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SERVICE CORP INTERNATIONAL

SERVICE CORP INTERNATIONALSCIEarnings & Financial Report

NYSE · Consumer Discretionary · Services-Personal Services

International Distribution Services Limited is a British company providing postal and courier services. IDS was created in 2013 by the UK government as a new holding company of Royal Mail, and a majority of its shares were then sold on the London Stock Exchange, with the government initially retaining a 30 per cent at the time. As of April 2025, IDS is owned and operated by Czech-based EP Group, owned by Daniel Křetínský.

What changed in SERVICE CORP INTERNATIONAL's 10-K — 2023 vs 2024

Top changes in SERVICE CORP INTERNATIONAL's 2024 10-K

218 paragraphs added · 230 removed · 193 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

65 edited+9 added−8 removed44 unchanged
Spilde was named Senior Vice President, General Counsel and Secretary in 2023. She joined SCI in 2000 with the acquisition of American Memorial Life Insurance. She began her tenure with the Company in operations. In 2006, she was promoted and her role shifted to managing legal affairs for Mergers & Acquisitions, Antitrust, and Real Estate.
Spilde was named Senior Vice President, General Counsel and Secretary in 2023. She joined SCI in 2000 with the acquisition of American Memorial Life Insurance Company. She began her tenure with the Company in operations. In 2006, she was promoted and her role shifted to managing legal affairs for Mergers & Acquisitions, Antitrust, and Real Estate.
Tanzberger was appointed Senior Vice President and Chief Financial Officer in June 2006 and also served as Treasurer from July 2007 to February 2017. Mr. Tanzberger joined the Company in August 1996 and held various management positions prior to being promoted to Corporate Controller in August 2002. In 2022, his responsibilities were expanded to include information technology.
He was appointed Senior Vice President and Chief Financial Officer in June 2006 and also served as Treasurer from July 2007 to February 2017. Mr. Tanzberger joined the Company in August 1996 and held various management positions prior to being promoted to Corporate Controller in August 2002. In 2022, his responsibilities were expanded to include information technology.
Combination facilities typically are more cost competitive and have a higher gross margin than funeral and cemetery operations that are operated separately. Combination locations also create synergies between funeral and cemetery sales personnel and give families added convenience to purchase both funeral and cemetery merchandise and services at a single location.
These locations also create synergies between funeral and cemetery sales personnel and give families added convenience to purchase both funeral and cemetery merchandise and services at a single location. Combination facilities typically are more cost competitive and have a higher gross margin than funeral and cemetery operations that are operated separately.
In our cemetery segment, we continue to grow revenue by responding to the customer’s desire for personalized and unique options by expanding our tiered product and cemetery property options. Over the past several years, we have substantially increased our property options to offer many unique choices.
In our cemetery segment, we continue to grow revenue by responding to the customer’s desire for personalized and unique options by expanding our tiered product and cemetery property options. Over the past several years, we have substantially increased our property options to offer unique choices.
We estimate that our funeral and cemetery market share in North America is approximately 16% based on estimated total industry revenue. Our funeral business has low to moderate barriers to entry, whereas the cemetery business barriers to entry are high due to the requirement of land and permitting along with the requirement of sufficient capital to develop cemetery property.
We estimate that our funeral and cemetery market share in North America is approximately 17% based on estimated total industry revenue. Our funeral business has low to moderate barriers to entry, whereas the cemetery business barriers to entry are high due to the requirement of land and permitting along with the requirement of sufficient capital to develop cemetery property.
The SEC website address is http://www.sec.gov . 12 Service Corporation International PART I Executive Officers of the Company The following table sets forth, as of February 13, 2024, the name and age of each executive officer of the Company, the office held, and the year first elected an officer. Officer Name Age Position Year First Became Officer Thomas L.
The SEC website address is http://www.sec.gov . 12 Service Corporation International PART I Executive Officers of the Company The following table sets forth, as of February 13, 2025, the name and age of each executive officer of the Company, the office held, and the year first elected an officer. Officer Name Age Position Year First Became Officer Thomas L.
We have reduced the time it takes to receive customer feedback through digital surveys. Online reviews provide visibility of customer engagement down to the location level and shorten our response time in addressing any customer concerns.
We have reduced the time it takes to receive customer feedback through digital surveys. Online reviews provide visibility of customer engagement at the location level and shorten our response time in addressing any customer concerns.
Moore was named Vice President and Corporate Controller in 2010 and oversees general accounting, trust and technical accounting, internal and external reporting, and customer service. She joined the Company in August 2002 as Manager of Financial Reporting and was promoted to Director of Financial Reporting in 2004 and Managing Director and Assistant Controller in June 2006.
Moore was named Vice President and Chief Accounting Officer in 2010 and oversees general accounting, trust and technical accounting, internal and external reporting, and customer service. She joined the Company in August 2002 as Manager of Financial Reporting and was promoted to Director of Financial Reporting in 2004 and Managing Director and Assistant Controller in June 2006.
We take various measures to comply with the Funeral Rule and all laws and regulations. For example, we have established and maintain policies and procedures around our business practices; we provide training of our personnel; and we perform ongoing reviews of our compliance efforts. We are currently in substantial compliance with the Funeral Rule and all laws and regulations.
We take various measures to comply with the Funeral Rule and all laws and regulations. For example, we have established and maintain policies and procedures around our business practices; we provide training to our personnel; and we perform ongoing reviews of our compliance efforts.
Growing Our Preneed Backlog Our preneed backlog, which includes both insurance and trust-funded merchandise and service products, allows us to grow future revenue in a more stable and efficient manner than selling at the time of need.
Preneed Backlog Scale Benefits Our preneed backlog, which includes both insurance and trust-funded merchandise and service products, allows us to grow future revenue in a more efficient manner than selling at the time of need.
Although labor disputes occur from time to time, relations with associates are generally considered favorable. We reach out to our associates for feedback throughout their employment at SCI using a variety o f voluntary surveys ensuring we are meeting the needs and expectations of our workforce.
Although labor disputes occur from time to time, relations with associates are generally considered favorable. We reach out to our associates for feedback throughout their employment at SCI using a variety o f voluntary surveys in an effort to determine if we are meeting the needs and expectations of our workforce.
We continue to pursue strategic acquisitions and complete divestitures of non-strategic funeral homes and cemeteries. See Strategies for Growth within Part I, Item 1. Business for more information on how we invest capital to grow our business.
We continue to pursue strategic acquisitions with a focus on returns on invested capital and complete divestitures of non-strategic funeral homes and cemeteries. See Strategies for Growth within Part I, Item 1. Business for more information on how we invest capital to grow our business.
We target businesses with favorable customer dynamics and locations where we can achieve additional economies of scale. Over the last several years, we have deployed significant growth capital spend on new funeral service locations, enlarging our footprint into new communities as well as expanding existing locations to remain relevant to our customers.
We target businesses with favorable customer dynamics and locations where we can benefit from additional economies of scale. Over the last several years, we have deployed significant growth capital spend on new funeral service and cemetery locations and related real estate, enlarging our footprint into new communities as well as expanding existing locations to remain relevant to our customers.
