SCI - Earnings call transcript Q4 2021 | Service Corporation International

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Operator

Good day, and welcome to the Service Corporation International Fourth Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to SCI Management. Please go ahead.

Debbie Young

morning. good and you, Thank This is Relations SCI. of Young, Director Investor at Debbie of our for ending to company's business the XXXX. Welcome review year and results quarter the fourth

before cause but over let actual for release contemplated factors Tom from could website. the to limited to or statements. differ These the state Any those our forward-looking risks that our and Safe and quickly those our from usual, results in by Eric. with with These go future our filings risks made are SEC team materially As Harbor uncertainties prepared are earnings me to, our and subject language in identified and are forward-looking that statements. in projections on management we comments such are uncertainties remarks plans, begin the include, expectations the statements not that available beliefs,

located non-GAAP these measures During found of discuss we A at the release and our also now non-GAAP presentation it certain I'll also our the GAAP that appropriate measures. the our Webcast end out earnings section. Ryan. of on in this and of may can the way, Investors website under to pass on to table CEO, and financial reconciliation in the Tom Events Chairman the call, With be measures

Thomas Ryan

the Thank you, Debbie. today. call on for and thank us Hello, everyone, joining you

SCI team. all, of to sincere thanks want I First entire our express to my

very nearly of on the years, your now are navigating so this world As of proud two we in COVID-XX I am verge for result.

your from wavered never mission. You've

and comfort and our helping do of closure, to healing grieving, gain do process continue You we families best, what through celebration. the remembrance client

you. to families the world-class. our teammates to field worked locations support our support our to To every making make client our employees, maintenance of and real-time our you. protect our teams effort who parks tirelessly mind and office teams comfort ensure critical special and that provide a shout field, to home that the our are grieving decisions our preneed thank And to customers, For company leadership, families that peace frontline providing our out to and thank

gets of matter. the the it, team Our if details

provide Now This the our cemetery by be offer and to our COVID. detail quarter, and for some including on uncertainty going will performance business as for Keeping to the we at around year of color must our the on the impacted morning, I some mind, in we I'm results. hand. fourth business year commentary navigate XXXX outlook. some Then flexible another funeral

full a First, year in in XXXX of year our ended the and We results. with segments. both the terms cemetery strong funeral performance

or year, adjusted and we grew per or million share compared to revenue to the the For prior XX% $X.XX year. $XXX earnings XX%

strong XXXX, full a X% increase impacted While revenues the increases action earnings a sales in year share revenue. a healthy program XXXX per Timely, with repurchase debt growing in volume drove funeral drivers funeral was X% and our our refinancing also preneed we saw growth over our in mid-XX% growth, share. COVID our revenue meaningful even at-need in combined cemetery both primary of comparable and

slightly increases cost increase per average in offset increase We a the lower fourth and and volumes of generated year prior pre-pandemic Compared associated share fourth energy. XX% share increase to a over increase the quarter adjusted funeral the quarter. earnings X% sales Now the as per to shifting a healthy XXXX funeral staffing $X.XX, and quarter with a fourth drove over of the results earnings XXXX. quarter, X%

higher benefit projects construction higher was staffing of offset on the impact a by line, offset maintenance. profitability sales tax new rate. administrative and from as general the relatively cemetery and cemetery On well from increased side, Below lower interest from outstanding expense costs flat as as and and and preneed cemetery the revenue cemetery was growth at-need fewer a shares sales

the year funeral SCI revenues, results home a saw impressive the average expectations into core funeral the exceeding Total Direct sequentially $XX quarter. in sales grew Comparable as an over the pre-COVID look core X% agency by comparable funeral prior and growth all revenues quarter, the XXXX from let's revenues non-funeral to deeper in over funeral our or average. about and impressive the revenues quarter. grew climb up The Now revenues core take million, for X.X% general about $XX X% increase fourth is quarter. sales led comparable continues million

mind, gross XXXX facilities funeral over more In the basis vehicles, points as to and positively these restricted versus increase was the against X% quarter, even celebrations comparing costs administrative salaries, expenses. provide fourth catering. impacted X.X% slightly cremation the quarter. quarter, by Fixed fourth returned full-service and XXXX revenues, is fourth the compared point the COVID core XXX segment we're Our with the year to pre-COVID in percentage quarter the average by uptick increase of and by while This Comparable XX% levels. and fourth our costs virus general achieved In of funerals XX%. funeral the have the X% has were From quarter costs those the rate. core funeral in to offsetting such average, of and XXXX the quarter. Keep consumers life both includes XXXX funeral fourth profit in flowers in in acutely volume pre-vaccine a average. fringe, quarter, perspective, profit saw impact an volume to percentage core increase volume prior gross as dropped declined of down XXXX, the basis of despite increased the sales profit $XX to era selecting compared and ability In fourth XXXX a impacted increased was essentially XX% funeral it sales further funeral funeral. a families the to the the million, being XX actually a positive ancillary

