Service Corporation International Announces Second-Quarter Results

On July 31, Service Corporation International reported results for the second quarter of 2024.

Second Quarter Highlights:

Revenue grew $20.6 million over the second quarter of 2023.
Earnings per share was $0.81 compared to $0.86 in the second quarter of 2023.
Adjusted earnings per share was $0.79 compared to $0.83 in the second quarter of 2023.
Net cash provided by operating activities was $196.9 million in the current year quarter compared to $144.1 million in the prior year quarter.
Net cash provided by operating activities excluding special items was $219.9 million in the current year quarter compared to $157.4 million in the prior year quarter.
Comparable core preneed funeral sales production increased by $9.7 million, or 4.0%, in the current quarter.
Comparable core funeral sales average grew 1.3% in the current quarter.

Tom Ryan, the company’s chairman and CEO, commented on the second quarter performance:

“Today we reported adjusted earnings per share of $0.79 and net cash provided by operating activities excluding special items of $220 million. Revenue grew $21 million due in part to the performance of the cemetery segment, resulting in slight growth in margins over the prior year quarter. During the latter part of the quarter, we experienced a higher than anticipated decline in funeral services performed, which in light of our high fixed cost structure, impacted our quarterly performance. On a positive note, we generated strong cash flow from operations that met expectations, which allowed us to reinvest and grow our business, as well as return capital to shareholders, through share repurchases and dividends during the quarter.

We believe our long-term growth strategy is on track as we continue to grow revenue, leverage our unparalleled scale, and allocate our capital wisely to enhance shareholder value. I would like to thank our 25,000 associates for their dedicated service to our client families.”

Other highlights included:

Diluted earnings per share was $0.81 in the second quarter of 2024 compared to $0.86 in the second quarter of 2023. The current year quarter was favorably impacted by $1.9 million of net gains on divestitures and impairment charges. The prior year quarter was favorably impacted primarily by $7.0 million of net gains on divestitures and impairment charges. Diluted earnings per share excluding special items was $0.79 in the second quarter of 2024 compared to $0.83 in the second quarter of 2023. Higher cemetery gross profit and a lower share count were more than offset by lower funeral gross profit on lower services performed as well as higher interest expense and a higher tax rate.
Net cash provided by operating activities grew $52.8 million to $196.9 million in the second quarter of 2024 compared to $144.1 million in the second quarter of 2023. Both the current year and the prior year were impacted by payments related to legal matters that were expensed in 2022 of $23.0 million and $13.3 million, respectively. Net cash provided by operating activities, excluding special items, grew $62.5 million to $219.9 million in the second quarter of 2024 compared to $157.4 million in the second quarter of 2023. Expected lower cash tax payments combined with favorable working capital changes, primarily related to strong preneed cash receipts, more than offset an increase in cash interest payments and lower operating income.

Outlook for 2024

SCI noted that it believes full-year results will be in the lower end of our adjusted earnings per share guidance range of $3.50 to $3.80. “However, reflecting the continued strength of our operating cash flow, we want to reiterate the midpoint of our adjusted cash flow from operations guidance range of $900 million to $960 million. The forecast for cash taxes includes the impact of a change in a tax accounting method related to our cemetery segment, which will defer cash taxes into future years. Our outlook for net cash provided by operating activities also excludes special items relating to the payments of certain estimated legal charges of $64.6 million recognized in the fourth quarter of 2022,” the company stated in its earnings release.