Service Corporation International (SCI) 1 Aug 242024 Q2 Earnings call transcript

Good day, and welcome to the SCI Second Quarter 2024 Earnings 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.

Good morning. This is Allie O'Connor, AVP of Investor Relations and Financial Reporting. quarter second our to earnings call. Welcome

language. Any have These and Eric statements. will let state quickly might safe our prepared measures in team in can differ but our and and But remarks Tom and out beliefs, and now our could Ryan, from me discuss measures. financial uncertainties reconciliation to harbor the over those in quarter to, the plans, the that earnings go certain factors made in website. With end of release the risks expectations forward-looking cause with Tom A or and that such these materially at that, filings by management about our turn we the way, of before are statements SEC tables We comments just that actual moment. earnings the for forward-looking on our I are projections also to from that contemplated those will not our subject statements. on our are results include, future These to uncertainties over are a non-GAAP of identified be limited available release in the it Today, CEO. found website. risks Chairman

for everyone, close XXXX. quarter, expectations our the around I will my with for results. some remarks some thoughts Hello, joining with the us on morning, begin to rest business funeral some regarding on provide you performance our Allie. and Thanks, for cemetery greater This high-level thank going the then of call earnings and I'm today. and our detail color

a lower The $X.XX prior adjusted generated $X.XX, a funeral share tax performed. profits lower offset negative of the higher results the larger-than-anticipated by in to offset a year from services the share better-than-expected which This of the year. by expense, compared $X.XX quarter, from in count in cemetery impact an decline line, higher decline and to For of favorable attributable prior rate. the per from was acquisitions. Below recent impact was slightly was second earnings increase the of decline we profits and interest

take let's revenues million shortfall $X X% or June. months effect, higher volume for funeral across quarter. this in Total Comparable million. $X during the almost into lower the quarter. to over a versus slightly expectation in decline our flat the Now volume. Funeral deeper revenues first X contributed funeral accounted an funeral year, quarter. the unexpected declined funeral expectations May the We to the and our volumes the markets, of for declined about comparable as excess believe results prior-year the look Core declined services X.X%, COVID decline we saw core of our tracked deaths pull-forward it with and for combined

However, of with positive we case trend versus seeing modeling comparable a and are funeral expectations. July volume more volume in the our the positively year prior month trending

an cremation commissions the by by were the our first revenue mix. you Our revenues non-funeral core negative primarily by the generated the gross increase we of preneed favorable with the deliveries, about funeral $XX XX% declined the increase and higher service decrease the to XX%. revenue respect in primarily the about incentive X% gross a million, was discussed funeral ancillary or timing million increase insurance million by while per second a higher Preneed offset to in merchandise $X profit core production that over changes sales incentive due reflecting commission the $X California X.X%, core operational other impact general production. market preneed $X from effects XX increased quarter million the annual production to quarter with call. which after is of increase adjustments a point on SCI costs in by This grew sales and quarter from rates. From sales prior-year average by agency revenue quarter. $XX by accrual due X% or over a funded perspective, in prior-year sales of agency funeral percentage million, and profit This to compensation compensation declined profit the decreased in basis absorbing of over timing decline XXXX, Direct, about in general home led

revenue increase $XX for the preneed impressive merchandise year-over-year cemetery million $X or Now core revenue or million quarter. to prior-year increases and out shifting other million were revenue contract due core in the a XX% increase of was million a increased backlog increase $X $XX Comparable about in second $X recognized increase by earnings X% the favorably averages to million Robust to The primarily revenue. The impacted cumulative being and responsible increase result cemetery. in the service delivered compared was trust of in a revenue. increase.