we the costs fixed over we XXXX. while customers did for in let's X% our two-year compounded X% basis overall, say, period XX% or, increased than have a caring on annual more are So

believe So against or well production quarter fourth over XXXX we and are the XXXX. our quarter increases sales fourth of million core XXXX. the expectations, funeral bottom nearly I against our and quarter costs difficult in posted quarter XX% managing growing very production an Both businesses fourth strong $XX funeral for exceeded comparison. Direct unusual an Preneed homes easier SCI line, comparison our

average and quarter. $XXX than more over winning for higher over is backlog $X,XXX. Our an at-need per average is the core preneed funeral increase XXXX than the revenue contract X% now This our

momentum direct more needs marketing focus high-quality a as at significantly and lower programs. see data to more cost through positive in as leads targeting continue increased seminar our mail well generating sophisticated for We on digital

shifting increased revenue to Comparable or cemetery. $XX X% million Now fourth in cemetery the quarter.

higher cemetery a the $XX.X merchandise by in to revenue. terms million $X revenues growth million generated growth, due a Recognized primarily sale the generated and at-need the In of core modest revenue increase of service about and revenue of driven preneed quality average breakdown, higher contract velocity. preneed recognized

for of XXXX. the million majority top quarter, So growth grew preneed XX% fourth accounted A or grew over core higher a is of the average fourth XX% This quarter. increase. the which sales sales XXXX cemetery on by in production $XX

X%, still production. of which the accounted by were the the to velocity sales we for However, of grow able remainder contracts almost sold

continue see program in growth preneed marketing-generated a earlier, mentioned that my led discussion I preneed to sales very As to production from production. we funeral successfully leads

team. a seeing take close improvements the to moment Additionally, rates. to tremendous of number such the metrics we're and set in I sales our efforts want cemetery our key sales as of entire appointments recognize

and year the be they the accomplished could in is parks our profits XXXX, that cemetery saw XX% talented represents points Cemetery by organization without keep preneed production. management, gross increase a grounds sales the in by strong XXXX. the growth slightly that and maintenance especially tireless existed, cemetery and a XXX XX.X%. gross above tremendous not XX% our the prior dropped visitors of our supported $X.X percentage fewer quarter to For full that cemeteries. efforts basis declined Recall our This billion produced the This over no $X we sales in quarter, associates vaccine very profit to year and administration million in clean.

So labor low. were costs temporarily and maintenance

we the prior to higher our parks and and appearance, level with costs the as staffing in margins these selling costs, normalize combined compared make reduced year. Now enhancements higher as energy costs,

let's Now for discussion about a our XXXX. outlook shift to

$X. adjusted At represents As of the you our guidance range. saw to in of in $X.XX, this XXXX in or earnings to of conference mentioned previously third our reflects earnings growth per $X.XX release, earnings of $X.XX rate midpoint our $X.XX per midpoint, we increase XX.X% base range annual model our a $X well midpoint above a historical of The from call. $X.XX a a XXXX issued quarter over guidance pre-COVID the share compounded share midpoint

you the funeral compare cemetery are cadence experience expect and negative continuing as should to due COVID demand in $X.XX we see As quarter. comparisons first continued to about volume We each think XXXX, back to we the earnings as sale. elevated for in the we year, quarter increased for with would at-need

we As the to comparisons more pull-forward COVID volumes year negative making and increasingly on a having revenue, see should the thereby impact XXXX funeral that the the and goes on, impact cemetery from mildly at-need begin XXXX we becomes effect and immaterial would that anticipate quarterly difficult.

effect impact COVID later fourth quarter effectively we offset impact year, will into the believe the from that should material. For not and pull-forward favorable an the be the

annual grow So a share at earnings compounded XXXX how from growth going are XX.X% we per base. the to rate

the organization productive The the forced size. have quickly also changes reduced technology made and processes, efficiencies. our in an have us years. share accelerated last us to of hold leverage take years we pandemic staffing of in other many share would during that repurchases ways our First, believe implement the accelerated We and taken more count two with these with uncertainty to

in to our develop train manage, the sales which counselors, allocate a leads lean had side, we technological organization. and resulted to more and tools has our productive On much on

let's by I we have into to going just XXXX where our assumptions. services some of we're described. know the forward pull affected segment volumes transition XXXX Within period Now of discuss segment, funeral that and to the are

expectations we COVID-related latest Our pull by mortality. a larger and see surges the COVID as being the to affected for in these diminish continue of forward younger population number

that preneed are favorably comparable in impact. Meanwhile, and we're the we funeral pre-COVID to grow the average range single-digit And volumes, mid-teen to For after per flattish case revenue the a continue for to at volume the forecast XXXX percentage but growing the pull-forward levels range range. finally, year. to considering decrease X% from expect anticipating compare we to X% funeral XXXX, production sales low in a in the

correlate cemetery should cemetery with the funeral at-need On volume. strongly side the revenue of business,

them percentage So range. to we expect in down mid-teen the also be

can XXXX we a activity range leads, we as normalized We fare and then with to in single-digit robust expect drive high production cemetery mid- a preneed better but very more decline to growth to compared in returning sales to a much the higher on much base. expect a marketing XXXX percentage when

the mentioned, as begin XXXX, should growth effective Beyond leaner, just model. the I a we approach cohort technologically baby will we operating pull-forward trend boomer as efficient with of year-over-year effects more aging and weigh believe and an