The following table at December 31, 2023 provides the number of our funeral service locations and cemeteries by country, and by state, territory, or province: Country, State/Territory/Province Number of Funeral Service Locations Number of Cemeteries Total United States Alabama 34 13 47 Arizona 31 11 42 Arkansas 12 3 15 California 172 42 214 Colorado 29 11 40 Connecticut 21 — 21 Delaware — 1 1 District of Columbia 1 — 1 Florida 135 62 197 Georgia 31 18 49 Hawaii 8 3 11 Idaho 1 — 1 Illinois 41 27 68 Indiana 50 14 64 Iowa 6 2 8 Kansas 8 5 13 Kentucky 11 4 15 Louisiana 33 11 44 Maine 10 — 10 Maryland 15 13 28 Massachusetts 27 — 27 Michigan 40 — 40 Minnesota 8 2 10 Mississippi 12 3 15 Missouri 25 10 35 Nebraska 8 2 10 Nevada 15 6 21 New Hampshire 5 — 5 New Jersey 21 — 21 New Mexico 1 — 1 New York 52 — 52 North Carolina 47 17 64 Ohio 48 14 62 FORM 10-K 7 PART I Country, State/Territory/Province Number of Funeral Service Locations Number of Cemeteries Total Oklahoma 13 7 20 Oregon 15 4 19 Pennsylvania 25 16 41 Puerto Rico 6 9 15 Rhode Island 6 — 6 South Carolina 12 9 21 Tennessee 43 18 61 Texas 162 65 227 Utah 4 3 7 Virginia 37 24 61 Washington 35 15 50 West Virginia 6 6 12 Wisconsin — 7 7 Canada Alberta 9 — 9 British Columbia 36 9 45 Manitoba 4 3 7 New Brunswick 5 — 5 Nova Scotia 12 — 12 Ontario 42 — 42 Quebec 40 — 40 Saskatchewan 13 — 13 Total funeral service locations and cemeteries 1,483 489 1,972 We believe we have satisfactory title to the properties owned and used in our business, subject to various liens, encumbrances, and easements that are incidental to ownership rights and uses and do not materially detract from the value of the property.
The following table at December 31, 2024 provides the number of our funeral service locations and cemeteries by country, and by state, territory, or province: Country, State/Territory/Province Number of Funeral Service Locations Number of Cemeteries Total United States Alabama 34 13 47 Arizona 39 12 51 Arkansas 11 3 14 California 170 42 212 Colorado 29 11 40 Connecticut 21 — 21 Delaware — 1 1 District of Columbia 1 — 1 Florida 140 64 204 Georgia 31 18 49 Hawaii 8 3 11 Idaho 1 — 1 Illinois 43 27 70 Indiana 48 14 62 Iowa 6 2 8 Kansas 8 5 13 Kentucky 12 4 16 Louisiana 33 11 44 Maine 8 — 8 Maryland 15 13 28 Massachusetts 27 — 27 Michigan 40 — 40 Minnesota 8 2 10 Mississippi 12 3 15 Missouri 25 10 35 Nebraska 8 2 10 Nevada 15 6 21 New Hampshire 4 — 4 New Jersey 21 — 21 New Mexico 1 1 2 New York 52 — 52 FORM 10-K 7 PART I Country, State/Territory/Province Number of Funeral Service Locations Number of Cemeteries Total North Carolina 48 17 65 Ohio 48 14 62 Oklahoma 12 7 19 Oregon 14 4 18 Pennsylvania 25 16 41 Puerto Rico 6 9 15 Rhode Island 6 — 6 South Carolina 12 9 21 Tennessee 43 18 61 Texas 164 65 229 Utah 4 3 7 Virginia 37 24 61 Washington 35 15 50 West Virginia 6 6 12 Wisconsin — 7 7 Canada Alberta 9 — 9 British Columbia 37 11 48 Manitoba 4 3 7 New Brunswick 7 — 7 Nova Scotia 12 — 12 Ontario 42 — 42 Quebec 38 1 39 Saskatchewan 13 — 13 Total funeral service locations and cemeteries 1,493 496 1,989 We believe we have satisfactory title to the properties owned and used in our business, subject to various liens, encumbrances, and easements that are incidental to ownership rights and uses and do not materially detract from the value of the property.
At December 31, 2023, we owned approximately 90% of the real estate and buildings used at our facilities, and the remainder of the facilities were leased under both financing and operating leases. At December 31, 2023, our 489 cemeteries contained a total of approximately 35,500 acres, of which approximately 66% was developed.
At December 31, 2024, we owned approximately 90% of the real estate and buildings used at our facilities, and the remainder of the facilities were leased under both financing and operating leases. At December 31, 2024, our 496 cemeteries contained a total of approximately 35,800 acres, of which approximately 66% was developed.
From high-end family estates, which capture incredible views, to nicely landscaped hedge estates, we continue to develop property selections that resonate with our customers. For cemetery merchandise and services, we have developed innovative products such as recurring floral placements, customized cemetery property offerings, and specialized graveside service options.
From high-end family estates, many of which capture incredible views, to nicely landscaped hedge estates, we continue to develop property selections that resonate with our customers. For cemetery merchandise and services, we have developed relevant products such as customized cemetery property offerings, and specialized graveside service options.
At December 31, 2023, we operated 1,483 funeral service locations and 489 cemeteries (including 305 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. We are well known for our Dignity Memorial ® brand, North America's first transcontinental brand of deathcare products and services.
At December 31, 2024, we operated 1,493 funeral service locations and 496 cemeteries (including 308 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. We are well known for our Dignity Memorial ® brand, North America's first transcontinental brand of deathcare products and services.
Ryan 58 Chairman of the Board, Chief Executive Officer, and President 1999 Sumner J. Waring, III 55 Senior Vice President, Chief Operating Officer 2002 Eric D. Tanzberger 55 Senior Vice President, Chief Financial Officer 2000 Lori Spilde 53 Senior Vice President, General Counsel and Secretary 2019 Elisabeth G. Nash 62 Senior Vice President, Operations Services 2004 John H.
Ryan 59 Chairman of the Board and Chief Executive Officer 1999 Sumner J. Waring, III 56 President 2002 Eric D. Tanzberger 56 Executive Vice President, Chief Financial Officer 2000 Lori Spilde 54 Senior Vice President, General Counsel and Secretary 2019 Elisabeth G. Nash 63 Senior Vice President, Operations Services 2004 John H.
Typically, our highest relative return opportunities come from acquisitions and funeral service and cemetery new builds. Investing in Acquisitions and Building New Funeral Service and Cemetery Locations We manage our footprint by focusing on strategic acquisitions and building new funeral service and cemetery locations where the expected returns are attractive and meaningfully exceed our weighted average cost of capital.
Investing in Acquisitions and Building New Funeral Service and Cemetery Locations We manage our footprint by focusing on strategic acquisitions and building new funeral service and cemetery locations where the expected returns are attractive and meaningfully exceed our weighted average cost of capital.
Nash serves as Chair of the Board of Directors of Genesys Works Houston. Mr. Faulk was named Senior Vice President of Revenue and Business Development in 2018. He joined SCI in March 2010 as Vice President, Business Development, to oversee the Company's strategic growth, including mergers and acquisitions, real estate, and construction.
