By Tom Parmalee, VP of Industry Insights & Content.
SCI’s Earnings Reports Reveals Trends and Opportunities
The pull-forward effect in the death rate that we saw from the recent pandemic is waning… or it may even be in the rearview mirror.
At least, that would be the conclusion you’d make judging by the first-quarter results and commentary from Service Corporation International.
The largest provider of deathcare products and services in North America held a conference call with Wall Street analysts and investors on April 30.
During the call, company executives reviewed the company’s financial performance, which included adjusted quarterly earnings per share of 98 cents compared to 89 cents in the year-ago period – an increase of 10%.
Tom Ryan, SCI’s chairman and CEO, commented on the death rate, stating, “I think we’re taking the approach of one quarter does not a year make. So, we’re very pleased with the first quarter. It was ahead of our expectations. We haven’t altered our annual guidance because, again, it’s the first quarter, but I’d say that we feel a lot better now about that than probably we did as we started the year. So, yes, I’m optimistic that it could be a really good solid funeral volume year.”
If you operate a funeral home or cemetery near SCI firms, now may be the time to focus on locking in future market share with prearrangements, as the corporate giant has had its hands full in that area amid a big pivot.
“Non-funeral home preneed sales production decreased $20 million or 26%, as SCI Direct transitions from the sale of trust to insurance-funded preneed contracts,” Ryan reported. “This transition required many of our sales counselors to go through extensive training and obtain insurance licenses and change the term to payment terms for customers financing their preneed, all of which contributed to a temporary slowdown in sales.”
But SCI expects the slowdown to be short lived, with Ryan adding, “We’ve made the transition in markets that represent 80% of our production. So, this too should stabilize over the next few months and begin to grow again, probably sometime during the fourth quarter of 2025.” He continued, “As we think out to 2026, we would expect preneed funeral sales production to return to a low to mid-single-digit percentage growth rate.
From a cemetery perspective, we anticipate that we can grow preneed cemetery sales production in the low single-digit percentage range, resulting in cemetery revenue growth of about 1% to 2%. The volatility in the equity markets and the potential impact on trust income for the rest of the year has caused us to dial back our expectations a bit.”
Translation: If SCI has been somewhat distracted from selling preneed as it works through some kinks, this won’t last for long, so be prepared for some renewed competition – and lock in those prearrangements NOW.
Ryan also commented on the prospect of a downturn in the economy and how that might affect funeral service.
“We’re not blind to what’s going on outside,” he said. “There’s a lot of pressure right now, I think, discretionary purchases in other industries, you’re seeing in retail, and others. So, what I want to remind people is we’ve been through this movie before. In 2008 and 2009, and then again in ’20 and ’21, discretionary purchases really kind of fell off the map in a lot of industries.”
But he added, “The nice thing about us that I see in our business is, we’re viewed as a mature sale or call it a taking-care-of-business type of sale. We’re not a big-screen TV. We’re not a sports car. This is a responsible decision. So, we always saw these sales tend to come back very quickly, relative to other discretionary purchases.”
Eric Tanzberger, executive vice president and chief financial officer, responded to a question about tariffs, noting that they would primarily impact the company on the merchandise side, which encompasses caskets and urns as well as granite, bronze and other types of products in the cemetery segment.
“Ultimately, that’s a couple of hundred million dollars for us in terms of costs when I’ve lumped all of that as a very general category, but I got to tell you, there’s a good 60% or two-thirds that we already source within the U.S.,” he said.
He added that SCI has some long-term production contracts with certain business partners that should limit the damage from tariffs.
Ryan also noted that SCI invested $13 million of growth capital in the first quarter toward buying real estate, in construction projects or in the expansion of existing funeral homes and cemeteries.
“Finally, we invested $15 million toward business acquisitions during the quarter,” he said. “And we again remain optimistic about the deal pipeline that’s currently out there in the industry, and we do expect to achieve our $75 million to $125 million of acquisition investment, which is our target for the full year of 2025.”
Carriage Services Also Reports Strong Earnings
While much smaller than SCI, Carriage Services saw some of the same trends as SCI.
The company reported quarterly adjusted diluted earnings per share of 96 cents compared to 75 cents in the prior-year quarter – an increase of 28%.
Other highlights included:
- Total funeral operating revenue increased $3 million or 4.6% over the prior year quarter, driven by an increase in consolidated funeral average revenue per contract of 2.3%.
- Total revenue for the three months ended March 31, 2025, increased $3.6 million compared to the three months ended March 31, 2024. The company experienced an 11.8% increase in the consolidated average price per preneed interment right sold, which was partially offset by a 5.8% decrease in the consolidated number of preneed interment rights (property) sold. Additionally, it experienced a 2.3% increase in the consolidated average revenue per funeral contract, as well as a 0.7% increase in consolidated funeral contract volume driven by the delayed flu season.
