Q1 2022 Service Corporation International Earnings Call
Good day and welcome to the Service Corporation International first quarter clean in 'twenty two earnings call.
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Now I would like to turn the conference.
Sci management. Please go ahead.
Thank you and good morning to everyone. This is Debbie young director of Investor Relations at Sci Welcome to our company's review of business results for the first quarter as usual I'm going to cover the safe Harbor language before we begin with our prepared remarks.
Any comments made by our management team that stay to our beliefs plans expectations or projections for the future are forward looking statements.
These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements.
These risks and uncertainties include but are not limited to those factors identified in our earnings release and in our filings with the SEC that are available on our website.
During this call. We may also discuss certain non-GAAP financial measures a reconciliation of these measures to the appropriate GAAP measures can be found in the tables at the end of our earnings release.
On our website under the investors webcast and events section.
With that behind US I'll now pass it onto our chairman and CEO Tom Ryan.
Thank you Debbie Hello, everyone and thank you for joining us on the call today.
First of all I want to express my heartfelt, thanks to our entire Sci team.
Is your continued courage and commitment that positioned us for the results we posted this quarter.
More importantly, you have continued to stay relentlessly focused on what we do best helping our client families and our communities gain closure and healing through the process of grieving remembrance and celebration.
Every day, you live and reinforce the dignity memorial motto every detailed remember.
Now out of the business at hand, this morning, I'm going to provide some color on our business performance for the quarter.
Losing some detail around our strong funeral and cemetery results.
Then I will offer some commentary on our revised 2022 outlook keeping in mind, we must be flexible as we navigate the uncertainty of another year still being impacted by COVID-19.
For the first quarter, we generated adjusted earnings per share of $1 34, a two cent increase over the prior year quarter, and a 212% increase over our pre pandemic first quarter of 2020.
Compared to the 2021 first quarter funeral results were relatively flat, but well ahead of our expectations. As we continue see elevated levels of funeral services with a healthy increase in our funeral average.
On the cemetery side profitability was slightly down at <unk>.
Double digit increases in our Preneed cemetery sales over a strong 2021 quarter were muted by lower recognition rate.
This was primarily due to a healthy increase in premium property sales production that occurred in a variety of projects that are still being developed.
These revenues should be recognized later in the year once we've completed construction.
So the primary driver of our year over year earnings per share beat was a lower share count from our share buyback program and contributions from our recent acquisition.
Now, let's take a deeper look into the funeral results for the quarter.
Total comparable funeral revenues grew nearly $18 million or about 3% over the prior year quarter exceeding our expectations as core revenues and General agency revenues provided the growth for the quarter.
Comparable core funeral revenues grew $9 million led by an impressive 6% increase in the comparable funeral sales average.
Our percentage of families selecting to have funerals in celebration of life services has essentially returned to pre COVID-19 levels in the funeral sales average is being further positively impacted by an uptick in ancillary revenues such as flowers and KBR.
This increase in average was achieved despite a 120 basis point increase in the core cremation rate.
Comparable core funeral volume declined about 4% compared to the prior year quarter slightly.
Slightly offsetting the positive impact of the funeral sales average.
Keep in mind, the 2021 first quarter, we're comparing against was acutely impacted by Covid and saw a 22% core funeral volume increase over the 2021st quarter.
So we're continuing to service elevated levels of client families.
General Agency revenues grew by $9 million, primarily from a 21% growth in comparable preneed funeral insurance production for the quarter.
From a profit perspective funeral gross profit decreased $2 million, while the gross profit percentage dropped 120 basis points to 34%.
Remember $9 million of our revenue increase was from General agency revenues due to the impressive growth in our funeral preneed sales production.
General Agency revenues were effectively offset by the selling cost associated with the deferred preneed funeral sales production.
No gross profit has delivered and it puts downward pressure on our gross margin gross profit percentage.
Comparable core funeral revenues grew by $9 million and the anticipated seven and a half million dollar gross profit was offset by inflationary increases in our fixed cost.
Our fixed costs in the funeral segment, the majority of which are tied to labor costs grew 4% over the prior year quarter.
Overall, our fixed costs, we have compounded at a 3% growth rate since 2020, and we are serving 19% more customers than we did two years ago.
Bottom line I believe we are managing our costs very effectively against an unusual and difficult 2021 first quarter comparison.
Preneed funeral sales production for the quarter exceeded our expectations growing $42 million or nearly 17% over the first quarter of 2021.
Our core production was particularly strong posting an increase of over 20% over the prior year quarter with solid gains in both velocity and sales average.
