Service Corporation International · NYSE:SCI
Service Corporation International — Service Corp International — Investor Day (May 2022)
101 slides from Service Corporation International's investor day presentation, May 5, 2022
Slide 1: Investor Day 2022
INVESTOR DAY 2022 EXHIBIT 99.1
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements in this presentation that are not historical facts are forward-looking statements. You can generally identify our forward-lookin
Slide 3: Introduction Video
©) Introduction Video
Slide 4: Tom Ryan, Chairman, CEO and President
TOM RYAN Chairman of the Board CEO and President Investor Day 2022 4
Slide 5: Grow Revenue, Leverage Scale, Deploy Capital
GROW REVENUE LEVERAGE SCALE DEPLOY CAPITAL 5
Slide 6: Liquidity, leverage and debt maturity profile
6 $24 $49 $487 $230 $153 7.500% $750 $850 $800 $550 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 4.625% 5.125% 3.375% 4.000% TERM LOAN AMORTIZATION PAYMENT REVOLVER MATURITIES NON-CALLABLE SENIOR BONDS CALLABLE SENIOR BONDS $ in millions LIQUIDITY $1.04B LEVERAGE DEBT MATURITY PROFILE March 31,
Slide 7: Making our equity sweat—enhancing shareholder returns
Making our equity sweat— enhancing shareholder returns $5.3B $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 150,000 175,000 200,000 225,000 250,000 275,000 300,000 325,000 350,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 52% Reduction
Slide 8: Shareholder returns over time
shareholder returns over time 47% 29% 25% 15% 172% 133% 85% 76% 5 YEAR1 YEAR 10 YEAR 693% 246% 277% 362% 47% Annualized Return 29% 25% 15% 22% 18% 13% 12% 23% 16% 14% 13% SCI S&P 500 S&P MIDCAP 400 RUSSELL 2000 Returns are as of December 31, 2021, and include the reinvestment of dividends. TOTAL SHA
Slide 9: Sustainable value creation foundational in everything we do
Sustainable value creation foundational in everything we do SUPPORTING OUR INVESTING IN OUR COMMUNITIES OPERATING WITH PRINCIPLE 2021 Sustainability Report 9
Slide 10: Investor Day 2022 Key Takeaways
Investor Day 2022 Key Takeaways 10 1 Strong business model with a sustainable growth platform 2 consistent cash to grow the Company and enhance shareholder value 3 Industry leaders in innovation and technology 4 Preneed model and backlog strength 5 Potential for incremental growth is much greater in
Slide 11: Agenda
Agenda Welcome Funeral & Cemetery Segment Overview New Earnings Base for Growth Long-Term Power of SCI's Growth Model Q&A OPENING & OVERVIEW GROWTH DRIVERS CLOSING 11
Slide 12: Industry/Company Overview
INDUSTRY/COMPANY Overview JAY WARING Senior Vice President Chief Operating Officer 12
Slide 13: North America Deathcare Industry
North America Deathcare Industry (U.S. & Canada) | Number of funeral homes and cemeteries estimated by SCI from various sources and include only those of size. We estimate that there are several thousand smaller funeral homes and smaller Industry Revenue Contribution ~$17B ~$5B Funeral Homes Cemeter
