Service Corp at Consumer Growth Conference: Strategic Growth and Stability

On Tuesday, 10 June 2025, Service Corporation International (NYSE:SCI) presented at the 25th Annual Consumer Growth and E-Commerce Conference. The company, a leader in the funeral and cemetery industry, shared its strategic outlook, highlighting both growth opportunities and challenges. Positive aspects included strong free cash flow and growth potential, while a slight dip in preneed cemetery sales was noted as a concern.

Key Takeaways

• Service Corp aims for an 8% to 12% earnings per share growth, driven by organic and inorganic strategies.
• The company highlighted its extensive asset base, with 1,500 funeral homes and 500 cemeteries in North America.
• Despite a 2% drop in preneed cemetery sales in early 2025, long-term growth is expected.
• Free cash flow is projected at $550 million, with capital allocated to M&A, construction, and shareholder returns.
• Rose Hills Memorial Park is a significant contributor to earnings, accounting for 10% of EBITDA.

Financial Results

Service Corp reported a stable financial performance, with a focus on maintaining strong margins in its cemetery segment, expected to range from 32% to 35% in 2025. The company has seen a significant reduction in outstanding shares, from 345 million in the mid-2000s to just over 140 million currently, primarily through a consistent share repurchase program.

Operational Updates

The company interacts with approximately 700,000 families annually, performing about 350,000 funeral services each year. During the pandemic, funeral volumes initially surged, but have since stabilized, with a 1.8% growth in the first quarter of 2025. Service Corp has been increasing funeral revenue per service in the low single digits, adapting to consumer preferences and inflationary pressures.

Future Outlook

Looking ahead, Service Corp is optimistic about future growth, driven by demographic trends and strategic initiatives. The company plans to invest $50 million to $75 million in construction and greenfield projects, with M&A activities expected to account for roughly $100 million of capital allocation. The company’s preneed sales strategy is bolstered by a $16 billion backlog of contracts, split between trust funds and life insurance policies.

Q&A Highlights

During the conference call, CFO Eric Tansberger emphasized the importance of staying relevant to consumer preferences, focusing on celebrations of life rather than traditional funeral services. He also highlighted the strategic importance of Rose Hills Memorial Park, a major contributor to the company’s earnings.

In conclusion, Service Corp’s presentation at the conference provided a comprehensive view of its strategic direction and financial health. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - 25th Annual Consumer Growth and E-Commerce Conference:

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Good morning, everyone. I’m Scott Schnaberg, the senior business services analyst Thank you all for joining us today. It’s our pleasure to have from Service Corp’s chief financial officer, Eric Tansberger, to speak on the company’s investment story. Now we’re drawn to Service Corp’s leading position in the funeral services and cemetery offerings industry.

Its opportunity to capitalize on the favorable demographics of an aging baby boomer population, and its strategy of providing preneed contracts to gain advanced market share and garner a backlog to build its trust fund portfolio. We’re using a fireside chat format. Today, I’ll ask mister Tansberger some high level questions upfront, get us an overview of the business. Later in the session, I’ll facilitate audience questions. So please feel free to send those in to me throughout, and I’ll make sure that, we get them to the CFO, before we end the session.

But in the meantime, let’s get started with the fireside chat. Starting off, could you please discuss your overall business model and strategy?

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. Sure, Scott. of all, thanks for having us and everyone at Oppenheimer as well. I’d also like to note that’s the time in our lengthy relationship that Scott has ever called me Mr. Tansberger.

So let’s let the record show that if that’s how we’re going to kick this off.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Might happen again.

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. So we are the largest owner of funeral homes and cemeteries in North America. The history of the company in thirty seconds or less was an EPS accretive roll up model that started back in the seventies. The bad news is those former management teams in the seventies and eighties and even in the early nineties kinda lost sight on return on invested capital, instead drove the EPS accretion, ended up overpaying for acquisitions. And there was a pivot or an event in 1999, February.

We became senior management team in 02/2002. We sold 21 of those 23 countries. We are in The United States and Canada. Canada is about 10% of our business. We own about 1,500 funeral homes and 500 cemeteries.

The funeral business has, you know, overall market share, you know, approaching kinda 15%. The cemetery has market share approaching 28 to 30%. So the good news back in the sixties, seventies, eighties, and nineties are the former management teams really bought a unparalleled group of assets in terms of cemeteries, in terms of 35,000 acres that are really in the middle of major markets. So it’s just unprecedented, the barriers to entry because those cemeteries are huge. The funeral business is kind of a slow growth business, which is a play that we’ve been strategically staying up with the consumer in terms of criteria, which has changed over time to less of a formal process and formal service to really a lighter celebration of life.

