Q3 2023 Service Corp International Earnings Call
We keep that to a straw. Your question. Please press Star then two.
Please note that this event is being recorded.
I would now like to turn the conference over to <unk> management. Please go ahead.
Thank you Ann Good morning. This is Debbie young and we welcome you today to our third quarter earnings call. We'll have prepared remarks from Tom and Eric in just a moment, but before that let me quickly go over the Safe Harbor language.
Any comments made by our management team that stayed 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 also in our filings with the SEC that are available.
<unk> on our website.
Today, we will also discuss certain non-GAAP financial measures and a reconciliation of these measures can be found in the tables at the end of our earnings release as well as on our website.
I'd now like to turn the call over to Tom Ryan Chairman and CEO.
Thank you Debbie.
Hello, everyone and thank you for joining us on the call today.
This morning, I'm going to begin my remarks, with some high level color on our business performance for the quarter.
<unk>, some greater detail around our solid funeral and cemetery results.
Then close with some thoughts on the rest of 2023.
Preliminary thoughts on 2024.
For the third quarter, we generated adjusted earnings per share of <unk>, 78 cents, which compared to 68 tests in the prior year.
This impressive 15% growth in earnings per share over the prior year is primarily related to improved cemetery profitability driven by higher cemetery revenue from completed construction projects.
Along with lower fixed costs in both the cemetery and funeral segments.
Resulting in higher gross profits.
And margin expansion.
Below the line the 425 basis point rise in interest rates on our variable rate debt increased our interest expense reducing earnings per share by nine cents.
This increased interest rate expense was predominantly offset by lower general and administrative expenses and the favorable impact of a lower share count.
We have accelerated the pace of our share buyback given our recent stock price repurchasing $65 million of stock during September and $99 million during the month of October.
Now, let's take a deeper look into the funeral results for the quarter.
Total comparable funeral revenues declined $7 million or about 1% over the prior year quarter.
Primarily due to an expected decrease in core funeral volume.
Although core funeral volume declined 6% compared to the prior year quarter.
We believe due to the COVID-19 pull forward effects.
We're in line with what we had anticipated.
Notably funeral volumes are about 11% higher than third quarter 2019 levels.
Our core average revenue per service grew over the prior year by an impressive 4%.
Even after absorbing the negative effects of a 120 basis point increase in the cremation mix.
From a profit perspective funeral gross profit increased by $6 million, while the gross profit percentage grew 130 basis points to about 20%.
Lower fixed costs and reduced incentive compensation costs over the prior year quarter more than offset the slight revenue decline.
Preneed funeral sales production grew an impressive $15 million or about 5% over the third quarter of 2022.
Both the core and the Sci direct channels experienced impressive sales production growth during the quarter.
Now shifting to cemetery.
Comparable cemetery revenue increased $22 million or just over 5% compared to the prior year third quarter.
Core revenue accounted for the preponderance of the increase as recognized preneed revenue increased by $21 million or 7%.
This growth is primarily due to the expected completion of construction projects during the third quarter, which drove an increase in the revenue recognition rate by capturing sales from both the current and previous quarter sales production.
Additionally, we saw increased merchandise and service Trust fund income generated from higher returns over an average five year period as compared to the prior year quarter.
Preneed cemetery sales production declined by $20 million or 6% in the third quarter.
While we continue to see impressive growth in our large sales activities.
Our production or sales contracts below $80000 declined by $29 million.
We believe some of this decline is attributable directly and indirectly to the COVID-19 pull forward effect.
We also continue to see our discretionary consumer being impacted by diminished savings rates and lower real incomes acutely impacted by inflation.
History tells us that a similar economic trends have stabilized in the past our products and services have experienced a relatively early recovery in the discretionary purchase cycle.
We have the advantage of selling a product that appreciates versus depreciates in value.
And we believe our cemetery sales production is deferred not lost.
This affords us an ability to recover quickly as the consumer economic cycle turns.
Notably Preneed cemetery sales production is 58% higher than the third quarter of 2019.
While large sales are an impressive two five times higher than 2019.
<unk> of the sales production growth is from core or sales less than $80000, which grew 48% over 2019 were at a 10% compounded annual growth rate over the four year period.
Cemetery gross profit in the quarter increased by $15 million and the gross profit percentage grew by 190 basis points to over 32%.