Slide 14: We are the largest company in the industry
~750K Customers Served (Funeral & Cemetery) ~24K Employees $2.4B Preneed Sales ~$14B Backlog of Future Revenue $2.3B $1.8B Funeral Homes 488 Cemeteries 2021 SCI Revenue $4.1B WE ARE THE LARGEST COMPANY IN THE INDUSTRY 14
Slide 15: Funeral and cemetery locations
® FUNERAL CEMETERY UNITED STATES FUNERAL CEMETERY CANADA 15 L O C A T I O N S
Slide 16: Business characteristics
business characteristics FUNERAL CEME TERY High-touch personalized service/retail Moderate, except low in the price-sensitive market Generally recognized at time of death Revenue growth and high incremental margin growth expected from demographic tailwinds Real estate/sales/service High (Capital/reg
Slide 17: Our base case earnings framework remains sound
Our base case earnings framework remains sound 8%–12% ORGANIC CAPITAL DEPLOYMENT 5%–7% FUNERAL Modest revenue growth driven by increases in volume and sales average supporting stable margins CEMETERY Mid-single digit % preneed sales growth supporting increasing margins 3%–5% Continue Reinvesting in
Slide 18: Comparable adjusted earnings per share
Comparable ADJUSTED EARNINGS PER SHARE Long-Term Consistent EPS Growth Modest incremental revenue growth drives EPS above the range STEWART-DRIVEN GROWTH COVID IMPACT 14% CAGR 2013–2017 $0.28 $0.52 $0.51 $0.65 $0.92 $1.18 $1.55 $1.90 $2.91 $4.57 2021202020192017201520132011200920072005 18
Slide 19: Segment Overview: Funeral & Cemetery
STEVE TIDWELL Senior Vice President Sales & Marketing Segment Overview FUNERAL & CEMETERY 19
Slide 20: Funeral segment overview
Funeral customers and poised for growth FUNERAL & CEMETERY SEGMENT OVERVIEW 20
Slide 21: Funeral segment overview
21 Funeral segment overview $2.3B Revenues 2021 SNAPSHOT ~500K Customers Served (atneed and preneed) Funeral Homes ~$10B Preneed Backlog BUSINESS FOCUS service/retail BARRIERS TO ENTRY Moderate, except low in the price-sensitive market REVENUE RECOGNITION time of death FUTURE OUTLOOK Revenue growth
Slide 22: Funeral services performed
af ter pull-forward impact BA SE C A SE Target Growth (2024-2025) 22 2025E2024E2023E2022E20212020201920182017 PRE-PANDEMIC TRANSITIONAL YEARSCOVID IMPACT STEADY GROWTH PULL-FORWARD IMPACT Decrease in the low to mid-teen % range due to pull-forward Slightly lower than 2022 as volume growth offset by
Slide 23: Average revenue per funeral service
AVERAGE REVENUE PER FUNERAL SERVICE Comparable 23 • Innovative Products/Services • Dignity Packages • Preneed Strength PRE-PANDEMIC COVID IMPACT $5,307 $5,234 $5,183 $4,983 $5,337 20212020201920182017 $5,930 $5,837 $5,786 $5,561 $5,976 $1,184 $1,227 $1,244 $1,263 $1,395 SCI Direct Total Core BA SE C
Slide 24: SCI Direct revenues and preneed production
24 $165 $179 $197 $180 $233 Preneed Production BASE CASE TARGET GROWTH (2022-2025) Mid to High Single-Digit % Range $162 $159 $171 $167 $208 20212020201920182017 Revenues $37M Locations 31 States 2021 SNAPSHOT SCI DIRECT REVENUES AND PRENEED PRODUCTION Comparable $ in millions THE OPPORTUNITY