We’ve really become party planners and event centers and that type of thing. There is a nice future material play to our industry and our to our company when the funeral business experiences a expected increase in demand in the sense of the baby boomer generation turning to what would be an average age of 82 to 84 years old when people need our at need services in our funeral segment and our industry. The cemetery segment’s a little different because it’s more driven from a pre need perspective, which means selling merchandise, property, and services before people need it. The average age of that is about 65 years old. The baby boomers, by definition, have already crossed over that.

And so we’ve had some really nice growth at our company related to our cemetery segment. To wrap up the introduction, the algorithm is about a eight percent to 12% earnings per share growth that we’ve been able to maintain pre COVID for, god, at least ten years or so. That primarily is about 5% to 6% of that is coming for organic growth, primarily driven by the cemetery preneed sales that I just mentioned. Then we have about 2% to 3%, what I characterize as inorganic growth, meaning capital deployment, in the industry itself. So that’s m and a and new build construction opportunities.

And lastly, another one to two, two to 3% is gonna be our share repurchase program, which we believe heavily in. We started this journey back in the mid two thousands with 345,000,000 shares outstanding. Today, we have just over a 140,000,000 shares outstanding. So we bought well over half of the company back over this period of time. So so, Scott, that’s your that’s kinda the answer to your introduction in the five minutes or so.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Alright. Great job. Very thorough. Appreciate it. Certainly earns you another mister Tanburger.

So looking closer at your at need funeral and cemetery businesses, growth was elevated during the pandemic. Yes. Followed by a a pull forward stabilization period. Please share funeral volume trends as well as perspective on the broader timing of demographic tailwinds. Thanks.

Eric Tansberger, Chief Financial Officer, Service Corp: So to start at a big picture, we we we interact with about 700,000 families a year. Couple 100,000 of that is on the pre need side, where we’re selling products, merchandise, and services both on funeral and cemetery on a pre need basis I’ve described earlier. 150,000 of that are actual interments into the 500 cemeteries. That’s when a death has occurred and you are interring a loved one or a family member into one of our cemeteries. And 350,000 of that are the actual funeral services that we perform on average.

And that that’s a good number for today’s volume, for for example. During the pandemic, though, as Scott has mentioned, we performed about an extra 130,000 funerals during a, let’s call it, a two and a half year, period at the peak of the at at the peak of pandemic. Those funerals had to come from somewhere. And, ultimately, we had thought that it would be a very acute pull forward from you know, if we’re in ’22 or ’21, it would be from ’22 and ’23 maybe. As it turns out, it’s been a longer tail, in terms of the pull forward effect, as we got halfway through in later half of the pandemic, which we were servicing primarily people that were in their forties, were in their fifties, were unvaccinated.

That’s a long pull forward, as you could imagine, on average. And so what has happened is we had this big spike in volume, up mid teens type percentages in volumes during the COVID pandemic. And then the subsequent, so to speak, hangover from that demand has come in mid single to low double digit declines in funeral volumes. That has now all, for the most part, stabilized. We thought it would stabilize a little bit better than it was in ’twenty four.

It was still down about 2%, 2.5% in terms of volumes. We are hoping to be more flattish, but our current guidance in 2025 is more flattish in terms of funeral volumes, and we’re off to a very good start. We had almost 2%, I think it was 1.8% to be exact, growth in funeral volumes during the first quarter of twenty twenty five. But that has been something that’s been, Scott, as you know, very material to our business, very material to our model. And we’re glad to say that we’re talking about it less and less as what we call the pull forward effect becomes less and less material to our company and to our industry.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks. Alright. Staying with funeral, it’s a funeral revenue per service that’s been steadily growing in the low single digits since the pandemic. Please discuss the drivers and provide a long term perspective there.

Thanks.

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. I I think as a general statement, as long as you’re delivering in a relevant fashion to your consumer, you’re gonna have inflationary type price increase in, you know, in the funeral segment. What I mean by that is we’ve gone through a metamorphosis over the past fifteen years where you walk into a funeral home, you know, it was dark, it was traditional, it was a chapel. Now we’ve spent a tremendous amount of capital over the last ten or fifteen years reformulating the actual infrastructure of those assets where they’re more open, they’re lighter. There’s really not chapels anymore.