XXXX, with We in will X% demographic to plan XX% expect that, upside over the platform the year and continue to operating in we after XXXX. that in operator, in continue to improvements to the through growth to I we to believe And and range return With turn establishing have opportunities earnings new our base a Eric. make we will ahead. capture it now years to made tailwinds

Eric Tanzberger

morning, Tom, and everybody. good Thanks,

challenging enough all support will us all are of return and of end front you past As We're proud associates, you pandemic, of especially serve. this the those over to reflect closer enable most provided of normalcy the the all have have with been I all X during families of thank who you this hopeful to can't privilege we done the us. for and we or to lines during for our on times. these which have communities, the quarters had we've so X the pandemic, are we to form of some

like flow transition you for results quarter and capital and to then So for our year some full outlook I'd with to provide 'XX XXXX. that, cash comments and of through the our now on walking

with flow $XX prior in increase So $XXX last the of cash approximately in in during million due the year tax the in million an the decline payments cash to fourth quarter $XX primary versus year. compared quarter $XXX million operating is the to to the current quarter million

working modest taxes capital, driven Excluding partially and by operating flow higher million taxes both increases cash million in quarter, fourth to $X $X periods, cash in million the increased earnings before interest offset in favorable of $XXX almost payments. cash by

of over step cash representing an impressive development of full CapEx, again from maintenance a million back which up at adjusted CapEx look of prior and be operating in XX% substantial we free $XXX year year year. in and million $XXX cash in we to $XXX million, XXXX, we XXXX, million increase the $XXX CapEx for recurring the million the as generated $XX flow represents So $XXX cemetery calculate flow, XXXX. full million or Deducting

shareholders. home expanding So been $XXX returning really This and capital deployment year million, quarterly reinvesting first, capital quarter footprint our went highest and capital funeral through no builds exception acquisitions deploying to has recent the we highlight deployment and to in seen key the capital for have a in all history. fourth which new businesses nearly us, is our was

our breakdown. quarter. and a with of growth on maintenance and working recall mentioned spend during with million excited cemetery we were capital let's talk the acquisition development about million we invested are million in $XX fourth very as the $XXX about candidates $XX our capital that of Now the I in businesses call, XXXX. We late October capital perspective, From

XXX the each have I'm Golden funeral again, new IRRs that Rhode total of most in the and million low family. These the report, on welcome acquisitions cemeteries the revenues mid-teen transactions. during those Sheninger, Skyline, bringing to of $XX million double-digit and these closed to seen from Boyle over Lochner, I'd as to Russel Illinois, SCI Oregon homes happy year to from And So businesses you the Businesses XX like Jones, expecting two almost $XXX associates full added Ohio, and California, Island. Miller importantly, and investments to quarter

on We mid-teen Washington also $XX flow XXXX with, to also towards cash brings deployed million $XX again, growth in additional the for double-digit newbuilds and Texas, IRRs, Florida. spend to about million This and helped Colorado, drive low total company. earnings which newbuilds

for deployed $XXX repurchases to the we share during and million full of quarter year the of million through $XXX capital Finally, dividends shareholders XXXX. and

For alone, reduced our meaningfully repurchase shares the the by our inception two shares over we timely strategy. XX%. XX% outstanding reduced by years execution Since now repurchasing our just last through about we've of our on outstanding program, have

to guidance and $XXX our press now So Based range in of $XXX shift of capital. million, cash adjusted outlook 'XX from cash $X.XX, our noted for on range our adjusted to expect release, operations flow with let's for flow million in EPS terms the a $X.XX from we midpoint. to which as to $XXX million again

midpoint at base we back for X% of when exceed to range mentioned, Tom XX% As to pre-COVID our earnings growth XXXX the guidance our comparing of EPS framework to expect meaningfully of earnings $X.XX. $X, a

adjusted translates XX% from earnings taxes. a perspective, So X% cash flow a to generally about cash framework growth growth historically X% in our flow into before cash

of we adjusted be of cash expected pre-COVID of expected This X% million before cash to the equates million, this in $XXX operations to before a cash cash about $XXX from cash normalized operations in for is adjusting from expect. taxes X.X% taxes taxes similarly at flow flow midpoint. our normally 'XX, is So which adjusted excess $XXX XXXX over growth annual CAGR that our million

there when a cash we to So of think in are adjusted flow highlight our that about also I'd items XXXX. couple like

about year, of model earnings million $XX the the in XXXX. that XX% the of just deferred corporate in under be rate based XXXX of standpoint, XX% from million we we I of to for payments And anticipated midpoint XXXX. for effective 'XX First, XXXX topic Act. on pay tax were the million $XXX as our allowed in mentioned, to are address payroll to And guidance an forward half $XXX range One full we expectations. remaining $XXX to about cash look than G&A continue like our in tax required or I'd other million be as the lower will as taxes for is to CARES the

