Service Corp International Files 10-Q for Period Ending March 31, 2024

Ticker: SCI · Form: 10-Q · Filed: May 2, 2024 · CIK: 89089

Sentiment: mixed

Topics: 10-Q, Service Corp International, Acquisitions, Divestitures, Impairment Charges

TL;DR

<b>Service Corp International reported a net loss of $684,000 from divestitures and impairments in Q1 2024, driven by $1.08 million in impairment losses.</b>

AI Summary

SERVICE CORP INTERNATIONAL (SCI) filed a Quarterly Report (10-Q) with the SEC on May 2, 2024. Acquired businesses for $15.8 million in Q1 2024, compared to $8.7 million in Q1 2023. Acquired real estate for $6.9 million in Q1 2024, compared to $16.7 million in Q1 2023. Recognized net gains on divestitures of $395,000 in Q1 2024, down from $691,000 in Q1 2023. Recorded impairment losses of $1,079,000 in Q1 2024, with no comparable losses in Q1 2023. Reported net gains on divestitures and impairment charges of ($684,000) in Q1 2024, a decrease from $691,000 in Q1 2023.

Why It Matters

For investors and stakeholders tracking SERVICE CORP INTERNATIONAL, this filing contains several important signals. The company's acquisition activity for businesses increased significantly in Q1 2024, indicating potential expansion or consolidation efforts. The substantial impairment losses in Q1 2024, absent in the prior year, suggest potential write-downs of assets or underperforming locations.

Risk Assessment

Risk Level: medium — SERVICE CORP INTERNATIONAL shows moderate risk based on this filing. The company experienced a net loss of $684,000 from divestitures and impairment charges in Q1 2024, primarily due to $1,079,000 in impairment losses, which contrasts with a net gain of $691,000 in the prior year period.

Analyst Insight

Monitor the impact of the Q1 2024 impairment losses on future profitability and assess the strategic rationale behind the increased business acquisitions.

Key Numbers

Key Players & Entities

FAQ

When did SERVICE CORP INTERNATIONAL file this 10-Q?

SERVICE CORP INTERNATIONAL filed this Quarterly Report (10-Q) with the SEC on May 2, 2024.

What is a 10-Q filing?

A 10-Q is a quarterly financial report with unaudited financials, management discussion, and interim business updates. This particular 10-Q was filed by SERVICE CORP INTERNATIONAL (SCI).

Where can I read the original 10-Q filing from SERVICE CORP INTERNATIONAL?

You can access the original filing directly on the SEC's EDGAR system. The filing is publicly available and includes all exhibits and attachments submitted by SERVICE CORP INTERNATIONAL.

What are the key takeaways from SERVICE CORP INTERNATIONAL's 10-Q?

SERVICE CORP INTERNATIONAL filed this 10-Q on May 2, 2024. Key takeaways: Acquired businesses for $15.8 million in Q1 2024, compared to $8.7 million in Q1 2023.. Acquired real estate for $6.9 million in Q1 2024, compared to $16.7 million in Q1 2023.. Recognized net gains on divestitures of $395,000 in Q1 2024, down from $691,000 in Q1 2023..

Is SERVICE CORP INTERNATIONAL a risky investment based on this filing?

Based on this 10-Q, SERVICE CORP INTERNATIONAL presents a moderate-risk profile. The company experienced a net loss of $684,000 from divestitures and impairment charges in Q1 2024, primarily due to $1,079,000 in impairment losses, which contrasts with a net gain of $691,000 in the prior year period.

What should investors do after reading SERVICE CORP INTERNATIONAL's 10-Q?

Monitor the impact of the Q1 2024 impairment losses on future profitability and assess the strategic rationale behind the increased business acquisitions. The overall sentiment from this filing is mixed.

Risk Factors

Filing Stats: 4,549 words · 18 min read · ~15 pages · Grade level 18.9 · Accepted 2024-05-02 16:52:04

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 5 Item 1.