Nash serves as Chair of the Board of Directors of Genesys Works Houston. Mr. Faulk was named Senior Vice President and Chief Operating Officer in 2024 and oversees SCI’s funeral and cemetery operations. He joined SCI in March 2010 as Vice President, Business Development, to oversee the Company's strategic growth, including mergers and acquisitions, real estate, and construction.
Subsequent to December 31, 2023, we repurchased 310,581 shares for $20.93 million at an average cost per share of $67.39. Managing Debt We continue to focus on maintaining optimal levels of liquidity and financial flexibility. Our flexible capital strategy allows us to manage our debt maturity profile by making open market debt repurchases when it is opportunistic to do so.
Subsequent to December 31, 2024, we repurchased 467,208 shares for $36.3 million at an average cost per share of $77.74. Managing Debt We continue to focus on maintaining optimal levels of liquidity and financial flexibility. Our flexible capital strategy allows us to manage our debt maturity profile by making open market debt repurchases when it is opportunistic to do so.
We continue to embrace cremation opportunities for customers in our cemetery segment by offering an increased variety of cremation property options, including glass-front niches and scattering gardens. 10 Service Corporation International PART I As we evolve to meet ever-changing customer preferences, we will continue catering to the numerous religious, ethnic, and cultural traditions important to many of our customers.
We continue to embrace cremation offerings for customers in our cemetery segment offering an increased variety of cremation property options, including glass-front cremation niches and cremation gardens. As we evolve to meet ever-changing customer preferences, we will continue to serve the numerous religious, ethnic, and cultural traditions important to many of our customers.
As a result of such preneed sales, our preneed backlog of unfulfilled funeral and cemetery contracts was $14.8 billion and $13.7 billion at December 31, 2023 and 2022.
As a result of such preneed sales, our preneed backlog of unfulfilled funeral and cemetery contracts was $16.0 billion and $14.8 billion at December 31, 2024 and 2023, respectively.
Waring was appointed Vice President, Western Operations, a position he held until May 2004 when he was appointed Vice President, Major Market Operations. He was promoted to Senior Vice President in 2006. In May 2015, Mr. Waring's responsibilities were expanded to include all operations in North America. Mr.
Waring was appointed Vice President, Western Operations, a position he held until May 2004 when he was appointed Vice President, Major Market Operations. He was promoted to Senior Vice President in 2006 and in July 2008, Mr. Waring's responsibilities were expanded to include business development.
Federal, state, and local legislative bodies and regulatory agencies (including Canadian legislative bodies and agencies) frequently propose new laws and regulations, some of which could have a material effect on our operations and on the deathcare industry in general.
We believe we are currently in substantial compliance with the Funeral Rule and all laws and regulations. Federal, state, and local legislative bodies and regulatory agencies (including Canadian legislative bodies and agencies) frequently propose new laws and regulations, some of which could have a material effect on our operations and on the deathcare industry in general.
Human Capital Management At December 31, 2023, we employed 17,612 full-time individuals and 7,310 part-time individuals. Of the full-time associates, 14,840 were employed in the funeral and cemetery operations and 2,772 were employed in corporate or other overhead areas of our business. Approximately 2.5% of our associates are represented by unions.
Human Capital Management At December 31, 2024, we employed 17,685 full-time individuals and 7,268 part-time individuals. Of the full-time associates, 14,946 were employed in the funeral and cemetery operations and 2,739 were employed in corporate or other overhead areas of our business. Approximately 2.4% of our associates are represented by unions.
This investment in our future will allow us to continue creating cemetery offerings that appeal to varying preferences in those markets for many years to come. We invested $72.5 million in acquiring 17 funeral service locations and 2 cemeteries in 2023.
This investment in our future will allow us to continue creating cemetery offerings that appeal to varying preferences in those markets for many years to come. In 2024, we invested $181.2 million in acquiring 26 funeral service locations and 6 cemeteries, which included 3 combination locations.
Our blended funding approach between insurance and trust-funded merchandise and service products allows us to combine the positive cash flow and predictability of the insurance product with the potential upside of higher returns from our trusted merchandise and service products. This blended approach also helps our ability to grow our preneed backlog in a cash flow neutral manner.
Our blended funding approach between insurance and trust-funded merchandise and service products allows us to combine the positive cash flow and predictability of the insurance product with the potential upside of higher returns from our trusted merchandise and service products.
Funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise, is sold at funeral service locations. 6 Service Corporation International PART I Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, niches, and other cremation memorialization and interment options.
Funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, 6 Service Corporation International PART I outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise, is sold at funeral service locations.
In addition to development programs and a robust online training portal offering thousands of courses, books, audiobooks, and videos, associates can participate in mentoring programs and take advantage of discounts and tuition reimbursement through our many university partnerships. We are also proud to offer scholarship and apprentice programs to those interested in joining our profession.
Additionally, associates can participate in mentoring programs and take advantage of discounts and tuition reimbursement through our many university partnerships. We are also proud to offer scholarship and apprentice programs to those interested in joining our profession.
FORM 10-K 5 PART I Training and Development We provide opportunities for career growth and supporting the personal and professional goals of our associates is a priority for us.
FORM 10-K 5 PART I Training and Development We provide opportunities for career growth and supporting the personal and professional goals of our associates is a priority for us. Our associates have access to development programs and a robust online training portal offering thousands of courses, books, audiobooks, and videos.
In 2023, we repurchased 8,700,767 shares of our common stock at an aggregate cost of $549.6 million, which is an average cost per share of $63.17. In 2022, we repurchased 10,356,250 shares of our common stock at an aggregate cost of $661.1 million, which is an average cost per share of $63.84.
In 2024, we repurchased 3,439,551 shares of our common stock at an aggregate cost of $249.8 million, which is an average cost per share of $72.63. In 2023, we repurchased 8,700,767 shares of our common stock at an aggregate cost of $549.6 million, which is an average cost per share of $63.17.
Prior to joining the Company, Mrs. Moore was a certified public accountant with PricewaterhouseCoopers LLP. She holds a bachelor's degree in business administration in accounting from the University of Texas at San Antonio. Since 2019, Mrs. Moore has served on the Board of Regents of Commonwealth Institute of Funeral Service.
Prior to joining the Company, Mrs. Moore was a certified public accountant with PricewaterhouseCoopers LLP. She holds a bachelor's degree in business administration in accounting from the University of Texas at San Antonio and a Master of Accounting degree from the Kenan-Flagler Business School at the University of North Carolina. Since 2019, Mrs.
We target a dividend payout ratio of 30% to 40% of after-tax earnings excluding special items and intend to grow our cash dividend commensurate with the growth in our business.
Our quarterly dividend rate has steadily grown from $0.025 per common share in 2005 to $0.30 per common share at the end of 2024. We target a dividend payout ratio of 30% to 40% of after-tax earnings excluding special items and intend to grow our cash dividend commensurate with the growth in our business.
Cemetery merchandise and services, including memorial cemetery markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside services, merchandise installation, and interments, are sold at our cemeteries.
Our cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, mausoleum spaces, cremation niches, and other cremation memorialization and interment options. Cemetery merchandise and services, including memorial cemetery markers and bases, outer burial containers, flowers and floral placement, other ancillary merchandise, graveside services, merchandise installation, and interments, are sold at our cemeteries.
