Q1 2026 Service Corp International Earnings Call

April 30, 2026

Speaker #1: Okay, and welcome to the SCI first quarter 2026 earnings conference call. All participants will be in the listen-only mode. Should any assistance, please signal your conference specialist by pressing the star key followed by 0.

Operator: Good day, and welcome to the SCI Q1 2026 Earnings Conference Call. All participants will be in the listen-only mode. After today's presentation, there'll be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to SCI management. Thank you, and over to you.

Speaker #1: After today's presentation, there'll be an opportunity to ask questions. To ask a question, we press star and then 1 on your touchstone phone. To withdraw your question, we press star and then 2.

Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to SCI management. Thank you and over to you.

Speaker #2: Good morning. This is Trey Bokaj, AVP of Treasury and Investor Relations. Welcome to our first quarter earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute, but before that, let me go over the Safe Harbor language.

Thomas L. Ryan: Good morning. This is Trey Bocage, AVP of Treasury and Investor Relations. Welcome to our Q1 earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute. Before that, let me go over the safe harbor language. Any comments made by our management team that state our plans, beliefs, expectations, or projections about 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. Today, we might also discuss certain non-GAAP financial measures.

Trey Bocage: Good morning. This is Trey Bocage, AVP of Treasury and Investor Relations. Welcome to our Q1 earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute. Before that, let me go over the safe harbor language. Any comments made by our management team that state our plans, beliefs, expectations, or projections about 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. Today, we might also discuss certain non-GAAP financial measures.

Speaker #2: Any comments made by our management team that state our plans, beliefs, expectations, or projections about 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.

Speaker #2: 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.

Speaker #2: Today, we might also discuss certain non-GAAP financial measures, a reconciliation of these measures, can be found in the tables at the end of our earnings release and on our website.

Trey Bocage: A reconciliation of these measures can be found in the tables at the end of our earnings release and on our website. With that out of the way, I will now turn the call over to Tom Ryan, Chairman and CEO. Thanks, Trey. Good morning, everyone, and thank you for joining us. I'll start with an overview of our quarterly performance, followed by a deeper look at our funeral and cemetery results, and then conclude with our outlook for the remainder of 2026. For the first quarter, we generated adjusted earnings per share of $0.97, which compared to $0.96 in the prior year. Cemetery revenue and gross profit increased meaningfully, supported by double-digit growth in preneed cemetery sales production.

Speaker #2: With that out of the way, I will now turn the call over to Tom Rein, Chairman and CEO.

Speaker #3: Thanks, Trey. Good morning, everyone, and thank you for joining us. I'll start with an overview of our quarterly performance. Followed by a deeper look at our funeral and cemetery results, and then conclude with our outlook for the remainder of 2026.

Thomas L. Ryan: Thanks, Trey. Good morning, everyone, and thank you for joining us. I'll start with an overview of our quarterly performance, followed by a deeper look at our funeral and cemetery results, and then conclude with our outlook for the remainder of 2026. For the first quarter, we generated adjusted earnings per share of $0.97, which compared to $0.96 in the prior year. Cemetery revenue and gross profit increased meaningfully, supported by double-digit growth in preneed cemetery sales production.

Speaker #3: For the first quarter, we generated adjusted earnings per share of $97, which compared to $96 in the prior year. Cemetery revenue and gross profit increased meaningfully, supported by double-digit growth in pre-cemetery sales production.

Speaker #3: This performance was more than offset by lower funeral revenue and gross profit. Driven by mid-single-digit decline in case volume, resulting in a $0.02 reduction in earnings per share from operating income.

Thomas L. Ryan: This performance was more than offset by lower funeral revenue and gross profit, driven by a mid-single-digit decline in case volume, resulting in a $0.02 reduction in earnings per share from operating income. Below the line, the favorable impact of a lower share count and a slightly lower effective tax rate was partially offset by higher interest expense, which when combined, resulted in an additional $0.03 of earnings per share growth. Despite a meaningful decline in funeral case volumes during the quarter, the company delivered strong underlying performance across several key operating metrics. Pre-need funeral and cemetery sales grew exceptionally well, reflecting continued success in building long-term customer relationships and future revenue visibility. In addition, average revenue per funeral service increased meaningfully, demonstrating the strength of our offerings and disciplined pricing execution.

Speaker #3: Below the line, the favorable impact of a lower share count and a slightly lower effective tax rate was partially offset by higher interest expense.

Speaker #3: Which, when combined, resulted in an additional $0.03 of earnings per share growth. Despite a meaningful decline in funeral case volumes during the quarter, the company delivered strong, underlying performance across several key operating metrics.

Speaker #3: Pre-need funeral and cemetery sales grew exceptionally well, reflecting continued success in building long-term customer relationships and future revenue visibility. In addition, average revenue per funeral service increased meaningfully, demonstrating the strength of our offerings and disciplined pricing execution.

Speaker #3: At the same time, we maintained strong control over our cost structure effectively managing controllable expenses minimizing the impact on margins in a challenging volume environment.

Thomas L. Ryan: At the same time, we maintain strong control over our cost structure, effectively managing controllable expenses, minimizing the impact on margins in a challenging volume environment. Importantly, had funeral case volumes been flat for the quarter, we estimate EPS would have been approximately $1.12, representing roughly 17% growth over the prior year quarter. Taken together, these results underscore the resilience of our business model and our ability to execute strategically despite near-term headwinds. Now let's take a deeper look into the funeral results for the quarter. Total comparable funeral revenues decreased by $17 million or just less than 3% over the prior year quarter, mainly due to a decline in core funeral revenue. Comparable core funeral revenue declined by $18 million or just more than 3%, primarily due to a 6.6% decrease in core funeral services performed.

Speaker #3: Importantly, had funeral case volumes been flat for the quarter, we estimate earnings per share would have been approximately $1.12, representing roughly 17% growth over the prior year quarter.

Speaker #3: Taken together, these results underscore the resilience of our business model and our ability to execute repeatedly despite near-term headwinds. Now let's take a deeper look into the funeral results for the quarter.

Speaker #3: Total comparable funeral revenues decreased by $17 million or just less than 3% over the prior year quarter. Mainly due to a decline in core funeral revenue.

Cemetery revenue and gross profit increased meaningfully, supported by double-digit growth in pre-need cemetery sales production.

Speaker #3: Comparable core funeral revenue declined by $18 million or just more than 3%, primarily due to a 6.6% decrease in core funeral services performed. The decline in services reflects the impact of a strong flu season in the prior year quarter and is consistent with broader first quarter mortality trends as indicated by data from the CDC, as well as reporting from other industry participants.

This performance was more than offset by lower funeral revenue and gross profit driven by a mid single-digit, decline in case volume resulting in a 2-cent reduction in earnings per share from operating income.

below the line, the favorable impact of a lower share count in a slightly, lower effective tax rate was partially offset by higher interest expense which when combined resulted in additional 3 cents of earnings per share growth

Thomas L. Ryan: The decline in services reflects the impact of a strong flu season in the prior year quarter and is consistent with broader Q1 mortality trends as indicated by data from the CDC as well as reporting from other industry participants. While we saw a notable decline in Q1 volumes, it's important to put that in historical context. Outside of the COVID-impacted era, over the past 20 years, we have experienced five instances where Q1 volumes declined from 4% to 9%. In each of those periods, we saw a meaningful improvement as the year progressed, with full-year results improving by an average of 400 basis points relative to the Q1's decline. While each year is different, this pattern reinforces our expectation that performance can improve as we move through the balance of the year.

Despite a meaningful decline in funeral case volumes during the quarter, the company delivered strong underlying performance across several key operating metrics.

Speaker #3: While we saw a notable decline in first quarter volumes, it's important to put that in historical context. Outside of the COVID-impacted era, over the past 20 years, we have experienced 5 instances where first quarter volumes declined from 4% to 9%.

Pre-need funeral and Cemetery sales, grew exceptionally well.

reflecting continued success in building long-term, customer relationships in future Revenue, visibility

Speaker #3: In each of those periods, we saw a meaningful improvement as the year progressed. With full-year results improving by an average of 400 basis points relative to the first quarter's decline.

In addition, average revenue per Funeral Service, increase meaningfully demonstrating the strength of our offerings and disciplined pricing execution.

Speaker #3: While each year is different, this pattern reinforces our expectation that performance can improve, as we move through the balance of the year. This unfavorable impact from funeral volume decline was partially offset by a healthy, 3.5% growth in the core average revenue per service.

Effectively managing controllable expenses, minimizing the impact on margins in a challenging volume environment.

Importantly had funeral case volumes been flat for the quarter, we estimate earnings per share would have been approximately 1.12 representing, roughly, 17% growth over the prior year quarter.

Thomas L. Ryan: This unfavorable impact from funeral volume decline was partially offset by a healthy 3.5% growth in the core average revenue per service. This core average growth was achieved despite a modest increase of 40 basis points in the core cremation rate. Non-funeral home revenue increased by $2 million, primarily due to a 10% increase in the average revenue per service. We expect this impressive growth in the average revenue per service to continue as older Pre-need contracts that are maturing out of our backlog have higher cumulative trust earnings. More recent Pre-need contracts written will mature with higher value in the backlog due to our operational decision to no longer deliver Pre-need merchandise at the time of sale. Funeral gross profit declined by approximately $23 million, with the gross profit percentage down 300 basis points to just over 21%.

Speaker #3: This core average growth was achieved despite a modest increase of 40 basis points in the core cremation rate. Non-funeral home revenue increased by $2 million primarily due to a 10% increase in the average revenue per service.

Taken together these results, underscore the resilience of our business model, and our ability to execute strategically, despite near-term headwinds.

Now, let's take a deeper look into the funeral results for the quarter.

Speaker #3: We expect this impressive growth in the average revenue per service to continue, as older pre-need contracts that are maturing out of our backlog have higher cumulative trust earnings.

total comparable funeral revenues decreased by 17 million or just less than 3% over the prior year quarter mainly due to a decline in Core Funeral Revenue

Speaker #3: And more recent pre-need contracts written will mature with higher value in the backlog due to our operational decision to no longer deliver pre-need merchandise at the time of sale.

Comparable Core Funeral Revenue declined by 18 million, or just more than 3%. Primarily due to a 6.6%, decrease in Core Funeral Services performed.

Speaker #3: Funeral gross profit declined by approximately 23 million dollars. With the gross profit percentage down 300 basis points, to just over 21%. This is primarily driven by a $17 million decline in funeral revenues.

The decline in Services, reflects the impact of a strong flu season in the prior year quarter and is consistent with broader first quarter mortality Trends as indicated by data from the CDC as well as reporting from other industry. Participants.

Speaker #3: We also saw a modest increase in selling compensation consistent with higher pre-need funeral sales production and a greater mix of insurance-funded contracts. Which accelerates selling expense recognition.

Thomas L. Ryan: This is primarily driven by a $17 million decline in funeral revenues. We also saw a modest increase in selling compensation consistent with higher pre-need funeral sales production and a greater mix of insurance-funded contracts, which accelerates selling expense recognition. Importantly, more than offsetting this variable cost increase, the team held fixed cost growth to just over 1% for the quarter, well below inflation, which helped moderate the negative impact on margin. As a result, margins landed in line with expectations based on an 80% incremental margin framework and roughly 3% inflation on fixed costs. Pre-need funeral sales production increased by $18 million or about 6% over the Q1 of 2025. Core pre-need funeral sales production increased by $13 million or 6%.

Well, we saw a notable decline in first quarter volumes. It's important to put that in historical context.

Speaker #3: Importantly, more than offering an offsetting this variable cost increase, the team held fixed cost growth to just over 1% for the quarter. Well below inflation, which helped moderate the negative impact on margins.

Outside of the co impacted era over the past 20 years. We have experienced 5 instances where first quarter volumes decline from 4% to 9%,

Speaker #3: As a result, margins landed in line with expectations based on an 80% incremental margin framework and roughly 3% inflation on fixed costs. Pre-need funeral sales production increased by 18 million dollars or about 6% over the first quarter of 2025.

in each of those periods, we saw a meaningful Improvement as the year progressed with full year results, improving by an average of 400 basis points relative to the first quarter's decline.

While each year is different, this pattern, reinforces our expectation that performance can improve as we move through the balance of the year.

Speaker #3: Core pre-need funeral sales production increased by 13 million dollars or 6%. Non-funeral home pre-need sales production increased by over 5 million dollars or 9% over the prior year quarter.

This unfavorable impact from funeral. Volume decline was partially offset by a healthy 3.5% growth. In the core, average, revenue per service.

This core average growth was achieved. Despite a modest increase of 40 basis points in the core cremation rate.

Speaker #3: We feel great about our momentum in both channels as we have worked through the initial challenges of the insurance partner transition in the core segment and as of the end of 2025, we have now rolled the insurance product into 100% of our SCI direct locations.

Thomas L. Ryan: Non-funeral home pre-need sales production increased by over $5 million or 9% over the prior year quarter. We feel great about our momentum in both channels as we have worked through the initial challenges of the insurance partner transition in the core segment. As of the end of 2025, we have now rolled the insurance product into 100% of our SCI Direct locations. Now shifting to cemetery. Comparable cemetery revenue increased by $31 million or about 7%, primarily due to higher core revenue complemented by an increase in other revenue. Core revenues increased by $25 million as a $28 million or 10% increase in recognized pre-need revenue was slightly offset by a $3 million decline in at-need revenue.

Non-funeral home revenue increased by $1 million, primarily due to a 10% increase in the average revenue per service.

We expect this impressive growth in the average revenue per service to continue as older pranay contracts. That are maturing out of our backlog have higher cumulative, trust earnings.

Speaker #3: Now shifting to cemetery. Comparable cemetery revenue increased by 31 million dollars or about 7%, primarily due to higher core revenue complemented by an increase in other revenue.

And more recent printing contracts written will mature with higher value in the backlog, due to our operational decision to no longer deliver pre-need merchandised at the time of sale.

Speaker #3: Core revenues increased by 25 million dollars as of 28 million dollars or 10% increase in recognized pre-need revenue was slightly offset by a $3 million decline in at-need revenue.

Funeral goes profit declined by approximately 23 million with the growth profit percentage down 300 basis points to just over 21%.

This is primarily driven by a 17 million decline in funeral revenues.

Speaker #3: The recognized pre-need revenue growth came from a $20 million increase in property revenue and another $8 million in higher merchandise and services. Other revenue was higher by $6 million compared to the prior year quarter, primarily from an increase in endowment care trust fund income.