- Net income for the three months ended March 31, 2025, increased $14 million compared to the three months ended March 31, 2024. The company experienced a $9.3 million increase in gain on sale of divestitures and real property, a $4.2 million decrease in general, administrative and other expenses, a $1.4 million decrease in interest expense, and a $0.6 million increase in gross profit contribution from our businesses; offset by a $1.6 million increase in income tax expense.
On a conference call with Wall Street analysts and investors, Carlos Quezada, CEO and vice chairman of Carriage Services, observed that there was a shift in the flu season that moved “volume we would typically expect to see in the fourth quarter to the first quarter.” He added, “We estimate that only a portion of the first quarter’s volume is related to the flu season shift. Typically, the first quarter of the year represents our highest funeral home volume.”
Like SCI, however, Carriage Services struck a cautious tone related to the overall economy, with Quezada noting, “While we are encouraged by our momentum, we also recognize that the broader economic environment continues to be uncertain. This reminds us to stay focused, disciplined and forward thinking. With that in mind, we believe the most responsible course of action is to maintain our current guidance for now. This does not reflect any lack of confidence in our performance.”
But the overall economy is clearly something that Carriage Services is keeping a close watch on as it relates to its marketing and preneed efforts.
Quezada said that in his experience, while the death-care profession is resilient during downturns, you may need to put in more work to reach your preneed growth goals.
“It’s pretty clear to me that it’s just a numbers game,” he said. “So, for example, before you had to talk to, let’s just say, 10 families to sell one preneed cemetery contract, all it means is now maybe you need to talk to 15 families to sell one preneed cemetery contract. And so, all we do is just accelerate and plan for lead generation programs that deliver those numbers to fulfill our goal to 10% to 20% growth on a year-over-year basis of preneed property.”
Matthews International Reports Second-Quarter Earnings
On April 30, Matthews International Corporation announced financial results for its fiscal second quarter of 2025.
The company reported a diluted loss per share of 29 cents compared to earnings of 29 cents per share in the year-ago period. Sales were $427.6 million compared with $471.2 million in the prior-year period – a 9.3% decline.
In discussing the results for the company’s fiscal 2025 second quarter, Joseph C. Bartolacci, president and CEO said, “The company’s results for the fiscal 2025 second quarter were generally in line with our expectations. Later, he added, “The company’s comprehensive evaluation of strategic alternatives for our entire portfolio remains ongoing. The board and I firmly believe the inherent value of the company is well above current trading levels and, over the next several months, we intend to identify the appropriate path to unlock this shareholder value.”
During a conference call with Wall Street analysts and investors, Steven Nicola, chief financial officer, broke out results for the memorialization segment, which accounted for less than half of quarterly revenue. Memorialization segment revenue for the fiscal 2025 second quarter was $205.6 million, compared to $222.2 million for the same quarter a year ago.
“Sales volumes for bronze and granite cemetery memorials and caskets were lower for the quarter compared to last year, primarily
resulting from lower U.S. casketed deaths,” Nicola said. “Cremation equipment sales were also lower for the quarter. In addition, the recent disposal of our unprofitable cremation and incineration equipment operations in Europe unfavorably impacted sales for the current quarter. These declines were partially offset by improved price realization.”
He continued, “Changes in foreign currency rates had an unfavorable impact of $422,000 on the segment’s current quarter sales compared to a year ago. Memorialization segment Adjusted EBITDA for the current quarter was $45 million compared to $46.6 million for the same quarter last year. The decrease primarily resulted from the impact of lower sales and increases in material and labor-related costs. These increases were partially offset by the favorable impacts of improved pricing, benefits from cost savings initiatives, and the disposal of the European operations, which were generating operating losses.”
Later, Nicola explained that one of the factors affecting year-over-year comparability was that last year included higher than normal granite-related sales. “A year ago in this past quarter, we were still working off significant backlogs from the pandemic,” he said. “So, that was one other comparable that contributed to the reported decline year-over-year.”
In related news, Matthews Memorialization, a division of Matthews International, announced that it has bought The Dodge Company for $57 million. Learn more in the full news release.
When Bad News Hits Your Community
Imagine the residents of your community suddenly heard from the state attorney general $650,000 from customers who paid for pet burial and cremation services over a three-year period.
For those of us at Ring Ring Marketing, we would hope a few thoughts would run through your mind:
- If you aren’t already serving pet families or partnering with a reputable crematory that can assist these families, the $650,000 number should give you pause … that shows there’s a significant opportunity.
- If that news came out about one of your competitors, it might spell opportunity.
This isn’t just a hypothetical scenario: On April 28 Pennsylvania’s attorney general, Dave Sunday announced charges against Patrick Vereb regarding the Pittsburgh-based funeral home owner’s alleged theft of more than $650,000 from 2021 and 2024, according to a news release.
