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Service Corporation (SCI) Q1 Earnings Top, Cemetery Revenues Up
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Service Corporation International (SCI - Free Report) posted first-quarter 2024 results, wherein both the top and bottom lines surpassed the respective Zacks Consensus Estimate, and revenues increased year over year.
Quarter in Detail
Service Corporation posted adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents. However, the metric declined from the year-ago quarter period earnings of 93 cents. The downside was a result of reduced funeral gross profit and increased interest expenses, partly made up by the increased cemetery gross profit, a reduced tax rate and a lower share count.
Total revenues of $1,045.4 million increased 1.6% from $1,028.7 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,012 million.
Service Corporation International Price, Consensus and EPS Surprise
The gross profit declined 5.1% to $274.2 million. Corporate general and administrative costs were $41.3 million, which declined by $2.8 million year over year. The decrease was mainly associated with the year-ago period’s accelerated compensation expenses, along with the timing of reduced long-term incentive compensation costs compared with the year-ago period.
The operating income of $232.2 million decreased from $245.6 million reported in the year-ago quarter.
Segment Discussion
Consolidated Funeral revenues came in at $604.7 million in the quarter, down from the $609.7 million reported in the year-ago period.
Total comparable funeral revenues fell 1.4%, mainly due to lower non-funeral home preneed sales revenue, partly offset by higher funeral core revenues.
Core funeral revenues rose 0.7%, mainly due to higher core average revenues, partly negated by lower core funeral services performed. During the quarter, the core cremation rate expanded 70 basis points to 56.6%.
Non-funeral home preneed sales revenues tumbled 29.9%, mainly on account of operational changes in select markets due to the timing of merchandise deliveries. This was partially compensated by higher general agency revenues.
Comparable preneed funeral sales production fell 2.4%. Core preneed sales production declined by 3.1% due to lower contract velocity compared to solid prior-year results. Non-funeral home preneed sales production remained flat year over year.
Comparable funeral gross profit came in at $131.2 million, down by $18.3 million. The gross profit margin contracted 270 basis points (bps) to 21.9% due to lower abovementioned revenues and elevated incentive compensation costs.
Consolidated Cemetery revenues came in at $440.6 million, up from $419 million reported in the year-ago quarter.
Comparable cemetery revenues increased 5%. The upside was mainly caused by increased core revenues to the tune of $18.9. Core revenues jumped due to growth in total recognized preneed revenues, partially hurt by reduced atneed revenues.
Comparable preneed cemetery sales production rose 7.8% due to continued strength in large sales activity, along with a higher core production sales average.
Comparable cemetery gross profit came in at $142.5 million, up $2.6 million. The gross profit margin contracted 100 bps to 32.4% due to elevated annual incentive compensation costs.
Other Financial Details
Service Corporation ended the quarter with cash and cash equivalents of $205.6 million, long-term debt of $4,613.2 million and total equity of $1,590.8 million.
Net cash from operating activities amounted to $220.1 million during the three months ended Mar 31, 2024. During the same period, the company incurred total capital expenditures of $79.8 million.
Guidance
Service Corporation expects 2024 earnings per share (EPS), excluding special items, in the range of $3.50-$3.80. We note that the company’s earnings came in at $3.47 per share in 2023.
Net cash provided by operating activities (excluding special items and cash taxes) is anticipated in the range of $935-$985 million. Net cash provided by operating activities (excluding special items) is expected in the range of $900-$960 million.
Management expects total maintenance capital expenditures of $325 million for 2024.
Shares of this Zacks Rank #3 (Hold) company have risen 6.2% in the past three months compared with the industry’s increase of 5.6%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Colgate-Palmolive (CL - Free Report) , Vital Farms Inc. (VITL - Free Report) and Celsius Holdings, Inc. (CELH - Free Report) .
Colgate-Palmolive, which manufactures and sells consumer products, currently carries a Zacks Rank #2 (Buy). CL delivered a positive earnings surprise of 4.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings calls for growth of 3.6% and nearly 11.7%, respectively, from the year-ago reported numbers.
Vital Farms offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 15% and nearly 43.8%, respectively, from the year-ago reported numbers.
Celsius Holdings, which develops, processes, markets, distributes and sells functional energy drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings implies growth of 41.6% each from the year-ago reported numbers.