Thomas L. Ryan: The recognized pre-need revenue growth came from a $20 million increase in property revenue and another $8 million in higher merchandise and services. Other revenue was higher by $6 million compared to the prior year quarter, primarily from an increase in endowment care trust fund income. Comparable pre-need cemetery sales production grew an impressive $32 million or 10% in the quarter. Large sales drove $20 million of that increase, with core sales contributing the remaining $12 million, supported by continued strong underlying sales velocity. This performance reflects the strength of our sales organization, which continues to expand pre-need production despite lower Q1 funeral volumes. Ongoing investment in sales force retention and growth, particularly in our community-based teams, has broadened our reach beyond location-generated leads.

We also saw a modest increase in selling compensation, consistent with higher pre-need funeral sales production and a greater mix of insurance funding contracts, which accelerates selling expense recognition.

Speaker #3: Comparable pre-need cemetery sales production grew an impressive 32 million dollars or 10% in the quarter. Large sales drove $20 million of that increase, with core sales contributing the remaining $12 million supported by continued strong underlying sales velocity.

Importantly more than offering an offsetting this variable cost increase the team held fixed cost growth to just over 1% for the quarter.

Well below inflation which helped moderate the negative impact on margins.

As a result margins landed in line with expectations based on an 80% incremental margin framework in roughly 3% inflation on fixed costs.

Speaker #3: This performance reflects the strength of our sales organization, which continues to expand pre-need production, despite lower first quarter funeral volumes. Ongoing investment in Salesforce retention and growth, particularly in our community-based teams, has broadened our reach beyond location-related needs.

Pre-need funeral sales production increased by 18% over the first quarter of 2025.

Core pre-need Funeral sales production increased by 13 million or 6%.

Speaker #3: Cemetery gross profit in the quarter grew by 15 million dollars or 11%, with margin expansion of 120 basis points to approximately 33%. The increase was driven by higher margin trust income, which lifted overall profitability.

Non Funeral Home printed sales production increased by over 5 million dollars or 9% over the prior year quarter.

Thomas L. Ryan: Cemetery gross profit in the quarter grew by $15 million or 11%, with margin expansion of 120 basis points to approximately 33%. The increase was driven by higher margin trust income, which lifted overall profitability. This was partially offset by above-inflation growth in fixed cemetery maintenance costs. Even so, margins came in as expected, consistent with our 75% incremental margin framework and roughly 3% fixed cost inflation. Now let's shift to discussion about our outlook for 2026. As we look ahead, we are reaffirming our 2026 normalized earnings per share guidance range of $4.05 to $4.35. While the Q1 funeral volumes presented a near-term headwind, we expect the year-over-year rate of decline to moderate as the year progresses, resulting in a 1% to 3% decline for the year.

Speaker #3: This was partially offset by above inflation growth in fixed cemetery maintenance costs. Even so, margins came in as expected, consistent with our 75% incremental margin framework and roughly 3% fixed cost inflation.

We feel great about our momentum in both channels as we have worked through the initial challenges of the insurance partner transition in the course segment. And as of the end of 2025, we have now rolled the insurance product into 100% of our SDI Direct locations.

Now shifting to cemetery.

Speaker #3: Now let's shift the discussion about our outlook for 2026. As we look ahead, we are reaffirming our 2026 normalized earnings per share guidance range of $4.05 to $4.35.

Primarily due to higher core Revenue, complemented by an increase in other Revenue.

Speaker #3: While the first quarter funeral volumes presented a near-term headwind, we expect the year-over-year revenue decline to moderate as the year progresses. Resulting in a 1 to 3% decline for the year.

Core revenues increased by 25 million, has a 28 million or 10% increase in recognized. Preneed Revenue with slightly offset by a $0 decline in antney Revenue.

Speaker #3: When combined with strong momentum in pre-need cemetery sales, average revenue per funeral can continue to discipline expensive management. We are confident in our ability to deliver within our stated earnings range.

The recognized pre-need Revenue growth came from a 20 million increase in property revenue and another 8 million in higher merchandise and services.

Other Revenue was hired by 6 million compared to the prior year quarter primarily from an increase in endowment care, trust fund income.

Speaker #3: In closing, we remain firmly focused on building long-term value for shareholders with high revenue, leveraging the strength of our scale, and allocating capital with discipline to the highest and best use.

Thomas L. Ryan: When combined with strong momentum in pre-need cemetery sales, average revenue per funeral, and continued disciplined expense management, we are confident in our ability to deliver within our stated earnings range. In closing, we remain firmly focused on building long-term value for shareholders, growing revenue, leveraging the strength of our scale, and allocating capital with discipline to the highest and best use. As we move into a period of meaningful demographic tailwinds, we are exceptionally well-positioned to expand our reach, serve more families, and deliver sustained growth over time. In closing, I'd like to recognize and thank our entire SCI team for their ongoing commitment to our customers, our communities, and each other. Your dedication continues to be the foundation of our success. With that, I'll turn the call over to Eric.

Comparable, pre-need Cemetery sales production, grew an impressive, 32 million, or 10% in the quarter.

Speaker #3: As we move into a period of meaningful tailwinds, we are exceptionally well positioned to expand our reach and serve more families and deliver sustained growth over time.

Large sales drove 20 million dollars of that increase with core sales, contributing the remaining 12 million supported by continued strong, underlying sales velocity.

Speaker #3: In closing, I'd like to recognize and thank our entire SCI team for their ongoing commitment to our customers, our communities, and each other. Their dedication continues to be the foundation of our success.

This performance reflects the strength of our sales organization, which continues to expand pre-need production despite lower first quarter funeral volumes.

Speaker #3: With that, I'll turn the call over to Eric. Thanks, John. Good morning, everybody. Thanks for joining us today. And as Tom just finished, I'm going to start that way and take a moment to really sincerely thank our more than 25,000 associates across the entire SCI network.

Ongoing investment in Salesforce retention and growth particularly in our community-based teams has broadened our reach Beyond location generated leads.

Speaker #3: We are truly grateful for all of your dedication and, most importantly, the compassion that you have for our client families. And we're very proud of the positive impact you continue to make in all the communities we serve.

Cemetery gross profit in the quarter grew by 15 million, or 11% with margin expansion of 120, basis points to approximately 33%,

The increase was driven by higher margin trust income, which lifted overall profitability.

Eric D. Tanzberger: Thanks, Tom. Good morning, everybody. Thanks for joining us today. As Tom just finished, I'm gonna start that way and take a moment to really sincerely thank our more than 25,000 associates across the entire SCI network. We are truly grateful for all of your dedication and, most importantly, the compassion that you have for our client families, and we're very proud of the positive impact you continue to make in all the communities that we serve at SCI. Today I'm gonna start by reviewing our cash flow results and capital investments for the quarter, then I'm gonna make a few comments on corporate G&A and our trust returns, and I'll conclude with an update on our cash flow guidance for the full year of 2026, and then talk a little bit about the overall financial position.

Speaker #3: Today, I want to start by reviewing our cash flow results I'm going to take make a few comments on corporate G&A and our trust returns.

This was partially offset by above inflation growth. In fixed Cemetery, maintenance costs.

Speaker #3: I'll conclude with an update on our cash flow guide for the full year of 2026 and then talk a little bit about the overall financial position.

Even so margins came in as expected. Consistent with our 75%, incremental margin framework and roughly 3% fixed cost inflation.

Speaker #3: During the quarter, we generated very impressive adjusted earnings cash flow of $335 million. This, by the way, was in line with our expectations and was an improvement of just under $20 million or 6% over the prior year.

Now, let's shift to discussion about our outlook for 2026.

As we look ahead we are reaffirming our 2026 normalized earnings per share. Guidance range of $4.05 to $4.35.

Speaker #3: It's a little bit more color on that because some of this is timing. But just operating cash flow was positively impacted by $20 million source working capital related to an additional payroll tax payment that was made in the first quarter of last year.

While the first quarter funeral volumes presented a near-term headwind. We expect the year-over-year rate of decline to moderate as the year progresses.

Resulting in a 1 to 3% decline for the year.

Speaker #3: Additionally, though, we're stronger pre-need cash receipts than other working capital that provided an additional $7 million source. But partially upsetting these sources were lower adjusted operating income of $4 million and $4 million of higher cash interest, which was primarily due to higher average balances on our floating rate debt partially offset by the lower floating rates.

Eric D. Tanzberger: During the quarter, we generated very impressive adjusted operating cash flow of $335 million. This, by the way, was in line with our expectations and was an improvement of just under $20 million or 6% over the prior year. A little bit more color on that 'cause some of this is timing. Adjusted operating cash flow was positively impacted by a $20 million source of working capital related to an additional payroll tax payment that was made in the first quarter of last year. Additionally, though, there were stronger preneed cash receipts and other working capital that provided an additional $7 million source.

When combined with strong momentum and pre-need Cemetery sales, average revenue per funeral, and continued disciplined expense management. We are confident in our ability to deliver within our stated earnings range.

Speaker #3: We believe this growth in adjusted operating cash flow despite the subject volumes that we reserved in the first quarter really highlights the resiliency of our cash flow at SCI.

In closing, we remain firmly focused on building long-term value for shareholders growing Revenue leveraging, the strengths of our scale and allocating Capital with discipline to the highest and best use.

As we move into a period of meaningful demographic Tailwind, we are exceptionally. Well, positioned to expand our reach.

Speaker #3: So shifting to capital investment, we invested $108 million of capital into our existing funeral homes and cemeteries and real estate business and real estate acquisitions and, of course, construction of new operating locations.

Serve more families and deliver sustained growth over time.

Eric D. Tanzberger: Partially offsetting these sources were lower adjusted operating income of $4 million and $4 million of higher cash interest, which is primarily due to higher average balances on our floating rate debt, partially offset by the lower floating rates. We believe this growth in adjusted operating cash flow, you know, despite the softer volumes that we reserved in Q1, really highlights the resiliency of our cash flow at SCI. Shifting to capital investment, we invested $108 million of capital into our existing funeral homes and cemeteries, real estate business, real estate acquisitions, and of course, construction of new operating locations. I'm gonna break that down a little bit for you. We invested $66 million of maintenance capital back into our current businesses.

in closing, I'd like to recognize and thank our entire SEI team for their ongoing commitment to our customers, our communities, and each other,

Speaker #3: I'm going to break that down a little bit for you. We invested $66 million of maintenance capital back into our current businesses. Included in this maintenance spend, we invested $41 million into new cemetery development projects, $20 million into our current funeral home and cemetery locations, which improves the overall customer experience, and about $5 million into digital strategy and some other corporate investments.

your dedication continues to be the foundation of our success.

With that, I'll turn the call over to Eric.

Thanks, Sean.

Good morning everybody. Uh, thanks for joining us today and as Tom just finished, I'm going to start that way. And take a moment to really sincerely, thank our more than 25,000 Associates across the entire STI Network.

Speaker #3: We also invested $17 million of growth capital in the quarter towards the construction of new funeral homes as well as the purchase of some real estate for future new builds and expansion opportunities.

We are truly grateful for all of your dedication and most importantly, The Compassion that you have for our client families. And we are very proud of the positive impact you continue to make in all the communities that we serve at SCI.

Speaker #3: Turning specifically to acquisitions, we invested $24 million into business acquisitions in the quarter and in locations in several states, including Texas, Massachusetts, Alabama, and North Carolina.

Eric D. Tanzberger: Included in this maintenance spend, we invested $41 million into new cemetery development projects, $20 million into our current funeral home and cemetery locations, which improves the overall customer experience, and about $5 million into our digital strategy and some other corporate investments. We also invested $17 million of growth capital in the quarter towards the construction of new funeral homes, as well as the purchase of some real estate for future new builds and expansion opportunities. Turning specifically to acquisitions, we invested $24 million into business acquisitions in the quarter and in locations in several states, including Texas, Massachusetts, Alabama, and North Carolina. We're excited about these high-quality funeral homes and cemeteries that are now joining our company, and we're very happy to welcome all of those associates to the SCI family.

So today I'm going to start by reviewing our cash flow results and capital Investments for the quarter. Then I'm going to take a make a few comments on corporate GNA and our trust returns. And I'll conclude with an update on our cash flow, guidance for the full year of 2026 and then talk a little bit about the overall financial position.

Speaker #3: We are excited about these high-quality funeral homes and cemeteries that are now joining our company and we're very happy to welcome all of those associates to the SCI family.

So during the quarter, we generated very impressive. Adjuster operating cash flow of 335 million.

Speaker #3: We have seen continued momentum in April and remain optimistic about the acquisition pipeline. And believe we're on pace to achieve our $75 to $125 million acquisition investment target for 2026.

This by the way, was in line with our expectations and it was an improvement of just under 20 million dollars or 6% over the prior year.

Speaker #3: So now let's move on to capital distributions, primarily to our shareholders. We returned $190 million of capital to shareholders in the quarter through a $143 million of share purchases and $47 million of dividends.

Related to an additional payroll tax payment that was made in the first quarter of last year.

Speaker #3: We repurchased just under $2 million shares during the quarter at an average price of about $80 per share. Bringing the number of shares outstanding at our company to just over $130 million shares at the end of March.

Eric D. Tanzberger: We have seen continued momentum in April and remain optimistic about the acquisition pipeline and believe we're on pace to achieve our $75 to $125 million acquisition investment target for 2026. Now let's move on to capital distributions, primarily to our shareholders. We returned $190 million of capital to shareholders in the quarter through $143 million of share repurchases and $47 million of dividends. We repurchased just under 2 million shares during the quarter at an average price of about $80 per share, bringing the number of shares outstanding at our company to just over 130 million shares at the end of March.

So additionally though, there were stronger printing cash receipts and other working capital that provided an additional 7 million Source. But partially offsetting these sources were lower adjusted. Operating income of 4 million and 4 million of higher cash interest which is primarily due to higher average. Balances on our floating rate uh, debt partially offset by the lower floating rates.

Speaker #3: So shifting gears now, let's talk about corporate G&A, which spend of about $44 million in the quarter was down $1 million over the prior year but higher than our quarterly guidance range.

We believe this growth in adjusted operating cash flow. You know, despite the softer volumes that we reserved in the first quarter really highlights, the resiliency of our cash flow at SEI.

Speaker #3: This was primarily a result of higher accruals related to our long-term incentive compensation plans which, by the way, was driven by outperformance in total shareholder return versus our peer group.

Speaker #3: We expect that corporate G&A expense going forward will average around the $40 to $42 million per quarter. But as a reminder, this rate could be impacted by timing of these accruals related to the short and long-term compensation plans just like you saw this quarter.

So, shift into capital investment. We invested a 108 million dollars of capital into our existing funeral homes in cemeteries, and real estate business, and real estate Acquisitions. And of course, construction of new operating locations. So I'm going to break that down a little bit for you. We invested 66 million of Maintenance Capital back into our current businesses.

