Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Service Corporation International First Quarter 2023 Financial Results Conference Call. [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

Good morning, everyone, and welcome. Director Relations. Young, Debbie is of Investor This And of first our going to quarter. an overview be providing business today, we're results for the

over the team that Before me our plans, Any prepared with or states forward-looking made the projections statements. expectations go for comments management we language. are safe our remarks, by beliefs, harbor future begin quickly let

GAAP uncertainties and from These forward-looking These include, differ website. cause materially A on those found and actual in to, measures identified in non-GAAP could are those Today, our risks statements end that Events our are also release will the in financial tables but on and at reconciliation with discuss our also uncertainties measures subject limited not measures. these Investors and the our earnings release are results that the certain the SEC to Webcast section. and statements. contemplated risks filings appropriate can available such of of our be we the factors to in under earnings website to

it that's turn way, out the Tom CEO, to opening let of Chairman me remarks. that for Ryan, Now and over

Tom Ryan

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

a a moment tenacity, there Chairman would I begin, I away mentor Without vision and honor of the XX. tremendous Bob's was want in service to professional. Bob XX our be Founder age Before SCI. and Walter. the to take consummate Emeritus, at passed He on funeral He February no

results. a He you the be then with remarks morning, he our color having on and going all for cemetery This solid detail all be business provide known man. performance created greater this begin quarter forever will such for I'm some and from and will our around high-level funeral to grateful we're some and with my immensely. company We for missed learned better great

from in but with the generated of our $X.XX, first was share down adjusted pandemic the which impact. a benefited we per from prior which line significant For quarter, year, expectations, earnings

pre-pandemic We rate continue $X.XX to to doubled annual see first our significant growing per over at of XX%. years earnings of have per X earnings quarter share compounded a we of at effectively share, results. Compared growth share from ago, per XXXX

strong or while preneed the on Coast, sales at above our were temporarily experienced events and of metrics weather fell which expectations Funeral short performed expectations as sales cemetery affected our production internal cemetery unusual we at expense impact some debt. lower in the activity share incurred our of interest count favorable slightly of a of our line, a higher on variable the the offset rate properties. lower largest rate Below impact tax West

let's take revenues a in prior year $XX comparable volume. comparable funeral the Now funeral funeral quarter Total to declined the deeper a into about X% over quarter. or core for due million decline the results primarily look

to XX% Although anticipated about quarter, funeral comparable than compared year volumes XX% levels. core were we had by volumes the prior comparable and declined quarter higher XXXX first higher than

while and impressive reduced absorbing versus income. revenue volumes per profit profit to a even effects due of preponderance translation mix of XXXX change, profit the accounted million over revenue the The decreased the gross service perspective, the XX%. prior decline cremation negative core percentage trust funeral about X.X%, an average by year Our after profit to lower $XX for declined gross decline. currency the grew fund From

selling growth with the solid quarter. growth and slightly higher the in moderating production correlating costs fixed costs preneed for funeral sales saw We in year-over-year

both than the averages. more Preneed $XX sales impressive million contract showed production over quarter funeral the and XXXX. and Direct X% Both first of channels core an in sales the or SCI grew velocity growth

preplanning awareness marketing sales leads in and preneed consumers' see continue We openness production. with funeral strength to elevated to and continued

revenue cemetery a record-setting off saw compared comparable to or million to coming the $XX shifting cemetery. quarter. year XX% Now prior year we first decline, After almost prior when quarter,

this accounted X% decrease. revenue to available to and the cemetery to accounted decline would million versus by few purchase a for the atneed decreased continue The quarters $XX preneed revenue revenue it prior of quarter. compared families or for versus year remaining preneed by $XX next of of the prior in XXXX. over decline for year revenue higher preneed as the that favorably the million developed as we recently as decline to property sales more the trend million X% percentage declined preponderance XX% core $XX constructed production Core We compares sold as property is our expect recognized

quarter, declined XX% sales million production sales decrease a to cemetery by primarily or in $XX production. first Preneed due property in the preneed

into the compared to to impacted showcase also our our on custom While property was Coast foot the our decline inventory. we COVID-XX the geographic a we both cemetery traffic impacts Multiple by unanticipated ability year heavily and California, adversely to production. design experienced prior property quarter, affected particularly which properties premium West anticipated severe events and sales rain and pandemic,