Continue to see positive momentum generating significantly more high quality marketing leads at a lower cost through increased focus on digital leads as well as more sophisticated data targeting for our direct mail and seminar programs.
Now shifting to cemetery.
Comparable cemetery revenue increased $1 million was essentially flat in the first quarter.
In terms of the breakdown core revenue was down by $2 $6 million compared to the prior year seeing slight revenue declines for both acne and recognized Preneed Cemetery revenue.
Other revenue increased by $3 $5 million over the prior year quarter as ECF Trust income was positively impacted by the timing of alternative asset distributions.
Preneed Cemetery sales production grew over $35 million or 11% in the first quarter.
This growth is on top of a record 2021 first quarter, which grew by an astounding 67% over 2020.
Substantially all of the revenue from the sales production increase was deferred as it was primarily related to new cemetery inventory in the midst of development.
We anticipate completing construction to occur later this year, having a positive impact on revenue and earnings in the coming quarters.
Strong large sales accounted for a significant part of the increase.
Particularly within Rose Hills in Los Angeles, and in our Phoenix market.
Core sales average improved across the entire network and further contributed to growth with a 7% increase over the prior year.
Sales velocity declined by almost 7% as we expected offsetting some of the strong gains from large sales and core sales out.
Remember, we're comparing against the 2021 first quarter, which saw a 48% increase in sales velocity.
As I mentioned in my Preneed funeral discussion earlier, we continued to see production growth from both our marketing and core lead programs that are very successfully contributed to our increase in our preneed sales production.
Additionally, we're seeing continued strength in key sales metrics, such as the number of appointments set and close rates.
Cemetery gross profit in the quarter declined by about $10 million and the gross profit percentage dropped about 210 basis points to 38, 9%.
Recall that we deferred an incremental $35 million of revenues, primarily from unconstructed property sales, which still had the effect of driving selling compensation costs higher in the quarter.
We also experienced modest inflationary cost increases coupled with higher incentive compensation compared to the prior year quarter.
Now, let's shift to discussion about our revised outlook for 2022.
As you saw in our earnings release revise our 2022 adjusted earnings per share to a range of $3 30.
The $3 70, or a midpoint of $3 50.
At the midpoint. This represents a 50 cent increase from our previously mentioned model a midpoint of $3.
The $3.50 midpoint, reflecting almost 23% compounded annual growth rate over the pre COVID-19 earnings per share base in 2019 of $1 90, well above our historical guidance range.
The increase in the midpoint is attributable primarily to our first quarter outperformance on both the funeral and cemetery segments. Additionally.
Additionally, we are favorably revised our expectation related to preneed cemetery sales production.
Previously anticipating a mid single digit decline and now expecting to show a low single digit growth for the year 2022.
We have effectively maintained our expectations for the next three quarters in the funeral segment expecting volumes down for the year in the low to mid teen percentages and funeral sales average growth in the low single digit percentages.
We invite you to attend or listen into our Investor Day presentation Tomorrow, we will discuss some of the exciting trends and opportunities we see in the coming years, and we'll provide more color on our thinking for 2022 2023 and beyond.
With that operator, I'll now turn the call over to Eric.
Thanks, Tom and good morning, everybody.
It's really hard to believe as we start these comments. This morning that we've endured two years serving families through this pandemic and as I really look back. During this time I continue to be amazed by all that our funeral and cemetery teams have accomplished not only to support the communities and families. We serve but also to support each.
Other during these unusual and trying times, it's really hard for us its management to put into words, how proud we are of the entire SDI team.
That's very important message being set.
I'm going to start talking walking you through this morning, our cash flow results and our capital investments for the quarter and then I'll provide some comments on our increased cash flow outlook for the rest of 2022.
So as Todd already highlighted this morning, our results in the quarter were significantly ahead of our internal expectations operating cash flow grew 35 million to $332 million in the current quarter, which compared to 298 million in the prior year. This.
This was driven by solid operating results and this reflects the highest quarterly cash flow from operations that we've seen in recent history.
The quarter over quarter increase in cash flow was also affected.
By lower cash tax and interest payments as well as favorable working capital year over year cash taxes decreased approximately $10 million due to the timing of the payments.
Cash interest payments also declined 2 million predominantly due to lower balances on our floating rate debt.
Finally, we experienced a net source of working capital during the quarter, which primarily resulted from strong cash collections on Preneed cemetery property sales.
Even though a significant amounts of these sales are deferred as we just mentioned we will recognize the associated revenue once we complete construction of the cemetery property later this year.
