SERVICE CORPORATION INTERNATIONAL ANNOUNCES FOURTH QUARTER 2023 FINANCIAL RESULTS AND PROVIDES 2024 GUIDANCE

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PR Newswire

HOUSTON, Feb. 12, 2024

Conference call on Tuesday, February 13, 2024, at 8:00 a.m. Central Time.

HOUSTON, Feb. 12, 2024 /PRNewswire/ -- Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today reported results for the fourth quarter of 2023.

Highlights:

Revenue increased $28 million to $1.1 billion.
Comparable preneed cemetery sales production grew 9.4%.
Comparable preneed funeral sales production grew 4.2%.
GAAP earnings per share were $0.93 and $3.53, for the fourth quarter and full year 2023, respectively.
Adjusted earnings per share were $0.93 and $3.47, for the fourth quarter and full year 2023, respectively.
Operating cash flow of $278 million and $869 million, for the fourth quarter and full year 2023, respectively.
Adjusted operating cash flow of $882 million for the full year 2023, just above the high end of our expectations.
2024 adjusted earnings per share guidance of $3.50 to $3.80.

Tom Ryan, the Company's President, Chairman, and Chief Executive Officer, commented on fourth quarter results:

"We delivered a solid quarter as we closed out 2023 and are pleased to report growth in revenue and adjusted earnings per share. The revenue growth is primarily due to a 9% increase in preneed cemetery sales production, which drove higher gross profit. Adjusted cash flow for the quarter grew over $100 million from improved operating income enhanced by expected lower cash taxes and increased sources of working capital that more than offset higher cash interest payments.

For the full year of 2023, we reported adjusted earnings per share of $3.47, which represents a 16% growth on a compounded annual basis since pre-pandemic 2019.

The number of comparable funeral services performed is 3% higher than pre-pandemic 2019 levels on a compounded annual growth basis.
Comparable cemetery preneed sales production in 2023 experienced a 10% compounded annual growth rate over 2019 levels.

These results are all made possible by our greatest asset, our 25,000 associates. Their hard work, dedication, and focus on our client families are what makes this company so strong. Looking forward, we are confident that our solid operating platform and healthy financial condition will allow us to continue to grow revenue, leverage our scale, and allocate capital wisely to enhance shareholder value."

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FOURTH QUARTER AND FULL YEAR SUMMARY

Details of our fourth quarter 2023 financial results and the consolidated financial statements can be found in the Appendix at the end of this press release. The table below summarizes our key financial results.

(Dollars in millions, except for per share amounts)	Three Months Ended December 31,		Twelve Months Ended December 31,
	2023	2022	2023	2022
Revenue	$ 1,055.8	$ 1,027.7	$ 4,099.8	$ 4,108.7
Operating income	$ 242.1	$ 167.0	$ 944.3	$ 927.3
Net income attributable to common stockholders	$ 138.4	$ 92.3	$ 537.3	$ 565.3
Diluted earnings per share	$ 0.93	$ 0.59	$ 3.53	$ 3.53
Earnings excluding special items ⁽¹⁾	$ 138.4	$ 144.3	$ 529.3	$ 607.9
Diluted earnings per share excluding special items ⁽¹⁾	$ 0.93	$ 0.92	$ 3.47	$ 3.80
Diluted weighted average shares outstanding	148.8	156.4	152.4	160.1
Net cash provided by operating activities	$ 277.6	$ 170.3	$ 869.0	$ 825.7
Net cash provided by operating activities excluding special items⁽¹⁾	$ 277.6	$ 170.3	$ 882.3	$ 825.7


(1)	Earnings excluding special items, diluted earnings per share excluding special items, and net cash provided by operating activities excluding special items are non-GAAP financial measures. These items are also referred to as "adjusted earnings per share" and "adjusted operating cash flow". A reconciliation from net income attributable to common stockholders, diluted earnings per share, and net cash provided by operating activities in accordance with generally accepted accounting principles in the United States (GAAP) can be found under the headings "Cash Flow and Capital Spending" and "Non-GAAP Financial Measures" in the Appendix at the end of this press release.
•	Diluted earnings per share were $0.93 in the fourth quarter of 2023 compared to $0.59 in the fourth quarter of 2022. The prior year quarter was impacted by $64.6 million of an estimated charge for certain legal matters and a $5.2 million pre-tax gain on divestitures. Diluted earnings per share excluding special items were $0.93 in the fourth quarter of 2023 compared to $0.92 in the fourth quarter of 2022. Higher cemetery gross profit and a lower share count helped to offset the combination of lower funeral gross profit associated with anticipated decreases in COVID-19 related activity as well as higher interest expense.
•	Net cash provided by operating activities increased $107.3 million to $277.6 million in the fourth quarter of 2023 compared to $170.3 million in the fourth quarter of 2022. The increase is due to higher operating income enhanced by favorable working capital and lower cash tax payments that more than offset higher cash interest payments.