Included in this maintenance, spend we invested 41 million into new Cemetery development projects.

Speaker #3: And finally, before transitioning to our cash flow outlook, I wanted to update you on our trust fund returns. So as you saw in the release yesterday, we ended the quarter with a 0.7% decline in our combined trust fund returns.

Eric D. Tanzberger: Shifting gears now, let's talk about corporate G&A, which spend of about $44 million in the quarter, was down $1 million over the prior year, but higher than our quarterly guidance range. This is primarily a result of higher accruals related to our long-term incentive compensation plans, which by the way, was driven by outperformance in total shareholder return versus our peer group. We expect that corporate G&A spends going forward will average around $40 to 42 million per quarter. As a reminder, this rate could be impacted by timing of these accruals related to the short and long-term compensation plans, just like you saw this quarter. Finally, before transitioning to our cash flow outlook, I wanted to update you on our trust fund returns.

20 million into our Current Funeral Home and Cemetery locations, which improves the overall customer experience and about 5 million into our digital strategy and some other corporate Investments.

Speaker #3: However, importantly, in the month of April, we observed a market recovery with an estimated 4 to 5 percent increase in our combined trust fund returns which really gives us confidence to say bring us back in line with our full-year expectation of about a 7% trust fund return for the full year.

We also invested 17 million of growth capital in the quarter towards the construction of new funeral homes, as well as the purchase of some real estate for future new builds and expansion opportunities.

Turning specifically to acquisitions.

Speaker #3: Now let's talk about our outlook as it relates to cash flow. So as we talked about in the press release, we are confirming our 2026 adjusted operating cash flow guidance range of $1.0 billion to $1.06 billion.

We invested 24 million dollars into business Acquisitions in the quarter and the locations. In several States including Texas, Massachusetts, Alabama, and North Carolina.

Eric D. Tanzberger: As you saw in the release yesterday, we ended the quarter with a 0.7% decline in our combined trust fund returns. However, importantly, in the month of April, we observed a market recovery with an estimated 4% to 5% increase in our combined trust fund returns, which really gives us confidence to say bring us back in line with our full year expectation of about a 7% trust fund return for the full year. Let's talk about our outlook as it relates to cash flow. As we talked about in the press release, we are confirming our 2026 adjusted operating cash flow guidance range of $1.0 billion to $1.06 billion.

We are excited about these high-quality funeral homes and cemeteries that are now joining our company and we're very happy to welcome all of those Associates to the SDI family.

Speaker #3: And as I really mentioned to you in February, we anticipate full-year cash taxes to be about $120 million at a normalized cash tax rate of around 15 to 16 percent as, again, we're benefiting from an investment we made in renewable energy projects in the current year.

We have seen continued momentum in April and remain optimistic, about the acquisition Pipeline and believe we are on Pace to achieve our 75 to 125. Million, acquisition investment Target,

For 2026.

So now let's move on to Capital distributions primarily to our shareholders.

Speaker #3: As we look beyond 2026, we anticipate returning to a normalized cash tax rate of about 24 to 25 percent. That would be absent any additional tax planning strategies or any regulatory changes that we don't know about.

We returned 190 million of capital to shareholders in the quarter.

Through 143 million of Sherry purchases and 47 million of dividends.

We repurchased just under 2 million shares during the quarter and an average price of about 80 per share.

Speaker #3: From an effective tax rate perspective, consistent with the guidance that we've talked about before, we expect full-year 2026s ETR to trend in the line with 2025 at 25 to 26 percent.

bringing the number of shares outstanding at our company to just over 130 million shares at the end of March,

Eric D. Tanzberger: As I really mentioned to you in February, we anticipate full year cash taxes to be about $120 million at a normalized cash tax rate of around 15% to 16%. Again, we're benefiting from an investment we made in renewable energy projects in the current year. We look beyond 2026, we anticipate returning to a normalized cash tax rate of about 24% to 25%. That would be absent any additional tax planning strategies or any regulatory changes that we don't know about. From an effective tax rate perspective, consistent with the guidance that we've talked about before, we expect full year 2026's ETR to trend in the line with 2025 at 25% to 26%. In closing, I'm now gonna provide some commentary about our liquidity and financial position.

Speaker #3: So in closing, I'm not going to provide some commentary about our liquidity and financial position. We continue to benefit from a favorable and disciplined debt maturity profile, complemented by robust liquidity.

So, shifting gears. Now, regarding corporate G&A, spend of about $44 million in the quarter was down $1 million over the prior year, but higher than our quarterly guidance range. This is primarily a result of higher accruals related to our long-term incentive compensation plans, which, by the way, was driven by outperformance in total shareholder return versus our peer group.

Speaker #3: We ended the quarter with liquidity of about $1.7 billion consisting of approximately $260 million of cash on hand and approximately $1.45 billion available on our long-term bank credit facility.

Speaker #3: We ended the quarter with a leverage ratio of 3.68 times net debt to EBITDA. This is very similar to where we ended last quarter and, again, at the lower end of our long-term leverage target range of 3.5 to 4 times.

We expect that corporate GNA expense going forward will average around the 40 to 42 million per quarter. But as a reminder, this rate could be impacted by timing of these across related to the short and long-term compensation plans. Just like you saw this quarter

Speaker #3: So in conclusion, our solid balance sheet enhanced liquidity position consistent and predictable cash flows constrained continue to bolster our capital deployment program giving us significant flexibility to invest opportunistically for the long-term benefit of SCI, our associates, and our shareholders.

Eric D. Tanzberger: We continue to benefit from a favorable and disciplined debt maturity profile, complemented by robust liquidity. We ended the quarter with liquidity of about $1.7 billion, consisting of approximately $260 million of cash on hand and approximately $1.45 billion available on our long-term bank credit facility. We ended the quarter with a leverage ratio of 3.68x net debt to EBITDA. This is very similar to where we ended last quarter, and again, at the lower end of our long-term leverage target range of 3.5x to 4x. In conclusion, our solid balance sheet, enhanced liquidity position, consistent and predictable cash flows constraint continue to bolster our capital deployment program, giving us significant flexibility to invest opportunistically for the long-term benefit of SCI, our associates, and our shareholders.

And finally, before transitioning to our cash flow Outlook, I wanted to update you on our trust fund returns. So as you saw in the release, yesterday, we ended the quarter with a 0.7% decline and our combined trust fund returns, however, importantly, in the month of April, we, we observed a market recovery with an estimated 4 to 5% increase in our combined, trust fund returns, which really gives us confidence to say, bring us back in line with our full year. Expectation of about a 7%, trust fund return for the full year.

Speaker #3: So with that operator, this really concludes my remarks and Tom's remarks. I'm going to pass it back to you. And then we'll go ahead and open the call up for questions.

so now let's talk about our outflow Outlook, as it relates to cash flow,

Speaker #1: Thank you. We will now begin the question answer session. To ask a question, you may press star and then one on your touchstone telephone.

So as we talked about in the press release, we are confirming our 2026 adjusted operating cash flow, guidance range of 1.0 billion to 1.06 billion dollars.

Speaker #1: If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two.

Speaker #1: At this time, we will pause momentarily to assemble our roster. We have the first question from the line of Parker Snow from Raymond James.

Full year, cash taxes to be about $20 million at a normalized cash tax rate of around 15 to 16%. As again, we're benefiting from an investment. We made in renewable energy projects in the current year.

As we look Beyond 2026.

Eric D. Tanzberger: With that, operator, this really concludes my remarks and Tom's remarks. I'm gonna pass it back to you, and then we'll go ahead and open the call up for questions.

Speaker #1: Please go ahead.

we anticipate returning to a normalized cash tax rate of about 24 to 25% that would be absent any additional tax planning strategies or any regulatory changes that we don't know about

Speaker #2: On the funeral volumes, it'd be great just to hear how volumes growth progressed throughout the quarter and kind of January-February-March. And then what are you seeing in early April, early days in the second quarter?

Operator: Thank you. We'll now begin the question answer session. To ask a question, you may press Star and then One on your touch tone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and then Two. At this time, we will pause momentarily to assemble a roster. We have the first question from the line of Parker Snure from Raymond James. Please go ahead.

Speaker #3: Sure, Parker. This is Tom. Thanks for the question. What we saw was out of the gate, really all three months were down. I think January and February were a little steeper and March was slightly better, but still down.

from an effective tax rate perspective. Consistent with the guidance that we've talked about before we expect full year, 2026 is ETR to Trend in the line width 2025 at 25 to 26%.

So in closing, I'm now going to provide some commentary about our liquidity and financial position.

Speaker #3: And what we're seeing, Parker, and it's not unlike when we study the five years before, what typically happens is the first quarters are the worst.

We continue to benefit from a favorable and disciplined debt maturity profile complemented by robust liquidity.

Speaker #3: The second quarter is still not great. And you tend to start trending to back half of the year and seeing that volume come back.

Parker Snure: On the funeral volumes, it'd be great just to hear how volumes, volume growth, you know, progressed throughout the quarter in kinda, you know, January, February, March. What are you seeing in early April, early days in Q2?

Speaker #3: That's what we've experienced in the previous five times. And I'd tell you right now in April, we're seeing the same thing. April is still down.

We ended the quarter with liquidity of about 1.7 billion dollars. Consisting of approximately 216 million dollars of cash on hand and approximately 1.45 billion available on our long-term Bank. Credit facility

Speaker #3: It's not as bad as the first quarter. But we're still kind of facing a little bit of a headwind. And again, I think in anticipate that that would get better throughout the quarter.

Thomas L. Ryan: Sure, Parker. This is Tom. Thanks for the question. You know, what we saw was out of the gate, you know, really all 3 months were down. I think, January and February were a little steeper, and March was slightly better, but still down. What we're seeing, Parker, and it's not unlike when we study the 5 years before, what typically happens is the Q1 is the worst, the Q2 is still not great, and you tend to start trending the H2 and seeing that volume come back. That's what we've experienced in the previous 5 times. I'd tell you right now in April, we're seeing the same thing. April's still down. It's not as bad as the Q1, but we're still kind of facing a little bit of a headwind.

Speaker #3: And really see maybe get to see some positive comps in the back half of the year.

We ended the quarter with a leverage ratio of 3.68 times. Net debt de this is very similar to where we ended last quarter. And again, at the lower end of our long-term leverage target range of 3.5 to 4 times.

Speaker #2: Okay. And then in terms of the guidance range, I may have missed this. I know you said that you now expect comparable funeral volumes down one to three but on the pre-need cemetery side, I think that's going to be kind of helping offset that.

Speaker #2: It was up 9.7% in the first quarter. But just how are you guys thinking about that throughout the course of the year, the comps do get a little bit tougher, but just how are you thinking about pre-need cemetery production within the full-year guidance now?

So in conclusion, our solid balance sheet, enhanced liquidity position consistent and predictable cash flow is constrained. Continue to bolster our Capital deployment program giving us significant flexibility to invest opportunistically for the long-term benefit of SEI our Associates.

And our shareholders.

Speaker #3: Yeah. I think, Parker, this time it's always hard to tell through three months. We're very pleased with the first quarter. But we still, if we talked about guidance before, remember, I think I told you to steer you towards the low to mid-single digits.

So with that, operator, this really concludes my remarks and Tom's remarks. I'm going to pass it back to you, and then we'll go ahead and open the call up for questions.

Thank you.

Thomas L. Ryan: Again, I think anticipate that that would get better throughout the quarter and really see, you know, maybe get to see some positive comps in the back half of the year.

Leave a notification on the session to ask a question. You may press star and then 1 on your touchtone, telephone telephone,

Speaker #3: I think with the first quarter in the bank, we feel pretty good about mid-single digit growth for the year. 10% is high step in it.

if you're using a speaker-phone, please pick up your handset before pressing the keys.

Parker Snure: Okay. Then I in terms of the guidance range that I may have missed this. I know you said that you now expect comparable funeral volumes down 1 to 3. On the pre-need cemetery side, I think that's gonna be kind of helping offset that. It was up 9.7% in the Q1. Just how are you guys thinking about that throughout the course of the year? The comps do get a little bit tougher, just how are you thinking about pre-need cemetery production within the full year guidance now?

Speaker #3: But we do still feel very good about our momentum. Jay's got the team really focused on KPIs in the four of those. One of the channels is large sales.

If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.

At this time, you will pause momentarily to assemble a roster.

Speaker #3: One of them is headcount. And so what we're seeing today, and I touched upon it a little bit on the call, is that we're growing the headcount.

Speaker #3: Part of that is we're trying to retain more of our employees and that's being successful. And then hire new ones. And we believe we've got better leads.

We have the first question from the line of Parker snow from Raymond James, please go ahead.

Thomas L. Ryan: Yeah. I think Parker, this time, it's always hard to tell through 3 months. We're very pleased with Q1. You know, we still, when we talked about guidance before, remember, I think I told you to steer you towards the low to mid-single digits. I think with Q1 in the bank, we feel pretty good about mid-single digit growth for the year. You know, 10% high stepping it, we do still feel very good about our momentum. You know, Jay's got the team really focused on KPIs and the four of those. You know, one of the channels is large sales, one of them is headcount. What we're seeing today, and I touched upon it a little bit on the call, is that we're growing the headcount.

Speaker #3: Our next KPI is our lead to sale ratio. And so that's really focused on the quality of leads and our ability to follow those up.

Um, on the funeral volumes, it'd be great just to hear how volumes volume growth. Uh,

Speaker #3: And then the third bucket before large sales is seminars. We found that seminars are a way that we can educate the consumer, get in front of them.

You know, progress throughout the quarter and kind of, you know, January February March. And then what are you seeing in early April? Um, early days in the second quarter?

Speaker #3: And so Jay really pushed the initiative to say, "Let's expand the number of seminars we're doing." And we're seeing great success with that. And those are the types of things where you're out in the community, you're not getting your leads through the funeral home, and that's why I think we can say we groove velocity in a quarter even though funeral volumes were down.

Speaker #3: And by the way, funeral volumes are a great lead source. But we're finding other ways to get out to the consumer. And seeing real success there.

Thomas L. Ryan: Part of that is, you know, we're trying to retain more of our employees and that's being successful and then hire new ones. We believe we've got better leads. Our next KPI is our lead to sale ratio. That's really focused on the quality of leads and our ability to follow those up. The third bucket, before large sales is seminars. You know, we found that seminars are a way that we can educate the consumer, get in front of them. Jay really pushed the initiative to say, Let's expand the number of seminars we're doing, and we're seeing great success with that.

Speaker #3: So we feel great about the momentum. You're right. The comps get a little tougher as we go along the year. But still very confident that we can get to that mid-single digit growth for the year.