Faulk 48 Senior Vice President, Revenue and Business Development 2010 Steven A. Tidwell 62 Senior Vice President, Sales and Marketing 2010 Tammy R. Moore 56 Vice President and Corporate Controller 2010 Mr. Ryan was elected Chairman of the Board of SCI effective in January 2016, appointed Chief Executive Officer in February 2005, and President in 2002.
Faulk 49 Senior Vice President, Chief Operating Officer 2010 Tammy R. Moore 57 Vice President and Chief Accounting Officer 2010 Mr. Ryan was elected Chairman of the Board of SCI effective in January 2016, appointed Chief Executive Officer in February 2005, and President in 2002.
We have an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code for the exclusive benefit of our United States employees. We contribute a matching contribution based on the employee's contribution and years of vesting service. For more information about our retirement plans, see Note 12 of Part II, Item 8. Financial Statements and Supplementary Data.
We contribute a matching contribution based on the employee's contribution and years of vesting service. For more information about our retirement plans, see Note 12 of Part II, Item 8. Financial Statements and Supplementary Data.
Ryan serves as a member of the University of Texas McCombs Business School Advisory Council and is a senior member of the University of Texas MD Anderson Cancer Center Board of Visitors. Mr. Waring, Senior Vice President and Chief Operating Officer, is responsible for North American Operations.
Ryan serves as a member of the University of Texas McCombs Business School Advisory Council and is a senior member of the University of Texas MD Anderson Cancer Center Board of Visitors. Mr. Waring was named President in 2024, maintaining indirect oversight of operations and assuming responsibility for sales and marketing.
Diversity, Equity, and Inclusion We believe in the power of inclusion and respecting our fellow associates’ work, ideas, beliefs, and lifestyles. Our Diversity, Equity, and Inclusion (DEI) Committee, which is a cross-functional team of associates, has been key to the development of programs such as our inclusive leadership training and Associate Resource Communities (ARCs).
We believe in the power of inclusion and respecting our fellow associates’ work, ideas, beliefs, and lifestyles. We have developed programs such as our inclusive leadership training and Associate Resource Communities (ARCs).
The growing trend of cremation has resulted in new product and service offerings, including cremation-specific service packages, which may or may not include memorialization. In addition, we have focused on making the entire cremation experience more meaningful for families, from the first point of contact to the delivery of a loved one’s ashes to the family.
In addition, we have focused on making the entire cremation experience more meaningful for families, from the first point of contact to the return of a loved one’s ashes to the family.
We have remained flexible to meet the varying needs of customers, demonstrating our resolve to remain relevant to changing customer preferences. Growing Preneed Sales Our preneed sales program drives current and future revenue growth. Baby Boomers have been influencing our cemetery preneed sales for several years and are beginning to positively affect the growth of our preneed funeral sales programs.
We remain flexible to meet the varying needs of customers, demonstrating our resolve to remain relevant to changing customer preferences. 10 Service Corporation International PART I Growing Preneed Sales Our preneed sales program drives current and future revenue growth.
Our advancements in technology are changing the way we present our product and service offerings to customers. Our atneed point of sale system, HMIS+, uses a digital platform enabled with high resolution video and photographs to create a seamless presentation of our products and service offerings.
Our atneed point of sale system, HMIS+, uses a digital platform enabled with high resolution video and photographs to create a seamless presentation of our products and service offerings. Our mobile preneed sales system, Beacon, provides customers with a full digital presentation experience in their home or other place of their choosing.
Our mobile preneed sales system, Beacon, provides customers with a full digital presentation experience in their home or other place of their choosing. Our Dignity Memorial® location websites feature a modern and user-friendly design. Our location-specific websites are designed for mobile use and optimized for better search engine ranking.
Our Dignity Memorial® location websites feature a modern and user-friendly design. Our location-specific websites are designed for mobile use and optimized for better search engine ranking.
Whether choosing burial or cremation, the Baby Boomers are redefining the traditional funeral by transitioning away from solemnly mourning a death to a personalized celebration of life ceremony. We responded to this trend by spending capital to repurpose traditional casket selection rooms to event rooms that can accommodate a celebration, while also updating existing locations to more contemporary, uplifting spaces.
Whether choosing burial or cremation, many Baby Boomers are redefining the traditional funeral by transitioning away from solemnly mourning a death to a more personalized celebration of life ceremony.
While these strategies remain unchanged, a shift to increased utilization of technology during the COVID-19 pandemic has influenced how we serve our customers and how we invest our capital. Grow Revenue We plan to remain relevant to our customers as their preferences evolve through a combination of price, product, and service differentiation strategies to facilitate revenue growth.
The following strategies remain the core of our foundation: 1) grow revenue, 2) leverage our unparalleled scale, and 3) invest capital. Grow Revenue We plan to remain relevant to our customers as their preferences evolve through a combination of price, product, and service differentiation strategies to facilitate revenue growth.
FORM 10-K 11 PART I Capital Allocation We consistently evaluate the best uses of our cash flow that will yield the highest value and return on capital. Our strong liquidity, favorable debt maturity profile, and robust cash flow generation enables us to continue our long-standing commitment to allocate capital to opportunistically grow our business and enhance shareholder value.
Our strong liquidity, favorable debt maturity profile, and robust cash flow generation enables us to continue our long-standing commitment to allocate capital to opportunistically grow our business and enhance shareholder value. Typically, our highest relative return opportunities come from acquisitions and the construction of funeral service and cemetery locations.
Developing Our Sales Organization Over the last several years, we have continued to invest significantly in the development of our sales organization with best in class tools and technologies. These investments include a customer relationship management system, which drives improvements in productivity and sales production by leveraging data analytics, rigorous lead tracking, and effective follow-up campaigns.
These investments include a customer relationship management system, which drives improvements in productivity and sales production by leveraging data analytics, rigorous lead tracking, and effective follow-up campaigns. We continue to diversify our sales force to understand and serve the numerous religious, ethnic, and cultural traditions important to our customers.
Waring holds a bachelor's degree in business administration from Stetson University, a degree in mortuary science from Mount Ida College, and a master's degree in business administration from the University of Massachusetts Dartmouth. Mr. Waring serves on the Board of Directors of BankFive and the Greater Houston Partnership. Mr.
In 2015, he was named Senior Vice President, North American Operations and in 2019, he was named Senior Vice President, Chief Operating Officer. Mr. Waring holds a bachelor's degree in business administration from Stetson University, a degree in mortuary science from Mount Ida College, and a master's degree in business administration from the University of Massachusetts Dartmouth. Mr.
The ARCs allow colleagues with similar backgrounds or interests to connect for networking, provide opportunities for mentorship, and support the communities and customers we serve. Our leadership team is committed to advancing inclusion and diversity within the workplace.
The ARCs, which are available to all associates, allow colleagues with similar backgrounds or interests to connect for networking, provide opportunities for mentorship, and support the communities and customers we serve. Our leadership team embraces the many backgrounds and perspectives that make each of us unique, which allows us to remain relevant to the families we serve.
Over the next several years, our industry will be largely shaped by the aging of the Baby Boomer generation in the deathcare space which we are poised to benefit from. In each stage of life, Baby Boomers have set new trends, transformed society, and redefined norms, and we are already seeing the impact on our industry.
Strategies for Growth We are the largest consolidated deathcare company in North America and are well positioned for long-term profitable growth. Over the next several years, our industry will be largely shaped by the aging of the Baby Boomer generation in the deathcare space which we are poised to benefit from.