They’re more event centers with roundtables and such. And it’s really, again, as I said, it’s turned into a celebrant leading a celebration of life for those consumers. So we’ve been very, very key in staying relevant. And with that, our pricing has really hung in there. But the most important thing you should get from that is the consumer finds value in the service component, which has allowed us to continue to have inflationary type increases in the particular funeral segment from an ASP perspective.

I think long term, to answer your question, Scott, I think we would continue to see that. During the inflationary period in the last couple of years, something that we’d normally raise prices 2% to 3%, we’re raising prices 4% to 6% in that funeral segment to stay ahead of inflation. We’re back down to, you know, kind of the former now, as inflation has come down. But I I still see that path as a relevant path as we move forward for several years.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Alright. Thanks for that. Let’s go to funeral preneed sales. They have the potential impact, revenue, market share in future periods. Could you address recent developments impacting the category as well as provide long term perspective on its potential growth at Service Corp?

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. So when we’re selling these prearranged and preneed contracts to these consumers, what are we doing? In the cemetery segment, we’re selling actual cemetery property and the interment rights to go into that property, whether that’s a mausoleum or, you know, a ground burial, as you would expect. We’re also selling cemetery merchandise, which are markers, granite markers, bronze markers, and then the graveside services. On the funeral side, people are actually prearranging their their funerals, and they do that not from a financial perspective.

It’s purely a peace of mind issue. It’s purely a the average age is 72 years old. They started going to some funerals. I didn’t know you could do that. Could we do that for me?

I don’t trust my kids to do it. I don’t wanna pass the burden, you know, on to my kids, etcetera, etcetera. So we sell about $2,600,000,000 a year in preneed merchandise and services. About 1.2 of that is on the funeral side, and about 1.4 of that is on the cemetery side. Now the funeral has been going through a metamorphosis over the last year or eighteen months or so, and that is that when we sell that under the law, you have to either take the money from the consumer and put it into a state mandated trust fund, or you have to have the consumer buy a life insurance policy, which we will arrange.

And, ultimately, we become the beneficiary or the or assign or the signee of that of that policy. When we did that so we have a $16,000,000,000 backlog. About half is in trust funds and half is in life insurance policies. And we’ve used the same life insurance company now for twenty five years. And we’ve just gone through an RFP, a process, and we changed it to Global Atlantic, which is a wholly owned subsidiary of KKR.

With that, because of the rise in interest rates, frankly, and timing it correctly, which is a lot of luck, we ultimately got economics that are substantially better than what we’ve had over the last twenty five years. So a general agency commission that we would receive, which would be both revenue and cash flow from day one, has gone from 25% to 30 of a sale, a face value sale, to probably 35%, 38% of a face value sale. And that’s had a nice tailwind for us, Scott, over the as we’ve been implementing that in our core operations, and we look forward to that. We’ll eventually lap that, but there’ll still be a little bit of that tailwind left for ’26 as well.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks, Eric. The, let’s go over now to to preneed cemetery sales or, yes. Historically, it’s been a it’s been, you know, in in our view, a major p and l growth driver for the company. And for some reasons that we can we can get into.

But could you please discuss drivers of the growth you’ve experienced in this category? How it’s trending here at the start of 2025, outlook over the balance of the year as well as longer term, and maybe some specifications on the timing of recognition?

Eric Tansberger, Chief Financial Officer, Service Corp: So there’s about five parts to that. So just keep me going as I as as we go and remind that I hit all of your all your five parts. I guess starting off the year, we’ve done we’ve done well, and we were down about a couple of percentage points in the first quarter, quarter over quarter. That has to do with large sales versus our core sales, which I’ll get into in a But let me start with the bigger picture. We sell about 1,400,000,000.0 About 10 to 15% of that every year in the Preneed Cemetery space are what we call large sales, which are north of $80,000, and that’s a couple 100,000,000, 150 to 200,000,000 a year.

And that generally is, like I said, 10 to 15% of the total. Let’s call it 13% on average of the total, and it’s been somewhat consistent. What we call core is the other remaining, you know, 80 to 80 85% to 90%, which is everything below $80,000. And, you know, they’re different consumers when you see that. So to understand this sale, you have to understand a couple things that have been driving it.

