quarter, efforts year this ramp-up fourth this projects While in these have the to spend we the our prior lower and

finally, growth shareholders the We build over quarter. form into $XX to opportunities. deployed million another dividend just repurchases a through in And have the million we new and $XXX during returned and acquisitions of share

let's $XX now to XX% million cash talk to million. shift has operations let's So outlook, of grown first $XXX the first almost the in forward-looking X And and from months about adjusted XXXX. or flow XXXX,

that about Act. the recall had as we benefited Now $XX taxes deferred under CARES in from million current allowed payroll

the look XXXX, the operating $XXX we've year. providing the deferral, given This $XXX interest or you per cash in million to updated result this activities, you XXXX. expected of press by earnings excluding of is grown prior are guidance the for anticipated $XX and in saw full higher cash being refinancing of million the higher million congruence we're over XX% taxes. year the flow as with of ranges adjusted offset When to share remainder which recent release, cash as and a So lower adjusted

beyond ever-evolving So beginning think and are to XXXX. XXXX now to many the pandemic We moving and acknowledge unknowns about first an situation. be continues there

in and a to well have will year repeat. performed We it tough be extremely XXXX,

are expect items cash worth $XXX $XXX cash outcomes There could EPS XXXX flow for in our to also that flow the the XXXX structure. and our are that sales of momentum preneed on million. known with expected seeing are average mentioned, said, noting. impacting eventually we encouraged we being from adjusted funeral Tom positive are improvements million we few range a this range all behind similarly currently sales, leaner gets However, as With in by COVID cost the us based

in payroll the pay remainder XXXX of XXXX. in the half deferred XXXX million of or $XX First, and we that to taxes will be required

we'll quarters X able million totals to compared we're Additionally, defer million. headwind which cash taxes items in to payroll collectively together a create taxes. about to which 'XX payroll in of incur $XX XXXX, $XX when in XXXX, regular XXXX These for flow

with that We importance into earlier return I complete we to and into we quarter activities to capital were development as also that cemetery XXXX And look interest business associated and spending purposefully looking some benefits spending as we reinvested quarter closer high-return our maintenance expect levels deferred our 'XX. just third refinancing the higher to 'XX cash we in of in the expect the would anticipate lastly, projects completed. recognize also fourth pre-COVID from XXXX. some

performing in So by heart continued the and of manner. proud of extremely thank these and while members, very XX,XXX our all accomplished then of efforts. closing, environment, services in a humbled amazing safe we've for thankful all to I'm passion tremendous much is I and needs prioritize these a to in truly I'm challenging and our year how who of all them client families team the have again our such It associates this almost

that, So it for with that like and over our now I'd concludes operator, questions. turn to prepared go remarks. ahead

Operator

We'll first Crédit [Operator at A.J. hear from Rice Suisse. Instructions]

A. J. Rice

to more off, guidance Is you're production that think year assuming next family. back that strength when can are all the year. you're you traditional as plots is where sort about? next that get go a -- death you I'm a seeing, like Is a buying they And seeing people there in cemetery production year, normalized get part of the fair what as back ways to a obviously, is? the you of that it have is sounds in in assuming from when you think rebound? is spillover still first to sales Maybe about you of their COVID-related amount multiple But

Tom Ryan

correct. that's think I A.J.,

the customer like there and part So discussion it's precluded driving kind management relationship that's I driving A the while that activity lot around of say we with are right, mentioned and And system. we're lot what it, think it, again, a we I not process believe different this from four is traveling, with effective. our importance force to impacting that said, around consumer is more sitting And atneed near a sales of clearly I preneed of things it. the of through better the would you're have been managing of openness seeing the majority we're right? I we're things I sales. it. some were the Because, are activity we other believe management are there a process, believe

I about -- down, the third is think years, something traffic continue. we point, to slow and June the the away. but focus as probably that last I this the a coming particularly going the this think -- And consumer it. soon, forget to atneed into hopefully going at that right of beyond everyone's believe don't think I issue clearly, year-over-year And consumer some quarter. So of have also that's is to could going this I for think intention may

something about opportunity excited of to important. reinforces to now peace pretty families, everybody our what's provide care they that think And to how we're truly conversation going mind take so of on have to that's So just important the that this is. and the I

be a So good XXXX going XXXX to about feel but we feel obviously, about beyond. good we comp, is tough and --

A. J. Rice

Right.