OUTLOOK FOR 2024

Our 2024 outlook for diluted earnings per share from continuing operations excluding special items is anticipated to be within our expected long-term growth framework of 8%-12% when excluding an estimated $20 million impact of the higher interest rate environment. Our outlook for net cash provided by operating activities excludes special items relating to the payments of certain estimated legal charges of $64.6 million recognized in the fourth quarter of 2022. The forecast for cash taxes also includes the impact related to a change in tax accounting method related to our cemetery segment, which will defer cash taxes into future years.

(Dollars in millions, except per share amounts)	2024 Outlook
Diluted earnings per share excluding special items ⁽¹⁾	$3.50 - $3.80

Net cash provided by operating activities excluding special items and cash taxes ⁽¹⁾	$935 - $985
Cash taxes expected in 2024 (at the midpoint of Diluted earnings per share guidance)	$25 - $35
Net cash provided by operating activities excluding special items ⁽¹⁾	$900 - $960

Capital improvements at existing field locations	$125
Development of cemetery property	$165
Digital investments and corporate	$35
Total maintenance, cemetery development, and other capital expenditures (Maintenance capital expenditures)	$325

(1)

Diluted earnings per share excluding special items and net cash provided by operating activities excluding special items are non-GAAP financial measures. We normally reconcile these non-GAAP financial measures from diluted earnings per share and net cash provided by operating activities; however, diluted earnings per share and net cash provided by operating activities calculated in accordance with GAAP are not currently accessible on a forward-looking basis. Our outlook for 2024 excludes the following because this information is not currently available for 2024: Expenses net of insurance recoveries related to hurricanes, gains or losses associated with asset divestitures, gains or losses associated with the early extinguishment of debt, potential tax reserve adjustments and IRS payments and/or refunds, acquisition and integration costs, system implementation and transition costs, and potential costs associated with estimated litigation charges or legal settlements or the recognition of receivables for insurance recoveries associated with litigation, or deferred tax payments. The foregoing items could materially impact our forward-looking diluted earnings per share and/or our net cash provided by operating activities calculated in accordance with GAAP, consistent with the historical disclosures found in the Appendix at the end of this press release under the headings "Cash Flow and Capital Spending" and "Non-GAAP Financial Measures".

CONFERENCE CALL AND WEBCAST

We will host a conference call on Tuesday, February 13, 2024, at 8:00 a.m. Central Time. A question and answer session will follow prepared remarks made by management. The conference call dial-in numbers are (888) 317-6003 (US) or (412) 317-6061 (International) with the passcode of 3508658. The conference call will also be broadcast live via the Internet and can be accessed through our website at www.sci-corp.com. A replay of the conference call will be available through February 20, 2024 and can be accessed at (877) 344-7529 (US) or (412) 317-0088 (International) with the passcode of 5463479. Additionally, a replay of the conference call will be available on our website for approximately one year.

ABOUT SERVICE CORPORATION INTERNATIONAL

Service Corporation International (NYSE: SCI), headquartered in Houston, Texas, is North America's leading provider of funeral, cemetery and cremation services, as well as final-arrangement planning in advance, serving more than 600,000 families each year. Our diversified portfolio of brands provides families and individuals a full range of choices to meet their needs, from simple cremations to full life celebrations and personalized remembrances. Our Dignity Memorial® brand is the name families turn to for professionalism, compassion, and attention to detail that is second to none. At December 31, 2023, we owned and operated 1,483 funeral service locations and 489 cemeteries (of which 305 are combination locations) in 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. For more information about Service Corporation International, please visit our website at www.sci-corp.com. For more information about Dignity Memorial®, please visit www.dignitymemorial.com.

For additional information contact:

Investors:

Debbie Young - Director / Investor Relations

(713) 525-9088

Media:

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