Financial Statements

Financial Statements 5 Unaudited Condensed Consolidated Statement of Operations - Three Months Ended March 31, 2024 & 2023 5 Unaudited Condensed Consolidated Statement of Comprehensive Income - Three Months Ended March 31, 2024 & 2023 6 Unaudited Condensed Consolidated Balance Sheet - March 31, 2024 & December 31, 2023 7 Unaudited Condensed Consolidated Statement of Cash Flows - Three Months Ended March 31, 2024 & 2023 8 Unaudited Condensed Consolidated Statement of Equity - Three Months Ended March 31, 2024 & 2023 9 Notes to Unaudited Condensed Consolidated Financial Statements 10 1. Nature of Operations 10 2. Summary of Significant Accounting Policies 10 3. Preneed Activities 13 4. Income Taxes 19 5. Debt 19 6. Credit Risk and Fair Value of Financial Instruments 20 7. Equity 21 8. Segment Reporting 22 9. Commitments and Contingencies 23 10. Earnings Per Share 24 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 The Company 25 Financial Condition, Liquidity, and Capital Resources 25 Results of Operations - Three Months Ended March 31, 2024 & 2023 32 Critical Accounting Policies 35 Cautionary Statement on Forward-Looking Statements 35 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 37 Item 4.

Controls and Procedures

Controls and Procedures 37

. OTHER INFORMATION

PART II . OTHER INFORMATION 38 Item 1.

Legal Proceedings

Legal Proceedings 38 Item 1A.

Risk Factors

Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38 Item 3. Defaults Upon Senior Securities 38 Item 4. Mine Safety Disclosures 38 Item 5. Other Information 38 Item 6. Exhibits 39 SIGNATURE 40 2 Service Corporation International Glossary The following terms are common to the deathcare industry, are used throughout this report, and have the following meanings: Atneed — Funeral, including cremation, and cemetery arrangements sold once death has occurred. Average Revenue per Service — Average revenue per funeral service performed, excluding the impact of non-funeral home preneed sales revenue, core general agency revenue, and certain other revenue. Cancellation — Termination of a preneed contract, which relieves us of the obligation to provide the goods and services included in the contract. Cancellations may be requested by the customer or be initiated by us for failure to comply with the contractual terms of payment. State or provincial laws govern the amount of refund, if any, owed to the customer. Care Trusts' Corpus — The deposits and net realized capital gains included in the perpetual care trusts that may not be withdrawable. In certain states, some or all of the net realized capital gains can also be distributed. Additionally, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal. Cemetery Marker — An item used to identify the deceased person in a particular burial space, crypt, niche, or cremation memorialization property. Permanent burial and cremation memorialization cemetery markers are usually made of bronze or stone. Cemetery Merchandise and Services — Merchandise and services used in connection with a cemetery interment, including stone and bronze memorials, cemetery markers, outer burial containers, floral placement, graveside services, merchandise installations, urns, and interments. Cemetery Perpetual Care Trust or End

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Service Corporation International Condensed Consolidated Statement of Operations (Unaudited) Three months ended March 31, 2024 2023 (In thousands, except per share amounts) Revenue Property and merchandise revenue $ 516,883 $ 515,242 Service revenue 451,945 439,505 Other revenue 76,554 73,962 Total revenue 1,045,382 1,028,709 Costs of revenue Cost of property and merchandise ( 263,593 ) ( 258,602 ) Cost of service ( 236,048 ) ( 231,298 ) Overhead and other expenses ( 271,528 ) ( 249,715 ) Costs of revenue ( 771,169 ) ( 739,615 ) Gross profit 274,213 289,094 Corporate general and administrative expenses ( 41,325 ) ( 44,160 ) (Losses) gains on divestitures and impairment charges, net ( 684 ) 691 Operating income 232,204 245,625 Interest expense ( 64,352 ) ( 53,916 ) Losses on early extinguishment of debt — ( 1,060 ) Other income, net 2,462 1,209 Income before income taxes 170,314 191,858 Provision for income taxes ( 39,040 ) ( 47,029 ) Net income 131,274 144,829 Net income attributable to noncontrolling interests 27 ( 66 ) Net income attributable to common stockholders $ 131,301 $ 144,763 Basic earnings per share: Net income attributable to common stockholders $ 0.90 $ 0.95 Basic weighted average number of shares 146,266 153,125 Diluted earnings per share: Net income attributable to common stockholders $ 0.89 $ 0.93 Diluted weighted average number of shares 147,913 155,300 (See notes to unaudited condensed consolidated financial statements) FORM 10-Q 5 PART I Service Corporation International Condensed Consolidated Statement of Comprehensive Income (Unaudited) Three months ended March 31, 2024 2023 (In thousands) Net income $ 131,274 $ 144,829 Other comprehensive income: Foreign currency translation adjustments ( 8,480 ) 298 Total comprehensive income 122,794 145,127 Total comprehensive income attributable to noncontrolling interests 30 ( 65 ) Total comprehensive income attributable

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