Service Corporation International SCI posted third-quarter 2024 results, wherein the top and bottom lines increased year over year.

Management is encouraged by the favorable impact on funeral revenues resulting from its new marketing partnership with a preferred preneed insurance provider, which was launched in the third quarter. Both funeral and cemetery gross profits remained relatively stable year over year, with modest revenue improvement reflecting the company’s ongoing focus on fixed cost management.

The company also remained very proactive on the acquisition front in the quarter, with strategic additions in key metropolitan markets. The company invested $123 million to acquire 10 funeral homes and two cemeteries, including one combination location. An additional $31 million was allocated for real estate transactions to expand funeral home and cemetery locations.

For 2025, the company plans to return to the high end of its long-term growth target of 8-12%. Management remains committed to its growth strategy, focused on increasing revenues, leveraging its unmatched scale and making strategic capital investments to enhance shareholder value.

Service Corporation International Price, Consensus and EPS Surprise

Service Corporation International price-consensus-eps-surprise-chart | Service Corporation International Quote

SCI’s Quarterly Performance: Key Insights

SCI posted adjusted earnings of 79 cents per share, which came in line with the Zacks Consensus Estimate while increasing from 78 cents reported in the year-ago period. The gross profit remained flat in the cemetery and funeral segments. A lower share count and a reduced tax rate were offset by elevated corporate general and administrative expenses and slightly increased interest expenses.

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Total revenues of $1,014 million increased from $1,001.9 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,012 million.

The gross profit was $252.3 million compared with $253.7 million reported in the year-ago quarter. Corporate general and administrative costs were $43.7 million, higher than the year-ago period figure of $33.2 million. The uptick was mainly due to expenses related to a long-term incentive compensation plan.

The operating income of $212.4 million declined from $223 million reported in the year-ago quarter.

Decoding SCI’s Segment-Wise Results

Consolidated Funeral revenues came in at $566 million in the quarter compared with $554.8 million reported in the year-ago period. Total comparable funeral revenues rose 1.3%. The upside was backed by a $4.4 million rise in core funeral revenues and a $7.6 million increase in core general agency revenues and other revenues. This was somewhat negated by a $5.5 million drop in non-funeral home preneed sales revenues.

Core funeral revenues climbed 1% due to 2.1% growth in core average revenues, partially hurt by a 1.1% dip in core funeral services performed. The core cremation rate rose by 30 basis points (bps) to 56.8%.

Non-funeral home preneed sales revenues dropped by 17.2% due to a fall in non-funeral home preneed sales production. Comparable preneed funeral sales production tumbled 7.1%. Core preneed sales production fell 6% due to a shift to a new preneed insurance provider. Non-funeral home preneed sales production decreased 10.4% because of a shift from trust to insurance-funded contracts.

Comparable funeral gross profit came in at $107.4 million, down by $1.5 million. The gross profit contracted 50 bps to 19.3%.

Consolidated Cemetery revenues came in at $448 million compared with $447.1 million reported in the year-ago quarter. Total comparable cemetery revenues remained flat year over year as lower core revenues were countered by higher other revenues. The $4.8 million decline in core revenues stemmed from a fall in atneed revenues and decreased total recognized preneed revenues. Increased recognized preneed merchandise and service revenues were also negated by a decline in recognized preneed property revenues.

Comparable preneed cemetery sales production dropped 2.5% due to a decline in large sales. Core preneed cemetery sales production was flat year over year.

Comparable cemetery gross profit came in at $144.9 million, up $0.6 million. The gross profit margin expanded by 10 bps to 32.4%.