million revenue other care of Comparable expectation. decreased predominantly increase was was in to endowment $X result by million which income. X%, than up production slightly less The sales or $X flat a increase fund cemetery preneed the our

profit cemetery about up large saw revenues again of preneed reflecting of cemetery costs we gross is the gross purely by timing the an higher we and production. quarter. increase incentive sales. as X%. Cemetery increased million in increase accrual an offset million from profits maintenance continue long-term XX%. We strength to in core had as million positive an increased adjustments costs, a On see sales incentive compensation we premium XX $XX generating offset slightly an quarter of by is or our sales percentage $XX $X $X and by profit note, decline margin annual inventory basis points, related timing was a believe in in sales production million While compared and production, the to higher The the to prior-year operating percentage this year-to-date

outlook our XXXX. for discussion about to a Now let's shift

our our adjusted guidance the $X.XX for of end to share release, in per of be saw $X.XX earnings our full believe you in results range As we lower now will XXXX. earnings year

for and impressive versus of We to would margins volume share well fourth the as months earnings period to prior-year For we challenging growth Cemetery funeral compared first and of half in the would preponderance more quarter. anticipate X-month growth the revenues a in cemetery earnings the revenue and occur the comparison both the prior to expect expect lower quarter back completed per in share per growth compared the as XXXX. resulting the sequentially X of in Funeral XXXX, segments and therefore, year, projects construction from to as recognized third the would

expect comparably new return to we share agreement per would historical operational of As of earnings the funeral annual insurance preneed takes our SCI XX%, rates, Atlantic our impact the range higher growth to towards interest negative and Global we XXXX, to higher of direct X% changes think effects of and as end effect. subside, the about guidance positive

want another. trends our acknowledge I and that is for thank are impact incremental our brands robust shareholders customers, to get market-leading Beyond a their SCI world-class preneed value and as commitment network and a With backlog, excited. our where for we truly entire workforce the vast businesses, American and our the to North our containing to one industry. In poised conclusion, communities daily capture team demographic I

the difference Your day. And every making call I'll dedication our success. Eric. turn to of with is Thank now that, over the foundation you a operator, for

dedication the call. really commitment on for communities, the the XX,XXX good client start not families families, you at I'll client you're for during you, go exceptional for your inspiring way and efforts do and do thank here especially SCI all you times company. comments, morning, most Thank the everybody unnoticed, just our we greatest and their our and you guess Again, start by that same those importantly, Tom, the need. associates to thanking everything I ended of off Tom, just of say

discuss thing capital what moving So going just with today, talk investments quarter. with providing to And on during important similar commentary first a that about cash financial our results did. our I'll bit I'm our outlook before end Tom position. mentioned, also to I'll flow little the some to

lower-than-anticipated only services cemetery strong installment but quarter resilient our the morning performed operations. remained atneed and aided we've funeral not underlying in primarily receipts was and preneed that Our by cash sales, yesterday, this mentioned despite flow cash from and funeral

million, So second reported operating flow $XXX adjusted of year. increase cash we an just of prior specifically It's quarter, for the the over million $XX

as primary of expect increase about that property for about the revenue to levels. talked installment are $XX change an future we The to perhaps contributor expect cash method in of was to of for to forward lower payments look And method beyond several revert we purposes. accounting to that that reminder, that. cash accounting about form payments for tax But you'd talk and of property result recognition tax in tax change these We've related this $XXX as quarters. expected from trend the a taxes compared the forward received. taxes more us the now in due toward with will anticipated cemetery tax XXXX, going the years a deferral million. in XXXX payments XXXX, cash when Let's million of increase cash That's tax of normalized of timing cemetery the

to than that though, to prior So flow cash installment new, increase operating the to this offsetting I rate you these in was about of they we rates net favorable prior assuming That's topic $X relates that. continue get really remind income year. in the year that of -- cash of generally payments. the on million, were higher if that remain you and $XX half associated higher levels, preneed current in flat interest, with the cash second just interest an while terms and to and remain million taxes, talked more to of cash expect And floating year capital, balances outside really sales, slightly want of flow, to the debt was we're at cash not cash we interest primarily decline with the but compared of the about working

capital grow the of to investment our over $XXX invested value So million shareholders. our and business to quarter. during We activity return just shifting now to capital