We have a unique competitive advantage to continue growing preneed sales benefiting from our size and scale. Our preneed program provides us with an opportunity to develop greater brand awareness, gives consumers peace of mind about their end of life arrangements, and secures future market share.
Our preneed program provides us with an opportunity to develop greater brand awareness, gives consumers peace of mind about their end of life arrangements, and secures future market share. In addition, our increased digital presence has provided significant growth in our digital lead channels over the last several years.
In every aspect of our business, we are listening and responding to our customer’s changing needs and leveraging our scale to deliver unparalleled experiences - both digitally and in person - to meet those changing needs. The following strategies remain the core of our foundation: 1) grow revenue, 2) leverage our unparalleled scale, and 3) invest capital.
We expect to see a similar impact on our atneed results as these preneed contracts mature in the future. In every aspect of our business, we are listening and responding to our customer’s changing needs and leveraging our scale to deliver unparalleled experiences - both digitally and in person - to meet those changing needs.
Over the last five years, we have seen the impact of the Baby Boomers through the growth in both our preneed cemetery sales production and our preneed funeral production. We expect to see a similar impact on our atneed results as these preneed contracts mature.
In each stage of life, Baby Boomers have set new trends, transformed society, and redefined norms, and we are already seeing the impact on our industry. Over the last five years, we have seen the impact of the Baby Boomers through the growth in both our preneed cemetery sales and our preneed funeral production.
In addition, our increased digital presence has provided significant growth in our digital lead channels over the last several years. Leverage Our Unparalleled Scale As the largest deathcare company in North America, we leverage our scale by developing our sales organization and optimizing the use of our network using technology, which benefits our preneed backlog.
Leverage Our Unparalleled Scale As the largest deathcare company in North America, we leverage our scale by developing our sales organization and with the use of technology through out our network.
Our highly trained sales force of approximately 3,800 counselors provide customers with informed guidance about various service and merchandise options tailored for today’s consumers. Utilizing our scale, our counselors are reaching out to consumers through multiple lead channels, driving future revenue growth.
Baby Boomers have been influencing both our funeral and cemetery preneed sales for several years and are beginning to positively affect the growth of our preneed funeral sales programs. Our highly trained sales force of approximately 3,600 counselors provide customers with informed guidance about various service and merchandise options tailored for today’s consumers.
We sponsor community events and seminars to educate and provide guidance around preplanning both funeral and cemetery services and merchandise. We have adopted a more sophisticated and targeted marketing approach, and we continue increasing our digital presence through search engine optimization and other marketing channels.
We have adopted a more sophisticated and targeted marketing approach, and we continue increasing our digital presence through search engine optimization and other marketing channels. We have a unique competitive advantage to continue growing preneed sales benefiting from our size and scale.
Our scale allows us to operate and expand our sales organization in a manner that would be difficult for our competitors to replicate. Optimizing Our Network and Deploying Customer-Facing Technology We continue driving operating discipline and leveraging our scale through standardizing processes and capitalizing on new technologies to improve the customer experience.
Optimizing Our Network and Deploying Customer-Facing Technology We continue driving operational discipline and leverage our scale through standardizing processes and capitalizing on new technologies to improve the customer experience. Our advancements in technology are changing the way we present our product and service offerings to customers.
We are encouraged by the increased digitization and we are making great strides with internal projects leveraging technology and simplifying nearly every facet of service delivery.
We are encouraged by the increased digital opportunities and we are making great strides with internal projects leveraging technology and simplifying nearly every facet of service delivery. FORM 10-K 11 PART I Capital Allocation We consistently evaluate the best uses of our cash flow that will yield the highest value and return on capital.
Associate Benefits Eligible associates in the United States may elect coverage under our group health and life insurance plans. Associates covered by a collective bargaining agreement are typically covered by union health plans and, therefore, do not participate in our health insurance plan.
Associates covered by a collective bargaining agreement are typically covered by union health plans and, therefore, do not participate in our health insurance plan. At December 31, 2024 and 2023, there were 9,462 and 9,779 associates, respectively, who had elected to participate in our group health insurance plans.
Our scale enables cost efficiencies through purchasing power and utilizing economies of scale through our supply chain channel. During the COVID-19 pandemic, we were able to continue to operate without any major disruptions to our business, which highlights the strength of our scale.
During the COVID-19 pandemic, we were able to continue to operate without any major disruptions to our business, which highlights the strength of our scale. Developing Our Sales Organization Over the last several years, we have continued to invest significantly in the development of our sales organization with best in class tools and technologies.
We are offering a customer-friendly digital presentation of options that allows the customer to choose merchandise and services including unique celebration, catering, and celebrant services. In our funeral segment, we focus on merchandise and services that are meaningful to both our burial and cremation customers.
In our funeral segment, we focus on merchandise and services that are meaningful to both our burial and cremation customers. The growing trend of cremation has resulted in new product and service offerings, including cremation-specific service packages, which may or may not include memorialization.
He FORM 10-K 13 PART I holds a master's degree in business administration from the Darden Graduate School of Business at the University of Virginia and a bachelor's degree in electrical engineering from the University of Virginia. Mr.
Faulk worked for Bain & Company, Inc. where he helped Fortune 500 Companies and specialty retailers identify profit growth opportunities and achieve strong operating results. He holds a master's degree in business administration from the Darden Graduate School of Business at the University of Virginia and a bachelor's degree in electrical engineering from the University of Virginia. Mrs.
His promotion in 2018 expanded his role to include setting direction for the company’s pricing and cemetery development functions. Prior to joining the Company, Mr. Faulk worked for Bain & Company, Inc. where he helped Fortune 500 Companies and specialty retailers identify profit growth opportunities and achieve strong operating results.
In 2018, he was named Senior Vice President of FORM 10-K 13 PART I Revenue and Business Development. His promotion expanded his role to include setting direction for the company’s pricing and cemetery development functions. Prior to joining the Company, Mr.
At December 31, 2023 and 2022, there were 9,779 and 9,478 associates, respectively, who had elected to participate in our group health insurance plans. Eligible associates in the United States are covered by retirement plans of SCI or various subsidiaries, while Canadian associates are covered by other SCI (or SCI subsidiary) defined contribution or government-mandated benefit plans.
Eligible associates in the United States are covered by retirement plans of SCI or various subsidiaries, while Canadian associates are covered by other SCI (or SCI subsidiary) defined contribution or government-mandated benefit plans. We have an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code for the exclusive benefit of our United States employees.
We continue to diversify our sales force to understand and cater to the numerous religious, ethnic, and cultural traditions important to our customers. Our premier combination locations and other large and recognizable cemeteries and funeral homes attract high-quality sales talent.
Our premier combination locations and other large and recognizable cemeteries and funeral homes, along with the selling tools we have available, attract high-quality sales talent. Our scale allows us to operate and expand our sales organization in an efficient manner to bolster preneed sales growth.
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Embracing the many backgrounds and perspectives that make each of us unique allows us to remain relevant to the diverse families we serve. We maintain a DEI senior management position to support the Company's belief that diversity of talent and people is a key driver of better business outcomes.