The thing is the average age of the consumer that raises their hand and says, I wanna buy a preneed cemetery property, is generally in their early sixties. Essentially, as a very general statement, they have just perhaps, you know, buried a loved one, perhaps a parent. And when they bury a loved one like a parent, they want to buy the adjacent property around their loved one, and that’s what creates the pre need environment. And when you have baby boomers that is a larger generation, so more of them crossing over that 60 to 65, that has created a nice situation for us in terms of having more people to market to, and it’s been a big growth driver for us in terms of the number of contracts that we’ve been able to sell over a period of time. The piece to this, which is very material that we need to mention, is that when we started this journey back in the early 2000s, like I described generally as the executive management team, you would walk into a cemetery and it was not really a real estate play.

It was a very homogenous situation. It was walk in. There’s a thousand plots per acre. Which one do you want? Just pick them.

They’re they’re all the same. They’re all priced the same. Fast forward fifteen years later, twenty years later, you walk into one of our cemeteries, and you’re gonna see kind of a real estate tiering strategy that took effect where you’re gonna still have that beginning homogenous offering. And let’s call that, you know, $5,000 in the Midwest, and let’s call that 10,000 to $15,000 on the on the West Coast. But then you’re gonna go all the way up to, you know, the top, which is a private family estate and a semi private family estate and a lake with lakefront property.

I mean, you can tell we became kinda real estate developers. And what that has done is really brought up that ASP to the extent that you could walk into a cemetery in California and and buy a high end family space for 2 and a half to $3,000,000. That’s the part that makes up those large sales. You can walk into Denver, and that same piece of property may only be 200 to $300,000. You walk into Houston, and it may be 6 to $700,000.

So a lot of it is a real estate play and localized pricing and such, but you get the idea. But those two things, the baby boomers, the size of it, allowing us to market to a lot more people that want to have the conversation, coupled with the ten to fifteen year progress of tiering the cemeteries with high end, medium type inventory is what has allowed us to be a big growth driver. And by the way, it’s essentially when we started this, has taken a 12% to 13% margin cemetery segment business to a 30% to 35% margin business. So it’s been a tremendous growth driver in driving that earlier 8% to 12% EPS algo that I’ve described to you before.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks. We did cover it all. I think, know, obviously, great margin expansion there as you discussed over the history. It was a five part question.

I think the only thing we didn’t cover is what’s the what’s the or the the the growth rate of that? What’s it been historically? What do you foresee going forward?

Eric Tansberger, Chief Financial Officer, Service Corp: It was pre COVID. It was low single to mid single digit type growth is how I would describe it. And it was a combination of the two factors, not to repeat it, that we’ve already described earlier. During COVID, it had a huge spike to it. Why?

Because the about one out of two sales or what we characterize as the number one driver or lead to these preneed sales is the at need event. And I’ve already described to you what happened to COVID with an extra 130,000 funeral services being performed. So just like funeral went like this during COVID, Pre Need Cemetery went like this during COVID, there’s a little bit of a pull forward effect associated with Preneed Cemetery. So we’ve had declines in Preneed Cemetery, not as bad as you saw the volume. But we started off the year again with kind of below 2% down ish.

But we hope to get to low single digit percentages during 2025. Now as we get further into it, we fully expect without I’ll give you long term guidance. We fully expect to get back to mid single digit percentage type growth in the pre need cemetery environment. When you take that as the baby boomers start to continue to affect the at need environment, you can’t also you have to also remember, you’re going to have all of a sudden this tailwind coming in both the at need funeral and at need cemetery type revenue streams, which again will have multiplier effect, hopefully, to the preneed cemetery revenue stream. So the whole thing, the whole strategy for the last twenty years are stay relevant to the consumer and the funeral segment and get set up for the baby boomer generation, sell Preneed Cemetery and sign everybody up as well.

But atneed Cemetery is gonna have a positive long term effect with baby boomers, which will radiate to Preneed Cemetery getting back to mid single digit type percentage growth. In the meantime, shrink the equity, buy back 60% of the company so it’s that much more valuable when the baby boomers do affect the top line of this company and this industry in a few years from now.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: And just real quick, Eric, following on that. They, yeah. You mentioned large sales, which I I think have held up very well consistently. The lower end, though, that’s it’s a little bit more of of a discretionary spend. So do you anticipate a pickup, perhaps lower interest rates or or other drivers?

Eric Tansberger, Chief Financial Officer, Service Corp: Well, it’s been somewhat solid. We saw a pickup in the first quarter, you know, where we had some growth. Even though we were down about 2% in total, core was up and large sales were down. And there’s different factors to that. As you said, Scott, correctly, the core is worrying about, you know, it’s discretionary purchase.