at components. the look Let's

million and our cemetery million our benefit We returning First, facilities, development let's into and systems growth. projects, inventory, capital $XX $XX $XX maintenance high with million invested maintenance to of digital new start preneed initiatives. capital. into future sales into again,

towards to a are one $XX of closing the growth in expansion Kentucky, Canada, half continue to end was we $X and homes mergers and That the here of total kind $XX M&A and our in three million perspective, optimistic million. expected and We to about first of in in of spend our homes, invested opportunities acquisitions. of our about construction $XX to million about funeral Illinois, was how million of spend quarter, above capital remain for acquisition And existing last transactions. new range momentum and an year alluded Western in also One as cemeteries. From that some brings very $XXX targeted million. to was funeral in successful investment invested I are about we one capital

$X also including addition in cemetery In acquiring in purchased States. to million million Western estate, we for spent United expansionary businesses, real $XX the land

Finally, million deployed invested of in quarter, of of our capital to just we through and $XXX capital or nearly returned $XXX shareholders, share repurchases. dividends the terms million to of $XX in under million shareholders

we an This So our shares of of million in shares company resulted million as about June ]. $XX XXX speaking that, for have price year-to-date, over purchased average X.X of just outstanding XX. about [ at

cemetery guidance the with $XXX for note outlook on of adjusted from quarter, the due Now yesterday, with businesses. reflected and both I've from of underlying cash during million moving receipts flow flows on resilient support cash $XXX continued our operations the important lower-than-anticipated flow preneed have atneed as Even that proven volumes Accordingly, in we reiterating press cash is earnings cash today, million of installment to full this cash receipts to impacted to mentioned, the our already midpoint are funeral million. release as to it $XXX the our year. our range and our sales our

highlight and I'd position. So our do prepared solid our about couple more a closing to remarks, financial just in items like

plus liquidity $XXX under at hand just consists long-term This We maturity $XXX of facility. available favorable end the just bank continue our to quarter. profile have on of million and over million a $XXX credit debt of of on million the cash

with increased about of at debt-to-EBITDA communities the each continue and invaluable be net want the to flow contributions to a value balance lucky that's entire our again, slightly sheet and delivering gratitude to their for to X.Xx. to well strength. we our my leverage end to are we And Once SCI are team cash I our day shareholders. serve. And client on every the positioned so continues basis. our express to families together Our And solid to quarter the again, position,

with I'd this prepared operator, our to turn So over with like that, that, remarks. call to concludes this now And questions.

comes [Operator America. Instructions] Gajuk The first from from of question Bank Joanna

I comment, your around So on outlook. may, year if next guess I

So weakness you because sounds funeral was in like tracking to better. alluded the you July sort this temporary June, drop think of

QX just of second confirm, reducing half you're right? expectations I your unchanged, the essentially And to results, for So for guess, your first, this guidance right? year

into half Yes, they're We and things we can positive July to back very predict. it's the of predominantly know a get year the XXXX. do then same, to got you trend. never we've as do is and again, volume, Joanna. But execute again, many say believe, we the We difficult did in with

in half. delivering ready, be expenses the we'll So back managing revenue and the both

me Okay. year you for comment question -- to Great. yes, leads I thinking that next just the that original And question about then made. was

sort say temporary QX was right you to issue, a end at higher so speak, So as of if typical and range. the grow viewed of expect the to

what off maybe of gives somewhat in the confidence number? guess I towards grow I ] post XX%, ability XXXX you guess, to [ So

Yes.

two as So 'XX. mentioned believe XXXX. before, unfavorable number, you is about think I subside rate as think things about about will in to going interest the as a you 'XX think One when have we -- that stand it's you as comparison away. out We 'XX