The increase in cemetery revenue was further enhanced by lower incentive compensation costs in the third quarter as compared to the prior quarter.
Now, let's shift to discussion about our outlook for the remainder of 2023, where we are maintaining our annual guidance.
In the funeral segment, we would expect to see low to mid single digit declines in funeral volume as the impact of the Covid pull forward slightly outpaces, increasing volume trends.
On the positive side, we would expect healthy low to mid single digit growth in our funeral average both at the at need customer level as well as the funerals maturing for the preneed backlog.
On the cemetery side, we would expect Preneed cemetery sales production to range from flat to low single digit percentage growth in the fourth quarter.
While we anticipate a healthy favorable impact from newly completed construction projects during the fourth quarter.
The comparison against the prior year quarter will be unfavorable as the 2022 fourth quarter, new construction impact was the highest in many years.
Favorable impact from a lower share count and lower general and administrative costs for.
For the most part offset higher interest expense.
Therefore, we would expect earnings per share to be at or slightly above last year's fourth quarter results.
Now as we look at 2024.
On the funeral side, we would expect fewer COVID-19 in excess deaths as well as a moderating impact from the pull forward effect.
Resulting in slightly lower comparable funeral volumes as compared to 2023 levels.
Still an improvement from mid single digit declines in 2023.
We would anticipate achieving inflationary increases and funeral average pricing slightly offset by the effect of the cremation mix change.
In the cemetery segment.
Absent a material change in discretionary consumer behavior.
We would expect a normalized pre COVID-19 growth trajectory.
Slightly impacted by the lead source decline from lower funeral volumes.
This anticipated low single digit percentage sales growth when combined with the favorable comparative impact from newly completed construction projects should result in cemetery revenue growth in the low to mid single digit percentages.
Below the line, we anticipate higher interest expense due to higher credit facility balances and a slightly higher comparable interest rate at least during the first half of the year.
This higher interest expense should for the most part be offset by a lower share count when impacting 2024 earnings per share.
Typically we would provide our preliminary earnings per share range of about 30.
When we set any guidance for the coming year.
Today, we maintain variable rate debt of approximately $1 $5 billion, having recently experienced significant fed rate hikes during 2023.
Keep in mind that a 100 basis point move has an annual effect of <unk> on 2024 earnings per share.
Due to the lack of visibility on interest rates and the uncertainty surrounding the economic condition of the consumer.
We are widening the range of our guidance to 50 cents.
Therefore, our preliminary guidance range for 2024 earnings per share is <unk>.
$3 42.
To $3.90.
We will provide formal guidance in our February earnings release Investor call.
So I want to point you back quickly to Investor Day May 22, because we gave you guys a presentation and talked about.
New base that we were growing off of and we gave you some preliminary thoughts around 2023, 'twenty four 'twenty five.
If you go back to page 35, we referenced this 65 higher base.
We believe we are operating off of 75% of that was coming from sales productivity, 15% from accelerated buybacks and 10% from cost effectiveness.
So if you go to that page 34, we were using a 10% earnings per share growth to grow off the new base, we had projected 2023 to be $3 50.
In 2024 to be $3 85.
So we would ask ourselves and I'm sure you ask yourselves, how are we doing versus that.
So lets reconcile to that 2024 number.
If you start with the idea that our range is $3 40 to $3 90, the midpoint would tell you I guess with math $3 65 to.
The 365 compares to $3 85, how are we doing it.
You'll remember at the time that we were in <unk>.
May 22 are variable rate on our debt was 2%.
When we were modeling out 2024, we assumed that that would raise rates and we had an average rate of three 5% for our variable rate debt in 2024.
Today, we sit projecting that to be seven 5%. So there's about a 400 basis point increase.
Versus our assumption that was in that model back on page 34. So if you put that 400 basis point increase against $1 six and variable rate debt, which is where we will we will finish the year most likely.
That's about $64 million of additional interest expense that's flowing into 2024, when you compare back to our Investor day, It's about <unk> 30 per share. So if you add <unk> 30 per share to the 365 midpoint that would tell you our midpoint is $3 95 compared to.
To the model in Investor day that was $3 85.
The truth of the matter is in looking back.
We're performing at a level at or actually above what we told you we do an investor day and the one variable that we didn't take into consideration was the.