Slide 25: Funeral revenue and gross margin
Comparable Moderate funeral revenue growth with REVENUE AND GROSS MARGIN 25 PRE-PANDEMIC COVID IMPACT TRANSITIONAL YEARS $1,823 $1,871 $1,909 $2,032 $2,307 20212020201920182017 2022 revenues expected to slightly exceed 2019 levels, but decline low-teen %'s from 2021 2023 revenues expected to be flat
Slide 26: Core gross profit per funeral service
26 PRE-PANDEMIC COVID IMPACT COVID IMPACT CORE GROSS PROFIT PER FUNERAL SERVICE 2 0 2 1 2 0 2 017% 18%
Slide 27: Preneed funeral sales production
27 PRE-PANDEMIC COVID IMPACT $809 $822 $893 $948 $858 $1,080 202120202019201820172016 7% CAGR 2019–2021 5% CAGR 2016–2018 DIFFERENTIAL GROWTH OPPORTUNITY Independents do not have well-structured and scalable preneed programs OUR PROGRAM IS CASH FLOW NEUTRAL Insurance commissions and trust retainage
Slide 28: Cemetery program and ability to invest set us apart
Cemetery program and ability to invest set us apart FUNERAL & CEMETERY SEGMENT OVERVIEW 28
Slide 29: Cemetery segment overview
29 2021 SNAPSHOT BUSINESS FOCUS BARRIERS TO ENTRY REVENUE RECOGNITION FUTURE OUTLOOK Cemetery segment overview $1.8B Revenues 250K Customers Served (atneed and preneed) 488 Cemeteries (61% combos) $4B Preneed backlog of merchandise and services sold Real estate/sales/service High (Capital/regulatory
Slide 30: Cemetery preneed sales production
30 Comparable CEMETERY PRENEED SALES PRODUCTION PRE-PANDEMIC COVID IMPACT TRANSITIONAL YEARS $845 $891 $909 $1,045 $1,333 2021 2022E / 2023E2020201920182017 21% CAGR 2019–2021 4% CAGR 2017–2019 2022 up low single-digit %'s from 2021 and then maintain that level in 2023 TARGET GROWTH O N N E W H I G
Slide 31: Cemetery atneed sales production
31 Comparable CEMETERY ATNEED SALES PRODUCTION higher base 2023 and beyond 2%-4% TARGET GROWTH O N N E W H I G H ER B A SE (2024-2025) PRE-PANDEMIC COVID IMPACT TRANSITIONAL YEARS $318 $321 $326 $401 $494 2021 2022E / 2023E2020201920182017 23% CAGR 2019–2021 1.3% CAGR 2017–2019 2022 down low- to mid
Slide 32: Future cemetery revenue and margin growth
Comparable PRE-PANDEMIC COVID IMPACT TRANSITIONAL YEARS Revenues expected to increase in the low single-digit % range in 2022 and 2023 Margins expected in the mid-30's range $1,223 $1,290 $1,305 $1,459 $1,799 2022E / 2023E20212020201920182017 28.5% 30.1% 29.6% 33.1% 37.7% REVENUE $ in millions GROSS
Slide 33: New Earnings Base for Growth
ERIC TANZBERGER Senior Vice President Chief Financial Officer New Earnings Base for Growth 33
Slide 34: Adjusted earnings per share
Please see appendix for a reconciliation to the appropriate GAAP measure and for other disclosures. Pre-COVID $0.32 $0.82 $2.27 $0.65 $1.90 $2.09 $2.30 $2.53 $2.78 $3.06 $3.37 2025E2024E2023E2022E202120202019 PRE- PANDEMIC TRANSITIONAL YEAR COVID IMPACT RETURN TO STEADY GROWTH T L Guidance $3.30–$3.