to that easing of So Canada you in more improve down in going that are the you bit do and that, decline about of worse your a situation in about even? the sounds X.X%. in you primarily it and more? you per little quarter. what given some year? a California in the California? think will than operations the further the picking that Or rest -- you'll into how just up the maybe closer are see countries it next bifurcation was case the thinking thinking like Canada still restrictions rest are And quarter country optimistic Are Is fourth lockdown third a It the the think you sales

Tom Ryan

California A.J., quarter. the the particularly back and in Canada both actually of we half improve, saw third

It's slightly that big that not see different, didn't change. we big. but still So differential

it service to people shared attachment whole seeing used And clearly, it's a to drop back XX%, across with really, as the So be you, we normalization. having gathering XX%. not for network, and now rate XX%, we're to are our larger

variable on consumer the of -- the we've choosing of little close that that, is cremation, we, And improvement of the bifurcate level. to lower a people too, of think pretty stubbornness to and with are side, kind seen improve. par, bit percentage service same cremation will back we're seeing you a a If where though even

So we feel better.

impacting as not The a are, much lot they clearly, buy. buying it that are catering, people of ancillary other are that the would things things traditionally

up So begin open we'd revenue selected a those to return and growth. we as categories expect to more, to be see

A. J. Rice

Okay. Maybe last one question.

in prepared think remarks, You may Tom, you that local you mentioned be competitors. picking up vis-à-vis share

think you're driving do Just a And do able driving talking what much wondering think what COVID the be we you sense might that about? is of better any Or you of Is have handle shift that share how to driving as situation. that? that? do what's you is

Tom Ryan

insights, Jay had I'd is you question. his follow-up a little and on I share the Jay, Operating think, I'll lot Waring, But with here, of our David. follow-up. Chief a last then do and to I'll Sure, more of he's discussions, want our Officer like part some markets.

Jay Waring

in visit of said yes. And us, safe thing about actually on this, a and to we're our Yes. tremendous "Did safety, focus you ask, XX.X% tremendous focus the clean Power We that [indiscernible]. Tom, added that the that quality, feel location survey, use question April, to PPE, families families on One of J.D. seeing with our the did when we is you location?" over a

ago, we and coming in of share weeks for reputation are comfortable feel couple gaining of we because the So here do They we cleanliness. have a team Angeles community Rose we a gathering services our anecdotally, said, of Hills believe and safety and in for Los as clergy. were

Tom Ryan

campaign, a lot higher a Detail websites. There's social more a Every A.J., rolled people our more through And we perspective, I'd just media. on, add presence. the much people we're digital and There's having out Remembered digital from flowing on lot

we're with So area that in company, have again, the we in with have, that getting our more, think, the we expertise more more that message out scale the and effectively. I

our the and and both digital hotspot like numbers with the a interaction think consumer, throughout feel the, consumer I physical let's from network. expectations, in and our a with with are again, up, say, markets the awareness that So is the we're interaction above we seeing

Operator

Our James. John at Raymond next from Ransom will question come

John Ransom

hard may next a we this imagine let's a This sync. in volumes year be are where and how volumes about world think question, just year sort but of -- should

of you've So this think costs. out we cost permanent about like-for-like been basis? kind structure the take the a we're year? able during what to stripping variable on And cost out should How

Tom Ryan

Sure, John. from that one. I would And only you. expect question type of Good

So there's on lot I'd say, of John, side. learnings, a cost the

And I the I'd and touch out Do for XX The I know have guess question -- job. and have I yes, crisis, found we in think a upon I what you us really do. answer, tremendous is now you, didn't told years, The asked truth this through we a did go first the one I'll you've is handle? network you XX. to because order flexibility your in

because not they're so resources do have or is the said, we sharing but process, smart ever of And done, don't I'd out said, clustering we learning available. tools through the positions management did to labor we out partially to a we the Our much probably the just And it. teams enough what concept we job partially that better and has say company of where that probably we weren't of found the talented in utilizing it. part-time being got necessity, benefit and are have we I about maximum nimble really local than

process through how effectively. So we better I utilize this learned force our labor to more think

and lot and a we is a other travel lot this employees. of XX,XXX issue, America corporate thing entertainment have a is The almost -- goes into

when going won't say we seminars, have traditional the think, we did and lot that and learned it, more leverage It about -- we method. to didn't lead I down piece. from we things a we are levels the entertainment, ways much we we're it we digitally mean it earlier, our think or that of what utilizing have pretty effectively, probably think as driven again, you'll per but types to I is And touched upon which I cheaper those marketing learned doesn't travel lead, leads, I'd good. in a cost lot than see we've forward, really

technology. just I So what's found And that, we midst in call level. I that did project, technology think service the John, is of think existing on operate the reimagined leveraging taking we move backs to of next interesting as which to we we what better -- these every really with ways are It's delivery. forward. all now of things the because We're facet a

try I going lot allow nimble that client think importantly, us, So I effective. to become service delivering in think, to through more crisis to efficient, this accelerated And our of most there And more more again, that's family. even quicker. to a we've to get even

a lot 'XX and there's near-term that. around good of benefit news benefits 'XX. So I will that think And