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As a result, we have been certified as a Great Place To Work since 2017 in the U.S. and since 2020 in Canada. Associate Benefits Eligible associates in the United States may elect coverage under our group health and life insurance plans.
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Strategies for Growth We are the largest consolidated deathcare company in North America and are well positioned for long-term profitable growth. Like most businesses world-wide, the outbreak of a novel strain of coronavirus (COVID-19) impacted various aspects of our business operations. However, our fundamental strategy has not changed.
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We responded to this trend by spending capital to repurpose traditional casket selection rooms to event rooms that can accommodate a celebration, while also updating existing locations to more contemporary, uplifting spaces. During the arrangement, we offer a customer-friendly digital presentation of options that allows the customer to choose merchandise and services including unique celebration, catering, and celebrant services.
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Through the COVID-19 pandemic, we learned valuable lessons around our ability to quickly deploy customer-facing technology. Our associates and client families embraced an increasingly digital world, as we utilized various online tools to complete sales and meet families.
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Utilizing our scale, our counselors are reaching out to consumers through multiple lead channels, driving future revenue growth. We sponsor community events and seminars to educate and provide guidance around preplanning both funeral and cemetery services and merchandise.
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Return Excess Cash to Shareholders Absent any strategic acquisition or new build opportunities, we intend to return excess cash to shareholders through dividends and our share repurchase program. Our quarterly dividend rate has steadily grown from $0.025 per common share in 2005 to $0.29 per common share at the end of 2023.
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As our preneed backlog grows from the development of our sales organization, the backlog also realizes scale benefits from the ability to grow trust portfolios and from our our preferred preneed insurance provider agreement . Our scale also enables cost efficiencies through purchasing power and utilizing economies of scale through our supply chain channel.
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Tidwell was named Senior Vice President of Sales and Marketing in 2018 and is responsible for leading all areas of sales and marketing for SCI. He joined SCI as Vice President, Main Street Market Operations, in March 2010 and was promoted to Senior Vice President of Sales and Merchandising in 2012. As a co-founder of Keystone North America, Inc., Mr.
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In July 2024, we finalized our agreement to change our preferred preneed insurance provider in the United States, which will allow us to further utilize our scale and streamline our processes across our network.
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Tidwell served as its President and Chief Executive Officer from May 2007 until it was acquired by SCI in March 2010. In his role, Mr. Tidwell worked closely with Keystone's Senior Leadership Team to develop and implement organic growth strategies as well as external growth and acquisition strategies.
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This blended approach also helps our ability to grow our preneed backlog in a cash flow neutral manner as general agency commissions on our preneed insurance sales offset associated selling compensation for both preneed trust and insurance sales.
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He began his career as a licensed funeral director and embalmer in Nashville, Tennessee, and has been actively involved in the funeral and cemetery profession for over forty years. He holds an associate of arts degree from John A.
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In addition, we spent $62.1 million for several real estate acquisitions that will be utilized for new funeral service or cemetery locations during the twelve months ended December 31, 2024. Return Excess Cash to Shareholders In addition to any strategic acquisition or new build opportunities, we continue to return cash to shareholders through dividends and our share repurchase program.
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Gupton College and has attended Executive Management and Leadership programs at the Harvard Business School, Vanderbilt University Owen Graduate School of Management, and the Center for Creative Leadership. Since 2019, Mr. Tidwell has served on the Board of Regents of Commonwealth Institute of Funeral Service. Mrs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The covenants limit, among other things, our and our subsidiaries’ ability to: • Incur additional indebtedness (including guarantee obligations); • Create liens on assets; • Engage in certain transactions with affiliates; • Enter into sale-leaseback transactions; • Engage in mergers, liquidations, and dissolutions; FORM 10-K 15 PART I • Sell assets; • Pay dividends, distributions, and other payments in respect of our capital stock; • Purchase our capital stock in the open market; • Make investments, loans, or advances; • Repay indebtedness or amend the agreements relating thereto; • Create restrictions on our ability to receive distributions from subsidiaries; and • Change our lines of business.
The covenants limit, among other things, our and our subsidiaries’ ability to: • Incur additional indebtedness (including guarantee obligations); • Create liens on assets; • Engage in certain transactions with affiliates; • Enter into sale-leaseback transactions; • Engage in mergers, liquidations, and dissolutions; • Sell assets; • Pay dividends, distributions, and other payments in respect of our capital stock; • Purchase our capital stock in the open market; • Make investments, loans, or advances; • Repay indebtedness or amend the agreements relating thereto; FORM 10-K 15 PART I • Create restrictions on our ability to receive distributions from subsidiaries; and • Change our lines of business.
The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other similar effects.
The recent existence of higher inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other similar effects.
Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties and liabilities for us.
Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties and liabilities.
If the investments in our trust funds experience significant declines in 2024 or subsequent years or in a high inflation environment, there could be insufficient funds in the trusts to cover the costs of delivering merchandise and services or maintaining our cemeteries in the future.
If the investments in our trust funds experience significant declines in 2025 or subsequent years or in a high inflation environment, there could be insufficient funds in the trusts to cover the costs of delivering merchandise and services or maintaining our cemeteries in the future.
We may be required to cover any such shortfall with cash flows from operations, which could have a material adverse effect on our financial condition, results of operations, and cash flows. For more information related to our trust investments, see Note 3 in Part II, Item 8.
We may be required to cover any such shortfall with cash flows from operations, which could have a material adverse effect on our financial condition, results of operations, and cash flows. For more information related to our trust investments, see Note 3 in Part II, Item 8. Financial Statements and Supplementary Data.
Significant weather events in these states or other key areas where our operations are concentrated, natural or other disasters, and unforeseen public health crises, such as pandemics and epidemics (including the COVID-19 pandemic), could disrupt our business through injury or illness to our associates or client families, physical damage, closure or destruction of one or more of our locations, data centers or office facilities, disrupt access to scarce resources such as water supply or disrupt the delivery of goods or services by one or more of our vendors, any or all of which could adversely impact our operations or increase our costs, which would adversely affect our financial results.
Significant weather events in these states or other key areas where our operations are concentrated, natural or other disasters, wildfires, and unforeseen public health crises, such as pandemics and epidemics, could disrupt our business through injury or illness to our associates or client families, physical damage, closure or destruction of one or more of our locations, data centers or office facilities, disrupt access to scarce resources such as water supply or disrupt the delivery of goods or services by one or more of our vendors, any or all of which could adversely impact our operations or increase our costs, which would adversely affect our financial results.
For additional information, see Unclaimed Property Audit in Note 9 in Item 8, Part II of this Form 10-K. The application of unclaimed property laws could have a material adverse effect on our liquidity, cash flows, and financial results.
For additional information, see Unclaimed Property Audit in Note 9 in Part II, Item 8. Financial Statements and Supplementary Data of this Form 10-K. The application of unclaimed property laws could have a material adverse effect on our liquidity, cash flows, and financial results.
In the event of market declines that result in a severe decrease in trust fund value, we may be required to replenish amounts in the respective trusts in some future period. As of December 31, 2023, we had unrealized losses of $2.6 million in the various trusts within these states, but no such replenishment is currently necessary.
In the event of market declines that result in a severe decrease in trust fund value, we may be required to replenish amounts in the respective trusts in some future period. As of December 31, 2024, we had unrealized losses of $2.6 million in the various trusts within these states, but no such replenishment is currently expected to be required.