Slide 35: Incremental EPS growth in 2022
$2.53 Incremental EPS growth in 2022 above ~$0.32 ~$0.65 ~75% Sales & Marketing Productivity in Cemetery ~15% Accelerated Share Repurchases ~10% $3.50 MIDPOINT OF 2022 GUIDANCE BASE 35 P R E - C O V I D EXPECTATION 2022E $2.53 $0.65 $3.18 ~$0.32 $3.50P O S T- C O V I D EXPECTATION
Slide 36: Key growth drivers
Sales & Cemetery Inventory Preneed Backlog Tailwinds Enhanced 36
Slide 37: Key growth drivers: Tailwinds
ELISABETH NASH Senior Vice President Operation Services KEY GROWTH DRIVERS Tailwinds 37
Slide 38: Tailwinds: population age 75 and older
T A I L W I N D S PEOPLE AGE 75 AND OLDER 2020 23.3 2040 INCREASE Funeral and cemetery growth coming with ~53% TX AZ CA GA FL NY 1 38 U.S. 75+ Population 2020-2040 SCI U.S. Volume 2021 SCI Footprint LARGEST GROWTH STATES INCREASE % INCREASE % OF TOTAL FUNERAL SERVICES NUMBER OF FUNERAL HOMES NUMBER
Slide 39: U.S. population age 55 and older
2020 2025 2030 2035 2040 2045 2050 2055 2060 99M 106M 112M 117M 122M 127M 133M 137M 142M Baby Boomers (1 946-1964) Gen X (1965-1980)Silent Generation (1928-1945) Millennials (1 981-1996) Age 65+ 71M Age 91+ 7M Age 55+ 61M Age 80+ 30M Gen Z (1997-2012) Average Age SCI Customer Atneed Customer 75+ Pre
Slide 40: U.S. COVID deaths
40 WAVE 2 DELTA Variant OMICRON Variant 2020 2021 2022 42% Of Covid Deaths Under Age 75 Jan 20 – Mar 21 62% Of Covid Deaths Under Age 75 Apr 21 – Dec 21 WAVE 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Peak Month Volum
Slide 41: Estimated SCI COVID deaths pulled forward
ESTIMATED SCI COVID DEATHS PULLED FORWARD -COVID VOLUME T A I L W I N D S 18KEstimated Volume Pulled Forward 15K 12K 8K 6K 4K 2K 6% 5% 4% 3% 2% 1% 1% 2028202720262025202420232022 s ~110K 41
Slide 42: Indirect effects of the pandemic on mortality
One of the things that we don't know is … how the COVID pandemic will affect mortality indirectly. ELIZABETH ARIAS, CDC The pandemic may have created a nation of problem drinkers… CNN HEALTH We’re facing a mental health crisis like we’ve never seen before as Covid continues… CNBC U.S. overdose death
Slide 43: Matured preneed funerals / total funerals
MATURED PRENEED FUNERALS/TOTAL FUNERALS GROWING OVER TIME Consolidated 40% 2021 35% 2010 43 volume growth T A I L W I N D S
Slide 44: Main drivers: tailwinds
AGING DEMOGRAPHICS MODERATION OF COVID PULL-FORWARD PRENEED DRIVING MARKET SHARE These drivers could easily increase our current assumptions for funeral volume and cemetery atneed production MAIN DRIVERS volume growth 44 T A I L W I N D S
Slide 45: Key growth drivers: Sales & Cemetery Inventory
KEY GROWTH DRIVERS Sales & Cemetery Inventory 45
Slide 46: Driving current and sustained growth initiatives
Driving current and sustained growth I N I T I AT I V E S JAMIE PIERCE Vice President — Chief Marketing Officer GERRY HEARD Vice President — Sales MICHAEL JOHNSON Vice President — Revenue Management 46 Quality & Quantity of Marketing- Driven Leads Cemetery Inventory
Slide 47: Quality & Quantity of Marketing-Driven Leads
JAMIE PIERCE Vice President Chief Marketing Officer QUALITY & QUANTITY OF Marketing- Driven Leads 47 I N I T I AT I V E S
Slide 48: Marketing channels are generating new and accretive leads
Marketing channels are generating new and accretive leads CORE LEADS SCALABILITY OF MARKETING STRATEGY IS A COMPETITIVE ADVANTAGE MARKETING LEADS 48 I N I T I AT I V E S
Slide 49: Tremendous growth in visits to our websites
97 125 166 199 2021202020192018 Tremendous growth in visits to our websites I N I T I AT I V E S ANNUAL WEBSITE VISITS IN MILLIONS 27% CAGR in millions 49
Slide 50: Digital lead generation and preneed sales
DIGITAL LEAD GENERATION AND PRENEED SALES FROM DIGITAL LEADS These visits are driving material increases $31 $44 $84 $120 27,233 43,198 55,413 81,837 2021202020192018 I N I T I AT I V E S Digital Lead Generated Preneed Sales Digital Lead Generation 44% CAGR 57% CAGR $ in millions 50