Let’s start with that on both ends. But as a general statement, you know, the core consumer that we’re selling to on a per need basis being discretionary, you know, they care about the price of eggs and they care about the price of gasoline. The large end does it. The large end cares about what the market’s doing and what real estate is doing. And so there are two different kind of differentiators there.

But the other thing that I would describe to you on the high end is that it ebbs and flows. People don’t walk in and spend $3,000,000, you know, in in at their visit. It’s a long term two month, three month, six month process to get that family, you know, across the the the finish line in those large type sales. Generally, you know, you’re gonna sell about 13% of your sales are gonna be in that high end, but it can be a little volatile in terms of timing. Fourth quarter of ’twenty four was 16%.

That’s a very strong high end quarter. First quarter of twenty twenty five, 9%. Now some of that could have been pulled in from January into December and such like that, but it does ebb and flow as a general statement regardless of what the macroeconomic factors are related to those high end situations. But as a general statement, we’re seeing we continue, like other companies, not really trying to explain it, but we’re continuing to see a nice core consumer, less than that $80,000 spend that really kind of hangs in there. We have a really nice pipeline, as we told you on the conference call in April, of those large end sales.

It’s just that the first quarter kind of ebbed, And you see that, and it will go like this. But generally, we feel pretty good about it for the remainder of ’25.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks, Harry. Appreciate that. I snuck that one in because the next question on the prepared list, I think we we covered in in all that discussion. I’m gonna go over it again, maybe just a quick answer if we missed anything.

But we’re fortunate to be conducting a a field trip with with Service Corp to Rose Hills Memorial Park in Los Angeles. It’s not only the largest, cemetery park in the company’s portfolio. It’s actually the largest in all North America, possibly the world. Could you please discuss some interesting attributes of that property, maybe draw some parallels to your entire portfolio? You mentioned Denver, Houston, just kinda bouncing on.

Any any, any any parallels? Thanks.

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. There there there’s two things I would probably mention about that. Well, thing is we hope a lot of people sign up because when people get out there and do this tour of it, it all kinda comes together visually. And people are like, wow. I understand the tiering now.

And and I understand this and I understand that. And and I I would encourage as many people on this call to get with Scott and sign up for that. I think we redid it in August some date in August, if I recall correctly. The thing I’ll mention about Rose Hills is the sheer size of it. I mean, it’s 10% of our EBITDA with one location.

It is just it’s massive. It’s in L. A. It does a tremendous business. It will never be duplicated in the history of the company or the industry, in my opinion, whether it’s in North America or somewhere else, as you’ve described.

The key point, I think, is how we have continued to change who we are serving. And again, this again, relates to our, we have to remain relevant to the consumer. So if you go back twenty years ago, it was a very high Caucasian consumer that was in there. Today, it’s probably, at least printing sales metrics, it’s probably 40%, 50% Asian and 30%, 40% Hispanic. That’s great for us.

We love that because those are segments that value the celebration of life and value the recognition of the cemetery process, the property, the markers, the services, same thing on the funeral side. We have a separate Asian specific funeral home that we built there that we would be able to tour, which is very interesting. But that is a consumer that’s high spend, both of them, Asian and Hispanic, that we that we really love and has really solidified the growth for many, many, many years for Rose Hills. So you’ll see a different consumer when you go there. You’ll see the sheer size of it.

You’ll see the different consumer, and you’ll understand the tiering effect as well. It would it would be anyone that’s interested in the industry, not just our company, but in the industry, that we’d get a lot of, in my opinion, benefit from taking the tour with us.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks. Really appreciate that. And, yes, I’ve seen it once before. It is massive.

It is impressive. And, again, everyone, yeah, that’s in that’s in mid August. Please contact me if you have interest. And and with that, audience, there there are a lot of folks on there, but, pretty shy with the questions. So we have about six, seven minutes left.

I have a few more questions. But, audience, if you have anything you want to, ask about mister Tansberger, please send it to me, and, we’ll get it in there. So next, I’m gonna go to cemetery segment margins. We have touched on this, how much they’ve expanded. Let’s just maybe talk about the drivers.

Sounds like the the the the the main driver really has been the, the high end sales, but, just anything you can elaborate and what should be what what we should watch as leverage, good or bad for those margins.

Eric Tansberger, Chief Financial Officer, Service Corp: Yeah. I think the large sales, as it ebbs and flows, are gonna move it. You know? I think we’re expecting not a lot of growth in margin expansion during cemetery during ’25 versus ’24. Why?