As a result of inflation, we have already experienced modest cost increases and surcharges from our vendors and suppliers on merchandise and goods and may continue to experience additional cost increases in the future, which could be of greater magnitude than those experienced to date.
As a result of inflation, we have experienced modest cost increases from certain vendors and suppliers on merchandise and goods and may continue to experience additional cost increases in the future, which could be of greater magnitude than those experienced to date.
Our cemetery segment, which has a goodwill balance of $358.8 million as of December 31, 2023, is more sensitive to market conditions and goodwill impairments because it is more reliant on preneed sales, which are impacted by customer discretionary spending. For additional information, see Critical Accounting Policies, Recent Accounting Pronouncements, and Accounting Changes in Part II, Item 7.
Our cemetery segment, which has a goodwill balance of $396.0 million as of December 31, 2024, is more sensitive to market conditions and goodwill impairments because it is more reliant on preneed sales, which are impacted by customer discretionary spending. For additional information, see Critical Accounting Policies, Recent Accounting Pronouncements, and Accounting Changes in Part II, Item 7.
Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties as a result. We maintain substantial security measures and data backup systems to protect, store, and prevent unauthorized access to such information.
Additionally, if we acquire a company that is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties. We maintain substantial security measures and data backup systems to protect, store, and prevent unauthorized access to such information.
The following table summarizes our investment returns (realized and unrealized), excluding certain fees, on our trust funds: Years Ended December 31, 2023 2022 2021 Preneed funeral merchandise and service trust funds 16.5 % (11.5) % 14.2 % Preneed cemetery merchandise and service trust funds 16.9 % (11.8) % 15.3 % Cemetery perpetual care trust funds 15.3 % (11.0) % 13.7 % Combined trust funds 16.3 % (11.5) % 14.4 % Generally, earnings or gains and losses on our trust investments are recognized and we withdraw cash when the underlying merchandise is delivered, service is performed, or upon contract cancellation.
The following table summarizes our investment returns (realized and unrealized), excluding certain fees, on our trust funds: Years Ended December 31, 2024 2023 2022 Preneed funeral merchandise and service trust funds 12.3 % 16.5 % (11.5) % Preneed cemetery merchandise and service trust funds 12.5 % 16.9 % (11.8) % Cemetery perpetual care trust funds 11.9 % 15.3 % (11.0) % Combined trust funds 12.3 % 16.3 % (11.5) % Generally, earnings or gains and losses on our trust investments are recognized and we withdraw cash when the underlying merchandise is delivered, service is performed, or upon contract cancellation.
If the financial condition of the third-party insurance companies were to deteriorate materially because of market conditions, strategic transactions, or otherwise, there could be an adverse effect on our ability to collect all or part of the proceeds of the life insurance policy, including the annual increase in the death benefit, if we fulfill the preneed contract at the time of need.
If the financial condition of the third-party insurance companies were to deteriorate materially because of market conditions, strategic transactions, or otherwise, there could be an adverse effect on our ability to collect all or part of the proceeds of the life insurance policy, if we fulfill the preneed contract at the time of need.
Our funeral and cemetery businesses are high fixed-cost businesses. The majority of our operations are managed in groups we call “markets”. Markets are geographical groups of funeral service locations and cemeteries that share common resources such as operating personnel, preparation services, clerical staff, motor vehicles, and preneed sales personnel.
The majority of our operations are managed in groups we call “markets”. Markets are geographical groups of funeral service locations and cemeteries that share common resources such as operating personnel, preparation services, clerical staff, motor vehicles, and preneed sales personnel.
In the event all of the surety companies canceled or did not renew our surety bonds, which generally have twelve-month renewal periods, we would be required to either obtain replacement coverage or fund approximately $121.9 million into state-mandated trust accounts as of December 31, 2023.
In the event all of the surety companies canceled or did not renew our surety bonds, which generally have twelve-month renewal periods, we would be required to either obtain replacement coverage or fund approximately $277.4 million into state-mandated trust accounts as of December 31, 2024.
These unanticipated changes could have a material adverse effect on our financial condition, results of operations, and cash flows. Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future impairments to goodwill and/or other intangible assets.
These unanticipated changes could have a material adverse effect on our financial condition, results of operations, and cash flows. 16 Service Corporation International PART I Declines in overall economic conditions beyond our control could reduce future potential earnings and cash flows and could result in future impairments to goodwill and/or other intangible assets.
Three of our largest states by total revenue are California, Texas, and Florida, areas where natural disasters are more prevalent.
Three of our largest states by total revenue are California, Texas, and Florida, areas where natural disasters may be prevalent.
In the ordinary course of our business, we and our vendors receive and retain certain personal information, in both physical and electronic formats, about our customers, their loved ones, our associates, and our vendors. There is an expectation that we will adequately protect that information.
In the ordinary course of our business, we and our vendors receive and retain personal information about our customers, their loved ones, our associates, and our vendors, in both physical and electronic formats, with the expectation that we will adequately protect that information.
Any such adverse outcomes, in pending cases or other lawsuits that may arise in the future, could have a material adverse impact on our financial position, results of operations, and cash flows. Cemetery burial practice claims could have a material adverse impact on our financial results.
Any such adverse outcomes, in pending cases or other lawsuits that may arise in the future, could have a material adverse impact on our financial position, results of operations, and cash flows. FORM 10-K 19 PART I Cemetery burial practice claims could have a material adverse impact on our financial results.
As of December 31, 2023, no such charge was required in any reported period. We may be required to replenish our affiliated funeral and cemetery trust funds to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow.
As of December 31, 2024, no such charge was required in any reported period. 14 Service Corporation International PART I We may be required to replenish our affiliated funeral and cemetery trust funds to meet minimum funding requirements, which would have a negative effect on our earnings and cash flow.
Additionally, there is a continuing upward trend in the number of cremations performed in North America as an alternative to traditional funeral service dispositions. In our operations during 2023, 62.9% of the comparable services we performed were cremation cases compared to 61.3% and 59.2% performed in 2022 and 2021, respectively.
Additionally, there is a continuing upward trend in the number of cremations performed in North America as an alternative to traditional funeral service dispositions. In our operations during 2024, 63.8% of the comparable services we performed were cremation cases compared to 63.1% and 61.3% performed in 2023 and 2022, respectively.
Financial Statements and Supplementary Data. 14 Service Corporation International PART I If the fair value of these trusts, plus any other amount due to us upon delivery of the associated contracts, were to decline below the estimated costs to deliver the underlying products and services, we would record a charge to earnings to record a liability for the expected losses on the delivery of the associated contracts.
If the fair value of these trusts, plus any other amount due to us upon delivery of the associated contracts, were to decline below the estimated costs to deliver the underlying products and services, we would record a charge to earnings to record a liability for the expected losses on the delivery of the associated contracts.
Any failure to maintain the security of the information relating to our customers, their loved ones, our associates, and our vendors could damage our reputation, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating results, financial condition, or cash flow.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. Any failure to protect personal information relating to our customers, their loved ones, our associates, and our vendors could damage our reputation, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating results, financial condition, or cash flow.
A breach of our security measures or failure in our backup systems could adversely affect our reputation with our customers and their loved ones, our associates, and our vendors; as well as our operations, results of operations, financial condition, and cash flows; and could result in litigation against us or the imposition of penalties.
