Service Corporation International Q4 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: John Ransom - Raymond James & Associates, Inc. - Analyst : Hey, good morning. Looking forward to seeing you guys in a couple of weeks in Orlando, but Tom, the spending teacups are down, so you might -- Eric might be disappointed. The -- look, I'm going to try to do some math, which is always dangerous, but we're getting -- between the general agency good guy next year, this year, '25 and then the acquisition timing, we're getting something like a $40 million to $45 million pretax benefit from those two. Is that in the ballpark?

Question: John Ransom - Raymond James & Associates, Inc. - Analyst : Okay. And then just looking at the long-term funeral pricing algo, I mean you've got stuff coming out of the backlog at a higher price point, you got cremation mix, you've got other stuff. Is that -- is this just kind of settling into a CPI-like price increase when you net all that stuff together? And are you seeing -- were you implying -- and I don't know that you were, but is there some sign that maybe the cremation mix effect is starting to taper off a little bit?

Question: John Ransom - Raymond James & Associates, Inc. - Analyst : Meaning, is it still that 100 to 150 bps long term? Or is that going to hit a ceiling at some point where it doesn't -- it isn't as much of a drag?

Question: John Ransom - Raymond James & Associates, Inc. - Analyst : Right. And so lastly, I just kind of step back and look at your funeral and preneed revenue growth. It's probably, let's call it, against CPI, to call that 3%. So to grow at 5% EBIT margins, have to do a little more work. Is that how you're seeing it?

Question: John Ransom - Raymond James & Associates, Inc. - Analyst : Yeah. So just said another way, and you can't make it too obvious for me, obviously, is that you think '24 is kind of the last year of the COVID pull-through and it gets more normalized starting next year, '26?

Question: Albert Rice - UBS Investment Bank - Analyst : Hi everybody, I wondered if I could maybe ask a couple of questions here. You had some volatility again on the funeral volumes and comparable cases year-to-year, and we saw that in the second quarter as well. I wonder if you've been able to drill down and -- is this just the ebb and flow you get from month to month? Or is there anything going on there? And it sounds like maybe you backed off a little bit in your expectation for '25 case growth to now sort of flat to slightly down versus flat to slightly up. Is that because of what we've seen this year?

Question: Albert Rice - UBS Investment Bank - Analyst : Okay. I want to delve into this switching from trust to preneed insurance sales. And you threw out 75%. I didn't know. Is that -- you think that you'll ultimately settle out with 75% of your preneed funeral sales being insurance related as you make this transition? I guess that's the question.

Question: Albert Rice - UBS Investment Bank - Analyst : No, that's good because I think I did misunderstand it. When you made the conversion this new contract, I think you talked about potentially having about $900 million in business that you would move over annual business. Is that still the number with all the puts and takes? Or do you think it's a bigger number than that now at this point?

Question: Albert Rice - UBS Investment Bank - Analyst : Okay. And maybe just one final one for me. The comment on the deal. So you're guiding for $75 million to $125 million of acquisitions this year. I think you came into last year, if I remember right, with a similar target but ended up at $181 million, which obviously is a positive. Is there any comment about the pipeline? Is the pipeline still quite robust? Or is that $75 million to $125 million really reflective of what you see in the pipeline right now?

Question: Albert Rice - UBS Investment Bank - Analyst : All right. That sounds good. Thanks so much.

Question: Joanna Gajuk - BofA Securities - Analyst : Hey, good morning. Thanks so much for taking in the questions here. So a couple of -- same topics. So I guess, first, maybe a little more color on this funeral volume outlook. I appreciate it could be very lumpy month-to-month. But I guess any comments you might be able to give us in terms of January? Because it sounds like November was a weak month, but then, I guess, December might be a little bit still down year over year, but like how is January trending?

Question: Joanna Gajuk - BofA Securities - Analyst : All right. Because you also made it sound like you don't think that this is some sort of like a higher headwind from the pull-forward effect. It could be just like some other bigger factors going on. But is there anything else you might be able to glean into when you look at these numbers in terms of like why this November was such a weak month or is it some sort of like you said, volatility? Or is it more like the macro stop and the pull forward?

Question: Joanna Gajuk - BofA Securities - Analyst : Right, yes. Because I mean, from hearing hospitals talk about Q4 was like a year-over-year -- the lower activity on the flu, but I guess generally is tracking higher, so I guess we'll see what that means for your business. So another topic, I guess, around just in Q1, the wildfires in California, specifically outside Los Angeles. Do you assume any impact of that lingering for when it comes to your Rose Hills location from those wildfires around -- in the communities?

Question: Joanna Gajuk - BofA Securities - Analyst : Right. Yes. I guess there was like 200,000 people dislocated. So hopefully, that takes maybe some time. But when it comes to your preparations there, I guess, so you mentioned opening up new sections because last time you talked about there was a section that's being developed, but that kind of blocked off access to some other sections. So where are you on that front? Like, is everything kind of now open up and ready for the traffic to come through?

Question: Joanna Gajuk - BofA Securities - Analyst : Okay. And if I may squeeze the last one. So there was a restructuring charge in the quarter. Can you give us a little bit of color like what was the driver for doing it now? And what exactly was happening?

Question: Joanna Gajuk - BofA Securities - Analyst : Great, that's very helpful. Thanks for this last comment. I appreciate it thanks for taking the question.

Question: Daniel Hultberg - Oppenheimer & Co. Inc - Analyst : Hey guys, good morning. It's [Daniel] on for Scott. Could you elaborate a little bit, please, on the outlook for cemetery preneed sales in terms of how you think about large sales activity versus the volume component? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 2:00PM, SCI.N - Q4 2024 Service Corporation International Earnings Call

Question: Daniel Hultberg - Oppenheimer & Co. Inc - Analyst : Got it. And the recognition rate looks a bit accelerated in the fourth quarter. Could you speak to how you think about that in 2025 as well as some perspective on cemetery margins for next year? Thank you.

Question: Daniel Hultberg - Oppenheimer & Co. Inc - Analyst : Great. Thank you so much.

Question: Tobey Sommer - Truist Securities, Inc. - Analyst : Can you just give us an update on your expectations for the funeral rule and kind of what you're hearing from your government people? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 2:00PM, SCI.N - Q4 2024 Service Corporation International Earnings Call

Question: Tobey Sommer - Truist Securities, Inc. - Analyst : Thank you. Within cemetery, tell us your -- how are your expenses trending, in particular, labor? And how do you think that, that sort

Question: Tobey Sommer - Truist Securities, Inc. - Analyst : Thank you. If I could sneak a last one in. From a baby boomer perspective, what do you think that trend is likely to do in terms of incremental service volumes? And what's your best forecast for when it starts to fold into the P&L?

Question: Tobey Sommer - Truist Securities, Inc. - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 2:00PM, SCI.N - Q4 2024 Service Corporation International Earnings Call