Because we had some really nice margins, for example, when we had that fourth quarter at 16% or the high end. These are high margin situations with those high end sales. But generally, you’re going to see a very stable 33%, 32%, 34%, 35% type margins for the cemetery segment. As sales increase and, of course, as the at need events stabilize, that’s gonna help your margins. And, you know but we think that margins are gonna be somewhat stable.

But over a period of time, as you grow printing cemetery sales for the reasons I’ve already described to you, it’s not unusual to see 50 to eighty eighty basis points of margin expansion per year as we move forward. And we saw that and even higher ends of that, you know, come through in the last twenty years as we’ve gone from 13 to 33%.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks. I guess my prompting, helped because I have one from the audience I’m gonna ask now because we only have five minutes left. What have been the biggest drivers of Preneed Cemetery over the past three to four quarters? Third quarter twenty four and the fourth quarter was very strong.

Then first quarter twenty five, a little bit of a pullback. Any color on the drivers of movements like this? Thank you.

Eric Tansberger, Chief Financial Officer, Service Corp: I I think we’ve really kinda answered the question, to be honest with you. I mean, I think the were very strong in terms of the higher end of sales. I don’t remember the third quarter specifically, but I remember the fourth quarter, and it was 16%. And yes, it’s going to ebb and flow, and it ended up 9% last year. But what was important to understand is that we weren’t seeing some kind of macro pullback during the first quarter from that.

It was more of the natural ebb and flow of that consumer when you measure things on a ninety day basis because we’ve said it very clearly in April on our call that we continue to have a very nice pace pipeline in those large end sales. But there’s nothing really else going on in the cost structure, and there’s nothing really going on in the core. I mean, it is just kind of that large end sales that affected margins and had them ebb and flow, but we continue to be, you know, positive with that.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Yeah. And I think actually that didn’t come in earlier. I’d, I had missed it. So I think that was that came in while you were discussing it. The okay.

2025 EPS profile, how will that look compared to the company’s longer term expectations?

Eric Tansberger, Chief Financial Officer, Service Corp: I think we’re we’re in the lower end of the 8% to 12% as our expectations of the current guidance of the March. We have a tax rate difference, which is at least 100 basis points. That has to do with the law that went through in 2017 where any options that were issued after that, no longer are tax deductible from a high end executive perspective. And that has eliminated a benefit that we had related to exercising of stock options, which have held our tax rate from 24% to 25%, which is now 25 to 26%. If you add that back, you’d be at the higher end of that eight to 12%, and that’s why it’s worthy to mention.

So I think we’re back into that 8% to 12% from our perspective. I think the more funeral volume is more flattish, like our expectations compared to leaking still down 1% to 2%, it’s going to make a difference. The more we can get cemetery sales despite the slower quarter to start off the year, get them back to growing again on the high end, then that’s gonna help us get us annual growth of cemetery sales back into the low single digits. And when you get that, that’s going to all come together into, hopefully, that three eighty five midpoint of the guidance, which will get us back into our algorithm made to 12%.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Great. Thanks. And we’re basically at time, and that was everything from the audience. So we’re I’m gonna wrap up, but just one thirty more thirty second answer, Eric, if we could. We haven’t really touched on the the strong free cash flow here and the application of capital.

Yeah. On that real quick how you consider it?

Eric Tansberger, Chief Financial Officer, Service Corp: Yes. We have very strong cash flow. We expect it in the guidance of about $550,000,000 The highest best use is M and A, which we’ll spend, let’s roughly call it, dollars 100,000,000 at the midpoint. We’ll do about another 50,000,000 to $75,000,000 of construction greenfield. Then we’ll go ahead and pay a dividend, and we’ll reduce shares according.

And the shares will ebb and flow based on our opinion of the intrinsic value, but that’s generally the algorithm that we have deployed for many, many years at our company and will continue in 2025.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Excellent. Perfect. Summary at the end there. Great overview. Thanks so much.

We really appreciate it. Audience, thanks for the questions. Thanks for listening in. Let us know if you have interest in that Rose Hills, Memorial Park field trip. And, with that, we’re gonna wrap it up.

Eric Tansberger, Chief Financial Officer, Service Corp: Thank you, mister Schneeberger.

Scott Schnaberg, Senior Business Services Analyst, Oppenheimer: Thank you, mister Danzburger.

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