Vereb, owner of Vereb Funeral Home and Eternity Pet Memorial, has been charged with improper disposal of thousands of dogs and cats for which owners paid for cremations, burials, the return of cremated remains and other services.
According to the Office of Attorney General investigation, Vereb took money in exchange for private cremation services, then disposed of many of the pets at a landfill and provided customers with the cremated remains of other, unknown animals.
The Office of Attorney General has charged Vereb with felony counts of theft by deception, receiving stolen property, and deceptive business practices.
An extensive investigation by the Office of Attorney General has identified more than 6,500 victims from Allegheny, Armstrong, Washington and Westmoreland counties.
“This case is disturbing, and will cause devastation and heartache for many Pennsylvanians,” Sunday said. “Our pets are members of our families, and this defendant betrayed and agonized pet owners who entrusted him to provide dignified services for their beloved cats and dogs.”
The case has drawn much attention, including coverage from The New York Times, so even people who live beyond the coverage area served by the business have no doubt heard about this funeral home’s alleged illicit deeds.
As a business owner, it is important to be aware of any scandal that may impact the way members of the community view funeral service.
Such bad news is an opportunity to run advertisements and/or reiterate the following messages:
- How your funeral home has safeguards in place to ensure that every family gets back the proper remains of their loved one – human or pet.
- What makes your standard of care better than the competition.
- Why you are so trusted by the community.
The sad fact is that all the funeral professionals in the coverage area of the accused in this case may suddenly be confronted with questions from families who are suddenly wary of working with a funeral home or crematory.
So, when a scandal or bad news hits your area, it’s one more reason to be out there sharing your message and explaining what makes you different, which includes paying close attention to digital marketing efforts.
Why to Start Thinking about “Real IDs” for Staff
You may have heard chatter about needing a “Real ID” to fly domestically and thought, “Nothing to worry about … I’ll just bring my passport.”
Lost?
Let us define what we are talking about.
According to the Department of Homeland Security, the Real ID Act, which Congress passed in 2005, established minimum security standards for state-issued driver’s licenses and identification cards and prohibits certain federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards.
These purposes are:
- Accessing certain federal facilities.
- Boarding federally regulated commercial aircraft.
- Entering nuclear power plants.
While you can solve the boarding an airplane problem with a passport and you likely want to avoid nuclear power plants anyhow, the first bullet is another matter altogether — especially if you operate a funeral home or cemetery.
To find out why, consider an announcement issued by Arlington National Cemetery on April 29, which stated, “Beginning May 7, 2025, all individuals over the age of 18 who are authorized to drive onto Arlington National Cemetery in a vehicle should be prepared to
present a REAL ID at the security checkpoint. This applies to funeral attendees, family pass holders, honor flights, contractors who do not possess a Department of Defense (DoD) Common Access Card (CAC) or an Automated Installation (AIE) badge, family-hired photographers and florists who drive into the cemetery via Memorial Avenue, Joint Base Myer-Henderson Hall or the Service Complex Gate.”
Now, can you imagine if you were a funeral home in the area that did not work with Arlington on a regular basis and suddenly had to try to move heaven and earth to get your employees Real IDs?
Or can you imagine having family members or service providers (such as florists) suddenly being turned away from a service because you failed to let them know about such an essential requirement?
We at Ring Ring Marketing can’t either … the repercussions would be devastating.
Keep in mind that not every national cemetery or other entity will be as proactive as Arlington in communicating Real ID restrictions to the community. Also, it would be wrong to assume that an exception will be made for a funeral home or grieving family.
That’s why getting a Real ID may be something you may want to push up on the priority list.
Ring Ring Marketing’s Founder to Provide Insights to Boost Market Share
Welton Hong, the founder and CEO of Ring Ring Marketing, will deliver a presentation that will transform the way you do business at “Mastermind: Elevating Your Funeral Service Business to New Heights,” which will be Thursday, Sept. 11, at the Live! Casino & Hotel in Philadelphia, Pennsylvania.
His presentation, titled, “What Will and Will Not Work in 2026 for Getting More Cases” will help funeral home operators adjust to a rapidly evolving landscape – one in which embracing the power of artificial intelligence will be crucial to staying ahead.
Hong will break down the essentials of online marketing, so you can:
- Discover how AI tools streamline website optimization, enhance mobile compatibility, and improve conversion rates.
- Learn to manage your online reputation through real-time review analysis, automate ad targeting for maximum ROI, and create high-quality content that resonates with your audience.
- Future-proof your business and thrive in the year ahead.
If you enter Promo Code “VIP” at online checkout, you’ll save $50 off your registration – but register before the early-bird expires on June 19 to maximize your savings.
Mastermind includes four other experts who will focus on a variety of topics and the event is approved for 5.5 CEUs by the Academy of Professional Funeral Service Practice as well as individual states, including Pennsylvania, Ohio, Maryland and many others – with approval from New Jersey pending.