I us think leverage reimagine allow structure. to term, cost further longer our will

John Ransom

didn't a that not Tom, have answer. it elephant in usual, beautifully -- was, single a So answer, number that a as but have single did

to it This question. So maybe share is But was questions my could math it. attach I number high that a question. a you you essay on well in last did bet school.

Tom Ryan

guess this would to it, about savings to you even math way an is Jay I the if going We've a be is, the all think one. efficiencies the number. $XX I XXXX did. structure tools I 'XX we I identified but doing look into today, the service as section, you about exact how answers clients the in a out call let's I weird the pin million probably of it cost -- said, be put cost say But we did. think we'll versus structure, believe with into we're XXXX that Like to because it drive that a to way down I we that. the I range I what as just on way believe begin on it's when I think think within have and in And of million we somewhere to getting we're position reimagine, just more today. hard $XX

think neighborhood. number I'd a to So that's today, that probably about say fair in somewhere

Operator

from hear [Operator Instructions] We'll next Oppenheimer. Schneeberger at Scott

Scott Schneeberger

quarter. single-digit balance we growth I premium guess the the for of it this believe fourth I year, could start was if high guidance heard in cemetery I with

in quarter. the commenting hear curious, October. I'm XX% you're flows in market on third based on that seems we in it trends the which just Now concerning

just And you could curious consideration at. answer, in is please the So into looked that of how work recognition preneed. if -- the being and on also, trend

Tom Ryan

Scott. Sure,

probably things cemetery, we're third comp you you an when of quarter comparing last consider, X So think as about against about easier think to year.

So when percentage the change, quarter. a you look at strong we and pretty had fourth

with, particular, comps still, I remember, when the want the believe, the we say, is, are then April, this of to activities I'd look the use -- stand So the dramatically. second had were part second don't month but I start different. word you at And of quarter in thing, to to down

but probably is So used a a factor it, to get a there's of to that it. see I'm have number probably consumer to used into catch-up that the That's little seeing what this not I conversation. are believe is I'd XX%. don't this rolls ready we bit to, and love But to continue

a out it's gates in being up more October. single we're maybe the right, of high ends in we're as and of ballpark So you what we'd digits But the think what may I little kind anticipate seeing of conservative. be

So I from be reasons are second the way comparable biggest issue. the it. probably my think And would quarter it's catch-up think and the X to about better that

typically spillover in gave word goes, it just quarter [indiscernible] me -- of cadence fourth far of the tends the As cadence. the quarter. recognition because we the of traditionally project, The a as fourth is the to more fall recognition

some in see sold So today. a we I that the expect revenue of recognizing in catch-up, you will backlog the would

will you change. We're next XXXX, spending anticipating cemetery of inventory a when probably year. a that somewhere development. neighborhood So million in the be think will of $XXX be change That about

XXXX, when you that about number And that -- would think expect when would a recognition could higher even be I you think so about percentage.

Scott Schneeberger

Okay. next question and And that. that I answered appreciate my was Yes. going you somewhat it. to then be

the Just on flows throughout. that spills and XXXX recognition of how the part certainly and first I'll from move into though.

stance environment. out company regard the technology of talked certainly is of this in heard in discussion to in M&A just what with use about you As covered industry, on a versus differentiator this some capital, is peers. the We've differentiating You it environment? Service the factor Corp. curious

repurchase. using on and So thoughts curious capital with to regard just stock M&A also on