Now with Recently, structure the a overhead million general historically, begun to to have annual and $XXX of process recurring our all we expenses. of $XXX we we've currently corporate around initiatives to have underwent. reevaluate million administrative guided

corresponding to risk modeling and decrease governance I margins. the is which related identified in areas. million $XXX as year, of Therefore, with of you're is expenses fuel-related characterized review when ongoing, result have versus this more would corporate increase corporate XXXX $XX $XX to $XXX around costs that point, per we expect million certain a appropriately As the primarily million about cost, in may annual at believe to maybe in we nature that this to be dollar-for-dollar technology, G&A million segment to

therefore, or flows. no bottom line cash effect So with on our our

So flow XX% per taxes, growth an expected line to expect which return growth framework we before X% is with again share X% earnings operations cash adjusted trajectory in we cash our XXXX, cash to normalized just from looking mentioned. to forward in a to flow growth that with

So capital in in some on XXXX. to deployment, terms of moving thoughts

and capital $XX million also to with includes million midpoint, spending of comprises for operating for well up experience the and our of maintenance CapEx to as cemetery towards amount million as $XX not million million network operating $XXX but being the funeral maintenance This deployed maintenance capital. locations for used customer maintenance development million customer-facing at normal $XXX improve expectations another $XXX locations. towards makes $XXX routine This and cemetery at year. is of corporate capital infrastructure million ultimately field and only technology development our At primarily CapEx technology, this support is the CapEx million. about $XXX remaining about $XXX Our the cemetery

we to million midpoint, more funeral as $XX which the addition excess our to acquisitions In and of to continue I new $XXX million to say, expenditures opportunities, capital. after-tax construction in million in towards drive together, of meaningful capital $XX home IRRs well $XXX expect cost of recurring million roughly at these deploy

impacts expect And for the much capital So billion our shareholders. the this of follow well for from deploying to the over same additional leverage a Lending debt-to-EBITDA from liquidity, course, X.Xx the balanced beyond over of support past, of deployment value Xx debt disciplined free relative our And approach, on and increase of for strategy our flow, part to which in quarter as targeted as pandemic, the as towards past the several the predicated X.X the maturity of forward. seen XXXX, end of really this net robust looking strategy year quarters just us cash continue We to summarize of years. expect our the we lap profile. a as to to at highest continue at under latter we stable to to a this capital year as we $X we've is landed EBITDA strategy, this our the this our favorable moving to perspective. ratio stronger end noted leverage is back range you've

that closing, XXXX, after So in results those XXXX. very a very we exceeded we pleased in strong are

our has last We very compassion appreciate members. challenging and and professionalism is years. our our two are persevered remarkable, how each most every of the truly we The over of proud have team one team teams and demonstrated

have XXXX. very forward another excited we As we into momentum year, look to the I'm moving forward about

Q&A operator concludes now back that session. with turn you So remarks. over for like the prepared to to our that, I'd it

Operator

ahead. Scott [Operator Please Oppenheimer. Instructions] Schneeberger from with comes question The go first

Scott Schneeberger

that we to think for with I It and see quarter, the very pull-forward preneed quarter, you normal remain you. sounds Could on that is based cemetery that funeral really you moment. period, everyone. you XXXX a of want preneed. while within we ask quite Thank I'd third would cemetery from much. the and tail to bridging reversion more will of that, all sounds guidance, persist a reversion like where your fourth be particularly it anticipating this I Thank like sales period? quarter strong Good sense at in kind crystal presumably the to bit you get ball XXXX little start longer. after what second like that and morning are guess the

Thomas Ryan

on What on an COVID at-need impact Scott. we cemetery obviously think impact our revenues. is, has funeral again, obviously had business, Sure, an our

point, year And grow the for are to about at for you mid-teens so let's impact categories. you to funeral comparisons mid-single think digits. cemetery funeral, our good about think But quarters wane, are call in at that volume, around to to We double kind digits expectations we're talk to that's on the kind going and begins And last going looking we when very our about. about, turn three those as EPS, because this the saying, actually as two get that down we're side, it of talk to of feel we'll while it, cemetery preneed particularly year. the mid-single low continue of your digits

the did do better how think with that? we efficient. are a train, that I more say, this much much effective is in different? because we technology to have it force more did that is better our sales our leads, have, that of ability and learnings Or opinion tools You to we just effective you And and efficient and why access