California last impact cemetery West The selling velocity events production direct markets. core decline on major XX% activities. wave on related Ming our celebrations, Ching sales of our sales markets. other Coast We Over our of California versus our as a and occurred rest disproportionate storms experienced of saw impact a the businesses in and had preneed decline a similar

higher parks not the X-year On was perspective, get negative annual quarter than news about from coming sales growth our period. months. put good rate and first deferred, to back sales Preneed impressive the first these XXXX production our X% our diligently even Still, customers with proper representing are those over front, the sales work over compounded its lost, we'll the into effects weather, a in to preneed quarter, XX% the cemetery production

profit higher year XX% in in expense, costs saw revenue cemetery profits million prior XX% percentage experienced We about other the gross all but year-over-year. moderating Cemetery accounted gross preponderance for by part, growth The dropped fixed the the most quarter the to of profit maintenance we $XX decline. from for and in quarter. the decline declined the

comparison expense in Now our more are slight quarters impacted quarters earnings let's rate deliver an be growth favorable for as our From year-over-year by outlook discussion first shift our perspective, as of the dramatic meaningfully impact when COVID-XX. the a the debt. per and the share year-over-year offset to XXXX. the expect able was volume of higher coming the and will impact over we to rest last of effects variable to revenues negative repurchase of XXXX higher program cemetery share tough We about the the declines would quarter interest from of than believe

team thank day every all families, for other. that you and SCI each for our to Finally, I'd like do our the communities entire

great. are You what makes this company

I'll With over call that, turn operator, now Eric. the to

Eric Tanzberger

where unwavering which kind serving start want client Thanks, none industry. Tom, everybody. families morning, really commitment because communities with to good the do is and this of so our all for truly that I in Tom going off second left I'm to all they to associates just the and their XX,XXX thank to excellence, of SCI well

talk So results, also I'm quarter, bit our this first and finally, financial our position. remaining flow about to our the outlook during morning, going quarter fiscal the year walk investment little through capital a you cash

had in strong COVID we impacted time. quarter, year we cash prior reported continued at as our operations to be history the activity that flow recent by the in that flow recall seen highest from cash So positively

cash flow we the that results. generated million. lower this about cash expect flow while flow operating are of to impressive prior these still $XXX than items be It's quarter, really and cash driving So lower are million there the quarter, during $XXX we year X

exclude quarter-over-quarter impacts just the the was equates First, due decrease operating continued cash I to from when impact divestitures that the year lower quarter in COVID, million about as the to $XX And of from flow mentioned. benefit you as primarily to income. prior

amount our Next, of interest $XX expected also million the due interest of rate to payments increased floating on an higher rates about impact debt.

under in resulted associated quarter million, of in year. due net primarily the cash a results compensation $XX XXXX just during February strong capital this paid working to made use incentive payments our with and of Finally,

our quarter, and businesses, investment and growth $XXX I our want current to to the funeral new now And So accretive during invested cemetery shift million we capital into acquisitions. activity. opportunities

continue also We shareholders. return to our to capital

down million the was support first-in-class current $XX of of So and primarily cemetery our inventory our cemetery enhancements a development, facilities, little We $XX bit. into $XX which for back let's of and relevant capital investments creating parks. maintenance and of million million for our sell that towards million again, $XX businesses, existing new counselors comprised break and at future deployed to systems and cemetery our initiatives digital for

So in full our for in guidance expenditures expect year maintenance million of to to capital total, we million the to our $XXX range be $XXX XXXX. total of continue

expansion to and the quarter. towards estate, Specific this of our growth was estate, and we expansion new million the of to invested invested real capital, estate facilities homes purchase of of we million primarily In further cemeteries, the terms existing with of real purchase of adjacent This cemeteries. construction of one associated funeral for which allow park. $XX will that high-producing real $XX

SCI to Connecticut, current to pipeline X we'd Based those total closed the confident like investment Pennsylvania, activity, acquisition transactions million family. on the and acquisition front, tremendous transactions we of acquisition a remain our year on about to million. full million $X the for LOI other Louisiana $XX On of target and under businesses in of welcome and we all $XXX