We also had a higher down payment rate on those sales as well as higher cash receipts associated with cemetery preneed installment sales from elevated cemetery sales production in prior periods.
So now let's talk about capital investment activity.
During the quarter, we invested 353 billion into really three categories, our existing funeral and cemetery businesses newbuild opportunities to enhance our existing cemetery footprint and returning capital to shareholders. So let's talk about the breakdown.
From a gross capital perspective, we deployed about $9 million towards the construction of new facilities and expansion of several of our existing funeral homes.
We expect that these new builds will provide us with attractive low double digit percentage returns and also expand our footprint into growing and desirable markets.
We also invested about $48 million in our businesses during the first quarter with $37 million of maintenance capital will be invested back into our funeral homes and cemeteries, which includes technology and infrastructure Capex and $11 million of cemetery development capital spend.
On the acquisition front, we did not have any transactions closed during this quarter, which we expected due to the large acquisition activity that we discussed with you last quarter.
We remain very excited about the acquisition pipeline and bullish about our targeted deployment range for acquisitions, and we will provide in a bit more of an update on our acquisition outlook during our Investor day presentation Tomorrow that Tom just mentioned and of course, we invite you to join us for that for that webcast.
Ali we returned nearly $300 million of capital during the quarter to shareholders. Both in the form of dividends as well as share repurchases.
Let's move now to a few comments about our updated outlook for 2022 in terms of cash flow as well as the capital investments.
Earlier, Tom highlighted the outperformance in our cemetery segment as well as the continued impacts to our business from Covid driving us to increase our earnings guidance. After the first quarter by 50 cents per share at the midpoint of our range.
Our cash flow outlook has also similarly increased to a range of $750 million to $800 million, representing an increase of $75 million at the midpoint from our previous guidance or.
Our higher than expected cash earnings as well as positive working capital contributions should produce about $100 million in additional cash flows compared to our previous estimates of which about $25 million to $30 million of this will be offset by higher cash taxes, resulting from these higher earnings.
So and on that note, we are now expecting $180 million of cash taxes at the midpoint of our earnings guidance for 2022.
Or an additional $30 million over the $150 million, we got it to you in February again, driven by this expected increase in earnings.
An effective tax rate standpoint, we continue to model the range of 24% to 25% for the full year of 2022.
Our expectations for maintenance and cemetery development capital spending for the remainder of the year remain unchanged at 270 million to $290 million.
So now lets shift to kind of our financial state, we remain very well positioned with a favorable debt maturity profile and liquidity of more than $1 billion at the end of the quarter. This consisted of approximately $300 million of cash on hand.
Almost $740 million available on our long term bank credit facility.
Lastly.
Our leverage at the end of the quarter remained about two six times, we expect to lever back to the lower end of our targeted leverage range of three and a half to four times net debt to EBITDA towards the latter part of this year.
As we continue to invest capital in high return opportunities such as acquisitions and our share repurchase program coupled of course with the effects of Covid waning for the remainder of the year.
So in closing we're off to a great start in 2022 reporting better than expected earnings and cash flow results and as long as I have stressed before these results could not have been possible without the contributions of all of our 24000 associates and let me just say a heartfelt. Thank you.
To each and every one of you.
So with that operator that concludes our prepared remarks, we'll now turn it turn the call back over to you and open the call up to questions and answers.
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Our first question comes from AJ Rice with credit Suisse. Please go ahead.
Hi, everybody just maybe first to ask a little bit more about what you saw with respect to the you know bigger sales it sounds like the bigger sales on the cemetery side did you know you got a recognized part of it in the first quarter, but you recognized so the additional 35 billion over the rest of the year do you think that.
It's just an unusual abbott blow that you get every once in awhile, where quarter has pick up or is there something happening in the market that you see these larger sales Oh, there's more activity around these larger sales.
Yeah, Jay this is Tom look towards senior debt.
As it relates to this it's really we have about.
You know 15 projects that right now being differed across the country and we're seeing a lot of great sales at the high end, but the biggest one that's really driving this number as you know rose Hills, our property in Los Angeles, which is the largest in the country are.
They have a they have a golden Oaks garden that is still being constructed and we're seeing a lot of large sales are going into that project and particularly but again I'd say, it's a real.
15th separate project from across the country, we're seeing a customer that really is is lagging the inventory we're putting in front of them and then at the same time I think again you understand the tiered strategy by having those types of projects and then you know.