Speaker #2: Okay. Yeah. No, that's great. And then if I can just squeeze in one last one, kind of more of a math question on EPS seasonality.

Sure, Parker. This is Tom. Thanks for the question. Um, you know what we saw was out of the gate? You know, really all 3 months were down, I think, uh, January and February were a little steeper and marched with slightly better but still down and what we're seeing in Parker. And it's not unlike when we study the 5 years before, what typically happens is the first quarter is the worst. The second quarter is still not great and, and you tend to start trending the back half of the year and seeing that volume come back, that's what we've experienced in the previous 5 times. And I tell you right now, in April, we're seeing the same thing, April's still down. It's not as bad as um, the first quarter, but we're still kind of facing uh, a little bit of a headwind. And again, we, I think in

Speaker #2: So if I look at the first quarter, 97 cents, and then if I just kind of look at the last couple of years, 2Q is down somewhere in the range of 8 to 10 cents.

Anticipate. That, that would get better throughout the quarter and and really see, you know, uh, maybe get to see some positive comps in the back half of the year.

Thomas L. Ryan: Those are the types of things where you're out in the community, you're not getting your leads through the funeral home. That's why I think we can say we grew velocity in a quarter even though funeral volumes were down. By the way, funeral volumes are a great lead source, but we're finding other ways to get out to the consumer and seeing real success there. We feel great about the momentum. You're right, the comps get a little tougher as we go along the year, but still very confident that we can get to that, you know, mid-single-digit growth for the year.

Okay.

Speaker #2: So that would imply something like 88 cents in the second quarter. That'd get you to $1.85 for the first half. And if I look at the last three years, the first half seasonality is somewhere around 50%, maybe just below that.

Speaker #2: So that would kind of imply something in the high $3 of EPS, maybe 3.70 to 3.90. So I guess the question is, what is different this year in terms of the second half ramp than a normal year that kind of gives you confidence in getting to the guidance range?

Because of the, the guidance range that I may have missed this. I, I know you said that you now expect comparable funeral volumes down 1 to 3, um, but on the printing Cemetery side, I think that's going to be kind of helping offset that it was up 9.7% in the first quarter. Um, but just how are you guys thinking about that throughout the course of the year? The comps do get a little bit tougher but just uh how are you thinking about? PRI Cemetery production within the 4 year guidance. Now

Parker Snure: Okay. Yeah, no, that's great. Yeah, if I can just squeeze in one last one, kind of more of a math question, on EPS seasonality. If I look at Q1, $0.97, and then if I just kind of look at the last couple years, Q2 is down somewhere in the range of $0.08 to $0.10, so that would imply something like $0.88 in Q2. That'd get you to $1.85 for H1. If I look at the last three years, the H1 seasonality is somewhere around 50%, maybe just below that. That would kind of imply something in the high $3 of EPS, maybe $3.70 to $3.90.

Speaker #3: Yeah. I think the real difference is, of course, just this down volume. And so I'd say if you can get that volume back, you're going to shift quite a bit of profitability to the back half of the year.

Speaker #3: So in your instance, it would probably assume where you get into those low threes, that you keep the volume at down 6% for the year.

Speaker #3: We believe, because history tells us, and we believe again, that that's going to trend back the other way. So you're just going to push some of that funeral profitability that was in the first half of the year to the back half of the year.

Parker Snure: I guess the question is like, what is different this year in terms of like the H2 ramp than a normal year that kind of gives you confidence in getting to the guided range?

Speaker #3: And that's how we're looking at it. We're modeling a couple of different scenarios like we said. It's hard to be precise, but we think 1 to 3 percent is a fair estimate at this point in time.

Parker Snure: I guess the question is like, what is different this year in terms of like the H2 ramp than a normal year that kind of gives you confidence in getting to the guided range?

Thomas L. Ryan: Yeah. I think the real, the real difference is, of course, just this down volume. I'd say if you can get that volume back, you're gonna shift quite a bit of profitability to the H2 of the year. You know, in your instance, it would probably assume where you get into those low 3s that you keep the volume at down 6% for the year. We believe because history tells us, and we believe, again, that that's gonna trend back the other way. You're just gonna push, you know, some of that funeral profitability that was in the H1 of the year to the H2 of the year, and that's how we're looking at it. We're modeling two different scenarios.

Speaker #3: And obviously, at the end of the second quarter, we'll have better data to make that a little more funny for you.

Speaker #2: Okay. Great. Thank you so much.

But, you know, we still, if we, when we talked about guidance before we remember, I think I told you to steer you towards the, uh, you know, low to mid single digits. I think with the first quarter in the bank, we feel pretty good about mid single digit growth for the year. Um, you know, 10% is high step in it, but um, we do still feel very good about our momentum. Um, you know, Jay's got the team's really focused on kpis in the 4 of those. You know, 1 of the channels is large sales, 1 of them is headcount. And so, we're seeing today and I touched upon it a little bit on the call, is that we're growing, the headcount part of that is, you know, we're trying to retain more of our employees and, and that's being successful and then hire new ones. And we believe we've got better leads. Our next kpi is our lead to sale ratio. And so, that's really focused on the quality of leads, in our ability to follow those up. And then the third bucket, uh, before large sales is seminars. You know, we've found that seminars are a way that

Speaker #4: Thank you. We have the next question on the line from Arno from JP Morgan. Please go ahead.

Speaker #5: Good morning, everyone.

Speaker #6: Good morning, Arno.

Speaker #5: Thank you for taking my questions. So regarding a funeral volumes, I believe the main reasons for the decline in a faster quarter was tough year-over-year comps due to last year's strong flow seasons.

Speaker #5: Was this trend seen across the entire industry? And do you believe it had any impact on ACI's market share?

Thomas L. Ryan: Like we said, it's hard to, you know, be precise, but we think 1% to 3% is a fair estimate at this point in time. Obviously, at the end of Q2, we'll have, you know, better data to make that a little more finite for you.

we can educate the consumer, get in front of them. And so, Jay really pushed the initiative to say, let's expand the number of seminars we're doing and we're seeing great success with that. And those are the types of things where you're out in the community. You're not getting your leads through the funeral home and that's why I think we can say, we Groove velocity in a quarter even though funeral volumes were down. And by the way, funeral volumes are a great lead Source, but, um, we're finding other ways to get out to the consumer and seeing real estate.

Speaker #3: Yeah, Tomo. We do not think it's a market share. We don't have a lot of public competitors, but we do talk to a lot of our friends in the private world.

Success there. So, so we feel great about the momentum. You're right, the comps, get a little tougher as we go along the year, but still very confident that uh,

Speaker #3: And we've got suppliers in different places. And then you add that with I've mentioned CDC data. We've got January and February. And they're kind of right on where we see some of our other competitors actually have worse comps.

We can get to that, you know, mid single digit growth for the year.

Parker Snure: Okay, great. Thank you so much.

Operator 2: Thank you. We have the next question from the line of Tobey Sommer from J.P. Morgan. Please go ahead.

Operator: Thank you. We have the next question from the line of Tomohiko Sano from JPMorgan. Please go ahead.

Okay, yeah, no, that's great. And then yeah, if I can just squeeze in 1, last 1 kind of more of a math question um on EPS seasonality. So

Speaker #3: Some of our suppliers have worse comps. So we feel number one, that it's not a market share issue. And therefore, we believe it will bounce back.

[Analyst]: Good morning, everyone.

Tomohiko Sano: Good morning, everyone.

Thomas L. Ryan: Morning, Tobey Sommer.

Thomas L. Ryan: Morning, Tomohiko.

[Analyst]: Thank you for taking my questions. Regarding the funeral volumes, I believe the main reasons for the decline in the past quarter was tough year-over-year comps due to last year's strong flu seasons. Was this trend seen across the entire industry, and do you believe it had any impact on SCI's market share?

Tomohiko Sano: Thank you for taking my questions. Regarding the funeral volumes, I believe the main reasons for the decline in the past quarter was tough year-over-year comps due to last year's strong flu seasons. Was this trend seen across the entire industry, and do you believe it had any impact on SCI's market share?

Speaker #3: And the other checks that my sanity checks that I use, Tomo, is typically our SCI direct business. I can't remember when we had down volumes in SCI Direct.

Speaker #3: It's always a leader and we may be a drag in the core. The other thing is pre-need going at need is typically a lot better than the walk-in business, what we call the pure at need.

Thomas L. Ryan: Yeah, Tobey Sommer, we do not think it's a market share. You know, we don't have a lot of public competitors, but we do talk to a lot of our friends in the private world, and, you know, we got suppliers in different places. You add that with, I've mentioned CDC data. We've got, you know, January and February, and they're kind of right on where we see. You know, some of our other competitors actually have worse comps. Some of our suppliers have worse comps. We feel, number one, that it's not a market share issue, and therefore, we believe it will bounce back. You know, the other checks that, my sanity checks that I use, Tobey Sommer, is typically our SCI Direct business, I can't remember when we had down volumes in SCI Direct.

Speaker #3: And in both those checks, for the first time in a long time, SCI Direct has down volumes. And low single digits, but down volumes.

If I look at the first quarter, 97 cents and then if I just kind of look at the last couple years, 2 Q is down somewhere in the range of 8 to 10 cents so that would imply something like 88 cents. In the second quarter that gets you to a dollar 855 for the first half and I look at the last 3 years, the first half seasonality is somewhere around 50%, maybe just below that. So that would kind of imply, something in the High 3 dollars of eps maybe 370 to 390. So I guess the question is is like what is different this year in terms of like the second half ramp than a normal year, that kind of gives you confidence and getting to the uh the guidance range.

Speaker #3: And again, that just tells me that this is real. This is a death rate thing. Hard to predict all the reasons why. But it is a tough comparison.

Speaker #3: We did have a bigger flue season last year. And history tells us it's going to work back. And I tried to point out on the call that if you just give us flat volume, this would have been a 17% earnings per share growth quarter.

Yeah, I think the the real um the real difference is, of course, just this down volume. And so, I say if, if you can get that volume back, you're going to shift quite quite a bit of profitability to the back half of the year. So, you know, in your instance, it would probably assume where you get into those low 3s that you keep the volume at down 6% for the year. Um, we believe because history tells us that we believe um, again that

Speaker #3: That's how good we performed in other metrics. Unfortunately, we didn't get the volume. So it wasn't 17%. But we're optimistic that we're ready for that.

Thomas L. Ryan: It's always a leader, and we may be a drag in the core. The other thing is pre-need going at-need is typically a lot better than the walk-in business, what we call the pure at-need. In both those checks, you know, for the first time in a long time, SCI Direct has down volumes, you know, in low single digits, but down volumes. Again, that just tells me that this is real. This is a death rate thing. Hard to predict all the reasons why, but it is a tough comparison. We did have a, you know, a bigger flu season last year. History tells us it's gonna work back. You know, I tried to point out on the call that if you just give us flat volume, you know, this would have been a 17% earnings per share growth quarter.

Speaker #3: We're working hard doing things to have better advantages in competing on the funeral side, competing on the sales side. So anyway, hopefully, that answers your question.

Speaker #5: Yeah. It's very helpful. And just follow up on the in the face of declining volumes, what specific actions or initiatives were implemented? Do you feel level to address these challenges in terms of the cost of control, the labor retentions, and managing input costs, please?

Uh that's going to Trend back the other way. So you're just going to push you know some of that funeral funeral profitability that was in the first half of the year to the back half of the year and that's that's how we're looking at it. We're modeling a couple of different scenarios like we said it's hard to you know be precise but we think 1 to 3% is a fair uh estimate at this point in time and obviously at the end of the second quarter we'll have you know better data to to make that a little more uh finite for you.

Okay, great. Thank you so much.

Thank you.

We are the next question on the line of tommaso from JP Morgan. Please go ahead.

Good morning, everyone.

Good morning, Tomo.

Speaker #3: Yeah. So a lot of them are just in place. I think I've spoken before. That the field has the ability when volumes are down to manage labor costs.

Thomas L. Ryan: That's how good we performed in other metrics. Unfortunately, we didn't get the volume, so it wasn't 17%. We're optimistic that we're ready for that. We're working hard doing, you know, things to, you know, have better advantages in competing on the funeral side, competing on the sales side. Anyway, hopefully, that answers your question.

Speaker #3: How many people were bringing in? Part-time help versus full-time help? And so they're really good at leveraging that model without us having to say anything.

Thank you for taking my questions. So, regarding a funeral volumes, I believe the main reasons for the decline in a faster quarter was uh, tough year-over-year comps due to Velocity as a strong flow seasons, was this trend seen across the entire Industries and do you believe it had any impact on aci's market share?

Speaker #3: So a lot of that's just built into the DNA, built into the systems that we utilize. And so they're very good at leveraging those costs and we really don't have to say a thing.

[Analyst]: Yeah, it's very helpful. Just follow up in the face of declining volumes, what specific actions or initiatives were implemented at the field level to address these challenges in terms of the cost to control the labor retention and managing input costs, please?

Tomohiko Sano: Yeah, it's very helpful. Just follow up in the face of declining volumes, what specific actions or initiatives were implemented at the field level to address these challenges in terms of the cost to control the labor retention and managing input costs, please?

Speaker #3: So I feel good about the team's ability to pit. And get that volume back, it's going to be incremental margins on these things are huge.

Speaker #3: And so I look at the rest of the year and say, when that comes, we're going to have some nice comps to go back against the prior year quarter.

Yeah, Tomo. Um, we do not think it's a market share—you know, we don't have a lot of public competitors, but we do talk to a lot of our friends in the private world and, you know, we've got suppliers and different places. And so, and then you add that with, I mentioned CDC data. We've got, you know, January and February, and they're kind of right on where we see, um, you know,

Thomas L. Ryan: Yeah. A lot of them are just in place. You know, I think I've spoken before that the field has the ability when volumes are down to manage labor costs. You know, how many people we're bringing in, you know, part-time help versus full-time help. They're really good at leveraging that model without us having to say anything. A lot of that's just built into the DNA, built into the systems that we utilize, they're very good at leveraging those costs, you know, we really don't have to say a thing. I feel good about the team's ability to pivot. You know, when you get that volume back, it's gonna be, you know, the incremental margins on these things are huge.

Speaker #3: So that's predominantly it. Clearly, we'll talk about you can manage travel costs. You can do different things. But we're really focused on the long-term in making sure that we've got high-quality service that we're taking care of our customers.

Speaker #3: And taking care of our employees. And the volumes will come. So that's our position.

Speaker #5: Thank you very much.

Speaker #3: Yeah.