$XX million of capital during of shareholders. repurchases. and of $XXX to returned through we share Finally, million dividends $XXX quarter our the nearly million

and million about than So prior higher quarter, higher year shifting which of also touch $XX about than the on expectations. briefly gears, corporate I'd $X.X million G&A about in $X like to the our million is maybe

due to compensation our which return was compensation are increase to to long-term primarily plans. related well tied shareholder deferred as as plans, remember, This compensation-related expenses total both

G&A expected of per for $XX our maintain to range we million forward, quarter. $XX corporate million Going approximately

results during and incentive which short compensation on the actual range quarterly long-term company this the However, will performance will the depend affect plans. within year,

I now our we'll talk about a financial to to again, bit little Just position, and want outlook. our shift

XXXX comments that range Tom's a cash we our $XXX I which midpoint. with guidance, million also $XXX to operating a EPS said in confident outlook, was on adjusted flow to million $XXX million existing Similar just remain of our

which million credit our financially liquidity hand, million at well profile We of just continue $XXX cash $XXX facility. the over of approximately on a bank quarter, positioned maturity be favorable with long-term of billion consists approximately and to end on available very plus the of debt $X.X

net normalized the past to anticipated, Our of quarter, at the activity has range of leverage leverage now of now in X the or Xx. the And a X.X X.Xx. at credit end debt resulting being target as EBITDA years, about our in to COVID facility, consistent our end EBITDA leverage was low with the after as defined waning,

the specifically However, we as that of and towards a leverage the lower currently interest bias towards of we environment leverage also believe our rate range managing near-term in. are target we'll have the result end a our environment

in cash invest flow, through our So sheet our maximize to our strong track shareholder strong has which well best capital to highest which continues to believe use of balance will we record, been closing, value, us to remainder XXXX. continue position the and the

would operator, again now with like our contributions But all that, great team So operator, I our concludes open to the these during like remarks. this the questions. for to to with call would quarter. thank their that prepared for of results up SCI I

Operator

first The Oppenheimer. Schneeberger from comes with question Scott

Scott Schneeberger

all the start the Coast. I we curious, weather year? cadence I'm dynamic out anticipate the sales the guess maintained over the I guess with just of should preneed understand West I on You've would Gentlemen, production cemetery how the I And guidance. balance of

seen I think perhaps comfortable? think or low Ming see tied are the Should for in single end Ching now? April preneed Festival. what year digits. to So the Or might that low in we you firmly range of What we you for was guidance April have still cemetery

even weather little first was a Just the that seems because color bit like a with bit on dynamic, it soft more in it the quarter.

to get that going again... what's accelerated wondering Just

Tom Ryan

were $XX million. One, example, I back. XXXX, to million. sales were large good were sales in 'XX, million. you it it's $XX were take as think if $XX In they million. million. $XX they're they in In Scott. XXXX, 'XX, And 'XX, $XX Sure And In they step large an just our

best the we've X of quarter is years. It second first sales this happens in Godzilla. just to the So had to compare last high-end back

way first cemetery the probably what and that's think I about sales happened. think to So

wanted that as first about in the So hit our we we clearly, the didn't we think targets quarter. guidance,

can get some I in quarters I know back. back get the to think of we think don't that we we all can come. miss that generally it

is I lot annual We've year you're recognized how a there. first as much probably lower I of were But So out right. now and We'd for the one probably and all our think of able it and to quarter. levers One into other middle you are that we're going think a we gets point recognize and great think property. it sell guidance, pointed there sell of inventory towards are annual about where deferred range. it part developed built to the this it we last I upon That's completion. thing versus that you selling

So there's that help that nice that share coming mix better quarters will of call are per a recognized I'd coming us guidance. the streams revenue earnings what in achieve

On , it's, last as good a wasn't good Ching Ming been It year. again, year. as

a those a we but, I be Ching pretty solid markets. again, back little think to trends when see comparing March, are better we're think than April against in that you about Ming it going

years to everybody, super just have back X really XX% ago. I I said really, that feel results. these I to about overall, excited happens ourselves we're than we'd comparing in if very were XXXX, step just we'd to it And point difficult So kind think and be And we we're higher comparison. a of so back good.