Properties that lead up to that when you think about the breadth of properties. We offer we're seeing that come through on the core sales averaged two which is up 7% for the quarter. So they kind of go hand in hand.
Michael Johnson will talk a little bit about that tomorrow at our Investor day.
Okay, and I know you had a bolus of acquisitions in the fourth quarter. It's early but any updated thoughts on how those are playing out or are they tracking to your expectations or are they coming in a little better obviously they'd probably contribute part of the strong quarter, we see here.
We did a J I'm you know you've noticed we're comparing such an unusual quarter, because youre comparing against a monster 'twenty to 'twenty, one, but the real year over year impact with share repurchases in our inner acquisitions, and they're performing very well.
We're definitely seeing like I said elevated levels of volume than you would anticipate they were sitting in your pro forma. So we're very pleased they're great businesses. Great people. We're excited to have them a part of US and you know while you're on the topic, we didn't see a lot of closed activity for the first quarter, because we got a lot of things out of the fourth.
But we're definitely seeing a lot of activity and anticipate 2020 to be in a good acquisition year.
Okay and then the you know a lot of these calls there's a lot of focus on.
The labor challenges.
Can you just given some updated thoughts on that I know you said, you're getting input price increases you have probably more flexibility than the most of the industry to maybe pass that through to what extent is that happening and then on the labor front I know a lot and would you go with the <unk>.
And so forth is designed to get efficiencies, but give us a sense of what you're experiencing with respect to labor cost in general.
Yeah happy to do that when you think about the the product side of our business. The things that we're putting in front of our customers predominantly caskets markers things like that where we're really blessed in periods. Like this we have long term agreements that actually have inflationary caps on them.
So while the industry may.
May be experiencing a little more inflation than we would because again being protected by some of these agreements and the caps associated with them. So that's a that's a net positive for us as we think about going forward and what we're experiencing today. We are seeing you know sometimes in certain markets, we actually do the bowing and blowing or you know.
If you think about the cemetery maintenance ourselves and some of those we outsource and so.
On the outsource contracts, we're definitely seeing some inflationary.
Wage increases that are going through and so we've worked with our suppliers to try to be responsible partners and ensuring that we can capture those.
And then as you think about our internal labor costs.
We surely are seeing in certain pockets and in certain areas. Some pressure there and the way we've decided to manage that the J wearing our chief operating officers manage this through this is really less local markets take the leap and where they think they have risk where they think we need to do some.
Dissipated increases with our staff, we sit down in the market and we provide assistance obviously from here to evaluate and say, let's make these these are adjustments on the on the wage side, but same time, what's the plan to pay for so we really go on with an idea of if our wages are going up then we want to pass.
Those along to the consumer and and so far so good I think we've been able to do that and again I wouldn't call. It across the board I would call it isolated markets and we'll continue with that approach as the year goes on.
All right sounds great.
Yeah.
Your next question comes from Joanna <unk> with bank.
Please go ahead.
Hey, good morning, Thanks, so much for taking the question.
So I guess on the last earnings call. You said the data suggest that pull forward effect is smaller than previously thought so so any changes to this view based on what you've seen Oh this past quarter in terms of the number of deaths in the types of debt.
Sure Joanne you know again, we experienced slight decreases as it compares to the first quarter I would tell you that so far we're continuing to see you know unfortunately excess deaths are theres no doubt about it we're still 17% above.
The first quarter of 2020, which tells US something is going on in the market.
I would tell you that.
The percentage of Covid in my opinion is down now that doesn't mean, it's repeatable, but unfortunately I will talk a little bit about this in Investor Day Tomorrow Elizabeth Nash is going to go through some of this for you, but you know the the short answer is.
Deaths are occurring for a lot of different reasons lack of access to medical care screenings.
We're seeing every statistic you possibly could.
What's driving this and so it's very very hard and when you think about the pull forward. We really were talking about pull forward effect of Covid, which again, we think has diminished somewhat and we'll talk a little bit more about it but I think the harder ones. These excess deaths could you say if you if you had poor.
A less healthy American citizen, how long does that last and I think that's very difficult to talk to but we I guess, we'd say, there's clearly a lower aged person has been affected by Covid, which has less of a near term pull forward effect that hits the bottom line.
No I understand that yeah, it's a it's a very imprecise Matt that when it comes to hear these excess that so so I appreciate the color there and I guess, what what sounds like we might hear more tomorrow. So looking forward to that but I guess.
Somewhat related question, but maybe I'll have a different about that in terms of you know previous.
Previously you also talk about.