Direct, the pain. we're thought we we talked temporary some the Direct home to half The cause from some recorded relates you'll essentially SCI that these way year, other favorable to first were the insurance. $XX made thing to we away the revenue some is, and but remember because were going changes business, that Joanna, operational changes for very quarter, not in SCI of side, in deliver the first long-term had we about million the of merchandise of we that selling changes on And

go of two back negative of those half in effects away So the XXXX. also the year and kind away in go

trends disappear. of the two negative out that So kind gates, have you of

with some agency other The company insurance. an partners relates that there's we agreement, funds the in general positive preneed it, we to can terms announcement, And higher thing, this our commission. believe that the as are switched our new agency and and of been general insurance we it generate agreement

our the effects positive having good then we up XXXX. very think in funeral to into 'XX prospects from the we We would side. like out begin So core feel, that XXXX. And We itself, feel look stabilize inflation business lift as volume again, the I expenses. see feel about. again, our as us see about anticipate of in cemetery said you'll to And good that, you should we subsiding,

of lot people. a have We

pieces a appropriately, a I seeing other that go have and lot But people. the We it. inflation pay need have. great them we We into think of to we're subside and wage all bit

the company. exciting So for year we're be excited I it could 'XX, really think a about

I contract the So Atlantic new Global may if this with follow insurance. up on

adjust Or largely higher. you will get did sort expect negotiated, So But higher? you you kind in to returns it being you also the predetermined when is the commissions of that your be that of this on said contract? reflective commissions

it's predominantly also mix. in be to product then commissions Well, the going the it's and in

had for write I get happens our get product. ability of and give these aspects more do our to people have old technical in us. Global well difficult we'll to get way it worked customer, to of more terms. You The But won't we under our people. the all you really to example, generate an for And a commission insurance ways guaranteed to Atlantic protection real agreement, better some was in it which customers higher with technical to into to that. you underwritten, onboard finding give a also And we therefore,

Global commissions, think we'll underwritten of which customer really for better you about higher better for we better So product our our think them, for percentage honestly. a base, have quite is Atlantic as

it's we higher to kind also customers, rates. generate better think should, way a execute if allowed serve So which our through correctly, to commission us again, of

one the low. itself, because, margin very a Great. last on gross quarter If ] was right? there [ Funeral call it, I very The segment, the may,

So So revenue. then into surprise -- this like structure right? right? of we're That's to to quarter it sounds you, call quarter kind like there in you of, sort things the the surprised revenue and mismatch it general? think was of the with and different was about heading essentially cost cost how kind you June, in sounds So between it,

Yes.

and such accruals happen, better at think months. and I way I and can is at adjustments step look -- maybe that back time sometimes, look you periods funeral think of because Joanna, to to X things are you quarters if have a short the

funeral about last margin million not points is to below about change. period, the merchandise XX.X%, For think gross predominantly the XXX that about And I think, are, mind X-month Direct side. and thing $XX delivering margins when our you on we're of forecasted missing Direct SCI year basis SCI were which in percentages. One anticipated keep

So if takes to in think, the it, profits associated XX.X%. $XX XX.X% it you back with up add back that around, it's million XX.X%, I

So got would throughput I of, nothing basis margin it. of a I'd about categories, points. couple of And cost is with creep a say, XXX little material. explanation associated think We've explain bit XXX but your

funeral thought to of better we job it not would do So margins the think of the I would half year, in say we I can't it's as But the kind them expenses, we be higher. managing of will. back where be, to a about expect

arms better So going negative our SCI on the lose around getting comparison that. feel We're to about we Direct.

a margins of the XXXX. lot feel us. about the more going funeral to And I think that's half I as positive again, back So help about

Parker question Snure The comes James. next with from Raymond

I be the sales. for you cemetery improved. you just talk in recent John seems quarters. mentioned Maybe lower to divergence about on have the guys noted but is a This from core actually what preneed high-end sales, know Ransom. That Parker

just at you it us little themes purely then just consumer? maybe thread bit sales lower-end you're driving So just from on is kind that of then about one-off kind that Or also kind percent that consumer the any that's the related markets? And preneed cemetery seeing your a of high-end common are all? changed that comes of that core Has the some consumer. how remind maybe that in more. certain Are pull generally, there timing or versus trend? thinking of And