Scott Schneeberger

that the in a Got first quarter. in color I'm it. it areas? Could And year, contributor guidance you're more Appreciate Is was occurred sustainability It come? specific revenue you on pricing going looks again, to to quite for of that prices. price these the strong to the the there. there average Is speak bit it increases broad-based? quarter? per it meaningful funeral of over swing apparently service, is was like in sustainability that. to little the maintaining Obviously, the more the the but

Tom Ryan

Scott. Yes, Sure, is broad-based. it

across seeing country. I the think it we're

trends If you you mentioned then is trust face. kind growth in I organic it as look which going year-over-year, that about probably year And rest get the One the the at X%. smallest. to negative to our the basis which happened lessen. And XXX going currency, is what was have We approaches Canadian were about cremation change understand of we And income, actually X there you all change, think throughout then the the cremation points. have we piece. mix mix of the

as it be So quarters, . so we'd less on think of a normalize the average. to about would expect pushback that coming you

year-over-year I trust comparisons better. same thing get then would think income, And generally to with we the anticipate

I bad year. think the in quarters moves the moves of last and bond second occurred market market stock and third

of something going to you're be to that's begin against to So going drag. compare less a

and be the rest average should to throughout in year. the the good is think we So shape in good of shape continue

Scott Schneeberger

of And now the I for sneak there? repurchases it going to see we Or anticipate reduction? in am one bit The X.Xx going one manage to Just quickly to what low bias to getting that last Eric. are range and The end were about little into more, want dig to leverage, the there. Eric, slow? share everything, to and should you debt we foreshadowing elevated commentary a

Eric Tanzberger

going Well, to the and we're we're consistent, opportunity. to always Scott, deploy return relative highest to going be capital

we've because market that's transactions rate a off time, although of floating reduction, in us year, X.X% note of this debt some picked But seen of debt. period due of over time last long had lot debt. a we X% XXXX haven't You a the do open

As rate we here have floating X.X% sit debt. you X%, today,

basis of when is you that going So think still on something return a such, out lot of than trump debt on relative the menu to what a that's of the highest what return? in we've have past. X.X% is that a but think pretax to take acquisitions and We the had I better are return

$X.XX share. up little your $XX I it's of being that With from a alone, in million be bit or the said, obvious probably that something a that headwind choices. would ladder of an So goes think it terms

Now on on day-to-day was and work as degree, we to it before, cash plan do the to our we to grew more we and to would and are going But with We look said free debt in We balance. that. take what's have set about $X.XX do as of will flow. looking so don't the to were some best always of and menu a week-to-week thing that that exactly. we've expected nice down terms be

of low you anything see as you think not a But have this expect worthy We invest. I have we trying us forward to flow towards end it. to the think of dramatically dramatic bias amount substantial should mention do you'll the I'm something or range. to that way cash But move capital. do I free the tell it's deploy in say we

Operator

with Ransom John from is question next The James. Raymond

John Ransom

on what's with us just Can update FTC? on going the you

Tom Ryan

FTC The in questions in sent We were that. what was out. the called XX which with did very that rulemaking, responses to quarter, advanced submitted our Okay. early January, the our the We was in of we notice January before. consistent they proposed responses

Power XX two customers for J.D. the or have to relates the and X to of either Our X before expected. in met out submitted with pricing that is our the pricing, we've were that believe anchored years prices that of or facts clarity lower That in responses been XX% our them. XX% rank of with and data higher customers, surveys, last of us than our

So data. what the submitted FTC. that's That's we the to

I will questions John, next various that. consistent with they be are and in answers the constituents, after that have and the in questions those their they people in been will that. all go think is The going to submitted industry, our by through digest answers that, [ANPR] various to that step XX pretty

X,XXX at of another relates is, put items out been We've gives guess they proposed I expecting it will maybe and a situation, have is them and we a are visibility what called can. services. of moment websites, testing, Dignity our give some again us certain to here prices in locations. locations out in-depth across this the all take you I'll what terms this. as and for which go pricing we exploring mean, depth websites we've on had have lot that about locations. do more and call the of a before. the kind under homes When had of that. I our initiating and for just FTC stats We kind you through look seat example, we've given round to starting and can of that a you that continue to And website, we've rule, testing talked funeral looked job so then John, Memorial a some at been table And and initiatives our updated we Independent themselves other in in great have at this products the at of of

of the And XXX and have So that's course, allows skewed to X,XXX them a now of statistics, that those an kind a components all of and richer, out services we that the that of just of -- starting But of of type is totally pricing kind facilities homes. funeral individual the give update delivering the you our evaluate to give X,XXX larger of color to on the more experience the the to these prices. products over best-in-class on different customer websites. kind X,XXX to services. funeral homes, of kind and objective way combination customer And of some of products kind the through on sort at have