Slide 51: Advanced targeting for direct mail
Advanced targeting for direct mail Response Data BehavioralDemographic Purchase Data I N I T I AT I V E S ADVANCED CONSUMER DATA MODELING CAGR CAGR 77%DIRECT MAIL MARKETING LEAD GENERATION AND PRENEED SALES FROM DIRECT MAIL LEADS Direct Mail Marketing Lead Generated Preneed Sales Direct Mail Marketi
Slide 52: Three primary marketing lead channels
BEFORE CHANGES THREE PRIMARY MARKETING LEAD CHANNELS AFTER CHANGES DIGITAL DIRECT MAIL SEMINARS I N I T I AT I V E S 2018 2022 52 • • • • • • • • • • • • • • • • • •
Slide 53: Marketing generated preneed sales production
MARKETING GENERATED PRENEED SALES PRODUCTION Comparable , Excluding SCI Direct $120 $136 $168 $255 2021202020192018 29% CAGR 2018–2021 I N I T I AT I V E S $ in millions 53
Slide 54: Total preneed sales production by lead channel
TOTAL PRENEED SALES PRODUCTION BY LEAD CHANNEL in millions Comparable , Excluding SCI Direct 2021202020192018 Marketing-Generated Preneed Sales 29% CAGR 2018–2021 Core-Generated Preneed Sales 9% CAGR 2018–2021 $1,485 $1,605 $120 $1,524 $1,660 $136 $1,556 $1,724 $168 $1,924 $2,179 $255 These marketin
Slide 55: Initiatives: Sales
I N I T I AT I V E S GERRY HEARD Vice President Sales 55
Slide 56: Counselors and customers
COUNSELORSCUSTOMERS 56 I N I T I AT I V E S
Slide 57: Technology is foundational for quality and quantity of leads
Technology is foundational for Quality and quantity of leads More data with usage Targeted training ROBUST LEAD GENERATION MODELS SALESFORCE CRM BEACON SALES MANAGEMENT REPORTING & DASHBOARDS VIRTUAL LEARNING PLATFORM I N I T I AT I V E S 57
Slide 58: Salesforce and sales management
• • • • NOW Increased usage of our CRM during COVID accelerated growth I N I T I AT I V E S PULL REPORTING | Immediate Data 58 SALESFORCE AND SALES MANAGEMENT • • • • PUSH REPORTING | 30+ DAYS BEFORE
Slide 59: Sales counselor training
65% reduction in cost to trainI N I T I AT I V E S SALES COUNSELOR TRAINING 59 BEFORE NOW • • • • • •
Slide 60: Close rates and higher sales with fewer counselors
rates and higher sales with fewer counselors I N I T I AT I V E S Total Funeral & Cemetery Preneed Production Comparable 60 CORE CLOSE RATES ON ALL LEADS 2021202020192018 30.8% 39.6% 42.9% 44.7% +1,390 bps COVID IMPACTPRE-PANDEMIC $1.86B $1.90B $2.41B 4,198 3,580 3,632 714 670 690 Sales Managers Low
Slide 61: Total cemetery and funeral preneed sales production
COVID I N I T I AT I V E S 12% CEMETERY PRENEED PRODUCTION 7% FUNERAL PRENEED PRODUCTION 10% TOTAL PRENEED PRODUCTION 2017-2021 CAGR $822 $893 $948 $858 $1,080$1,667 $1,784 $1,857 $1,903 $2,413 $845 $891 $909 $1,045 $1,333 20212020201920182017 14% CAGR 2019–20216% CAGR 2017–2019 COVID IMPACTPRE-PAND
Slide 62: Cemetery Inventory
I N I T I AT I V E S MICHAEL JOHNSON Vice President Revenue Management Cemetery Inventory 62
Slide 63: Cemetery property sales averages and development spend
63 Property averages exclude large sales and second interment rights I N I T I AT I V E S CEMETERY PROPERTY SALES AVERAGES & DEVELOPMENT SPEND PRE-PANDEMIC COVID IMPACT $79 $79 $78 $89 $95 20212020201920182017 4,643 4,708 4,966 5,058 5,461DEVELOPMENT SPEND COMPARABLE PROPERTY AVERAGE 4% CAGR 2017–20
Slide 64: Cemetery Video
64 ©) Cemetery Video
Slide 65: Premium property sales
I N I T I AT I V E S PREMIUM PROPERTY SALES (>$40K Consolidated 65 $ in millions BENCH ESTATE $50,000 – $250,000 HEDGE ESTATE $25,000 – $125,000 PRIVATE MAUSOLEUM $250,000 – $5,000,000 GATED ESTATE $100,000 – $500,000 PRE-PANDEMIC COVID IMPACT 785 950 1,220 1,189 1,296 1,662 2,107 18% CAGR 2015–2021
Slide 66: Hispanic and Chinese/Vietnamese opportunities
I N I T I AT I V E S 66 HISPANIC OPPORTUNITIES CHINESE / VIETNAMESE OPPORTUNITIES 24% 16% VS.