The fed raising rates as aggressively as they did and so we sit here today I think with an operating model that's working very well, we've got a higher interest rate environment, we're navigating through but we're very pleased with where we are as a company and excited about.
Now seeing a lot of positive trends as we think about year over year comparisons.
Finally, I'd like to thank the entire <unk>.
<unk> team for for all that you continue to do every day for our customers our communities and each other.
And you guys are what makes our company great. So with that operator, I'm going to turn the call over to Eric.
Thanks, Tom and good morning, everybody I'm going to start the same way Tom you just ended on behalf of all of the management team here at SCE I want to address our 25000 associates across U S, Canada and Puerto Rico.
On behalf of everybody I'd like to thank you for everything you do to provide peace of mind and outstanding service to our client families at one of their worst times of their lives as we all know without you with what you do every each and every day and without your commitment to those client families. These strong financial results.
<unk> would not be possible at any stretch of imagination.
Now shifting to kind of some of my comments on the quarter I'm going to talk about our operating cash flow results in a lot of the things we've done with capital investments. During this quarter and then kind of how Tom did it I'm going to provide an update on our financial position and cash flow outlook for the fourth quarter and then also give you a little bit of color towards 2000.
<unk> 24 in a preliminary basis, but as you know we will talk more specifically about that in February so, let's just start with this quarter.
We generated strong adjusted operating cash flow of just under $230 million that beat our internal expectations and grew more than 45 million over the prior year Theres really three large factors that I think about that are driving this kind of quarter over quarter improvement first.
Increases in cash flow resulted from the higher earnings growth. Tom just went through that in detail and you could tell that that generated cash flow and a strong manner.
Cash tax payments were lower by about $40 million, that's what was as expected.
Resulting from the change in the tax accounting treatment that we discussed last quarter and as a reminder, this change acts to defer cash taxes into future years, when installment payments for the cemetery property or actually received from the consumers.
This lower cash taxes more than offset about an $18 million of higher interest payments, which again were primarily caused by the higher interest rates on our floating rate debt that we've already gone through this morning.
Some exciting things, we did with that cash flow and with our capital during the quarter.
First we invested a total of $148 million into our current locations new growth opportunities some accretive acquisition and some real estate. We gave you a little bit more color and break that down for you.
We deployed just over $80 million back into our current businesses with $41 million of cemetery development Replenishing cemetery inventory to meet the consumer sales demand $28 million of field maintenance capital into our existing facilities.
$13 million into digital systems and initiatives.
But a little bit deeper on the topic of maintenance Capex. We've guided you to a range of $290 million to $310 million of this total maintenance capex for the full year of 2023.
While we expect this total maintenance capital moderate a little bit in the fourth quarter. We believe we will finish the year at the higher end of this $290 million to $310 million range.
We also invested close to $9 million in growth capital primarily related to the expansion of some existing funeral homes and cemeteries in Texas, Ohio, and California to name a few as well as the construction of some new funeral home facilities, primarily in Virginia, and Florida to name a few.
On the acquisition front, we invested just over $30 million during the quarter.
Bringing our year to date acquisition spend to $73 million, which is approaching the low end of our full year acquisition investment target range of $75 million to $125 million for the full year of 2023.
Finally, we invested $24 million in real estate purchases, which was predominantly in one of our major Western U S markets on a large acre parcel of land to be used for future cemetery expansion.
And by the way in addition to these investments that just notice. We also returned nearly $132 million of capital to shareholders during the quarter.
$44 million of dividends and $88 million of share repurchases and as Tom just mentioned I'll reemphasize. This subsequent to quarter end, we have repurchased $99 million, bringing the total year to date capital returned to shareholders to approximately 560.
$5 million.
Well a lot of things for the quarter I just want to make a brief comment on our corporate G&A expense, which was $33 million for the quarter since it fell below kind of the normal expected range that I've talked about before of $38 million to $40 million for a quarter.
This was driven primarily by lower incentive compensation expense that was primarily associated with the company's long term compensation plan based on total shareholder returns relative to a designated peer group.
So moving on to a few comments about our financial position.
Our favorable debt maturity profile and liquidity of just under $1 billion at the end of the quarter continue to give us the ability to effectively invest capital.