XXX have in We that and have richer the deeper, products this about explored services.

out X,XXX have out of funeral or there, so there. something right homes have So that XXX you

funeral you is have over there. we for which general price now that that is homes our Additionally, lists X,XXX are of now out news new probably have

of an of consistent the what when just activity around we're the website. that lists longer We the even funeral we've that moves see Now about our is lever X this X is past but months, in kind and point that time needle X we've What we seen atneed are probably being But a newer out have months not is little from some to consumer on done have in preneed, said just at which to seeing price before. homes perspective, a with the ballpark behavior. that that for of X general XX% the bit in of in there that past positive.

what that's website. there That's kind that of GPLs so with far have XX% these the of we we're what seeing expected. And the locations on out

of a John, fruition A before to come So that's relates it a rule. take the to the FTC. It's while, is a more to This as lot probably time update come. this been the while. does take going with today longer to really going and to new it's for period

John Ransom

brand So Eric, something? pretty morning. up trying sound or you Did -- are you you of fired stronger this coffee a like

Eric Tanzberger

Actually -- caffeinated have I am. some I asking. for with coffee. have decaf thanks the but Normally you, John, do

John Ransom

maybe just so the Yes, the and is think preneed other topic in in cemetery. of thing your back coffee, this back some half or got year. going know peaked easier XQ, I We Bull to Red comp the [indiscernible]. to comps the you

any So just in you that that's getting the having are half now looks to see Are in Or be But the year? you to we're that quarter? hope of that clear, California. optically not monsoons evidence seeing that seeing this good. is you better back

Tom Ryan

right because clearly, get yet? think what's around. in in right mind there's a property, high-end I wanting not where walk feel. it's getting keep what's is of better, out elaborate in Can out John, -- the pretty the these people some sense having some sales, safe to on from to out has and the master really of gotten to it's the still there the parks Is process walk and come for understand California safe? the Because better. But you functional weather It's decide spots it

open particular the I still think to some May one high going open at now. in was So March to until end, going there's issues in is garden

to is there's specifics back. there. I'd the point, So general say some But coming traffic your

you've then through really, stock tough part, we'll at itself of I'd the behavior, you're take things. purchase those to into And things a and better, get to consumer is now back a And and to got world to going least I markets, said, consumer like inflation, rates think part back historically that. and you're volatile weather to feel those was ready got always weather generic I and big those you've a manage where expect things just customers we So got comparison, better discretionary about a and you higher be our volatile as play little -- interest willingly. care

John Ransom

for last just one then And me.

care little tough perpetual the and losses gains to Just model. a are

So the that looking gains think for so the historical can the you losses least comparison. and kind you're just rest at we of set of the at about kind level of year, can

Eric Tanzberger

realizing that periodically Yes. to fruition completely to I causes a in from for some portfolio, came distributions. think consistent certain mean XXXX, about on in starting in $XXX talking obviously, of And maybe approached their that, being kind million I of $XX from and talk I probably in to standpoint, are model And states XXXX the it think in difficult million. ECF. should million, almost gains ballpark dollar us, think independent we're in $XX generally, ECF ECF always But of portfolio managers the full to have for XXXX. own created of mid-XXs income an million back their obviously flat I $XX that down we specific you're John, very you in you with It's kind range about that fund of that year. that's about When forecast. lumpiness ECF, million

Operator

Yes.