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Service Corporation (SCI) Q1 Earnings Top, Cemetery Revenues Up
Service Corporation International (SCI - Free Report) posted first-quarter 2024 results, wherein both the top and bottom lines surpassed the respective Zacks Consensus Estimate, and revenues increased year over year.
Quarter in Detail
Service Corporation posted adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents. However, the metric declined from the year-ago quarter period earnings of 93 cents. The downside was a result of reduced funeral gross profit and increased interest expenses, partly made up by the increased cemetery gross profit, a reduced tax rate and a lower share count.
Total revenues of $1,045.4 million increased 1.6% from $1,028.7 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,012 million.
Service Corporation International Price, Consensus and EPS Surprise
Service Corporation International price-consensus-eps-surprise-chart | Service Corporation International Quote
The gross profit declined 5.1% to $274.2 million. Corporate general and administrative costs were $41.3 million, which declined by $2.8 million year over year. The decrease was mainly associated with the year-ago period’s accelerated compensation expenses, along with the timing of reduced long-term incentive compensation costs compared with the year-ago period.
The operating income of $232.2 million decreased from $245.6 million reported in the year-ago quarter.
Segment Discussion
Consolidated Funeral revenues came in at $604.7 million in the quarter, down from the $609.7 million reported in the year-ago period.
Total comparable funeral revenues fell 1.4%, mainly due to lower non-funeral home preneed sales revenue, partly offset by higher funeral core revenues.
Core funeral revenues rose 0.7%, mainly due to higher core average revenues, partly negated by lower core funeral services performed. During the quarter, the core cremation rate expanded 70 basis points to 56.6%.
Non-funeral home preneed sales revenues tumbled 29.9%, mainly on account of operational changes in select markets due to the timing of merchandise deliveries. This was partially compensated by higher general agency revenues.
Comparable preneed funeral sales production fell 2.4%. Core preneed sales production declined by 3.1% due to lower contract velocity compared to solid prior-year results. Non-funeral home preneed sales production remained flat year over year.
Comparable funeral gross profit came in at $131.2 million, down by $18.3 million. The gross profit margin contracted 270 basis points (bps) to 21.9% due to lower abovementioned revenues and elevated incentive compensation costs.
Consolidated Cemetery revenues came in at $440.6 million, up from $419 million reported in the year-ago quarter.
Comparable cemetery revenues increased 5%. The upside was mainly caused by increased core revenues to the tune of $18.9. Core revenues jumped due to growth in total recognized preneed revenues, partially hurt by reduced atneed revenues.
Comparable preneed cemetery sales production rose 7.8% due to continued strength in large sales activity, along with a higher core production sales average.
Comparable cemetery gross profit came in at $142.5 million, up $2.6 million. The gross profit margin contracted 100 bps to 32.4% due to elevated annual incentive compensation costs.
Other Financial Details
Service Corporation ended the quarter with cash and cash equivalents of $205.6 million, long-term debt of $4,613.2 million and total equity of $1,590.8 million.
Net cash from operating activities amounted to $220.1 million during the three months ended Mar 31, 2024. During the same period, the company incurred total capital expenditures of $79.8 million.
Guidance
Service Corporation expects 2024 earnings per share (EPS), excluding special items, in the range of $3.50-$3.80. We note that the company’s earnings came in at $3.47 per share in 2023.
Net cash provided by operating activities (excluding special items and cash taxes) is anticipated in the range of $935-$985 million. Net cash provided by operating activities (excluding special items) is expected in the range of $900-$960 million.
Management expects total maintenance capital expenditures of $325 million for 2024.
Shares of this Zacks Rank #3 (Hold) company have risen 6.2% in the past three months compared with the industry’s increase of 5.6%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Colgate-Palmolive (CL - Free Report) , Vital Farms Inc. (VITL - Free Report) and Celsius Holdings, Inc. (CELH - Free Report) .
Colgate-Palmolive, which manufactures and sells consumer products, currently carries a Zacks Rank #2 (Buy). CL delivered a positive earnings surprise of 4.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings calls for growth of 3.6% and nearly 11.7%, respectively, from the year-ago reported numbers.
Vital Farms offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 15% and nearly 43.8%, respectively, from the year-ago reported numbers.
Celsius Holdings, which develops, processes, markets, distributes and sells functional energy drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings implies growth of 41.6% each from the year-ago reported numbers.