Service International(SCI)2025-02-13 21:58Company Operations - The company operates 1,493 funeral service locations and 496 cemeteries across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico, serving approximately 700,000 families annually[158]. Financial Performance - Total revenue for 2024 was $4.186 billion, an increase from $4.099 billion in 2023, representing a growth of approximately 2.1%[273]. - Service revenue increased to $1.732 billion in 2024 from $1.683 billion in 2023, reflecting a growth of about 2.9%[273]. - Gross profit for 2024 was $1.091 billion, slightly down from $1.092 billion in 2023, indicating a decrease of approximately 0.1%[273]. - Consolidated net income attributable to common stockholders for 2024 was $518.6 million, a decrease from $537.3 million in 2023, with earnings per diluted share remaining at $3.53[209]. - The company reported a total comprehensive income of $486.632 million for 2024, down from $546.014 million in 2023, a decrease of about 10.9%[275]. Cash Flow and Investments - Operating cash flow increased to $944.9 million in 2024 from $869.0 million in 2023, reflecting a $75.9 million increase[171]. - The company reported a net cash used in investing activities of $620,949 in 2024, compared to $469,386 in 2023, indicating a 32.2% increase[278]. - Capital expenditures for 2024 were $389,107, an increase of 7.6% compared to $361,793 in 2023[278]. - The company reported realized gains from sales of securities of $509.98 million in 2024, significantly higher than $281.17 million in 2023[348]. Debt and Leverage - The company had $4.8 billion in aggregate principal outstanding on debt and finance leases as of December 31, 2024, with $83.9 million due in the next twelve months[174]. - The leverage ratio was 3.65 as of December 31, 2024, within the target range of 3.5x to 4.0x[165]. - Approximately 84% of the company's total debt as of December 31, 2024, consisted of fixed-rate debt at a weighted average rate of 4.64%[255]. Shareholder Returns - The quarterly dividend rate increased from $0.025 per share in 2005 to $0.30 per share at the end of 2024, targeting a payout ratio of 30% to 40% of after-tax earnings[168]. - In 2024, the company repurchased 3,439,551 shares at an average cost of $72.63 per share, totaling $249.8 million[168]. - Dividends declared on common stock increased to $174,282 in 2024, up from $167,983 in 2023, representing a 7.7% increase[279]. Trust and Preneed Sales - As of December 31, 2024, the company has a $16.0 billion backlog of future revenue from trust and insurance-funded preneed sales, enhancing revenue stability and predictability[159]. - Preneed insurance-funded sales production reached $725.0 million in 2024, with 120,434 contracts sold, compared to $704.8 million and 113,095 contracts in 2023[186]. - Preneed trust-funded sales production decreased to $480.0 million in 2024 from $541.5 million in 2023, representing a decline of approximately 11.4%[189]. - The backlog of insurance-funded contracts was $8.37 billion as of December 31, 2024, compared to $7.78 billion in 2023, indicating an increase of 7.6%[193]. Asset Management - The total fair value of trust investments was $7,084.7 million, with unrealized gains of $1,094.8 million and unrealized losses of $211.6 million[350]. - The fair value of deferred receipts held in trust increased to $5.16 billion in 2024 from $4.50 billion in 2023, a growth of 14.7%[193]. - Trust investments at fair value rose to $7,084.7 million in 2024, compared to $6,394.8 million in 2023, marking an increase of 10.8%[345]. Expenses and Costs - Consolidated funeral gross profit decreased by $31.8 million, or 6.4%, to $465.3 million in 2024, attributed to higher employee-related costs and increased maintenance expenses from natural disasters[213]. - Corporate general and administrative expenses decreased to $139.0 million in 2024 from $157.4 million in 2023, with a notable $20.3 million reduction in legal reserves[219]. - Interest expense increased by $18.3 million to $257.8 million in 2024, primarily due to higher interest rates on floating rate debt[222]. Tax and Regulatory Matters - The effective tax rate for 2024 was 23.2%, down from 24.1% in 2023, mainly due to increased excess tax benefits from employee share-based awards[223]. - The company believes it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $0.4 million within the next twelve months[248]. Goodwill and Intangible Assets - The consolidated goodwill balance was $2.1 billion as of December 31, 2024, with $1.7 billion associated with the funeral reporting unit[268]. - The company performed its annual goodwill impairment test using a 7.50% discount rate and revenue growth rates averaging 2.8% over a six-year period[308]. Market Risks - The company’s exposure to market risk includes price risk from marketable equity and debt securities, interest rate risk from floating rate debt, and currency risk primarily associated with the Canadian dollar[251]. - A hypothetical 10% increase in interest rates would increase the company's interest expense by $4.9 million[255].