Next Bank of Gajuk America. question is with from Joanna

Joanna Gajuk

I follow-up. guess, first, a

cemetery slightly same. sales but side, view? flows full to that the lower the it EPS cemetery kept So production be than guidance guess And on your recognized expect you you I prior sounds the the through year revenue your preneed like to

little was lower? being Is in like this is it funeral stronger So a bit cemetery the case that quarter? offsetting what sounds

Tom Ryan

gardens I think back some like would didn't get little a We we we be money are Yes, had of quarter. Joanna, completed. these that said, going function funeral now which of first a volumes be new strong, we before, that projects of available it's a year your stronger I than we to appear I And are projects for anticipated. few a the To it's spent things. a property have One to time we'll and selling. of that in of developing I Like point, sales too lot lot last combination said a and then think cemetery sale. be have we

to higher prior to we compare percentage year. what sell of So the when you a recognized get

things push would back So earnings fact to our first those probably getting gain some share and of the have weigh in the back anticipated quarter. going are ability per that towards of to the you

So again, at to can. we're I about what the incurring, those managing effectively are. feel ability feel really quarter. I we as we costs businesses manage they're be where And good as And particularly I costs think, first fixed drivers. our so look look those you and would my other good at then as we as about

Joanna Gajuk

last year? being the being All right. the the better. talking And digits the much down services rest mid-single on And the I -- for the time in about you Are side, then services your funeral for were came services quarter, or changing of down guess your volumes you so the of number clearly, are this what expectations view for full year. year?

it So still higher number? about Or now in ballpark? a we're this is talking

Tom Ryan

ballpark. in it's that think I

kind as think, again, I cemetery. opposite it I of would of skew the

end we'll think at of the expectations. be our I higher

have don't I in numbers play probably me, and funeral the comments, cadence, we think expect of the year out. as I the volumes you think but it kind -- it you the would about my in slightly would rest I of down is front way of as the said

on and again, we for up quarterly of go. those a revenues, is we're revenues ready what we'd as a to -- cemetery selling property be cadence then that's that function and for expect sale sales, And the

allow a the last And this then year that's think earnings going over share to quarter-by-quarter, the I impact. higher So favorable and you about slightly very to the our drive per of share year. us think, rest for year, repurchases that's

out, and there. $XX got we pointed of expense rates because in what occurred Eric as more have interest million Unfortunately,

the another that So more in flies thing kind than face the just your of that, shares year-over-year. earnings should but that's offset of

Joanna Gajuk

if may, funeral on the I And segment still.

I hear guess, shift the a So been that's the offset X% some changes guess talking range, increase to bit. and fund trust about good that, I income I in you little currency cremation then, higher essentially but guess, by price and the effectively

it think higher items? segment. how the his of we X% rest of year the sales see this less and about comes by these increase, average we the when moderate kind stay the should But of should of cremation flow-through the you at other kind level in expect offset Would to -- funeral of kind to of service a for or

Tom Ryan

I think so, Joanna.

the And perspective, as subject the think you you're favorable year. X% a I we back would always a call comparison, And the and get that on be to from income. quarter, now we're prior to expect continue going half downturn it, organic to like always think level, comparison think comparing to because to maintain year-over-year gets markets X% you kind to change, do, growth had more trust we I year. thing other I should cremation then year a because I take I of or that's grow mix -- it the because on comparison the a better. of last the while the year-over-year said,

quarter. it, basis go instead on we would expect a of I back the to, change, XXX XXX to we basis call depending point XXX think let's points

That's thing. the kind of

negative organic downward. X% offset trends. negative So trend to growth, we trend had That by point, of X.X% your should

bottom the organic of the more maybe to line line. the gets and top growth then to so And

Joanna Gajuk

a those discussion things in you I of All into delayed because sounds around production, also digits And right. and in into in mid-single talk So year, this right? so 'XX like year. about on. helpful. 'XX, next sorry, year these the this but maybe properties the I growth some rest preneed outyears sales I the of And just kind -- notes that if after the cement guess past, guess cemetery That's on may, slowdown also follow-up being

So grow can what you outyears. I expectation? guess the that is And in confidence that these drives still your at level

Tom Ryan

Absolutely.