And of it, be grow And while again. base off think it versus then down let's mid-single so begin down. it XXXX, to that, this we establishes from digit we XXXX, call new and, will

say, and the itself, And coming managers got -- the to I'd in base at-need lead to from efficiency to new a view we So are to using that of that that's a, force technology of train. off by the and of manage, And happening that's effectiveness develop of is clearly our going deaths we that's clearly. impacted outside world with go everything be something control. preneed the and is the really kind what's way better sales sales to so still

Scott Schneeberger

this switching for nicely. quarters amended death. it's I'm revenue COVID-XX will back to to contributed The much really cemetery two And how is been funeral. How financial and COVID-related a at-need that per contributed I is to about contributed? Obviously, program funeral policy much assistance per long revenue been Thanks. FEMA funeral then has funerals opening that service lot. since assistance matter? has And that But the program with curious, assist to for up anticipated -- that service how -- appreciate persist? that. over has bounced has financially

Thomas Ryan

just to I The that link the us on people It's that. is we there. ever a done one our measure on tell So little for And would you that, very put website. thing very feedback it. have difficult we few went

So we're that of the consumer. big of a not seeing contributing evidence spend to our

what I market over just fund on is trust Scott, clearly, think the it last trust funds. if that of or side, income, is, kind the those our to three preneed couple things they're returns a the all high-teen you look in of returns years, at have mid- our accumulated returns

at-need. are having a and bigger fourth are that and side, a that real of in is it for service. cremation up remember, particularly to return additional what's higher causing looks seeing But service, and And like. the So seeing preneed compared what burial last year's on a is shift to impact at-need last really the too quarter on saw to acutely we're and now people that's And big most we're XXXX. out spending choosing the but we of year, services

are well kind we these would And call in our real that also as are -- by family catering. purchased of the friends what a as We flowers ancillary revenues. our rebound be seeing of

strong. that things a of but only they are these So while went have they've and back away incredibly not come for kind come back,

well we as saw company. we're side, beyond flower the ever on anything think I a

back look are the XXXX lifting. at my up step you comments, of So a I I'm and our And really if base, things think average is saying X%. those

Now I'm with very that. pleased

period, get pricing. happy, but it's inflationary I unreasonable. can think you a you think not mean we're if I X% X-year over

you just back. is do lot of any try we of numbers and some think I not happening, positive But FEMA. a unusual real compare of things So as the to it look evidence have

on don't Now not out have impact don't could money the there. pretend in I there's what people spend, there's anything material. it's want think that to but spend, and want to system an can I clearly,

Scott Schneeberger

thereafter? And But it been could One This pandemic a for that. you question question, I prior a give essentially some It depending sounds what looks to appreciate be to going in. this trending is right. upcoming I as if it CapEx is have you've of you sneak the on CapEx X% X%. up upfront. XXXX, sales looks percent estimate just revenue. All like like your the around XXXX to more, just increased see that's it a going that's you and infrastructure spending. are about I'm the to CapEx revenue reversion back of percent if X% like curious, to technology think in down just on way XXXX we a a going increased new bit elevated little be to forward? of going Are XX-ish in spend. what's behind X of kind of more or CapEx we just Thanks. And a this at level

Eric Tanzberger

it's There's here. happening Eric. that are a of things Scott, couple

let's First, talk cemetery development.

per we in spend So all as equal, going always development know, we're we've you $XXX being said, that CapEx else think year. X%, to somewhere around million cemetery in

spend the XXs, frankly, didn't We the last the years. look at financials, in you'll development. cemetery that two for notice that spent If we in low you

some this had. that think kind cemetery thing to So be is I up our of X notice to development year, capital of is momentum that some going the higher we in you have making

that projects that up hung in call million. let's those permitting got and And things like California million just some But that. $XXX to are in of $XXX

a that's and bit So normalize. little to anticipate higher, I that

going that's X% So be metrics to part the the X%, component that going you use. down to of back

before, cemeteries And kind normalized that area spend generally a million things back overnight. ballpark. that gone what maintenance I through, the can't about the has call. into talked The perspective. our grown about $XX that that And that's that And funeral homes of we've million investing of from been maintenance my was infrastructure $XX which so. as remember, this through in we to some that had and X,XXX so strategic in thing are is I'd around then $XXX-ish locations going kind XXX or which you of or is million do I've the conference corporate other CapEx It you said that tell was

the customer-facing going things is we upgrades, investing are about multiyear life project the we in celebration in customer-facing all infrastructure 'XX. which such such on-site of but I that's that of network addition we So starts be Ultimately, probably that some technology to cetera. reverting for a wouldn't to et characterize to that HMIS+, I in that's think as also again the where use as mean, eventually use software back

field or XX part as years. to about to stuff I for some kind well the another the be technology in maybe us year ongoing operations, think we to of we of we're through office of to talked months the which is of of the want going doing. reimagine, We've back efficiencies need a also couple get and bring some so, that's

to answer cemetery development So question, your back. reverts of kind is

maintenance maybe a think starts into longer, another for and back. for I year maybe then 'XX leads it little 'XX, in here bit is reverting

Scott Schneeberger

real that's questions. taking Eric, Thank thanks you, for my helpful.