Eric Tanzberger

that, enough is And in M&A. and to are would hitting Tom's from we've think honest starting part that Day on of and I investors it's I of where to going consistent, mean, opportunity. our scale know on utilizing win do we've think of you. categories also agree return table think that plan, is long cylinders things I of of I'll the we're with And and bring been the of take kind -- it's all Scott, to be you first terms innings comments. all Investor before you look I echo really is highest it, early described to really our not -- to really deviating in at I the the very in relative situations. we're you M&A I those that leveraging technology. we in kind with

project, M&A that starting because executed stuff as put needle think the not of to I are today differentiator future in That's will a and some think needle, upon. be now, even But to the hasn't move notice, capital differentiator. it moving going and we're to going people as a think we're I behind been I of more to us. the frankly, the reimagine such I the doing of think, it are more

probably and being an So look it's when relative you you next, perspective, at kind IRR the from after-tax of return think what's of the build. M&A highest a kind of new then

without course, the So done both that of into reinvesting business. first we're -- doing of things this -- none is the

into flow with So reinvested builds. first development M&A appropriately an after thing and excess cash business, at maintenance that we're comfortable we're new looking cemetery and the we we're is the CapEx and doing

because stream but years less dividend couple low get takes double-digit slightly know we a and about. has it's The EBITDA the return builds than running, New up the a M&A successful to it of very percentages. into

having we're And the I the one taken to return with how intrinsic our the dividend of value I'll continue feel a said, record strongly very grow the is you probably company and is differential the in true of the we I comment growing. is the going seriously to we've thing -- dividend, to resort very that commensurate think believe on, we'll in what track see shares versus shares. we continue that shares. about As shares think last as we And have the

So aggressive. you shut shares. seen be down us points have certain And certain at you've seen very at us points

opportunity relative So first a among new and share on to that's have. new I M&A to we spectrum the quarter, to relative not that that with -- we're seen the the of think used it past or builds. return opportunities in of is M&A relative the during very At it's and we pandemic a you've really relative return as good terms -- program, want as and and us only builds and high-return repurchase first, it but going in before and it's third execute why seeing during doing frankly but use a we very is kind that we're But be reinvesting returns, higher clear, thing do returns to it's doesn't those business the such of what and saw beat very shares. levels the to specifically you

Scott Schneeberger

then on is one something that's So quick that's it? right just and incredibly right happen Or Or distracted now? that follow-up M&A, industry there and a On an targets? are there. actually can not this right is just now, that where

Tom Ryan

there's I No, think been disruptions. And it's some happening.

wherewithal terms other our kind little scale that's able maybe of that, through some alluded it. get know, bit leverage have of to probably to scale that us Jay and don't a to of withstand will you struggle do the people this As the out and it being to there. in and

markets, share, So light of market maybe -- especially with a came, kind quarterly. what little and of I don't We, that, brought more report that pipeline. little we also to is bit the think bit that's obviously, hotspot a in we the

it's we we're of in reported life, QX excited as it think numbers terms I But what our So pipeline. and I about characterize of would there. just we're to coming seeing the kind

Eric Tanzberger

add just going I that that's to we on people. a capital I'd a that. to of think Scott, gains motivate direction, got XX.X% candidate a lot there. went do that's out right There's If

occur. Tom to if in are So poised that to were writing we

Scott Schneeberger

the Yes. Interesting on dynamic, probably been topic, but funeral rule. check just with if in guessing burner And then can I'm update know that's you Tom. lastly, you I occasion. a back FTC on

Just status the is curious what there.

Tom Ryan

publicly comment, cutoff. the quiet since the status time the last is -- concluded the and who to concluded comments somewhat, mid-June was FTC their we of then those everybody industry we The everyone Yes. frankly, in with talked. And kind wanted

if period only not of all of they -- late is, to so of process. know, digest with they want forward and an some have some there'll conference adequate little or move update have at The will future, they'll don't And meetings -- as the and kind go in-person move whether writing, what to I these submit there's process, and since is consider. whereas then the they with you forward well with what a the call, the as time potentially and really primarily process we which decide then commissioners choose an this that last to do. they Scott, internally July. if look hearings in but of they'll that staff bit be and want an -- it And something, resets want to indication comments, to true And associated probably is past potentially the

and have kind of right I'm If already way. election something and meat the I'd digest to of along delay there's everything the the I going of be comments world, very it. lot that very, surprised a they're that With process and there's a a think on, of going to that's it is, not here may got aware go through because in lot file if to obviously, there just imminent.

Operator

to any additional And ladies for does question-and-answer management gentlemen, closing it SCI back turn and that conclude I will remarks. our session. or

Tom Ryan

being fourth good out time. on make safe you something be again everybody today. Please yourself, again, We'll quarter and call February. for strange the talk thank earnings on this want Thank I of to stay to our in and you call, will early which so care much.

Operator

We for participation. session. today's thank you all conclude does your This

day your rest hope of you your we the You lines, now enjoy that and may disconnect

Service Corporation International (SCI) 29 Oct 202020 Q3 Earnings call transcript