I we confident we'll think to that. that very feel able do be

part And we're sure normalized And that 'XX. you'll yes, levels. so and to in to get 'XX in those this think I back going to to and for year see begin

Joanna Gajuk

the maybe last guess guess I -- And if question, I may, because didn't nothing I just but there's you very to comment. comment, sorry,

to the update there rate announcement estimated any the last terms states? change indication quarter, from In the of we timing the settlement about of cancellation any any that talked or or of

Eric Tanzberger

charge That's if and Florida we than, early last Nothing material settlement really March final court of update. other to Florida only quarter. really the the described to issued was the that approval new on that member, California and you related you are on that the the

we've estimates We to still work through that I time. that else point continue and the those everything good on We in so at feel number this charge. you, described about don't have to update an really

Operator

comes question Sommer from next Truist. The Tobey with

Tobey Sommer

inflation relevant let's of cost and mean or starting characterize components to normalize, in and between hope, the prices I would sales, perhaps ability the you whatever your think interplay the you most to merchandise market? inflation including how company's raise

Tom Ryan

other would it say really about of lot I And feel a -- businesses, I labor that really, a is Tobey, I compared our to big good say one, Again, is reason the that. big number cost.

largest things about about caskets, you bit and about When purchaser things or our that. have as that we're seeing bronze to cemetery granite I think caps. that periods. to think when go you some agreements, that year purchase, supplier or a normalization think prior to think big we have think you that it We're into relates subsiding about agreements we we're long-term you the the the compared of starting see inflationary

relative feel a A our think of and really, that that lot it. ability other you business good have you particularly, unique about things about pricing, in we variety of as really the to there. think our cemetery when So the sense industries, manage cost to it's about out such of we

And to and at the product we We're therefore, relative those you others. cost price up seeing things consumer think in increases of don't along costs, our I So to effectively the that us long-term you're those put able and contain see place. to we're because having manage like. we're companies have agreements to able of better able pass consumers pretty for to

Tobey Sommer

contextualize this pretty your it We've heard year-to-date. of could you recent retention rates season earnings in corporate retention improved that from occurred sort employee other that in internal companies with periods? business? markedly reporting has And Has

Tom Ryan

years, so, that the more a level. think lot the last I couple I of of compared you're definitely Tobey. mean, to at seeing corporate

challenging to Some been think that corporate you to and we've still in to that a And in highest want we've positions retain field. working worm when sure make and think jobs. you're the of and And I the definitely, are customers bit quality that turn those and some and the cemetery as at higher away the little maintain, of these are seeing than that's parts The our have still with fill home us level regard, staffing. of a interfacing we others. I allowed flexible But got to from maintenance seeing corporate has in out the families. which some relates are optionality employees now you regarding look some of you're challenging like, it

Tobey Sommer

your to If in. sort I perceive period. change on high-end consumer one that time now activity? the since market maybe there of of now for things the more been in a have normal that in and and March outside focusing What's that and where sales experience have [post-SBB] the see been you in could discrete Has Republic the in more able feel over sneak been you've your California

Tom Ryan

a there's think to the -- at put long doing been I But we've really now. end a it this would I way, hard it's feeling this pinpoint.

again. down see they news way. the the to You've is and importantly, are high-end those prices good always other was purchases quickly you are out XXXX, to things, trend things that look once going stall. people tend in and and feel see finally sales confident there. crest very seen most what's up, rates is to interest a it of high-end inflation I back The And some to occur. Probably variety XX%. you correlate down recessions starting When stock market on, tend come the at Housing

somebody end, high spend impact. very million, million an very, if environment $X $X.X the the have at you're does or macro But asking what to

And so high very we again, would levels. expect it a at to drawback. But be bit a little operating of

in million XX history first it I right? was if $ said, $XX so think was happened second quarter, sold the which of large just company we for It the our sales, highest million I last year.

to So big out put and we're still numbers. print some being able

is second there of them. we're And good so and matter news is, when consumer And a just the It's the to the we plenty 'XX? the inventory, But what of inventory quarter have. close think we going that consumers to be got we've out willing. right the they're that confident we sell I want third to sale. Is right feel and quarter, have it people going

Operator

The next question with is Suisse. from Rice Credit A.J.