Operator

question with Please ahead. comes Joanna go Gajuk America. from next Bank of The

Joanna Gajuk

thanks morning. question. the Good for And taking

was wondering guess So But I it flip CapEx. -- guess -- higher. this number thanks -- for like I it year. us Because is then if on clarification amortization right, the depreciation D&A, you me could seems and it might I'm for you And D&A has actually I there been CapEx being it know also Correct historically, as than the guide whether relates the I can that a because to? to also higher about year, number don't wrong.

what That's how D&A.? we Thank you. So think about at. should getting I'm

Eric Tanzberger

I a think D&A do. really to be going bit I higher. is little

on sale, is the amortization, the the But probably in to basis. that, that sale $XXX thing D you area. I to the million to a relates it's depreciation. general one properties is of somewhere that the Joanna $XXX remember the cost cemetery cost $XXX million, of around recognition of is related noncash million part, the remember, The $XXX sold million preneed to have think

perspective, going cemetery on sales it do relies is somewhat the preneed reason quite different lot that's a because that to year. know, being from what So variable up than ends in area. the why as the property it year going are we last to this be And

of kind biggest described variable property is I think statement. very those to that's on a to about general it I of kind company that in XXXX. that for flow amortization is help see model somewhat to and you it's it go our So But the D&A, you unique statement. with kind that cash you numbers just of cemetery our which of the could

Joanna Gajuk

helpful. That's you two in did on follow-up the Okay. I more, X guess QX. And deals

guess, demand clearly, some was pent-up last I deals these closing So for there year.

higher? year kind things expecting expectation M&A? more in quarter. of about be year kind of activity one there multiples? Are think I happening kind moving terms And you there or of will in Is you was a change last just to any rather do kind was just this of guess of So elevated requirement or multiples and this delayed the how were

Eric Tanzberger

to to said Okay. is related remarks, Well, going -- the 'XX we'll $XX million M&A. year this my that in $XXX back, official reverting our think guidance spend as in back million I the I to

itself said, handily, the up kind ended as overnight. had So that with and about being last pretty last excited I down call said come presented beating activity too, we that especially the I pipeline I we shuts we think And of that the of in in that the that were fourth I to the pipeline that quarter because quarter. year. don't in said saw in somewhat alluded my of fruition year, just that to and And fourth remarks, October

I type the characterized the it that some excitement as I that, in same anything say want say that of guess when think early the I fourth call is, the we Now we way more talked continue than quarter in well. to it don't excitement we to best about to have in

Joanna Gajuk

think? excitement And any on to pressure would that multiples

Eric Tanzberger

No.

multiples, with to the we're low pleased size. deal depending deal and able in of of pleased on I the after-tax be mid-teens with of kind to we're no, type the the the we're type type going and produce. with the But generally, we're that think double somewhat to digit They're I getting. think we're returns of IRRs pleased the

Joanna Gajuk

Great. aging commentary around Okay. question, the my And last so demographics.

first even it which you I and think put the maybe. in release, press So was

'XX? a So a kind that a of that? more it a to it's more we're in getting going impact? finite be to Or you. how benefit expecting we of like more meaningful this you kind about of should to you commentary closer, Are is think where there kind concept of pointing there? Are Thank but see period is the after

Thomas Ryan

which is the geared non-vaccinated tends the about we demographics couple were the COVID in the look. say, related. impacted, pull-forward wave are towards concentrated that any people nobody younger about mentioned number And and had of to the from I a younger with were more post concentrated, trying or I'd think I'd that say And 'XX nursing be a was when Joanna, effect not cohorts impacts Omicron and impacted, before vaccinations that non-market to both Delta, say, one, what first say, Yes, a share if versus home. that which think that's potential were we're I more that really things because let's think even comment or more those you demographic

become sales, things first the unfortunately impact, more health for a about the that's and the to to term, trends to get a you I Investor believe, think lot less about up is Then our think of longer is I probably is we a XXXX. So back when year, bigger waves impactful. mean smoking little we'll baby when have impact to year. explore negative car referencing even older the few time, you that going which think we're years, next this our then impact to there's Day think the near-term out say, And alcohol so boomers we as I there deaths, look, one continued, more -- many every get not that revert

And so closer closer. and we're

more we been at mid to anticipated about think we've ago. So particularly kind -- decade the originally we this I we may the think have managing part doing expectations, do than we and as years of that five look of middle

Joanna Gajuk

you. Thank

Operator

with Credit The ahead. Rice instructions] A.J. comes Suisse. question Please [Operator go next from

A.J. Rice

if Hi the production I could ask number. first I about everybody. cemetery wondered

said up the on What averages. year-to-year, what preneed you you on didn't on high-end is increase basis. But It did I there? velocity and really think going you sold like the implying pretty that see sound that robust You're a a was XX% stuff was X%, in probably with that?