Speaker #4: Thank you. We have the next question on the line is Scott Snabberger from Openheimer. Please go ahead.

Speaker #7: Thanks very much. I have two pre-need questions, one cemetery, one funeral. I'll start with guys outlined a bunch of initiatives, Tom. You did about what you're doing headcount and seminars.

Thomas L. Ryan: You know, I look out at the rest of the year and say, when that comes, we're gonna have some nice comps to go back against the prior year quarter. That, you know, that's predominantly it. Clearly, we'll talk about, you know, you can manage travel costs, you can do different things. We're really focused on the long term in making sure that we've got high-quality service, that we're taking care of our customers and taking care of our employees, and the volumes will come. That's, that's our position.

Speaker #7: And it sounds like a lot of good progress on that front. So question two-part question. What's the sustainability of it? And then historically, you guys have provided what large sale contribution is and maybe what non-large sale contribution is in a quarter.

Speaker #7: Can you share a little bit about that in the first quarter and how you see that shaping up over the balance of the year as well?

Operator 2: Thank you very much.

Tomohiko Sano: Thank you very much.

Always a leader and we may be a drag in the core. The other thing is pre need going at need, is typically a lot better than the walk-in business. What we call the pure at need and in both those checks, you know, for the first time in a long time, SCI direct has down volumes, you know, and low single digits, but down volumes. And again, that just tells me that this is real. This is a death rate thing. Um, hard to predict all the reasons why, but it is a tough comparison. We did have a, you know, a bigger flu season last year and uh, history tells us it's going to work back. And, you know, I tried to point out on the call. That if you just give us flat volume, you know, this would have been a 17% earnings per share growth quarter. That's how good we performed in other metrics. Unfortunately, we didn't get the volume, so it wasn't 17%. But, uh, we're optimistic that we're ready for that. Um, we're working hard doing, you know, things to, you know,

Thomas L. Ryan: Yeah.

Speaker #7: Thanks.

Speaker #3: Sure. So Scott, if you start with the cemetery, and I think I mentioned, we had 32 million dollars of production growth. 20 of which was year-over-year improvement in the large sales.

Operator: Thank you. We have the next in line is Scott Schneeberger from Oppenheimer. Please go ahead.

We have better advantages competing on the funeral side than competing on the sales side. So, anyway, hopefully that answers your question.

Scott Schneeberger: Thanks very much. I have two pre-need questions, one cemetery, one funeral. I'll start with cemetery. You, you guys outlined a bunch of initiatives, Tom, you did about, you know, what you're doing headcounts and seminars, and it sounds like a lot of good progress on that front. Question, the two-part question, what's the sustainability of it? Historically, you guys have provided what large sale contribution is and maybe what non-large sale contribution is in a quarter. Can you share a little bit about that in Q1 and how you see that shaping up over the balance of the year as well? Thanks.

Speaker #3: And again, defined as 100,000 dollars sales or better. And then 12 million of it came from what we call the core business. And the preponderance of that was in velocity.

Speaker #3: So we didn't have I think our average revenue per contract was slightly up, but most of it came from velocity. So that's kind of the breakdown.

Yes, very hopeful. And uh, just follow up on the in the face of decline in volumes what uh specific actions or initiatives by implemented at the field level to address these challenges in terms of the cost to control the labor retentions and managing input costs. Please.

Speaker #3: I think if you're talking about large sales, I think we ended in the low 40 million dollars for the quarter. And that's a solid quarter for us, particularly with the new we used to use 80,000 dollars as our limit.

Speaker #3: Now it's 100,000. So that was a big win. But I think the bigger win, like I've said before, the large sales are going to come when they come.

Thomas L. Ryan: Sure. Scott, if you start with the cemetery, I think I mentioned we had $32 million of production growth, 20 of which was year-over-year improvement in the large sales. Again, defined as $100,000 sales or better. Then $12 million of it came from what we call the core business. The preponderance of that was in velocity. We didn't have, I think our average, you know, revenue per contract was slightly up, but most of it came from velocity. That's kind of the breakdown. I think if you're talking about large sales, I think we ended in, like, the low $40 million for the quarter.

Speaker #3: It's hard to sometimes they're going to push into a different quarter. Sometimes we've now had four or five quarters in a row where we've seen contract velocity increase.

Speaker #3: And I again put that back to what I mentioned before as Jay and the team, focusing on the key metrics that are going to drive those contracts.

Yes, so a lot of them are just in place, you know, we I think I've spoken before that the field has the ability. When volumes are down to manage, uh, labor cost, you know, how many people were bringing in, um, you know, part-time help versus full-time help. And so, they're really good at leveraging that model without us having to say anything. So a lot of that's just built into the DNA built into the systems that we utilize and so they're very good at leveraging. Those costs and you know, we really don't have to say a thing. Um, so so I feel good about the team's ability to Pivot and you know, when you get that volume back, it's it's going to be, you know the incremental margins on these things are huge. And so uh you know I look out at the rest of the year and say when that comes we're going to have some nice comps to go back against the prior year quarter.

Speaker #3: And seminars is a key thing. Headcount's a key thing. And really pushing the lead sources outside of the funeral home to be able to grow even when you have challenging volume environments.

Speaker #3: The other thing, I'll mention when we talked about it earlier, since you asked, the cremation cemetery strategy. I think we talked to you guys a while back that it's our belief based upon some studies and surveys that we did with consumers that there's a real lack of understanding of what we have to offer to the cremation consumer on the cemetery side.

Thomas L. Ryan: You know, that's a solid quarter for us, particularly with the new, you know, we used to use $80,000 as our limit, now it's $100,000. That was a big win. I think the bigger win, like I've said before, the large sales are gonna come when they come. It's hard to, you know, sometimes they're gonna push into a different quarter, sometimes not. What I'm really pleased about is I think we've now had 4 or 5 quarters in a row where we've seen contract velocity increase. I, again, put that back to what I mentioned before is Jay and the team focusing on the key metrics that are gonna drive those contracts.

So that, you know, that's predominantly it. Clearly, we'll talk about—you know, you can manage travel costs, you can do different things—but we're really focused on the long term, in making sure that we've got high-quality service, that we're taking care of our customers and taking care of our employees, and the volumes will come. So,

That's, that's our position.

Thank you very much.

Yeah.

Thank you.

We have the next court sniper from open. Hi Mo. Please go ahead.

Speaker #3: So we were good at the funeral side, but we weren't getting the point across at least consistently. So we worked really hard. And we actually piloted 10 markets in the first quarter.

Speaker #3: And I would tell you that it was very successful. And again, it's only 10 markets. I don't want to get overly excited. But it's really focusing on communicating with the consumer through advertising, through in-lobby presentations, different types of media and presentation materials.

Thomas L. Ryan: Seminars is a key thing, headcount's a key thing, and really pushing the lead sources outside of the funeral home to be able to grow even when you have a challenging volume environment. The other thing, you know, I'll mention, we talked about it earlier, since you asked, the cremation cemetery strategy. I think we talked to you guys a while back that it's our belief based upon some studies and surveys that we did with consumers, that there's a real lack of understanding of what we have to offer to the cremation consumer on the cemetery side. We were good at the funeral side, but we weren't getting the point across, at least consistently. We worked really hard, and we actually piloted 10 markets in Q1, and I would tell you that it was very successful.

Speaker #3: And what we're seeing was a real difference maker in those 10 markets versus what we saw in the other markets. So that's just on its beginning.

Uh, thanks very much. I have, uh, 2, Piney questions, 1 cemetery, 1 funeral, I'll start with Cemetery. Um, you you guys outlined, um, a bunch of initiatives, Tom, you did about, uh, um, you know, what's, what, what you're doing. Head down to seminars and it sounds like a lot of good progress on that front. So question, uh, the 2-part question, what's the sustainability of it? And then historically, you guys have provided what large sale contribution is and maybe what non-large sale contribution is in a quarter. Can you share a little bit about that um in the first quarter and how you see that shaping up over the balance of the year as well? Thanks.

Speaker #3: And we're intending to roll out, I think, another 80 or so markets in July. So really, really happy about that, that we feel like that's a market that we haven't addressed as aggressively as we should have been.

Sure. Um so Scott the if you get start with the cemetery and I think I mentioned we we had 32 million dollars of production growth.

20 of which was year-over-year Improvement in the large sales and again defined as hundred thousand dollars sales or better.

Speaker #3: And we're on it now. So a lot of good momentum on the cemetery sale side. And feel good about directionally where we're headed.

Thomas L. Ryan: Again, it's only 10 markets, so I don't want to get overly excited, but it's really focusing on communicating with the consumer through advertising, through in-lobby presentations, you know, different types of, you know, media and presentation materials. What we're seeing was a real difference maker in those 10 markets versus what we saw in the other markets. That's just on its beginning. You know, we're intending to roll out, I think, another 80 or so markets in July. Really, really happy about that we feel like that's a market that we haven't addressed as aggressively as we should have been, and we're on it now. A lot of good momentum on the cemetery sales side and feel good about directionally where we're headed.

Speaker #7: Great. Thanks. Appreciate that color. The second question, the funeral, is funeral at pre-need, excuse me, funeral pre-need. And just curious, I mean, and this is not a one-quarter dynamic.

Speaker #7: This has been ongoing. But you're delivering very strong pre-need funeral growth in an environment where volumes in at-need funeral are challenged. So maybe there's a bit of overlap in what this answer is going to be.

Speaker #7: But how have you been doing that? Can you just speak to what's the strength behind the pre-need funeral? Thanks.

Speaker #3: Yeah. I think a couple of things. First and foremost, you're exactly right. I'm going to say the same thing. Particularly the seminars. The seminars are put on in markets they probably are not at one of our locations.

Speaker #3: They're probably at a restaurant, somewhere, a hotel. So the draw that you're getting for the attendees has nothing to do with your funeral home traffic.

Scott Schneeberger: Great. Thanks. Appreciate that color. The second question, the funeral, pre-need, excuse me, funeral pre-need. Just curious, I mean, this is not a one-quarter dynamic, this has been ongoing, but you're delivering very strong pre-need funeral growth in an environment where volumes in at-need funeral are challenged. Maybe there's a bit of overlap in what this answer is gonna be, but how have you been doing that? Can you just speak to what's the strength behind the pre-need funeral? Thanks.

Speaker #3: So over time, I think we're pushing more and more of these leads outside of our locations. And therefore, we're less sensitive to volumes as they walk through the door.

Speaker #3: So I think our focus on that particularly probably has driven a lot of it. The other thing that I wouldn't not point out to you is we had a lot of change in our pre-need funeral, right?

Speaker #3: We had a new partner in our insurance core business. And we had SCI Direct last year that was transitioning from a trust product to an insurance product.

Thomas L. Ryan: I think a couple of things. First and foremost, you're exactly right, I'm gonna say the same thing, particularly the seminars. You know, the seminars are put on in markets. They probably are not at one of our locations. They're probably at a restaurant somewhere, a hotel. The draw that you're getting for the attendees has nothing to do with your funeral home traffic. Over time, I think we're pushing more and more of these leads outside of our locations, and therefore, we're less sensitive to volumes as they walk through the door. I think our focus on that particularly probably has driven a lot of it. The other thing that I wouldn't, you know, not point out to you is we had a lot of change in our Pre-need funeral, right?

Speaker #3: So just think of the forms, the explanation, the presentations, there's a lot of detail that goes into that. And it was a bit of a distraction over, call it a 12 to 18-month period.

Speaker #3: And I think what I'm pointing out now is, hey, that's behind us. I mean, obviously, we'll get better and better at utilizing the new contracts, the new tools, the new payment plans.

The key metrics that are going to drive those contracts and seminars is a key thing. Headcount, to key thing and really pushing the lead sources, outside of the funeral home, to be able to grow. Even when you have uh, challenging volume environments, the other thing, you know, I'll mention we talked about it earlier. Uh, since you asked the The Cremation Cemetery strategy. Uh, I think we talked to you guys a while back that it's our belief based upon some studies and surveys that we did with consumers. That there's a real lack of understanding of what we have to offer. To The Cremation consumer on the cemetery side. So we were good at the funeral side but we weren't getting the point across uh, at least consistently. So we worked really hard and we actually piloted 10 markets in the first quarter. And I would tell you that, um, it was very successful. Um, and again, it's only 10 markets. I don't want to get overly excited but it's really

Speaker #3: But we're really starting to see that stride take. And then again, I would point back to the lead sources. More outside the funeral home.

Speaker #3: And we're able to generate better leads. Have better closing rates. And so some of the same things we talk about on the cemetery side.

Thomas L. Ryan: We had a new partner in our insurance core business, and we had SCI Direct last year that was transitioning from a trust product to an insurance product. Just think of the forms, the explanation, and the presentations. There's a lot of detail that goes into that, and it was a bit of a distraction, you know, over call it a 12 to 18-month period. I think what I'm pointing out now is, hey, that's behind us. I mean, obviously, we'll get better and better at utilizing, you know, the new contracts, the new tools, and the new payment plans. We're really starting to see that stride take. Again, I would point back to the lead sources are more outside the funeral home, and we're able to generate better leads, have better closing rates.

Speaker #7: Understood. Thanks. Appreciate it. I'll turn it over.

Really focusing on communicating with the consumer, through advertising, through in lobby presentations, you know, different types of, uh, you know, media and and presentation materials. And what we're seeing was uh, a real Difference Maker in those 10 markets versus what we saw in the, the other markets. So that's just on its beginning and, you know, we're intending to roll out. I think another 80 or so markets in July

Speaker #2: Thank you. We have the next speaker on the line of Tobi Soma from Trust. Please go ahead.

Speaker #4: Good morning. This is Tyler Bash on for Tobi. Just wanted to double-click on the cremation in the cemetery point you just made. When you think about maybe run rate, when this is at full implementation, do you have a sense for how much this could contribute or margin opportunity maybe?

So really, really happy about that. That we feel like that's a a market that we haven't addressed as aggressively as we should have been and uh we're on it now. So, so a lot of good momentum on the cemetery sales side and and feel good about uh, directionally where we're headed.

Speaker #3: Yeah. I think where it's going to show up is in the revenue growth and pretty high margin products. We really don't and I hesitate to do that, Tyler, because like I said, 10 markets does not make a an initiative.

Thomas L. Ryan: You know, some of the same things we talk about on the cemetery side.

Speaker #3: So feel free to ask me as we continue, how successful it is. But I would just tell you, we're very excited because in each of these 10 markets, it exceeded the average of everybody else in some markets by quite a bit.

Thomas L. Ryan: You know, some of the same things we talk about on the cemetery side.

Scott Schneeberger: Understood. Thanks. Appreciate it. I'll turn it over.