Slide 67: Cremation property preneed production
I N I T I AT I V E S CREMATION PROPERTY PRENEED PRODUCTION Comparable PRE-PANDEMIC COVID IMPACT $69 $75 $82 $97 $126 20212020201920182017 30% CAGR 2020–2021 9% CAGR 2017–2019 67 $ in millions GLASS-FRONT NICHE $5,000 – $75,000 COLUMBARIUM $10,000 - $100,000 CREMATION GARDEN $2,000 - $25,000
Slide 68: Acres supporting our cemeteries for years to come
our cemeteries for many years to come Average Acres Years of Available Life ~110 ~110=Acres Remaining Acres of Unsold Land Acres of Unsold Land + 68 I N I T I AT I V E S
Slide 69: Main drivers: initiatives
IMPROVED SALES EFFECTIVENESS & EFFICIENCIES CEMETERY INVENTORY OPPORTUNITIES 69 These drivers could easily increase our current assumptions for cemetery preneed production INITIATIVES QUALITY & QUANTITY OF MARKETING- DRIVEN LEADS MAIN DRIVERS
Slide 70: Key growth drivers: Enhanced Deployment
JOHN FAULK Senior Vice President Revenue & Business Development KEY GROWTH DRIVERS Enhanced 70
Slide 71: Deployment: Acquisitions, New Builds, Miscellaneous Growth
DEPLOYMENT 71 ACQUISITIONS NEW BUILDS MISCELLANEOUS GROWTH
Slide 72: Over $770M invested in growth
$482M 2021 $192M $115M $143M $95M $227M 2020 2019 2018 2017 Acquisitions $ in millions $65 $176 $121 $56 $64 $193M New Build Funeral Homes & Cemeteries $ in millions $59 $22 $12 $68 $32 $97M Miscellaneous Growth $ in millions $12 $19 $29 $18 $19 Over $770M invested in growth DEPLOYMENT 72 TOTAL 5-YE
Slide 73: Acquisition spend and opportunity
DEPLOYMENT THE OPPORTUNITY • Low-to mid-teen IRRs • Still ample opportunity to acquire closely held candidates (Target list represents $0.8B–$1B in revenue) • Opportunities could accelerate as pandemic wanes BENEFITS WITH SCI • Funeral revenue growth due to improved funeral merchandising and packagi
Slide 74: Recent acquisitions
SKYLINE MEMORIAL PARK & CREMATORY MONEE, IL SCHOEDINGER FUNERAL & CREMATION SERVICE | NEW DUBLIN, OH WAPPNER FUNERAL DIRECTORS ONTARIO, OH MILLER JONES MORTUARY & CREMATORY AND MENIFEE VALLEY CEMETERY | HEMET, CA DEPLOYMENT 12 locations in the greater Columbus area in Ohio 7 funeral locations and 1
Slide 75: New build funeral homes and cemeteries
$ in millions $12 $32 $68 $22 $59 20212020201920182017 Funeral Home Locations Cemetery Locations SCI Direct Locations — 3 — 6 1 5 — 5 5 5 6 5 8 1 3 Locations in Progress9 9 7 12 14 TARGET $25M- $50M are an increasing focus for us THE OPPORTUNITY • Expansion of footprint to reach growing demographics
Slide 76: New build locations: where we focus
ALLNUT FUNERAL & CREMATION | GREELEY, CO DIGNITY MEMORIAL LIFE CELEBRATION CENTER | WILDWOOD, FL DEPLOYMENT WHERE WE FOCUS 76 HUA YUAN AT ROSE HILLS | WHITTIER, CA
Slide 77: Dallas growth projects overview
DEPLOYMENT DALLAS PLANO ARLINGTON OVERVIEW GROWTH PROJECTS 77
Slide 78: Dallas area new build facilities