A.J. Rice

the to of on Couple that properties? that different some of the property. to you your to reiterated the are sense fence that on that, Do Maybe maybe of banks on way, of well. incrementally target $XX regional from million any looking year. having add credit may the Are seeing pipeline you to a it's about whether comment just impact in last million time for the it thinking question, their sellers you I potential things. sell any there? know tightening activity people broadly $XXX at as

Tom Ryan

Sure.

to you. So A.J., pipeline from is good healthy. hear The

going We feel anything what's different in have to really you ability our noticed too it's deals tell would early. about related this generally, a noticeably guess, various on of regional haven't to I stages number year. and good banks. execute I with I

raised great you a think though. I point,

most thinking in at some had XXXX, If which your it big Webb productive rates transaction, generally company this years, went that particularly of I'm go when up. bought and we of that's look company and really the in the me. when and you had you Mike acquisitions, happened one history back pretty

these financing rise, exits. at for I consolidators when a particularly periods looking these as look But are of rates you that think are lot

plays aware of And we're bit a to pounce. little kind that Eric of about. is of talking that. what So We're into ready

of we're number our want come deals With there going this uncertain inflation, be this to that with when maintain we're going there. be -- also plays period going kind If we buying that's flexibility. we're is interest to the along, how do uncertainty out. thing kind to see back sheet through opportunity will balance knocks out with We rates, of this want a manage them. of to but and stock, to And you

A.J. Rice

Right.

that because think I on happens XX, out, And becomes purchases know there's more returns those property. about just the opportunities? had and on cemetery on saw assume you and I $XX that development Can cemetery more development our we of is that's XX it I you there's see immediate you're You cemetery. property years near spending for do the was looking development opportunistically because cemetery cemetery if then current available are you comment this an in going would the million, a to development adding quarter quarter. where this established

Tom Ryan

that, A.J. cash lot A of all Yes. it's driven,

some first those buying acceleration that's we'll of the bigger sell of So of out, a an where what lot some in you're is COVID are down things of got the we down, be things to really parks likely one we as last quarter impact. say, more because sell are kind you spent places throughout lot of where some these delayed. And was ready what get a as projects therefore, the and heels I into And the on And property. reasons, the money if of year, lot -- in on seeing I'd lot sale. a of year, of, which shut projects point is the XX% developed. it of recognized and the earnings saw at we And and COVID waiting a happened, when that

in in the And put place so lot things in cash a got and the of been of half has spent a of year. lot first 'XX this

level spend that more off quarters. recognized expect level sell us I in So and coming allow to to property

A.J. Rice

you seeing And about? little what I the uptick. maybe release in expense think -- or in comments, comment on prepared can all more business What some a in was maintenance you cemetery the that highlighted just

Tom Ryan

Yes.

a labor. of I really by driven that think that's lot

a and care cemeteries taking business, of two, labor outsource them just they're they're of level internal allows probably is lawn we that making at inflation care maintaining have they're in to that sure right, #X parks. their in to those maintenance lot of in the seeing have employees labor companies, costs; our a we a lot retention their pools, one, So,

Then of weather. land little through bad a seeing those pass-through and just into think when all third-party and as you then that roll we're internally So to relates it think care, both you pressure and about vendors. about energy, water things cost, kind

and a and going West get spend you there. weather lot mud going Coast, those so you're Salesforce running, money like on of to the parts back and bad the can to have on, get we you do things up If extra out

as relates go really to maintenance industry labor really have elsewhere. factors, So historically. cemetery to contributing number a workers instance, but These in for lot it the are to the one competition of with construction is maintenance cemetery tied options your

A.J. Rice

Right. And flexibility then the just maintaining power. finally, around on talked forth capital so and we fire

first the it's in cetera, pacing the You relative conditions, were commentary updated commentary on of I thinking what the guidance, somewhat the quarter. probably know buyback guidance? about year? rest dependent for et active any the Any you're the market in for to upon but

Tom Ryan

we'll No, told how it's it We're all -- see out. I you. what exactly just plays we think

our active will the be We are in investment. market. We shares return think great a on

general get So more. just And little up a difference. the conditions, because really out. stay rather recovery, we we'd year a of confidence EBITDA to a flexible to stepping how the and the more see be that on as going Xx more sheet robust our cautious plays balance little -- around use this lot Eric a I into and -- think then have Like economic uncertainty said, we're of no say, in, hitting let's more

Operator

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

Tom Ryan

to speaking want August. to forward everybody the much. call I in to look you early thank so Thanks for on being again today. We

Operator

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

disconnect. You may now

Service Corporation International (SCI) 2 May 232023 Q1 Earnings call transcript