Liquidity ended the third quarter consisted of approximately $170 million of cash on hand, plus approximately $800 million available on our long term bank credit facility.
Also on the stronger operating results our leverage at the end of the quarter decreased slightly to about three and a half times net debt to EBITDA, which is about three six times at the end of last quarter.
And just to refresh your memory, we continue to have a bias towards the lower end of our targeted leverage ratio range of three five to four times at least in the near term.
So it shifted more to an outlook as we disclosed in the press release, our 2023 adjusted operating cash flow guidance range as a midpoint of $855 million.
We're expecting to grow off of this projected range in 'twenty four and we'll give the official cash flow guidance. After we close out the year and again as we mentioned that will be in February when we talk to you again.
But preliminarily.
To give you some color on our cash flow expectations cash flow in 2024 should be positively impacted by our expected earnings growth that Tom just discussed with a new preliminary range.
Which includes by the way the expected increases in interest expense.
Our cash taxes will be $40 million to $60 million less in 2024 for some of the reasons that I already mentioned this morning.
And lastly, we also expect net working capital usage from our preneed program to generally be offset by reduced ICP payments that will occur in early 2024. So hopefully that gives you some preliminary guidance as it relates to our expectations and we're excited about.
In terms of cash flow for 2024.
So in closing as we do look forward you really can expect more of the same from our company as we move forward, especially in 'twenty for strong and predictable cash flow combined with a solid balance sheet, great liquidity that will provide opportunities to continue to invest capital to the highest.
Best use in order to maximize shareholder value.
So again I'd like to end this by thanking our entire SDI team for their contributions to do and what they what they do in front of the client families, which is second to none and helping us to achieve these results.
So with those.
What was that that that concludes our prepared remarks, and with that operator, I'm going to turn it back to you and we'll go ahead and open this call back up to questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speaker phone. Please pickup your handset before pressing the keys.
Your question. Please press Star then two.
First question comes from Joanna Jacob.
Please go ahead.
Morning, Thanks, so much for taking the questions.
So I guess first you talk about the.
'twenty 'twenty four initial look.
So thanks for that color.
And I guess the bridge to how you were thinking or the initial I guess.
Yeah.
Your next question will be May 2022, so that's helpful. In terms of the interest expense.
So the cemetery segment, Okay. So two questions there.
First could you talk about expectations for similar theory.
Revenues actually because I don't know.
Low single digit a few for you.
But I guess you know for this year for 23 production will be down.
Yes, what's driving desktop revenue.
Actually going into into next year.
Yes, so thanks for the question.
Yeah, I think the way to think about cemetery, and especially a few correlated with preneed funeral.
What we saw through Covid was a real spike in cemetery sales.
Much higher than funeral and so are the.
Discretionary consumer on the cemetery side was was more likely to purchase that probably was because they're very focused on that issue.
And secondarily I think on the funeral side, you're very reliant upon seminars direct mail digital leads so meeting in person was pretty difficult to do so if you. If you look at both sales trajectories over the entire period the compound annual growth probably the same differences cemetery really spiked up in <unk>.
I'll have to come down the mountain a little bit, whereas funeral did spike as much and now kind of as continuing to eke out the growth, but the trajectories are pretty pretty much the same.
The cemetery business relies upon traffic to come through the places. So as you think about the impact on Covid because funeral volumes are down 6% that has an impact on our lead source skewing towards cemetery, there's less traffic there are less people to sell to.
So again I think as the funeral volumes stabilize that's when year over year. That's when we think we begin to go back to being able to grow cemetery sales and were predicting that right now for 2024 that our funeral volumes will be slightly down because of again.
Excess test in Covid trending slightly down but.
We feel confident about our ability to from a lead source perspective, and a traffic perspective to get back to you.
That low to mid single digit growth that you expect to see.
From our core cemetery business.
Great.
My second my second question in terms of.
How you'd think about so I guess at the ports two parts right. How do you think about the same anthemic go out after 2024.
You just answered but also on the pre need cemetery sales production.
Remind me I don't know, whether you said it for next year, and then I guess off that way.
Yes. So next year, what we're saying is they think of I think we've always said, we think preneed cemetery sales can grow somewhere in the let's call it 3% to 6% range, depending on the year, we feel like we're back there and the only thing I wanted to call out were really two things. One is we think that trajectory.