Parker. Sure,

So of you hit head. while reversal. high-end think about core. saw growth and different. nail sales as We since I the and first is that's a the the I all, high-end the good tried dip the over, core, think explain over the on It's we've feel a It We we've seen sales very been to of in very high conversations to the just ability the I a of having didn't we are a people predict interest, year. it lot you when at the close We at to back of with hard that tell feel a in lot half probably still lot down. But there's fall. of end like they would of were execute the end, June.

I going work to to to hard. wouldn't that. get about So We're worried not we're -- continue

the flat. sales and actually you If are year, back look step high-end whole at about

you you think got it periods -- And again, out so probably normalizes. move time, I to of as

XX%. a high-end probably perspective, So right? the believe, generate, think Is half very XX% that of the from good year. I that preneed we the is sales feel reminder And cemetery about to back I

to probably It's year. ballpark over that XX%, in the XX%

little So to be I a the think that volatile to as try predict going always that's -- quarter-to-quarter. again, piece that's you more but

Okay. of just could one just higher-level maybe question. do then I more kind And a

of the driving maybe have of harder? volumes, some an talk the just selling. Maybe typically you're lead tools maybe in have kind preneed about an where for a little to tougher bit work where kit just you environment having just cemetery source more preneed is If cemetery preneed funeral that which in selling you you the environment your of for a managing in talk kind about cemetery

Yes.

coming lot a before, leads our the a the talked tools of about think I now location. we've are from that more outside of lot

about seeing lot think and through So from those leads a leads, we'll we on, put that where we're Parker. other you when about are think perspective, a seminars more digital that when you website means, digital the generate so

contracts very if any band And the in we're that our differently. But predict almost volume, you say, we'll correctly is our core and of you XX%. generally mean, [indiscernible] you of on can so look executing core a volume within given. That's percentage I funeral write between the that of those we XX% at XX% number

at it we're So other trend a are tremendous there's and a preneed homes a in to we're lead really high identifying that are cemetery. purchase where that we at there data sources, more could of front mining digital funeral from again, hard people still through we'll ready And our over that you getting do there's that's of how source out coming cemetery. I for and towards perspective, a better and lot correlation that, customers. do people time, understanding that those think shows are of working

trends in very -- can't cemetery ability still core turn it's those into you volume material reason we the our then such for Funeral about sales. still on So generate them leads impact a has to good that and business. sales. a feel But

from Truist comes question Tobey Securities. with next The Sommer

I headcount. to demand environment? able gains managing the even drive ago, want sales the I force This to you Jasper with Day X Investor Tobey. for years lower been think you've Bibb. showed impressive how how are ask the on productivity you current it's is in pretty

those you hold if see curious So levels up this year? productivity

force. Sales

but years, what just refresh now of you X had the to this again, back around you X,XXX 'XX total at $X.X or referenced billion we When so May the asked. you to billion, to produce $X.X X,XXX counselors sales Investor look by preneed is we as and Day, I memory, time. about Well, are doing memory, that, did somewhere X everybody's

of $X.X-ish So now $X.X funeral that's billion and get Now [ counselors but billion terms that when and entire you're Not sales as preneed counselors. I doing forward that, repetitive, of now, what in looking that's okay? answered the function. Today, Tom preneed say to today. fast for billion ] cemetery we're the area the at call the to X,XXX kind opposed during already to had it's with X,XXX force, sales