Great, thanks. Appreciate that color. The, um, the the, the second question, the funeral um, is, is funeral at uh, prey, excuse me, funeral prey. Um, and just curious, I mean, this is not a 1 quarter Dynamic. This is this has been ongoing but you're delivering very strong pre-need funeral growth. Um, in an environment, where volumes in at need funeral are challenged. Um, so maybe there's a bit of overlap in what this answer is going to be, but how have you been doing that? Can you just speak to what's the strength behind the premium funeral? Thanks.

Operator 2: Thank you. We have the next question on the line of Tobey Sommer from Truist Securities. Please go ahead.

Operator: Thank you. We have the next question on the line of Tobey Sommer from Truist Securities. Please go ahead.

Speaker #3: And I think it's just it's an obvious we woke up one day and said, "We're not we don't have a way to get in front of the consumer in a consistent way to educate them about it." And again, when we did this consumer survey, research, it really was eye-opening to us.

Tyler Barashon: Good morning. This is Tyler Barashon.

Tyler Barashick: Good morning. This is Tyler Barashick.

Thomas L. Ryan: Morning

Tyler Barashon: -for Tobey. Just wanted to double-click on the cremation in the cemetery point you just made. When you think about maybe run rate when this is at full implementation, do you have a sense for how much this could contribute or margin opportunity maybe?

Tyler Barashick: -for Tobey. Just wanted to double-click on the cremation in the cemetery point you just made. When you think about maybe run rate when this is at full implementation, do you have a sense for how much this could contribute or margin opportunity maybe?

Yeah, I think a couple of things. Um first and foremost you're exactly right. I'm going to say the same thing, particularly the seminars. Um you know the seminars are put on in markets, they probably are not at 1 of our locations. They're probably at a restaurant somewhere at a hotel.

Speaker #3: And we learned a lot about, hey, maybe we're focusing too much on funeral and burial. And we've got to have the tools and the resources to educate these consumers.

Thomas L. Ryan: Yeah, I think where it's gonna show up is in, you know, the revenue growth and pretty high margin products. We really don't. I hesitate to do that, Tyler, because like I said, you know, 10 markets does not make an initiative. I, you know, feel free to ask me as we continue how successful it is. I would just tell you, we're very excited because in each of these 10 markets, it exceeded the average of everybody else in some markets by quite a bit. I think it's just an obvious.

Speaker #3: So I don't have a number for you yet. I think it'll just be a nice complementary growth to all the other things that we've got going as I mentioned before with lead sources and growing the sales force numbers.

Speaker #3: So a lot of good momentum.

Speaker #2: Makes sense. And then just thinking about the funeral segment, how should we think about margins for the year on the gross margin basis despite the funeral volume contraction?

Speaker #3: Yeah. I mean, if you obviously, out of the gate, I think we talked before, if we got to flat funeral volume, we think we could grow margins call it 40 to 60 basis points going forward.

Thomas L. Ryan: We woke up one day and said, "We don't have a, you know, a way to get in front of the consumer in a consistent way to educate them about it." Again, when we did this consumer survey research, it really was eye-opening to us, and we learned a lot about, hey, maybe we're focusing too much on funeral and burial, and we've got to, you know, have the tools and the resources to educate these consumers. I don't have a number for you yet. I think it'll just be a nice complementary growth to all the other things that we've got going, as I mentioned before, with lead sources and growing the sales force numbers. A lot of good momentum.

Speaker #3: And we talked about the sensitivity, right? So if you back into 80% gross margins on funerals lost, you can back into the number. So at this point, we'd be forecasting that margins are going to be slightly down for the year.

So the draw that you're getting for the attendees has nothing to do with your funeral home traffic. So over time, I think we're pushing more and more of these leads outside of our locations and therefore we're less sensitive to volumes as they walk through the door. So I think our focus on that particularly probably is driven a lot of it. The other thing that I wouldn't um you know, not point out to you is we had a lot of change in our pre-need funeral, right? We had a new partner in our insurance Core Business and we had SCI direct last year. That was transitioning from a trust product to an insurance product. So, just think of the forms, the explanation, the presentations, um, there's a lot of detail that goes into that and it was a bit of a distraction, you know, over call it a 12 to 18 month period. And I think when I'm pointing out now is, hey, that's behind us. I mean, obviously, we'll get better and better at utilizing.

Speaker #3: Versus what we experienced in the prior year. Having said that, once again, comps are a weird thing. I like our comp first quarter 2027, right?

Using, you know, the new contracts, the new tools, the new payment plans. But, um, we're really starting to see that stride take. And then again, I would point back to the lead sources are more outside the funeral home and we're able to, to generate better leads have better closing rates. And, uh, so, you know, some of the same things we talked about on the cemetery side,

Speaker #3: I mean, I think we might have a pretty good one. So it is what it is. But I think for this year, you'd anticipate that our gross margin percentage will be slightly down as compared to the prior year number.

Understood. Thanks, appreciate it. I'll turn it over.

Tyler Barashon: Makes sense. Just thinking about the funeral segment, how should we think about margins for the year on a gross margin basis despite the funeral volume contraction?

Tyler Barashick: Makes sense. Just thinking about the funeral segment, how should we think about margins for the year on a gross margin basis despite the funeral volume contraction?

Thank you.

We have the next reason from the line of to be so from trust, please go ahead.

Thomas L. Ryan: I mean, obviously out of the gate, you know, I think we talked before, if we got to flat funeral volume, we think we could grow margins, you know, call it 40 to 60 basis points going forward. We talked about the sensitivity, right? If you back into, you know, 80%, gross margins on, you know, funerals lost, you can back into the number. At this point, we'd be forecasting that margins are gonna be slightly down for the year versus what we experienced in the prior year. Having said that, you know, once again, comps are a weird thing. You know, I like our comp Q1 2027, right? I mean, I think we might have a pretty good one.

Speaker #3: And then go back to that, can we grow it at 40 to 60 bips? I think so. Give us flat to slightly up volume and we'll do that.

Uh, good morning. This is Tyler. Baron for Toby.

Just wanted to double click on The Cremation, uh, in the cemetery.

Speaker #3: And if you give us a little bit more volume, it'll be a lot more.

Speaker #4: Thank you.

Point you just made when you think about maybe run rate when this is at full full implementation. Do you have a sense for how much this could contribute or margin opportunity? Maybe?

Speaker #2: Thank you. We have the next question on the line of Joanna Geguk from Bank of America. Please go ahead.

Speaker #5: Oh, yes. Hi. Good morning. Thanks so much for taking the question here. So I guess maybe just a follow-up on the salmon there because clearly, that's where the outperformance was.

Speaker #5: And I'm sorry if I missed it. So how do you kind of thinking about the full year now, versus your prior expectations for growing low single to mid-single digits?

Thomas L. Ryan: So, so it is what it is, but I think for this year, you'd anticipate that our gross margin percentage will be slightly down as compared to the prior year number. Then go back to that, you know, can we grow it at 40 to 60 bps? I think so. You know, give us flat to slightly up volume, and we'll do that. If you give us a little bit more volume, it'll be a lot more.

Speaker #5: And I guess, can you also break it for us, if you can, expectations for the large versus core sales performance for the year?

Speaker #3: Sure, Jen. So I think on the cemetery, you're right. We guided to low to mid-single digit. I'd say based on the performance we saw in the first quarter, we're confident in saying it's mid-single digit.

Tyler Barashon: Thank you.

Tyler Barashick: Thank you.

Speaker #3: And that would be somewhere between 4 and 7 percent, depending on how the year shakes out. That's kind of where our head is. Then if you go to when you think about the breakout, we obviously had quite a good comparison the first quarter.

Thomas L. Ryan: Okay.

Operator 2: Thank you. We have the next question on the line of Joanna Gajuk from Bank of America. Please go ahead.

Operator: Thank you. We have the next question on the line of Joanna Gajuk from Bank of America. Please go ahead.

Joanna Gajuk: Oh, yes. Hi. Good morning. Thanks so much for taking the question here. I guess maybe just a follow-up on the cemetery, because clearly that's where the outperformance was. I'm sorry if I missed it. How do you kind of thinking about the full year now, you know, versus your prior expectations for growing low single to mid-single digits? I guess, can you also break it for us if you can, you know, expectations for the large versus core sales performance for the year?

Speaker #3: It was an easier comp if you go back to last year. We didn't have a great large sale quarter. So we beat it by quite a bit.

I, you know, feel free to ask me as we continue how successful it is. But I would just tell you, we're very excited because in each of these 10 markets, it exceeded um the average of everybody else and and some markets by quite a bit and I think it's just it's it's an obvious we woke up 1 day and said we're not we don't have a a you know a way to get in front of the consumer in a consistent way to educate them about it. And and again, when we did this consumer survey, uh, research, is it really was eye-opening to us and we learned a lot about. Hey, maybe, we're focusing too much on funeral and burial and we've got a, you know, have the tools and the resources to educate these consumers. So, I I don't have a number for you yet. I think it'll just be a nice complimentary growth to all the other things that we've got going. As I, as I mentioned before with lead sources and growing the sales force numbers.

So, uh, so a lot of good moments.

Speaker #3: But I think both we expect both channels to end up being nice growth trajectories. Obviously, we've got quite a great growth trajectory in the first quarter.

Makes sense. And then just thinking about the funeral segment, how should we think about margins for the year on the gross margin basis despite the funeral volume contraction?

Speaker #3: And that's going to come down over time. We've got tougher comps. But we still feel like we can grow both channels in the remaining nine months.

Thomas L. Ryan: Sure, Joanna. I think on the, on the cemetery, you're right, we guided to low to mid-single digit. I'd say based on the performance we saw in the first quarter, we're confident in saying it's mid-single digit. You know, that would be somewhere between, you know, 4% and call it 7%, depending on how the year shakes out. That's kind of where our head is. If you go to, when you think about the breakout, we obviously had quite a good comparison the first quarter. It was, you know, an easier comp. If you go back to last year, we didn't have a great large sale quarter, we beat it by quite a bit. I think we expect both channels to end up being, you know, nice growth trajectories.

Speaker #3: On a year-over-year basis. And again, large sales are harder to predict because they come when they come. And sometimes they slip from June to July, or they slip from September to October.

Yeah, I mean, if you—obviously out of the gate, um, you know, I think we've talked before, if we got the flat funeral volume, we think we could grow margins, you know, call it 40 to 60 basis points going forward. And we talked about the sensitivity, right? So, if you back into, you know, 80% gross margins...

You know.

Speaker #3: And that's okay. Because eventually, we'll get them. So we feel good about both channels. And I think overall, expect a growth rate that's in the mid-single digits.

Speaker #2: Does it answer your question, Joanna?

Speaker #5: Oh, yes. Hi. So yes, I have a follow-up, actually. I was talking about I was muted. So thanks so yeah, I was asking. So yeah, with this growth now for the cemetery pretty just more like mid-single digits, how should we think about your assumptions around the gross margin in that segment?

Thomas L. Ryan: Obviously, we've got quite a great growth trajectory in Q1, and that's gonna come down over time as we got tougher comps. We still feel like we can grow both channels in the remaining 9 months on a year-over-year basis. Again, large sales are harder to predict because they come when they come, and sometimes they slip from June to July, or they slip from, you know, September to October, and that's okay because eventually we'll get them. We feel good about both channels, and I think, you know, overall expected growth rates is in the mid-single digits.

Funerals lost, you can back into the number. So at this point, we'd be forecasting that margins are going to be slightly down for the year versus um what we experienced in the prior year. Having said that, you know once again comps are a weird thing. You know, I like our comp first quarter 2027, right? I mean I think we might have a pretty good 1. Uh, so so it is what it is but I think for this year you'd anticipate that our gross margin percentage will be slightly down as compared to the prior year number

Speaker #5: Because it sounds like the funeral segment, while with the volumes being down, the gross margin will be lower. So should we expect better, I guess, margin here, given the kind of the elevated growth?

And then go back to that, you know, can we grow it at 40 to 60 bips? I think so um, you know, give us flat to slightly up volume and we'll do that and if you give us a little bit more volume, it'll be a lot more.

Speaker #3: Yeah. I mean, if we get the growth rates we think, you probably should see gross margins grow anywhere from 60 to call it 100, 120 basis points for the year.

Thank you. We have the next question on the line from Joanna Gag from Bank of America. Please go ahead.

Speaker #3: If we can get 4% revenue growth on the cemetery, we can grow it about, call it, 50, 60 basis points. So if we end up in the 5 or 6, you'd see a little better.

Speaker #3: So we got nine months to go. We'll see. But overall, we'd expect cemetery margins to go up for the year. And like I said, funeral to be slightly down.

Operator 2: Does that answer your question, Joanna?

Operator: Does that answer your question, Joanna?

Joanna Gajuk: Oh, yes. Hi. Yes, I have a follow-up, actually. I was talking while I was muted, so thanks. Yeah, I was asking, with this growth now for the cemetery pre-sales, you know, more like mid-single digits, how should we think about your assumptions around the gross margin in that segment? Because it sounds like the funeral segment, while with the volumes being down, the gross margin will be lower. Which should we expect, you know, better, I guess, margin here, given this kind of the elevated growth?

Speaker #5: And if I may, last question on the capital deployment and specifically the acquisition. So are you seeing sort of more interest, less interest? Any competitive dynamics around multiple and such?

Oh, yes. Hi, good morning. Thanks so much for taking the question here. Um, so I guess maybe just, uh, follow up on the semester because clearly that's where the outperformance I was, and I'm sorry if I missed it. Um, so how do you uh kind of thinking about the full year now? Um, you know, versus your prior expectations for growing, uh, lows and go to let's go digits and I guess can you also break it? Uh uh, for us if you can, uh, you know, expectations for the large versus core sales performance for the year.

Speaker #5: And it sounds like you mentioned before that this volume decline, the funeral volume decline of Q1 was kind of real big. But I think if I read it right, I'm sure that you said something along the lines that some of your competitors are actually doing worse.

Thomas L. Ryan: I mean, if we get the growth rates we think, you know, you probably should see gross margins grow anywhere from, you know, 60 to call it 100, 120 basis points for the year. You know, if we can get 4% revenue growth on the cemetery, we can grow it about, call it 50, 60 basis points. If we end up in the, you know, 5 or 6, you'd see a little better. You know, we got 9 months to go, we'll see. Overall, we'd expect cemetery margins to go up for the year, like I said, funeral to be, you know, slightly down.

Speaker #5: So yes, it's changing sort of your outlook in terms of consolidation opportunity. Thank you.

Speaker #3: Well, good morning, Joanna. This is Eric. I think we'll continue to be very excited about the pipeline. We have a lot in the pipeline right now.