<unk> is there to come back, but keep in mind funeral volumes will be slightly down so that means our lead source, maybe slightly down I wouldnt expect that to impact our cemetery sales more than a percentage point. So think of three to six now two to five.
And the one qualifier I'll put out there is the fact is to remind everybody cemetery is a discretionary purchase and if you look at other retailers you know this morning listening, Brian Cornell from target talking about seven quarters in a row that they've experienced consumer discretionary volumes being down.
I do think there's when you think about the effects of excess savings, which are you know drawing up you've got inflation. That's out there for the typical consumer you got higher interest rates that are impacting your ability to want to spend you know theres a lot of wind in your face is the consumer discretionary and that's why I applaud our sales team for <unk>.
What they've been able to do is absolutely incredible so I feel good about it absent something.
Really bad happening with the concessionary.
Ability for that consumer to spend.
At the high end, we're continuing to see very very positive trends and again I would correlate to high end more to stock market and housing prices because interest rates and inflation don't tend to impact that consumer.
But everybody else is being impacted so think of next year as you know slightly lower than normal growth and then when you get to 25 I think we're back to the that 3% to 6% same store range that you used to.
No that's very helpful.
And I guess, if I may just squeeze one more.
I guess.
So Eric in terms of the G&A.
Certainly.
So how should we think about this number going forward into next year is there going to be Evan first of all of the <unk>, that's going to impact next year when it comes to the numbers. Thank you.
Yeah, there probably is that the annual guidance since you're talking annually and I was talking quarterly before you know it is.
Generally to have G&A expense in the $150 million to $160 million range for the full year I think we'll end at the low end of that if not slightly below that low end.
All of that range and so I believe next year in 2024 will end up probably in the heart of that range. So if you put us in a 150 or $1 45 to $1 50 for 'twenty three.
Looking at a little bit of a headwind getting back up in the middle of that of $1 55, So a lot more to come there and a lot of assumptions in that related to the fourth quarter that I just said in my head, but ultimately that's generally where I think you should probably think about it as of now Joanne.
Alright, So would you say I guess as a follow up to that on the comp accrual.
Do you do those things, what's it like $5 million that sounds like.
You're talking about during the quarter.
Yeah.
Okay.
The benefits yet.
Yeah.
In the quarter, you're comparing against the very strong accrual that was really bringing a lot of the ICP accruals up to kind of their Max you know last year. So you know, it's probably a tailwind during the quarter of don't have in front of me, but I would probably say three to four cents.
<unk>.
That ballpark.
For this specific quarter and of course, we got to get some of that back next year, depending on how we accrue it but everything I just said in terms of my assumptions for G&A assumes kind of like a middle of the road target percentage.
For 2024, not a max percentage that we saw in 2022.
That helps you.
Great I appreciate it thank you.
Our next question comes from Scott Schneeberger with Oppenheimer. Please go ahead.
Hi, Good morning, it's Daniel on for Scott. Thank you for taking my question.
Could we elaborate a little bit on our funeral volume expectations for next.
Next year.
How you see the range here.
How do you think about the pull forward.
Packed at this point, where we are in that is that.
Cycle are we looking out to 2024 is the last to transition year before normalizing in 2025.
No I think Eric.
Eric has probably got much better numbers statistics, but I would say philosophically.
The way, we're thinking about this that pull forward effect diminishes each year. So we do think there is a pull forward effect 24, we think it's going to be <unk>, 25, and 26, but it becomes pretty de Minimis as you get further out so in that regard year over a year, it's actually an improvement when you think about 2002.
Four.
Having said that in 2023, we continue to see some COVID-19 deaths, we continued to experience some excess deaths.
As we think about those trends those are beginning to go away.
As you get into 'twenty four into 25. So the net net is a slightly negative is what we're trying to to point you towards is we think there's still a bit of a drag on 2024.
Probably in the you know call it 1% to 2% range as you think the year over year declines versus what we're seeing this year about a 5% decline then as you get out to 'twenty four 'twenty five our assumption would be that you'd begin to climb back up and see favorable year over year trends I'm getting back to you.
Kind of that call it 1%.
Growth in the numbers of deaths and then you know our.
Our competition for market share.
Got it thank you.
Switching gears to margin could you please speak to our margin expectations for next year across both segments.