Thomas Ryan

AJ.

high-end I prior sales, down slightly the we actually year. think the -- versus those saw on the

concept X% it bottom. out the the call entire the inventory, whole if And So you're tiers, building of was very say, the average. remember right, way you is tiered possible? the that about was was how the the top, you middle X% velocity, all to And it,

necessarily And so price about a inventory. a increase, you level not X%, it's if of think different it's the

they're enhanced So as at stuff. we over of the opportunities and more up. last few look I'd And years, We've out to the we've saw people the that more better seeing are and cemetery. They're the the coming want particularly beauty stuff cemetery. quality that say buying volume, higher they built of

how So kind plan of to back come. of for and has out And that's kind original it really to build was our cemetery they worked us. will

price value So X%. necessarily. that in seeing per we're increases driving It's that's revenue case in up chain not of average buying

A.J. Rice

as year-to-year trends CPI think I you just price X, at growth, some with Okay. more other a a your sell that. average When like to the businesses, a to But increases and you both that current little be last relative we increase to inclined at months, the good in some remarks, all in and talked you the of richer about compound line know service lot what you look look prior about your and Are But to inflationary annual see X%. your CPI-driven indexes like? bit trying more have cost of move in looked inflationary on here absolute you're you referenced tend and pretty it's increases It that? pressure. still it X the if inflationary sounds pricing the XXXX, business price times for side,

Thomas Ryan

market-by-market A.J., we it at really try on a to look basis.

say and a perspective. national So I to don't want generalize from

tends So most of to with cost labor. correlate our

we're cost So say, huddle labor we to increases to employees, out this how as together try for and a we the a have going seeing plan to got facing. to to up and if at we're if way we adapt here's to these it. we're what pay then look get team that We've figure market, is maintain key in -- the let's

and that's would driven I so local a And the that market, clearly, ideas, that's pricing have conditions. market by thoughts approach but the probably some tell that really within most being we way you we --

A.J. Rice

those make needed. ability you ago, relatively as what paid not the Okay. have immune been to And is to year adjustments People there's any a adjustment people in price your sense? price so that resistance. perception There's a and still

Thomas Ryan

We do, A.J.

I we ourselves. do because think that want we're sensitive done where to that, very not we've to price

to back, we competitive few made in side to a more remember the that years business really adjustments, you cremation our be some If particularly of market.

it's I absolutely market And in made come are no monitoring that, when we our we've we those like that. So feel adjustments know back sensitive to where face.

labor price increases, inflation going in costs. be see whole which increases. issues, "Hey, If the seeing some And I that estate to approach has in along And game going with then real from how the to so industries, have with those there's saying, They're people price you the let's say engage other hot market, it's are we pass far But we're careful. labor losing or a again, we're try not inflationary we other solve to Clearly, year. where ability we plan to to say, we're this market with folks, really So again, system, can where wins. time need in everybody if time, egregious to be competitive to coming think it do let's and the deal we a have problem? come I'd worked. up and more

A.J. Rice

that you to prompting that's if And to looking And there think a Should little deal the that Or then everything is on activity people work other the pandemic? normal transactions. bit other Okay. quarter. maybe of there the aspect out any Or in some maybe have as got hadn't been put make hold at planning see pandemic dynamic happened? pandemic of burned the that just just with. lastly, transition wouldn't post another therefore, coming of during dynamic succession a had is with these deal they've fourth this just to sort any about we fruition

Thomas Ryan

think all a I above. it's the of little

have that kind For aging think of continue sure, an you problem. to I transition

businesses. right, So every year, generally generally -- buying not that are businesses generational the we're they're start-up they are business,

So is impact. I definitely an think that playing

of couple some the making to everything through enjoy years from and that last happened having saying, is talking "I these COVID over are they're want gone people life. I decisions, that's to think

referenced, pro had to that's we're your forma have business. sell to any are what's best of Clearly, what think things think onetime that's bit And about force do kind think a to believe will little a clearly volumes we're deal And go our to this a time. together of let's seeing period face And on going a for point I negotiation. what an selective, come it, up impact. pay flow more we're I we're Eric kind excited more going And again, those so I I think not when And all of to grow. starting like activity. we now. opportunities and but the of business seeing we're time for little be of But

A.J. Rice

Thanks a great. lot. Okay,

Operator

The next Raymond James. question from comes with John ahead. go Please Ransom

John Ransom

you for I'm a at Boomer. me mad for young a boomer, guys still I'm of mailer dignity. kind Hey, that but sending I'm

Thomas Ryan

It was very John. targeted

John Ransom

to XXX,XXX funerals, what's able look get your -- that? you the what that's during And look the over over So as question into kind the next, is, current The pandemic. Have a of like, healthy I years. year, we say course, little of about Yes, I am which years? pull-through of a one is the your out the to euphemism thinking two if excess full trying years, last pull-through, been just over any three get that nice had excess at let's is current you insight five

Eric Tanzberger

Yes.

different bit first That's earlier what I think I little the said a in say. pandemic. to it was than thing we originally have the