Speaker #3: We closed about 25 million dollars so far. In the first quarter. A couple more in April as well. And it continues to build. It takes time.

Sure Jen. Um so I think on the on the cemetery you're right we got it to load amid single digit. I'd say based on the performance, we saw in the first quarter, we're confident in saying it's mid single digits, you know? That would be somewhere between, you know, 4 and call it 7% depending on how the year shakes out, uh, that's kind of where our head is. Um, then if you go to uh when you think about the breakout we obviously had quite a good comparison of the first quarter, it was, you know, an easier comp if you go back to last year, we didn't have a great large sale quarter. So we beat it by quite a bit, but I think both, we expect both channels to end up being, um, you know,

Joanna Gajuk: Even my last question on the capital deployment and specifically the acquisition. Are you seeing, sort of more interest, less interest, any, you know, competitive dynamics around multiples and such? Sounds like you mentioned before that, this volume decline, the funeral volume decline of Q1 was kind of broad-based. I think if I read it right, I'm not sure if you said something along the lines that some of your competitors are actually doing worse, so is this changing sort of your outlook in terms of consolidation opportunities? Thank you.

Speaker #3: To make sure that we have a win-win situation with the third, fourth, fifth generation families. But we continue to be excited about it. And I think it will be a good story the rest of the year.

Speaker #3: In terms of funeral volumes, we just have we have the CDC data like you do. We obviously have heard our vendors and other vendors and such.

Speaker #3: And it sounds like that maybe we're a little bit better than what some of the other figures that are out there, including the CDC, probably a little bit better in January and February, which is out there in the public realm.

Uh, nice growth, trajectories I see, we've got quite a great growth trajectory in the first quarter and that's going to come down over time. So we got tougher comps but we still feel like we can grow both channels in the, the remaining 9 months, uh, on a year-over-year basis. And, and again, large sales are harder to predict because they come when they come and sometimes they slip from June to July or they slip from, you know, September to October, and that's okay because eventually we'll get them. So, so we feel good about both channels and I think, uh, you know, overall expect the growth rate is in the mid single digits.

Thomas L. Ryan: Well, and, good morning, Joanna, this is Eric. You know, I think we'll continue to be very excited about the pipeline. We have a lot in the pipeline right now. We closed about $25 million so far in Q1, a couple more in April as well. It continues to build. It takes time, you know, to make sure that we have a win-win situation with the third, fourth, fifth generation families. We continue to be excited about it, and I think it will be a good story the rest of the year. In terms of funeral volumes, we have the CDC data like you do.

Eric D. Tanzberger: Well, and, good morning, Joanna, this is Eric. You know, I think we'll continue to be very excited about the pipeline. We have a lot in the pipeline right now. We closed about $25 million so far in Q1, a couple more in April as well. It continues to build. It takes time, you know, to make sure that we have a win-win situation with the third, fourth, fifth generation families. We continue to be excited about it, and I think it will be a good story the rest of the year. In terms of funeral volumes, we have the CDC data like you do.

Question.

Speaker #3: So that's all we're saying. It's clear to us that this is not a STI market share issue during the first quarter. We've definitely seen it before.

Speaker #3: But ultimately, these volumes, I don't think short-term like this is going to affect the M&A program to come full circle back to the original part of your question.

Speaker #3: It's a long-term process with long-term relationships. We'll continue to work those long-term relationships. And we feel pretty good about what's ahead of us in terms of the pipeline.

Thomas L. Ryan: We obviously have heard our vendors and other vendors and such, and it sounds like that, you know, maybe we're a little bit better than what some of the other figures that are out there, including the CDC, probably a little bit better in January and February, which is out there in the public realm. That's all we're saying. It's clear to us that this is not a SCI market share issue during the first quarter. We've definitely seen it before. But ultimately these volumes, I don't think short-term like this is gonna affect the M&A program, to come full circle back to the original part of your question. It's a long-term process with long-term relationships. We'll continue to work those long-term relationships, and we feel pretty good about what's ahead of us in terms of the pipeline.

Eric D. Tanzberger: We obviously have heard our vendors and other vendors and such, and it sounds like that, you know, maybe we're a little bit better than what some of the other figures that are out there, including the CDC, probably a little bit better in January and February, which is out there in the public realm. That's all we're saying. It's clear to us that this is not a SCI market share issue during the first quarter. We've definitely seen it before. But ultimately these volumes, I don't think short-term like this is gonna affect the M&A program, to come full circle back to the original part of your question. It's a long-term process with long-term relationships. We'll continue to work those long-term relationships, and we feel pretty good about what's ahead of us in terms of the pipeline.

Speaker #5: Okay. Great. And if I may squeeze in a last one. And sorry, going back to your outlook for the year. So just to make sure, right, you kind of talk about the funeral volumes, worse.

Speaker #5: And I guess that comes with lower margins. But the cemetery better. And then potentially if this gets closer to a 6, 7, the gross profit margin would be even better.

Speaker #5: But your guidance range for your EPS is pretty wide. So is there something to be said about orienting us towards one end or the other or the other of that range?

We expect, uh, you know, better, I guess margin here given the uh, kind of the elevator growth. Yeah, I mean, if we get the growth rates, we think, you know you probably should see gross margins grow anywhere from, you know, 60 to call it 100 120 basis points for the year. Um, you know, if we can get 4% Revenue growth on the cemetery, we can grow it about till 50 60 basis points. So if we end up in the, you know, 5 or 6, you'd see a little better. Uh, so you know, we got 9 months to go, we'll see. But but overall we'd expect Cemetery margins to to go up for the year. Um, and like I said, funeral to be, you know, slightly down.

Speaker #3: No, June. I think obviously with funeral volumes the way they are, we didn't perform at a level we originally wanted to do. So it all kind of gets back to how much comes back in the back half of the year.

Speaker #3: And so we still feel comfortable about it. I think what you're saying is it is a large range. Right now, with the funeral volumes the way they are, you're probably more likely to be in the lower half of the range versus the higher.

Joanna Gajuk: Okay, great. If I may squeeze in a last one, going back to your outlook for the year. Right, you kinda talk about the funeral volumes, you know, worse, and I guess that comes with lower margins, but the cemetery better. Potentially, you know, if this gets closer to like a, you know, 6, 7, the gross profit margin would be even better. Your guidance range for your EPS is pretty wide. Is, you know, is there something to be said about, you know, orienting us towards one end or the other of that range?

Thank you for my last question on the capital deployment and specifically the acquisition. So, um, are you seeing, uh, sort of more interest, less interest, any, um, you know, competitive dynamics around multiples and such? And, um, sounds like you mentioned before that this volume decline of funeral, volume decline of Q1, was kind of broad-based, but, but I, I think if I read it right after the, you said something along the lines that some of your competitors are actually doing worse. Um, so is that changing, sort of, your outlook in terms of consolidation opportunity? Thank you.

Speaker #3: But we're not there yet because again, if these volumes come back, if we continue the trends we're seeing in cemetery, we could push into the upper half of this too.

Speaker #3: So that's why we left it where it is. We honestly have a couple of different a variety of models. And some of which, if we get some funeral volume back, we can do really well this year.

Speaker #3: If you don't, clearly, you're going to be on the lower end of that range.

Speaker #5: All right. So you're still standing by by the range, right? And the midpoint kind of looks good. All right. Thank you so much. Thanks for all the questions.

Thomas L. Ryan: No, Joanna, I think, obviously with funeral volumes the way they are, you know, we didn't perform at a level we originally wanted to do. It all kind of gets back to, you know, how much comes back in H2. We still feel comfortable about it. You know, I think what you're saying is it is a large range. Right now with the funeral volumes the way they are, you're probably more likely to be in the lower half of the range versus the higher. We're not there yet because, again, if these volumes come back, if we continue the trends we're seeing in cemetery, you know, we could push in the upper half of this too. That's why we left it where it is.

Speaker #3: Okay.

Speaker #2: Thank you. We have the next question from the line of AJ Rice from UBS. Please go ahead.

Speaker #3: Please go ahead.

Speaker #6: Hi, everybody. Just a couple of things. To tie it all up. Just you mentioned a couple I've been asked a couple of times about the large sales and I know you've got a lot of initiatives in the cemetery side sales and marketing initiatives.

But uh, good morning, Joanna. This is Eric. You know, I think we'll continue to be very excited about the pipeline. We have a lot in the pipeline right now—we closed about $25 million so far in the first quarter, a couple more in April as well, and, um, it continues to build. It takes time, you know, to make sure that we have a win-win situation with the third, fourth, fifth generation families. Um, but we continue to be excited about it, and I think it will be a good story the rest of the year. Um, in terms of funeral volumes, we just have—we have the CDC data, like you do. Um, we obviously have heard from our vendors and other vendors and such, and, um, it sounds like that, you know, maybe we're a little bit better than what some of the other figures that are out there, including the CDC.

Speaker #6: Do you think that there are any of those that are particularly directed toward the large sales so that this level of performance might be a more sustainable thing?

Thomas L. Ryan: We honestly have a couple of different, a variety of models and some of which, if we get some funeral volume back, we can do really well this year. If you don't, you know, clearly you're gonna be on the lower end of that range.

Speaker #6: Or is it still going to be more quarter to quarter volatility depending on what comes in in any given quarter?

Speaker #3: Yeah. I think, AJ, a couple of things to answer that. And overall, let me just say it's a positive. I think the large sale concept we now have in a lot more areas of the country.

Joanna Gajuk: All right. You're still standing by the range, right?

Thomas L. Ryan: Standing by.

Joanna Gajuk: The midpoint kinda looks good.

Probably a little bit better in January and February, which is out there in the in the public realm. So that's all we're saying. It's clear to us that this is not a STI market share issue during the first quarter. We've definitely seen it um, before. Um, but ultimately these volumes, I I don't think short term like this is going to affect the m&a program to come full circle back to the original part of your question. It's a long-term process.

Thomas L. Ryan: That's correct.

Joanna Gajuk: All right. Thank you so much. Thanks for all the questions.

Thomas L. Ryan: You bet. Okay.

Operator: Thank you. We have the next question from the line of A.J. Rice from UBS. Please go ahead.

Speaker #3: So we really obviously, Rose Hills and some of the California parks and Vancouver, we've had large sales for a long time. Now, we continue to, I think, build even more spectacular properties that are higher level.

Process with long-term relationships. Uh, we'll continue to work those long-term relationships and we feel pretty good about what's ahead of us in terms of the pipeline,

A.J. Rice: Hi, everybody. Just a couple of things to tie it all up. Just you've been asked a couple times about the large sales. I know you've got a lot of initiatives in the cemetery side, sales and marketing initiatives. Do you think that there are any of those that are particularly directed towards the large sales so that this level of performance might be a more sustainable thing, or is it still gonna be more quarter-to-quarter volatility depending on what comes in in any given quarter?

Speaker #3: I think what we find is as we build bigger and better things, you're surprised by the people that will buy them. So the average ticket will go up.

Speaker #3: And that's one way to drive your sales. And then the other is velocity. And one of the things we've done particularly in the Asian communities and the Chinese and Vietnamese in particular, we take Qingming as an opportunity to present new inventory.

Okay, great. If I may squeeze in the last 1, uh I'm sorry, going back to your uh outlook for the year. Um, so just to make sure, right? You kind of talk about the funeral volumes, you know, worse and I guess that comes with lower margins but the 7:30 better. Uh, and then potentially, you know, if if this gets closer to like a, you know, 6 7 then the gross profit margin would be even better. Uh, but your guidance range for your EPS is pretty wide. Um, so it's, you know, is there something to be said about, you know, orienting us towards, uh, uh, 1 and on the other or the other of that range?

Thomas L. Ryan: Yeah. I think, A.J., a couple of things to answer that. Overall, let me just say it's a positive.

Speaker #3: I think we did Qingming in three markets if you go back 10 years. And now, Jay, we probably do it in 30 markets across the country.

A.J. Rice: Right.

Thomas L. Ryan: I think the large sale concept we now have in a lot more areas of the country. You know, we really obviously, Rose Hills and some of the California parks and Vancouver, you know, we've had large sales for a long time. Now, we continue to, I think, build even more spectacular properties that are higher level. You know, I think what we find is as we build bigger and better things, you're surprised by the people that will buy them. The average ticket, you know, will go up, and that's one way to drive your sales. The other is velocity. One of the things we've done, particularly in the Asian communities, in the Chinese and Vietnamese in particular, you know, we take Qingming as an opportunity to present new inventory.

Speaker #3: So I do think there's a likelihood to have more consistency in these numbers. And so the only thing I caution AJ, I think it's going to continue to grow, it's going to get better.

Speaker #3: Is you could have a quarter where it's down 10 million this quarter. And then you're up 15 million next quarter. So I never get that excited about large sales.

Speaker #3: It's a little bit like Eric's talking about visibility on acquisitions. We know the pipeline. We know the discussions that are happening. When someone's going to spend 5, 10 million dollars, Jay knows about it.

No Gene. I think. Um, obviously with funeral volumes, the way they are, you know, we didn't perform at a level, we originally wanted to do so it all kind of gets back to you know, how much comes back in the back, half of the year and so we still feel comfortable about it. You know. I think what you're saying is it is a large range. Um right now with the funeral volumes, the way they are you're probably more likely to be in the in the lower half of the range versus the higher. But we're not there yet because again if these volumes come back if we continue the trends we're seeing in Cemetery, you know we could push in the upper half of this too. So so that's why we left it where it is we we honestly have a couple of different

Speaker #3: And he's telling me about it. So we're talking about it. And these aren't sales that happen in a day. They've got attorneys involved. They've got I want to design a particular building.

A variety of models. And and some of which, if we get some front of the volume back, we can do really well this year, if you don't, you know, clearly you're going to be in the lower end of that range.

Speaker #3: So we're seeing the customers that are out there interested in our creative inventory interested in personalizing it. And so that's why we feel highly confident.

Thomas L. Ryan: I think we did Qingming in three markets, if you go back 10 years. Now, Jay, we probably do it in, you know, 30 markets across the country. I do think there's a likelihood to have more consistency in these numbers. The only thing I'd caution, A.J., I think it's gonna continue to grow, it's gonna get better, is you could have a quarter where it's down $10 million this quarter and then you're up $15 million next quarter. I never get that excited about large sales. It's a little bit like Eric's talking about visibility on acquisitions. We know the pipeline, we know the discussions that are happening. You know, when someone's gonna spend $5 million, $10 million, you know, Jay knows about it, he's telling me about it.

All right, so you're still standing by by the by the branch. Right in and buy and the midpoint kind of looks good.

All right. Thank you so much. Thanks for all the questions.

Okay.