of be to have and our talking better us capital the leads. terms down improvement, you way of which quantity all tiering a the mail the the build all mean much mouth we're be a It efficient. that's that's and in let's that in and if before. We're terms the returns of you're our wonderful talk these huge seminars is than helping capitals price piece it's don't a XXXX, direct with the more capital, on terms a we're technology has about quality is front inventory. that our all the industry in differently capital do for and utilizing money to not remember which about strategy I down less customer Tom lot in then that we the That's putting there we just to projects and cemeteries. benefit using, also probably high-end way those those points digital to mid-tier not less the mentioned but productive in and to more can projects, of spending same where are entry-level would we're You're getting us $XX leads, to into $XXX effective doing type if which of million than cemeteries. beginning continuing the correctly. $XXX of But spending CRM led what that use -- time helping back forget we of system in already such. And million, although and to how I turnover, million going handling that, the big and much, frame recruiting the to as reduce invest and distraction

it's So not bullet. one magic

All as of 'XX, above come back continues to that about speak fruition we which to the today. we in talked

think margin bps basis right the year Direct earlier, 'XX? going like Is 'XX tailwind that way I next XXX margin to points the and let's that's say, gross half year. help being, you to to on for SCI about XX versus you And mentioned changes as first XX for then think this gross headwind

-- think I no.

flatten comparisons think begin out to I negative 'XX. should your to

I kind have material any effect margins of it anticipate to So 'XX, just in wouldn't 'XX. on

with The question from A.J. next comes UBS. Rice

a couple things maybe. Just of

you're recognized in be more QX least half. What saying -- little away what you're the comments walk for assumption the right challenging in third think Their from third of make want about overall a prior expect the second more in preneed in to seem projects revenue the year. quarter? in cemetery versus to completed related comparison cemetery just at I you the quarter lower cemetery flat the I we with for to production preneed sure thinking construction

a I a is fine Yes, was construction of big I and our I be the the contracts. too production about production not referencing been more sales a in but -- $XX as, as we're comment of completed of say, think completed recognized of differentiation. third into. What projects year, And mausoleum more already last was about and decent-sized pretty will my difference what have highlight I lot trying number completing the think not And revenue contracts, sold that it Remember, ]. be quarter. let's we're think little a quarter timing in good in that could those the quarter had big bit third fourth [ from million we think to

the about production, and quarter. when do favorable gets is recognized it revenue nothing more So about much has fourth but the you think more comparison when to with that

the little have production a of third climb quarter, for if third We about going to of the cemetery think quarter. recognized hill for because a just good to So you're revenue still bit about that. you feel very

then construction on larger, just And when properties be I the it can the higher-end Okay. it. sometimes can completed you recognize know is and

more completed? Or and consumer you the you've are little you projects there's about behavior high saying the saw in Are you bit softness when end second that the a sometimes, got quarter high behavior. that to is the they the in actually saying a And in end? softness consumer seen little

Yes.

about consumer we talk behavior. that's just production, when So

to was relates really We the saw in less upside So highlight year's as surprise. I'd a of yes, sale. first high-end you, to closed it strong last very quarter But the again, you nice contracts we a quarter second kind quarter. second had

flat. So X months, the it's again, looking of kind at

I like seeing of we're think reason sales the that. can't of no we year, think as generate or pushbacks we consumers we anything back the half not high-end from see

Sometimes, pull it's trigger, of trigger. the front in they know, deciding people, getting as somebody you to pull A.J., want not just the

very the inventory, So the feel positive, of both our the year high-end to in sales we sell half still but in and back XXXX. again ability large then

rates, the per know on growth in I service very the put some core as might on Anything normal didn't funeral was down you you a funeral much that that. up where in a seemed there? you just that cremation then a see? in drill quarter stronger have about It environment. side, which have And little X.X% can been Okay. like array Anything pressure

Really not.

was X% I it think a year-over-year. contractual to level, closer from at the atneed

negates of backlog you tougher lastly, it preneed as more If the cremation that. the comparison comparison you a I relates And some of versus to which change, remember, was it atneed got the mix then think walk-in.

going in. contracts those that's vary to time so And from come to again, when time depending

] some coming income of X.X% kind mix of increases, be trust X%. backlog. are the of at contracts So and of still the X% seeing [ is level, the which But because customer the not because may of we're that from out that

then And just question. a last Okay.