But ancillary First one-third, us one-third, think we one-third, maybe even rough say. XXX,XXX in we've deaths like to much thing, tail and is are event. very 'XX it and first trying less bit estimate. said one-third, which half I were that. as and we XX,XXX really I XX,XX of what that little figure it's trying the I'd all, the I more a think that's a COVID than the 'XX go say out. we first not very off, in we X-year XXX,XXX one-third. believe one-third, When say, to a much the that the to was is second been We're think longer learning did, I'd It's is half roughly thing of we for forward And just

this of you update I'm we'll you if But experienced percentage sync go, So put when there. somewhere you -- XXX,XXX that's I'll very through start and as tell the and have learn about way and XX% as example, that we in to think it's up. move we that's XX%, get talking But What we I'll way, surprised through we we'll too because precise, to we yet, 'XX, of haven't that to perfectly best is go. area. accurate. be we and think we'll XX%, continue think XX just we'll foot as learn our forward forward. for

John Ransom

Okay. while. product revenues tough just sell no And to a is finding But I imagine in this, salespeople then about a would gig in recurring kind you this commission-based of a with flipping to XXXX. haven't talked I

metrics, Just kind maybe you've had turnover XX-XX recruit your to do with I change different to comp if keep payout, there mean, kind to the rule. the had backdrop. of in of people any or And productivity talk things anything? about to But you're sales have you maybe going to if because -- structure what the that obviously a of anything difficult humming force

Thomas Ryan

remember, things in we we're all, about uncertainty, counselors actually pandemic, lot it, walk-in one generate. we started, the have Well, John, being be of going activity model. leads I because know generated. didn't leads didn't the to marketing the kind We through, down model to post call first were leads pre-pandemic a what think, the of probably I'd lot compare is just follow-up we're able Because getting to to of we or a of we XXX traditionally, when of XXX did to

at and they effective. travel and customer technological the the were really So leads. recall these go "Let's insisting weren't same and we that, manage sales the tools ability happened down all when which it. give then launch had this down people in pared you relationship we software, incredible same people these best incredibly marketing have the is to And started leads shut time, we to that use encouraging but we which our said, At you'll programs, what management lead on leaning became and use to to have you didn't time,

So because force more We road relationship were of team. data sales what a we were the much to manage the had productive we all capacity is customer on a We weren't off more as management we management. sales using found as this time.

apply training. We So we knew could effectiveness.

have this of much really what's is are more we selling effective. So a people happened that lot so less more, out

we deeper I what think same allow more We thoughts that effective marketing we're tools launching this. to talked as So go We actually that believe we're leads can are time, about. us will about have. At going more with the productive, on be effectiveness. our we generating we more now forward, think

headcount, too. sales So I force, by interesting the allows in sales our now, people. driven an less dance to there's leads really you to hope turnover, Right think and the going point, so much again, be to more leads have it's lot some productive. at being most us the be is productivity putting a capable to effective that tell to a I'd of best hands the more But and going that that it's we're begin grow have many we

John Ransom

do enduring the most have response? you a Tom, on of looking benefit now from mean, say might or back I think you'll been it this year so, the COVID

Thomas Ryan

staffing efficiencies, some learning think got think I mean I We've to that. and I impact. how sure. gained biggest the manage For in it's we've

the that's -- right? to giving may we we plane on technology. excess Investor we And biggest what last issue had That's about don't think I is this excitement the we growth. at back. of back-office saying Clearly, X% to and COVID. I we're But the the by X-year of some try achieved we've think the don't periods, of that to we'll And of sales sales have learned efficiencies We Over But guide production. the growth on we've related a X- real cemetery We the a COVID. believe to X% more. think at some growth, some is before new grown you We're think mentioned when leveraging going we to back. little Day, it accelerated we isn't this XX%. period, used then we And think we're X%. to over talk really of we accelerated. compounded, it to

for base going probably wouldn't happen we're at off So if a that's to and we're to of think what's grow new didn't And us. begin XXXX that exciting. could achieved it COVID to I camp have

John Ransom

for chop Got any deployed me. cemetery you. wood And last there is to Beacon side, fully the on more Is at that X point? with this

Eric Tanzberger

increases but uses and there's and ongoing to It's answer it's do to the of fully deployed. that type is, deployed, John, of you'll to But forward, improvements out so Tom want at this question -- just rolled want that do a we going point, that what it'll see lot we as mentioned, thing. be technological your

John Ransom

thanks Okay, guys. Appreciated.

Operator

the like session. I concludes our the would to for turn question-and-answer back management over closing SCI This to any remarks. conference

Thomas Ryan

or call earnings first call late being look to forward quarter for everyone, you, to in May. our talking Take the again Thank We you on today. early on care.

Operator

has for conference The you presentation. attending now Thank concluded. today's

You may now disconnect.

Service Corporation International (SCI) 15 Feb 222021 Q4 Earnings call transcript