OPENED 2013 | Serving ~240 families annually NEW FACILITY OPENED 2019 | Serving ~650 families annually RENDERING | Construction starting soon New build will drive future growth for our shareholders LAUREL LAND FUNERAL HOME | DALLAS, TX STONEBRIAR FUNERAL HOME | FRISCO, TX (North of Dallas) PROSPER T
Slide 79: Miscellaneous growth
MISCELLANEOUS GROWTH $18 $19 $19 $29 $12 20212020201920182017 THE OPPORTUNITY $ in millions 79 DEPLOYMENT
Slide 80: Creating unique new venues within our existing footprint
DEPLOYMENT Creating unique new venues within our existing footprint Joseph G: 's Sons, Washington, DC joodlaw’ a ashville, Sons Funeral Directors, Houston, TX 20 @)
Slide 81: Deployment strength to earnings growth framework
DEPLOYMENT strength to our earnings growth framework DEPLOY ENT ACQUISITIONS NEW BUILDS OTHER GROWTH CAPITAL With more deployment years like 2021, with nearly $200M in acquisitions and new builds, we are able to support higher earnings growth potential MAIN DRIVERS 81
Slide 82: Key growth drivers: Preneed Backlog
AARON FOLEY Vice President Treasurer KEY GROWTH DRIVERS Preneed Backlog 82
Slide 83: Preneed backlog: deferred revenue growth and stability
S T R E N G T H growth and stability 83 TRUST Supported by marketable securities and customer receivables INSURANCE Supported by third-party life insurance policies $2.2 $2.2 $2.4 $2.6 $2.8 $2.8 $2.9 $3.2 $3.5 $3.9 $5.7 $6.0 $6.4 $6.6 $7.0 20212020201920182017 6% CAGR 2017–2021 9% CAGR 2017–2021 5%
Slide 84: Funeral averages going into and coming out of backlog
84 Funeral averages going into and coming $ in millions ~$10B 70% INSURANCE | 30% TRUST CURRENT FUNERAL REVENUES 20212020201920182017 Matured Preneed (Coming out of Backlog) Walk-in Atneed (Base Line) New Preneed Sales (Going into Backlog) 103% 105% 104% 106% 104% 100% 102% 106% 108% 111% 109% S T R
Slide 85: Backlog supporting future revenue growth
85 future revenue growth PRE-PANDEMIC COVID IMPACT 11% CAGR 2017–2021 14% CAGR 2017–2021 3% CAGR 2017–2021 $56 $60 $61 $66 $94 $217 $225 $225 $231 $249 20212020201920182017 $302 $317 $324 $366 $457 RECOGNIZED MERCHANDISE & SERVICE REVENUE RECOGNIZED PRENEED MERCHANDISE & SERVICE TRUST INCOME PRENEED
Slide 86: Main drivers: backlog strength
HIGHER-QUALITY CONTRACT SALES PRODUCTION TRUST INVESTMENT RETURNS SUPPORTING FUTURE GROWTH INCREASING CEMETERY BACKLOG RECOGNITION Strength in our backlog could easily drive increases in our sales average and cemetery recognition assumptions MAIN DRIVERS 86 S T R E N G T H
Slide 87: Long-Term Power of SCI's Growth Model
Long-Term Power of SCI’s Growth Model ERIC TANZBERGER Senior Vice President Chief Financial Officer 87
Slide 88: Growth drivers: tailwinds, sales, deployment, backlog
Sales & Cemetery Inventory Preneed Backlog Tailwinds Enhanced 88
Slide 89: Funeral segment revenue and margin growth