How your has the properties? it you're the range. more just in be end you'd target the know I normal smaller we're about issues. going said high of the On the deal in markets? new you give that there it Is Is -- more gotten would seeing remarks, are the some are a And Is competitors you're seeing? seeing? think -- consent of deals that? it what Do is of better having us decree as prepared deals anything on their pipeline, you away? Or there little financial own the those landscape above competitive economics the target

Sure.

of bit And and probably got of a above, lot just I'm first predominant competitors we of history of interest as I the feel we've again, is that, reason variable little. rates had very but a think the but up I our A rate debt gauge. think, little using all, all structures. spiking

very our think financial so Eric's And point, back I our of cost is stability, our to different. borrowings --

up, those as competitive stage. allowed it's So flow to in back. not I deals us pull more to And think directly to us be think those competitors to really had the went I and

difference I excited It's the we I stuff I until I want we're in drastic choice. about. think pretty there's working and and see much a signed same. never it's out a you don't pipeline. no. mean, something of it's the that the in lot I highly think there enough confident Like done. pricing, really we're we've declare got -- to deals And sizable Eric feel said, But think just

So great create opportunities to deploy SCI. some capital future growth for and some and profitability

Scott with The next question Oppenheimer. comes from Schneeberger

revenue much year-over-year, a some of some this timing it in had on quarter. difference profit what was was the break there are significant you on the on was the Funeral you question, magnitude Just the drop. And mix? not segment drivers in the out the underperformance quarter, and going know there cost yet in back Tom, mentioned creep. answer, maybe of this and Because in kind could maybe discussed prior revenue, but earlier and I an

concerned persist So talk then may I And some the half heard the SCI people leverage you stabilization. be just in and as creep. even some that think that's about going something comp to cost Direct I though is incentive that back did this

could little would more, a So appreciated. out if that break it bit you be

things is Sure. guys estimates and these I adjust what you [ in Scott, how accruals. to work, In it, sometimes ] was and quarter the see trying you say know

So I'll example. you an give

"Hey, an the show head hit and I'm that decided, in or may to first. its over may accrual reserve going I'm If you period not the begin It to reserved? in under you second reserved in quarter." or had AR one

hard. it's So really

the way Sometimes went a we're months look X why step that's one margin say and of another credit at you XX.X% back -- points. debit got you X months going and months, a versus year. from XXX last way, X and XX.X% quarter can the noise. And XX.X% in if It's have at basis the funeral for we I

would going line. which I If I basis on and to say, would pure delivering knew and was That's volume the have to a would go based you the bottom volumes, merchandise I that Direct you you take $XX say, your other stop tell million, $XX throughput, core. Then do volume have okay, the of calculation That's items. upon expected down that points. it couple SCI continue just XXX dropped, to million

now I've explained basis So XX now points explain another and another basis I'll XXX points.

they're So of think XXX and I take basis quarter-to-quarter do can you accruals, that again, at SCI points, not comp when say, on incentive way. And away higher flows. X.X% if again, points production. look I it They're it just because, and to of slightly basis whatever based Direct Okay, And the on is numbers you higher and recall EPS, comp the got back XXX my those cash some adjusted noise is I've based is on by difference based those timing throughput, of you expenses. incentive which explained are

have what don't said in any We last things I do. man so. are for rightfully think the that, big there's I'm years, couple So cost, had boogie guess, saying. Having there we clearly the we of can wage inflation

subside of trends. that seeing we're so and And some those

So if inflation you agency Direct. On are that, of got going we'll more are when XXXX, the a better the enhance drag we in which the be margins efficient to will XXXX. commissions have we should SCI operations, how less have don't generate I general of top think about we've agreement, funeral about wage which higher running think and

have good still revenue the a to SCI way on one about operational manage that's got we we're Direct a So And And of thing to the year-over-year are tighter. that of trust and XXXX. this going up. is lot Direct, better G&A the We've changes that exciting drag I coming on go business remember, we're day of SCI operational feel revenue should don't Direct's margins why we're story in money a selling. SCI come basis. And is to that going deferring out going get