No I think that.
Pretty good cost performance on the funeral side this quarter on in the past you've talked about the efficiencies gained during the Pandemics. If you. Please could get an update on how you think about the segment margins looking into next year.
I think on the segment margin overall, we would expect for the year both of those to kind of point positive.
More so on the cemetery side than on the funeral side.
When you think of year over year I would caution you that I think the first quarter of last year I'm, sorry, the first quarter 'twenty three.
That may be a tough comparison as my memory of.
What happened in those quarters, when you think about volumes because of sales.
Sales production and because of our funeral volume so but overall as you think of 24 I think you can model you know flat to slightly up type of margins is the way we were thinking about it.
Thank you.
Yeah.
Again. Thank you have a question. Please press Star then one.
Our next question comes from John Ransom with Raymond James. Please go ahead.
Hey, good morning.
Looking at the midpoint of your guide next year, the $3 65.
How do we think about the cemetery recognition rate, which was certainly elevated this year and where does that go relative to this year I'd say last year.
No I think last year when you look at what's in the press release the recognition rates were probably in the low nineties, John I think there prior to be in the <unk> is kind of where we're going to end this year and I would probably say that 'twenty 'twenty four will probably be in that ballpark. So I think of it as kind of we're starting to get back.
And completed a construction projects recognizing the revenues you saw that in the quarter that we were on plan and what we expect it to do and I think you'll see more of the same at 24, so think of it as kind of a.
24, being kind of a mid 90%.
Recognition rates similar to I think how 'twenty three will land.
Okay. So that's higher than like you said that part of it is that kind of a new normal or is it just still burning off some of the big construction projects.
I think theres more to come beyond that but I think that for right now what we have on our radar and visibility for the next 18 to 24 months I think that's a good metric to use.
Okay.
And then just a couple of other.
Again, using the midpoint of your guide.
Are you thinking about share count next year, just given your accelerated repo activity. So far this year.
Yeah, I mean, I you know it.
It depends on what happens and what prices because as you've seen us we kind of throttle up and throttle back based on what we think the value is in that we've already purchased because we gave you the numbers through October already we're already in a $6 5 million ish share range is what we are.
Repurchase back I think there's potentially more of that to come.
During the fourth quarter as we've already.
Describe to you. So it just depends on going forward you know I think right now that $6 million and brought our basic shares outstanding and let's just talk about that as opposed to getting into dilutive calculation.
To about 148 to 149 million shares outstanding So I think I'm very happy to finally peer screw that 150, and I think we'll go from there, but we will moderate in 'twenty four well that there's a lot of assumptions to that in terms of what or there are other opportunities with a higher return.
Deploy the capital too.
And what the share prices.
So you're kind of into that bye bye low thing that what you're telling me that are pretty.
Pretty clear.
[laughter].
And then just I hope this is the last time I asked this question because it is I know it's tedious, but.
Just.
Update on putting your prices online at T C competitor behavior.
If you are seeing any any sort of fallout from that end.
What are you thinking about for next year in that regard.
Yeah that it's really more of the same John are.
You know there was subsequent to what we've talked about last quarter.
A public workshop in early September.
Lot of people from the industry and some people outside the industry.
Visited with the FTC and we had a seat at that at that table subsequent to that we sent a letter you know just kind of memorialize and what we said in that workshop, which is consistent with what we said before we sent that letter in early October in terms of pricing online.
Haven't changed our position.
But again I would say right now of our 15 funeral 1500 funeral homes, we probably have a thousand to 1100 of those with prices online we have different levels of pricing, whether it's starting at or is it just the absolute full blown premium experience drill down into what exactly the.
Pricing is pick menus of.
For celebrations, all kinds of things and it's going to move and fluctuate because we're learning.
We like it.
We love interacting with our consumers using our very powerful dignity memorial website.
And we will continue to invest digitally into those websites and and and more to come but from an FTC perspective to come full circle whatever they decide as I've said you know moving forward I think we're well ahead of the curve and I just don't see it having a.
<unk> will affect our company in one way or the other.
So just to put a fine point on this are in the markets, where you've done. This you are not seeing any knock on effect from on the online pricing.
We're not seeing any type of negative effect and were actually seeing in some certain markets. The positive effects as it relates to preneed leads and premium consumer so we're.