FUNERAL REVENUE FUNERAL MARGIN FUNERAL SEGMENT and average growth could drive accelerated growth 1%–3% BASE CASE GUIDANCE ILLUSTRATIVE 3%–5% GROWTH DRIVERS POTENTIAL GROWTH 20.0%–21.5% 2025E2024E2023E POTENTIAL GROWTH 89
Slide 90: Cemetery segment revenue and margin growth
CEMETERY SEGMENT increases in revenues 4%–6% BASE CASE Mid 30's 6%–8% GROWTH DRIVERS POTENTIAL GROWTH additional High 30's POTENTIAL GROWTH CEMETERY REVENUE CEMETERY MARGIN 2025E2024E2023E GUIDANCE ILLUSTRATIVE 90
Slide 91: Growth drivers could increase our earnings
Growth Drivers could increase our earnings $0.32 $0.68 $0.32 $0.82 $2.27 $0.65 $1.90 $2.09 $2.30 $2.53 $2.78 $3.06 $3.37 2025E2024E2023E2022E202120202019 PRE- PANDEMIC TRANSITIONAL YEAR COVID IMPACT RETURN TO STEADY GROWTH T L $2.91 $4.57 $3.50 $3.50 $4.17 $4.91 $3.18 ILLUSTRATIVE Potential Growth ~
Slide 92: Customer trends are at the core of our innovation strategies
Consumer desire for more celebratory environments Elevated cremation 92 SCI continues to evolve to stay relevant in a CUSTOMER TRENDS ARE AT THE CORE OF OUR INNOVATION STRATEGIES
Slide 93: Looking Forward
©) Looking Forward
Slide 94: Investor Day 2022 Key Takeaways
Investor Day 2022 Key Takeaways 94 1 Strong business model with a sustainable growth platform 2 consistent cash to grow the company and enhance shareholder value 3 Industry leaders in innovation and technology 4 Preneed model and backlog strength 5 Potential for incremental growth is much greater in
Slide 95: Q&A
Q&A 95
Slide 96: Appendix
APPENDIX 96
Slide 97: Non-GAAP definitions
ADJUSTED EPS OR DILUTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS operational performance measure of the business and to have a basis to compare relevant in evaluating the overall performance of the business. ADJUSTED CASH FLOW FROM OPERATIONS OR NET CASH PROVIDED BY OPERATING ACTIVITIES EXCLUDING
Slide 98: Adjusted EPS reconciliation (annual)
(In millions, except Diluted EPS) Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Net income attributable to common stockholders, as reported
Slide 99: Adjusted EPS reconciliation (quarterly)
(In millions, except Diluted EPS) Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Net income (loss) attributable to common stockholders, as reported $ 153.8 $ 0.70
Slide 100: Adjusted cash flow from operations and free cash flow
100 (In millions) Net cash provided by operating activities Contractual/Legal settlements, net of insurance recoveries IRS tax settlement (receipt) payment Net cash provided by operating activities excluding special items (Adjusted cash flow from operations) Capital improvements at existing location
Slide 101: Financial outlook and 2022 guidance reconciliation
Financial outlook net cash provided by operating activities would vary substantially from the amount of projected net cash provided by operating activities excluding special items. recoveries associated with litigation, and these amounts could be material, such that the amount of Net income per shar