Speaker #3: We've got more inventory on the ground to sell. And we're getting better and better at it. And we're doing it in more and more places.

Thank you.

Speaker #3: It's not just in California. In Vancouver anymore. We're getting those sales in Missouri and obviously Florida, North Carolina, Tennessee. Nevada. Obviously, Texas too. So just seeing it in more locations, more pockets, and excited about the future and the things that we can continue to do in stretching the imagination and I'd love to have a 20 million dollar private sale one day, right?

We have the next question from the line of AJ rice from UBS. Please go ahead.

Thomas L. Ryan: We're talking about it, and these aren't sales that happen in a day. They've got attorneys involved. They've got, you know, I wanna design a particular building. We're seeing the customers that are out there interested in our creative inventory, interested in personalizing it. That's why we feel highly confident. We've got more inventory on the ground to sell, and we're getting better and better at it, and we're doing it in more and more places. You know, it's not just in California and Vancouver anymore. We're getting those sales in, you know, in Missouri and obviously Florida, North Carolina, Tennessee, Nevada, obviously Texas too. Just seeing it in more locations, more pockets and excited about the future and, and the things that we can continue to do and in stretching the imagination and, you know.

Speaker #3: I mean, it sounds incredible. But it will happen. Somebody will get it.

Speaker #6: Yeah. Yeah. And then I appreciate Eric's comments on the trust fund. Earnings and returns and that dip in the first quarter. But has rebounded early in the second.

We've got a lot of initiatives in the cemetery, Side sales and marketing initiatives. Do you think uh that there are any of those that are particularly uh directed toward the large sales? So that this level of performance uh might be a more sustainable thing or is it still going to be more quarter to quarter volatility depending on what comes in at any given quarter?

Speaker #6: Is there anything I know that that volatility in the trust fund returns tends to take a lot longer to show up in the results.

Speaker #6: Is there anything you're trying to signal with respect to the impact it may have had on the first quarter or positioning us for the second quarter to think about that?

Speaker #6: Or are you just making note of the fact that it's been volatile?

Speaker #3: I mean, more of the latter. It's a lot like predicting volume with what's going on in the world, AJ, right? I mean, I think trust fund income will be somewhere between 300 and 350 million dollars.

Speaker #3: Call it 325 in the midpoint. That's a pretty wide range for me to say. Three months into it. But that's the volatility that we all know that we have out there in the markets.

Thomas L. Ryan: I'd love to have a-

A.J. Rice: Right

Thomas L. Ryan: $20 million private sale one day, right? I mean, sounds incredible.

A.J. Rice: Right

Thomas L. Ryan: It will happen. Somebody will get it.

A.J. Rice: Yep. Yep. I appreciate Eric's comments on the trust fund earnings and returns and that dipped in Q1 but has rebounded early in Q2. Is there anything? I know that volatility in the trust fund returns tends to take a lot longer to show up in the results. Is there anything you're trying to signal with respect to the impact it may have had on Q1 or positioning us for Q2 to think about that? Are you just making note of the fact that it's been volatile?

Speaker #3: But we're marking to market every month. So we're pushing stuff through every month. But the contracts have to mature out of that backlog that's marked to market is why it becomes a muted effect.

Yeah, I think AJ a couple of things to answer that and and, and overall, let me just say it's a positive. I think the large sale concept, we now have in a lot more, uh, areas of the country. So, you know, we really obviously Rose Hills and some of the California parks and and Vancouver, you know, we've had large sales for a long time. Now, we continue. Do I think build even more spectacular properties that are higher level? You know, I think what we find is, as we build bigger and better things, you're surprised by the people that will buy them. So the average ticket, you know, will go up and that's 1 way to drive your sales and then the other is velocity and 1 of the things we've done particularly in the Asian communities in the Chinese and Vietnamese. In particular, uh you know, we take Ching Ming as an opportunity to present new inventory. I think we did Ching Ming in 3 markets. Uh, if you go back 10 years and

Now, Jay, we probably do it in, you know, 30 markets across the country.

Speaker #3: Over a longer period of time.

Speaker #6: Right. No, that makes sense. And then just an interesting comment you had. And I just wondered how much of an impact that's having. And is this just sort of an unusual thing in the quarter or not?

Speaker #6: You said that you had above inflation fixed cemetery maintenance costs. Sort of what's going on there? Was that just sort of a one-quarter phenomenon?

Eric D. Tanzberger: I mean, more of the latter. You know, it's a lot like predicting volume with what's going on in the world, AJ, right?

A.J. Rice: Right. Right.

Eric D. Tanzberger: I mean, I think trust fund income will be somewhere between $300 to 350 million, call it $325 at the midpoint. That's a pretty wide range for me to say 3 months into it. You know, that's the volatility that we all know that we have out there in the markets. You know, we're marking to market every month, so we're pushing stuff through every month. The contracts have to mature out of that backlog that's marked to market is why it becomes a muted effect over a longer.

Speaker #6: Or is there some level of incremental spend you're having to do on cemetery maintenance that's going to persist?

Speaker #3: Well, I think we've this is the category that's hardest. And again, it's very labor-intensive. You're talking about water. You're talking about fertilizers. You're talking about equipment.

Speaker #3: It's a big, big expense. Some of it's outsourced. Some of it's insourced. And it just tends to be the one that's hardest to control.

Speaker #3: And also, I think it's a reflection of how does your park look? And for us, because we've got great cemetery sales, we've got all this high-end inventory, we're spending money to make it special.

So I do think there's a, a likelihood to have more consistency in these numbers. And so, the only thing I caution AJ I think it's going to continue to grow. Its going to get better is you could have a quarter where it's down 10 million this quarter and then you're up 15 million next quarter. So I never get that excited about large sales. It's a little bit like Eric's talking about visibility on on Acquisitions. We know the pipeline, we know the discussions that are happening you know, when someone's going to spend 5 10 million dollars, you know, Jay knows about it and he's telling me about it. So, so we're talking about it and these aren't sales that happen in a day. They got attorneys evolved. They've got, you know, I want to design a particular building. So we're seeing the customers that are out there interested in our creative inventory, interested in personalizing it and so that's why we feel, highly confident. We've got more inventory on the ground to sell and we're getting better and better at it and we're doing it in more and more places, you know, it's not

A.J. Rice: Right

Eric D. Tanzberger: period of time.

A.J. Rice: Right

Eric D. Tanzberger: period of time.

A.J. Rice: Right. No, that makes sense. Then, just an interesting comment you had, and I'm just wondering how much of an impact that's having, and is this just sort of an unusual thing in the quarter or not? You said that you had above inflation, big cemetery maintenance costs. Sort of what's going on there? Was that just sort of a 1-quarter phenomenon, or is there some level of incremental spend you're having to do on cemetery maintenance that's gonna persist?

Not just in California in Vancouver anymore. We're getting those sales and you know, and Missouri and obviously Florida, North Carolina, Tennessee, Nevada. Um,

Speaker #3: And so I'm not surprised by it. It's just sometimes we'll manage to say cemetery maintenance could be 3 to 4 percent. Well, if it comes in at 5, it's a little bit over, right?

Obviously Texas too. So so just seeing it in more.

Speaker #3: So that's the kind of thing, AJ. I wouldn't expect it to trend down or anything like that. But I think we're getting better at controllable buckets of that cost to where it'll look more like inflation that's in the marketplace versus slightly ahead.

Thomas L. Ryan: Well, This is the category that's hardest. Again, it's very labor-intensive. You know, you're talking about water, you're talking about, you know, fertilizers, you're talking about equipment. It's a big, big expense. Some of it's outsourced, some of it's insourced. It just tends to be the one that's hardest to control. Also, I think it's a reflection of how does your park look? For us, because we've got great cemetery sales, we've got all this high-end inventory, you know, we're spending money to make it special.

Locations more pockets and uh, excited about the future and and and the things that we can continue to do and and stretching the imagination and and uh you know, I'd love to have a 20 million dollar private sale 1 day, right? I mean, sounds incredible, but it will happen. Somebody will get it. Yep.

Yep. Um,

Speaker #3: So it's we're getting there.

Speaker #6: Okay. All right. Well, thanks so much.

Speaker #3: Thank you, AJ.

Speaker #2: Thank you. We have the next question on the line of Paul Kushner from Raymond James. Please go ahead.

Speaker #7: Hey, yeah, just one more follow-up. Can you just remind us on the timing of Qingming and when that selling season kind of ends up flowing through your numbers?

Speaker #7: From my understanding, it's kind of late first quarter, early second quarter. But just how much was Qingming attributable to some of the pre-need cemetery sales in the first quarter?

A.J. Rice: Yeah.

Thomas L. Ryan: I'm not surprised by it. It's just sometimes, you know, we'll manage to say cemetery maintenance could be, you know, 3% to 4%. Well, if it comes in at 5%, it's a little bit over, right? That's the kind of thing, AJ. I wouldn't expect it to trend down or anything like that, but I think we're getting better at controllable buckets of that cost to where it'll look more like inflation that's in the marketplace versus slightly ahead.

And then I appreciate Eric's comments on the trust fund uh earnings and returns and that that dipped in the first quarter but has rebounded early in the second, is there anything? I know that that volatility in the trust fund returns tends to take a lot longer to show up in the results? Um, is there anything you're trying to signal with respect to the impact? It may have had on the first quarter or positioning us for the second quarter to think about that or you just making note of the fact that it's been bought

Speaker #7: And just kind of how do you expect that overall season to kind of play out?

I mean more the latter. You know, it's a lot like predicting volume with what's going on in the world, AJ, right? I mean, I think trust fund income will be—

Speaker #3: It's usually late March and early April, Parker. So actually across the quarter. And it depends on each market has events. For the community, community-facing events.

Speaker #3: And it kind of depends on when you plan it, to be honest with you. And where the end of the month lands. I don't think this was any out of the ordinary of a prior year or anything like that.

A.J. Rice: Okay.

Thomas L. Ryan: We're getting there.

A.J. Rice: Okay. All right. Well, thanks so much.

Speaker #3: I don't think it was a huge larger piece or a smaller piece in the first quarter of 2026 than the first quarter of '25.

Thomas L. Ryan: Thank you, AJ.

Somewhere between 300 and 350 million call 325 in the midpoint. That's, that's a pretty wide range for me to say, 3 months into it. But, you know, that's the volatility that we all know that we have out there in the markets, but, you know, we're marking to Market every month. So we're pushing stuff through, um, every month. Um, but the contracts have to mature out of that backlog.

Operator: Thank you. We have the next question in line of Parker Snure from Raymond James. Please go ahead.

Mark to Market is why it becomes a muted effect over over a longer period of time.

Parker Snure: Hey, yeah, just one more follow-up. Can you just remind us on the timing of Qingming and when that selling season kind of ends up flowing through your numbers? From my understanding, it's kind of late Q3 or late Q1, early Q2. Just how much was Qingming attributable to some of the pre-need cemetery sales in Q1? Just kind of how do you expect that overall season to kind of play out?

Speaker #3: So I think it's kind of right on pace. Tom's comment was more about that's a great opportunity to lay out your large sales though and your plans for that, which we utilized a lot across some of our larger cemeteries.

Speaker #7: Okay. Great. Thank you.

Speaker #2: Thank you. This concludes our question answer session. I will now let it on the conference over back to DSCI management for closing remarks.

Eric D. Tanzberger: It's usually late March and early April, Parker, it actually crosses over the quarter. It depends on, you know, each market has events, you know, for the community-facing events, and it kind of depends on when they plan it, to be honest with you, and where the end of the month lands. I don't think this was any out of the ordinary of a prior year or anything like that. I don't think it was a huge larger piece or a much smaller piece in Q1 2026 than Q1 2025. I think it's just kind of right on pace. Tom's comment was more about that's a great opportunity to lay out your new larger sales though and your plans for that, which we utilize a lot across some of our larger cemeteries.

Right? No, that makes sense. And then uh just an interesting comment you had. Um uh and I'm just wondering how much of an impact that's having and is this just sort of an unusual thing in the quarter or not. You said that you had above inflation fixed Cemetery, maintenance cost, sort of what's going on, there was that just sort of a 1 quarter phenomenon? Or is there some level of incremental spend you're having to do on Cemetery maintenance? That's going to persist.

Speaker #3: Thank you, everybody, for the time today. We appreciate you. We look forward to talking to you with our second quarter results in July. Have a great week.

Parker Snure: Okay, great. Thank you.

Operator: Thank you. This concludes our question answer session. I will now let it on the conference call back to the SCI management for closing remarks.

Thomas L. Ryan: Thank you everybody for the time today. We appreciate you. We look forward to talking to you with our Q2 results in July. Have a great week.

Uh fertilizers you're talking about equipment, it's a big, big expense some of its outsourced, some of its insourced um and it just tends to be the 1 that's hardest to control and and and also I think it's a reflection of how does your Park look and for us because we've got great cemetery sales, we've got all this high-end inventory, you know, we're spending money to make it special and uh so I'm not surprised by it. It's just sometimes, you know, we'll manage to say Cemetery. Maintenance could be, you know, 3 to 4%. Well, if it comes in at 5 it's a little bit over, right? So that's the kind of thing. I wouldn't expect it to Trend down or anything like that, but I think we're getting better at controllable. Buckets of that cost to where it'll it'll look more like inflation that's in the marketplace versus slightly ahead.

So it's we're getting there.

Okay. All right. Well, thanks so much.

Thank you, AJ.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Thank you. We have the next question from the line of FocusNerd from Raymond James. Please go ahead.

Hey, uh, yeah. Just one more follow-up. Uh, can you just remind us on the timing of Ching Ming, and when that selling season kind of ends up flowing through your numbers? From my understanding, it's kind of late first quarter, early second quarter. But, um, just how much was Ching Ming attributable to some of the pre-need cemetery sales in the first quarter, and just how do you expect that overall season to kind of play out?

Uh it's usually late March and early April Parker. So it actually crosses over the quarter and it depends on, you know, each market has events you know for the community community facing events and it kind of depends on when they plan it to be honest with you and where the end of the month lands I don't think this was any out of the ordinary of a prior year or anything like that. I don't think it was a uh huge larger piece or a much smaller piece in the first quarter of 206 than the first quarter of of 25. So I think it's just kind of right on Pace. Tom's comment was more about that's a great opportunity to lay out your your new larger sales though and your plans for that, which we utilize a lot across some of our larger cemeteries.

Okay, great. Thank you.

Thank you.

This concludes the question of the session. I would like to turn the conference over back to the SEI management for closing remarks.

Thank you, everybody, for your time today. We appreciate you. We look forward to talking to you with our second quarter results in July. Have a great week.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect

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