The this thing itself timing consumer business healthy. very the very a So healthy. is is and is

love digestion. of in bit stomach earnings And to a little term, Short so we're long having trend. term, our I

And just on the new partner, the new insurance company partner, you alluded to 'XX.

you So few flow is time. quarters a come better it get half? think going discernible? it's early it some as by you before that Or the like take to that it sounds as second fee maybe Could

will some get sure. We half for second the in

of as the front are full type there's robust effects I believe, lot now it to and come in of most going in type XXXX remember, to insurance, think relates our products we of products operational put right have commission customers. to a The underwritten of because what the selling. rates we're change here again, we get around

licenses. getting insurance people So is it

in and this the we you license. insurance opportunities make to So to as salespeople sure agreement insurance, transition real our have new have an that

get I'm insurance So as not, protected ever going they we that sound are we're licensed, is product customers like of than our excited get understanding And have we need the they're to to we simple, more what said, need to and but people more mix. have. about by historically I people underwritten

consumer. So it's for a product better the

our feel So providing we're about if it right, ] we to [ really commissions. counselor should do that And generate protection. good going higher

just in I consumer lower-priced both them the they're but can ask I'll is and behavior more, separate, tiers. have wrap. One two upfront. We

you volume. a worse? Just just seeing delve velocity into little Is inflecting little that contract it could inflection If about bit. you the curious a Are better?

So one. number that's question

about is anything and that how rule number FTC, the funeral two that? And that? update trend think on you Just

talk challenged. say to first that with payment get it's funeral are for to consumer, the started. able lower-end think at them I let's there lives, down we be with sales let And and to I to on board out by the lot of pieces I this, the through retailers would made consumers think we the other lower that impacting adjustments it people think as were a a get I'm having our end. correlates financing Eric better other relates harder about some saw it stay, leadership being of to their going But I And inflation back again, them rule. terms get while that

And that. of positive we And I so we little think a a continue saw bit reaction to to.

still really consumer again, of what opposed retailers do further to as we've not challenged, see I believe in seen because deterioration. other, that is I ours. So mainly any

a to So want that sure If bit, making we consumer. out what means little accommodate the We're that to we to can stretching accommodate can payments to easier. going we that do make do to try terms a little them.

Scott, on I guess no answer to to update really FTC, is you. give the the there's short

I'll remind everybody where So just are. we

work to with continue the We staff.

experiences anything to coming that's have in the the very relationship time point don't have to optimize any anything are adopt anything we we to already We're that home down offering expecting you surprise one we everywhere different ready between. Ultimately, deep And expect that with where just and go pipe there. our in funeral a a at continue We're tier kind you We us. that whether FTC. in full as the fashions, online we tremendous have staff ultimately, homes dive know, to most to homes effect any online, down we company. And funeral to of dealing forms continue, spend have. into will and think, that go importantly, funeral particular particular pricing we'll that such We'll with or that as test. to at and starting According it's think digitally pricing know from customer of good go we premium prices not have we at continue to particular do really complete that the about, We'll path. websites. material of one to the can of we in pricing market, not amount our

The Gajuk of next question Joanna Bank from comes with America.

on just commentary. to sales cemetery I clarify want production preneed the

cemetery So production? do of long-term view low anything growth still for single-digits year? then kind changed preneed the of in expect sales you to grow for And the has your

year anticipated because, we to think the with in low feel able about again, We And do we be volume, year as 'XX, mid outer to volume, get stabilization we the the stabilization Joanna. single-digits. think expect getting again, Yes, back that end of funeral the single-digit I to to better there. 'XX, expect is about low funeral in to we

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

Thanks, Thanks, us, everybody. Thank at will you end you and the we again everybody. see of joining for October.

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

now disconnect. You may