Expectations for 'twenty, three mm being the year, where you know you're going to come back to your long term growth targeting Germany. Obviously this year sounds like Q1 outperformance creates a very difficult comps for next year. So still here what are the implications for for next year's earnings are you willing to want to address.
How you were thinking about Oh.
Previously and what what does he have here now.
So you know we gave a little bit of color on 2023 before we've never really given.
Guidance, because I think it's really hard this far out to give you I think when we say the word guidance, we feel like we know a lot. Although we probably don't so so we've not given guidance, but again youre right I think it's out there kind of $3 30 for 2023.
And I'd love to tell you more but I don't want to steal Eric Thunder for Tomorrow.
And in front of a mirror for days.
Okay.
But I'll tell you we would.
Again as I can say this oh I would put it this way.
First of all he's going to talk about what we think is not our beautiful COVID-19 and he's going to talk to you about.
Earnings are efficiencies, we've gained in that's going to be a big part of his presentation tomorrow.
But I guess I'd, just say this without spoiling it.
We think 2023 is going to be better than we originally thought as of right now with the facts that we know again not being guidance.
Jim just encourage you to tune in tomorrow for an expanded discussion on this topic and really also just about you know how we think about the outer years and what are the what are the possibilities that are that we see in the coming years. So.
Well done presentation.
Cannot run Eric's Thunder a refuse.
No that totally makes sense.
Yeah, definitely I think Oh, well, let's Union Tomorrow, and if I may just squeeze a I guess that's.
Excuse me on a last question I guess, a follow up to the discussion around.
The large scale you know on the cemetery side of Preneed Cemetery.
You know what do you.
What do you kind of Oh, yeah.
I don't know how long would you would explain it like that it's just that people have that much more discretionary income or savings and they just try to put the money in because what I'm getting at is like you said sustainable way. It doesn't mean, you know that whoever feels like they have money now you know what you're spending now and it kind of up and that's it so any color kind of what the cemetery production and Adobe.
And as for for this you know demand for for large stout.
I think the demand side is there's a couple of things.
People worried about COVID-19.
Simplifying People's perspective on celebrating life and I think what we saw coming out of this is the opposite happened I think people appreciated the celebration more so I think you have a customer that is willing to buy I think youre right. There is excess savings and we're seeing that out there when you listen to the banks and I've always.
Having been around a long time.
Uh huh.
So it's high in cemetery sales correlate somewhat with housing prices and with the stock market because when you feel rich you Act rich and when you and when you are you don't so it does have a little bit of.
You've gotta be careful about as you go through economic cycles, they can dip down and it could come back.
So but.
But I think the thing to really focus on for what's happening now is recall that during COVID-19, we had to kind of slow down some projects because you couldn't get workers in you could do some things that we probably had some pent up construction and some pent up inventory and now what's happened is as the as it became easier to operate in Covid and we got better.
At it we're busy out there building. These gardens like I told you and we're finding that consumers really want the product. So I think youre seeing a robust demand against a pent up construction activity.
And that's what's leading to this kind of deferred revenues, which again are going to probably be recognized in the back half of this year or maybe even the early part of 2023.
Great. Thank you I appreciate it colleagues thank you Jim.
As a reminder, if you have a question. Please press star then one to be joined into the queue.
Next question comes from Scott Schneeberger with open Oppenheimer. Please go ahead.
Oh. Thanks, Good morning, Yeah, I had a I had my first question was the same as Joanne. It's about next next year the outlook, so really looking forward to Eric's presentation.
Think rainy it in since we do have guidance for this year, Eric if you could speak please to to kind of trends in the first quarter and then some of the commentaries earlier from you and Tom about at need funeral Cemetery Preneed funeral and cemetery I guess, just kind of a summary of the cadence of.
Those four metrics I'm just over the balance of the year I think that'd be helpful to just summarize each thank you.
Well I'll tell you, it's let's start with volume.
Scott I mean, I think obviously surprised us I mean, we've told you before that we thought it was going to be down kind of mid teens for the for the year and we thought it would kind of start off that way frankly, and it did and we were obviously surprised to the upside and again, it's not just COVID-19 that we're seeing as Tom just to reemphasize. This is it.
These are excess deaths levels are more track mortality that are higher than what we've expected even when you try to try to back out cohorts that took that 14th sets down to call. It low single digits down down 3% and you know for the most part I think for the rest of the year versus the comps you know we are.
We're expecting it to be tougher down into the double digits percentages in terms of in terms of volume and that's built into the models, but that's nothing that we'd be surprised to the upside like we were in Q1 of course, we could but.
