SCI Year-End Results: Revenue Up, Service Case Volume Down, Preneed brings questions

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Service Corporation International (SCI) reported its 4th Quarter of 2024 as well as its 2024 Year End results last week.  Being as large a Death Care company as they are it is probably as close as one gets to an annual report on the status of Death Care in the North America when one digests their annual results.

Here is the press release from Service Corporation International on their 2024 4Q and 2024 Annual results which was released last week.

Here is what CEO Thomas Ryan said in prepared remarks in the press release, “We are pleased to report a strong finish for the year with adjusted earnings per share growth of 14% in the fourth quarter of 2024. This was driven by revenue growth in both our segments, which translated into solid gross profit performance and margin expansion. Growth in cemetery preneed sales production and higher funeral general agency revenue more than offset a decline in services performed during the quarter . . . . cash flow for the year allowed us to invest $181 million into the acquisition of 26 funeral homes and 6 cemeteries in major metropolitan markets and $62 million into real estate transactions to expand our footprint of funeral homes and cemeteries in our existing markets.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  There is a lot in this report and it takes some time to digest.  And, following the release of the company’s Earnings Call transcript I’ll probably provide more details and have more to say.  For the time being, here are some thoughts that I have. . .

Revenue: Total Revenue for SCI jumped from FY2023’s $4.099 billion to FY2024’s $4.186 billion — an increase of about $87 million or 2.11%.  The company probably also gained margin as the year went on because their 4Q24 revenue jumped 3.6% over the same number for 4Q23.  In my book, especially because they reported less services conducted on the year, that revenue increase is probably indicative of price increases.

SCI does report in their “Consolidated Funeral Segment” that revenue per services jumped to $5,651 in FY2024 over the FY2023 number of $5,536 — an increase of 2.1%.

Service Case Volume:  In the company’s “Consolidated Funeral Segment” results, SCI reports 355,074 services perfermed in FY2024 as compared to 358,873 services performed in FY2023 — a drop of about 1.1%.  From those numbers alone we don’t know if that drop is because of a loss of market share or simply because of less deaths occuring in their market areas.

Matthews International, in their quarterly report last week, explained away a lower unit sales of casket by what they termed as “less deaths”.  That may be correct and the case with SCI’s lower volume, but one might keep an eye on market share — especially when SCI tells us of the acquisition of 26 facilities during the year whose services numbers should also be included.  When contemplating that fact, however, we do not know when during the year, or even if, those acquisitions started contributing to the financial numbers.  In my opinion, however, the reported number of “Services Performed” will be a number worth watching in the future.

In what SCI calls their “Comparable Funeral Results” which is defined by “those businesses owned for the entire period beginning January 1, 2023 and ending December 31, 2024″,  the company shows an even steeper drop in “Services Performed” for the 4th Quarter of 2024.  SCI indicates a drop of 3,366 services performed during the 4th Quarter, compared to the year prior, which translates into a 3.8% decline for the period.

Again, that number being “Same Store” results. . . . is that indicative of a loss of market share or simply a number reflective of less deaths in their market regions?  I believe it is a number worth watching in the future.

Preneed:  In July 2024, SCI announced a new Preneed agreement with Global Atlantic as you can read from this Funeral Director Daily article on the subject.  We believe, that as is common with new partners, implementation to fine-tuned operations will take some time to get to.  In fact, the SCI report offers footnotes on that subject.

However, in reporting their “Comparable Preneed Sales Production” a Total Preneed sales dollar drop of 9.2% for the 4th Quarter of 2024 as compared to the 4th Quarter of 2023 is reported.  That, too, will need to be watched over time to see if the drop is simply in the implementation of a new policy, a change in accounting in moving from trusts to insurance-based preneed, or reflects a market share trend.

It could possibly reflect a market share trend based on the seemingly growing popularity of low-cost and/or online cremation puchases.  My thought is that the drop in preneed revenue could represent lower cremation sales prices to meet growing competition or simply losing clientele to lower priced online cremation providers.  In any case, this number bears watching in future quarterly reports.

Final Thoughts:  When I read these reports with my background in funeral home ownership I realize that the numbers simply give us a “point in time” reflection of a public company.  However, I think that bringing up questions and possibilities about the numbers is how one can “see into the future” to put their funeral home in the best possible situation to win customers in the future.

Disclaimer — The author of this article for Funeral Director Daily is a shareholder of Service Corporation International.

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