Keep going we're going to keep testing, we're going to find the right variables to figure out that's what.
A lot of people doing this our management team is good at.
Okay.
Sorry, just to keep going on this because we get a lot of questions.
So in your markets, let's say a competitor doesn't.
But his or her prices are there prices online how do you use.
You just have mystery shopping you have other ways to know what's your what youre looking at although at a local level.
Yeah, I would say our market management is very very plugged in with their competition both online and.
What's happening at their competition is pretty much each and every week and each and every day.
If you got any mystery shopper opening.
I'll put my opening yeah, I'll put in for that.
Yeah.
You've made the demographic.
Okay.
[laughter], Yeah, I keep getting the Flyers from dignity I don't know what you guys are telling me that last checkout.
Yep.
Way to go.
Alright, thank you.
Thank you John.
Please follow up question from Joanna <unk>.
Please go ahead.
Hi, Thanks for taking the follow up I guess on this.
Last I'll take that.
So I understand the workshop to place and.
It sounds like the FCC was still collecting some information there so any update on the tiny way we might have from FTC.
No we really don't Joanna I mean, this has been going on for.
Several years at this point in time, I think there is a little bit of a change in its flavor that we've picked up on at the FCC that maybe this is sooner rather than later I wouldn't have said that you know last quarter before the September seven meetings at all of the industry has an opportunity.
To go to but I'm, hoping that sooner rather than later, but my predictions.
With the FTC and the government is not bad.
I have not been on compared to the timing as you know.
Alright, So I guess, we just sit and wait.
But actually my my my other follow up when you were talking about.
In the quarter.
Oh commentary around the preneed sales production has come in theory side. So.
So can you give us.
Maybe some comparison to how things were in Q2.
Versus the low end Amit here I guess can you talk about large sales.
Around or about $50 million in Q2, so I guess, where it was in Q3.
On the low end I guess you continue to.
For financing options to the customers. It sounds like that's what you were trying to do.
To kind of bring back some of these customers to to you. Thank you.
Okay, Yes.
<unk>. That's the first one was large sales and you'll continue to see a lot of success. There I mentioned that from 2019 levels. This third quarter was two five times.
I think in the second quarter were about equivalent I think were 50% and 49, so about the same pace on that piece.
As it relates to the consumer incentives, we have rolled those out I guess I would I would describe that as a mixed bag and you know certain markets. It's been effective in other markets, maybe not as much but it's a tool in the toolkit of our sales teams that they're utilizing and to varying degrees of success, but we just want to make sure if theres a customer that.
<unk> has a need and has a one that that we've got a plan for them to fix it I don't think we've seen anything dramatic yet Joanne up but we're.
And to utilize that as a tool.
Okay, and I guess do you still offer that because you're financing or I guess that that's off the table.
Yeah, it's a it's kind of a tool box item for different markets right. So they are different things that they can utilize if they see that consumer base.
What may drive behavior, so we try to give them.
Variety of things that they can utilize to help the consumer get onboard including.
Zero percent.
Okay, I understand market specific alright.
My last one on that.
Acquisition, So I guess you're tracking.
I guess towards the lower end for the year I guess, there's still one more quarter to quarter I guess.
Two months to go into in this year, So I guess.
Maybe talk about the pipeline a little bit you know fiduciary into next year are you.
So seeing any increase or decrease.
And interactive media and kind of your appetite sounds so you're going to keep the leverage at the current level.
But I guess you know the cash flow.
Guidance I guess implies base.
For for M&A, So just kind of thinking about this year and into next year when it comes to acquisitions. Thank you.
I think the pipeline is really good Joanna so we feel very positive as we look forward over the next call. It 12 months or the deals that are out there.
Timing is the tough part right so.
We're working on some deals now that may or may not close in the fourth quarter, but.
Highly likely they will close in the first quarter. So I think the way to think about the next 12 months were very positive.
It's just tough sometimes deals slip as far as timing can go but yet CN CN deal seeing good deals.
And good activity.
Thank you.
Okay.
This concludes our question and answer session I would now.
Like to turn the conference back over to you.
Alright management for any closing remarks.
Thank you everyone for being on the call today, we appreciate it and we look forward to speaking to you again in February with our fourth quarter and year end earnings. Thanks, So much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.