But we really Didnt take this and then say we're gonna. Okay. So we were expecting down mid single teens, and we only had 3% now we're gonna change everything just because of one court I just don't think that'd be that'd be prudent based on what we're seeing but could we be a little bit better than what we're expecting you know the answer is yes.
The other thing that we've seen is we've seen some really great.
Activity as you've seen in our press release related to the second driver, which is preneed cemetery.
Property sales and you'll hear a lot more about this tomorrow Scott in terms of the drivers, but it's a lot of the things that you and I have already talked about and a lot of our conversations related to really how we are able to manage in that type of that type of visibility. We had utilized in the technology in their CRM systems that we have.
The type of technology, we're using in the leads lead area such as digital leads that leads to visibility into close rates et cetera, et cetera, you're also going to hear a lot about the type of inventory as we continue to to invest capital into the cemeteries two of the cemeteries and get some of these.
Larger sales activity to continue to run so from all of that perspective, you know I think we told you last quarter to kind of think about cemetery sales going backwards in the mid single digit percentage range that hasn't happened.
This quarter, obviously and independent from an excess death, which obviously gives a little bit of flow to the lead process for Preneed Cemetery were given a lot of credit to some of the other things that I. Just described to you from the management perspective, and I don't necessarily think that we do believe cemetery sales will be down.
Mid single digits, I think will they'll be up you know, perhaps even low to mid single digits for the for the rest of the year. So that is sort of a change Scott from what we've talked about three months ago different than the volume perspective, which is harder to predict because these excess deaths and COVID-19. So that's kind of high describe those two.
Main metrics as Scott just I think you answered asked a couple of other pieces of that and just to clear up something I think Eric said I think he misspoke something on the Preneed Cemetery sales, we expect low single digit growth for the year. So that means the remaining nine months could be slightly down because we had such a strong first quarter.
So again, we may have a quarter, where we're not going to get back to last year, but it'll still be elevated strong is our opinion and they don't need cemetery I'd think of that as almost in between.
Funeral volume.
Cuz It should act a lot like funeral volume from a velocity perspective, but because you've got these large sales because you've got a great growth in the average it should mute your effective that declined somewhat and then on the funeral sales average Scott just to close it out I think the comparisons get harder as the year goes on but we're still good.
For you know kind of low single digit comparisons with last year.
Thanks, guys I appreciate that.
Oh I see.
I'm going to follow up with obviously youre doing very well it looks like it you know you've been back to pre COVID-19 levels on on.
Funeral.
Revenue per funeral.
And I guess question would be the.
And and and and I get asked this last quarter. There was a a female mandated COVID-19 funeral assistance policy and I think you'd said you just really haven't seen much activity from that I wanted to I wanted to ask that again and and and then inquire with do you think we're back here to stay with with with the you know the higher at.
Need revenue revenue per funeral and why is that.
Yeah, I'll give my answer is.
On the on this day I think what we learned through this crisis, which probably surprised a lot of people in the industry is people want to celebrate a life lived in and I think it became more important and we're seeing people wanting you know in.
Some cases, particularly on the burial side, we're seeing slightly higher increases in celebrations.
The other thing Scott I think to understand that we will talk a little bit again about this keep promoting this for its presentation.
A presentation of our hope it's good.
But we're going to talk a little bit about ancillary things so far.
By leveraging technology and some of the tools that we have again leveraging our scale. We're seeing you know pretty robust increases as it relates to.
Selling flowers, particularly with technology on the Internet, so capturing share of wallet not only of this consumer but you know friends and family of the consumer we're seeing really impressive growth. There and then as you think about catering some of the same things that we're leveraging these additional products, which are going to have different margins than you know the incremental.
Margins of a traditional funeral, which as you know are very high fixed cost in nature, but there their shares of dollars that we think we can we can put through the system. So.
Couple that with I think you know.
An appreciation for what we do and we feel pretty good about.
General averages as we go for it and again, it's not gonna be rocket ship, but it's gonna be consistent low single digit growth and if inflation is a little higher than that and we'll probably experience a little higher price increases too.
Great. Thanks, I appreciate that color I'll turn it over that.
This concludes our question and answer session I would like to turn the conference back over to the Sci management for any closing remarks.
We want to thank everybody for being on the call. Today. We appreciate you and again, if you can be in person or tune in for tomorrow, it's going to be a nice show it remember Eric practicing very hard [laughter].
Appreciate you have a great wave.
Right.
The conference has also now concluded. Thank you for attending today's presentation you may now disconnect.