A breach of our security measures or failure in our backup systems could adversely affect our reputation with our customers and their loved ones, our associates, and our vendors; as well as our operations, results of operations, financial condition, and cash flows; and could result in litigation or penalties. Our Canadian business exposes us to operational, economic, and currency risks.
Changes in the number of deaths are not predictable from market to market or over the short term. If the number of deaths in our markets declines, the number of funeral services and interments performed by us could decrease and our financial condition, results of operations, and cash flows could be materially adversely affected.
If the number of deaths in our markets declines, the number of funeral services and interments performed by us could decrease and our financial condition, results of operations, and cash flows could be materially adversely affected. Changes in the number of deaths may vary from quarter to quarter and across local markets, and those variations are not predictable.
FORM 10-K 17 PART I Our Canadian business exposes us to operational, economic, and currency risks. Our Canadian operations represent approximately 5% of our revenue. Our ability to successfully conduct operations in Canada is affected by many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing Canadian operations.
Our Canadian operations represent approximately 5% of our revenue. Our ability to successfully conduct operations in Canada is affected by many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing Canadian operations.
We have a significant amount of indebtedness, which could have important consequences, including the following: • It may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes. • A portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and may not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate costs or other purposes. • It could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt. • It could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth. • It could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our Bank Credit Facilities, bears interest at floating rates. • It could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness.
We have a significant amount of indebtedness, which could have important consequences, including the following: • It may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements, and general corporate or other purposes. • A portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and may not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions, and general corporate costs or other purposes. • It could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt. • It could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth.
Nevertheless, it is possible that computer hackers and others (through cyberattacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means) might defeat our security measures in the future and obtain the personal information of customers, their loved ones, our associates, and our vendors that we hold.
Nevertheless, it is possible that increasingly sophisticated cyberattacks might defeat our security measures in the future and obtain the personal information of customers, their loved ones, our associates, and our vendors that we hold.
We may not correctly anticipate or identify trends in consumer preferences, or we may identify them later than our competitors do. In addition, any strategies we may implement to address these trends may prove incorrect or ineffective.
Future market share, revenue, and profit will depend in part on our ability to anticipate, identify, and respond to changing consumer preferences. We may not correctly anticipate or identify trends in consumer preferences, or we may identify them later than our competitors do. In addition, any strategies we may implement to address these trends may prove incorrect or ineffective.
Unfavorable publicity about our business generally or in relation to any specific location could affect our reputation and customers’ trust and confidence in our products and services, thereby having an adverse impact upon our sales and financial results. 16 Service Corporation International PART I Our failure to attract and retain qualified sales personnel could have an adverse effect on our business and financial condition.
Unfavorable publicity about our business generally or in relation to any specific location could affect our reputation and customers’ trust and confidence in our products and services, thereby having an adverse impact upon our sales and financial results.
If we are unable to successfully compete, our financial condition, results of operations, and cash flows could be materially adversely affected. 18 Service Corporation International PART I If the number of deaths in our markets declines, our cash flows and revenue may decrease.
If we are unable to successfully compete, our financial condition, results of operations, and cash flows could be materially adversely affected. If the number of deaths in our markets declines, our cash flows and revenue may decrease. Changes in the number of deaths are not predictable from market to market or over the short term.
For example, foreign, federal, state, local, and other regulatory agencies have considered and may enact additional legislation or regulations that could affect the deathcare industry.
In addition, from time to time, amended, added or reinterpreted regulations could increase costs and decrease cash flows. For example, foreign, federal, state, local, and other regulatory agencies have considered and may enact additional legislation or regulations that could affect the deathcare industry.
New laws and regulations governing data privacy, security, cybersecurity, and the unauthorized disclosure of confidential information, including recent legislation in several U.S. states and Canadian provinces, pose increasingly complex compliance challenges and potentially elevate our costs.
In addition, our online website operations depend upon the secure transmission of confidential information over public networks, including information permitting electronic payments. New laws and regulations governing data privacy, security, cybersecurity, and information security, including legislation in several U.S. states and Canadian provinces, pose increasingly complex compliance challenges and potentially elevate our costs.
Our ability to attract and retain a qualified sales force and other personnel is an important factor in achieving future success. Buying cemetery and funeral home products and services, especially at-need products and services, is very emotional for most customers, so our sales force must be particularly sensitive to our customers’ needs.
Buying cemetery and funeral home products and services, especially at-need products and services, is very emotional for most customers, so our sales force and licensed funeral professionals must be particularly sensitive to our customers’ needs. We cannot give assurance that we will be successful in our efforts to attract and retain a skilled sales force and licensed funeral professionals.
Our average revenue for cremations is lower than that for traditional burials. If we are unable to continue to expand our cremation memorialization products and services, and cremations remain or increase as a significant percentage of our services, our financial condition, results of operations, and cash flows could be materially adversely affected.
If we are unable to continue to expand our cremation memorialization products and services, and cremations increase as a significant percentage of our services, our financial condition, results of operations, and cash flows could be materially adversely affected. 18 Service Corporation International PART I Our funeral and cemetery businesses are high fixed-cost businesses.
Changes in the costs of procuring commodities used in our merchandise or the costs related to our supply chain, due to inflation or other matters, could adversely affect our results of operations. Regulatory and Legal Risks Regulation and compliance could have a material adverse impact on our financial results.
Changes in the costs of procuring commodities used in our merchandise or the costs related to our supply chain,due to inflation, natural disasters, pandemics, changes to trade policy or other matters, could adversely affect our results of operations.
Accordingly, we are subject to financial and compliance audits of preneed sales practices and state trust funds. Our facilities are also subject to stringent health, safety, and environmental regulations. In particular, cremation and embalming facilities are subject to stringent health and environmental regulations and there are associated risks of investigations from regulatory authorities or incidental non-compliance with such regulations.
In particular, cremation and embalming facilities are subject to stringent health and environmental regulations and there are associated risks of investigations from regulatory authorities or incidental non-compliance with such regulations. Our pay practices, including wage and hour overtime pay, are subject to federal and state regulations. Violations of applicable laws could result in fines or sanctions against us.
There can be no assurance that we would be able to obtain replacement coverage at a similar cost or at all. Increasing death benefits related to preneed contracts funded through life insurance or annuity contracts may not cover future increases in the cost of providing a price-guaranteed service.
There can be no assurance that we would be able to obtain replacement coverage at a similar cost or at all. The financial condition of third-party insurance companies that fund our preneed contracts may impact our future revenue.
Changes in the number of deaths may vary from quarter to quarter and across local markets, and those variations are not predictable. Variations in the death rate and seasonality of deaths throughout each year may also cause revenue to fluctuate between quarters or years.
Variations in the death rate and seasonality of deaths throughout each year may also cause revenue to fluctuate between quarters or years. If we are not able to respond effectively to changing consumer preferences, our market share, revenue, and/or profitability could decrease.
We cannot give assurance that we will be successful in our efforts to attract and retain a skilled sales force. If we are unable to maintain a qualified and productive sales force, our revenues may decline and our cash available for distribution may decrease.
Furthermore, the stringent licensing standards required for funeral professionals under various state regulations create a significant barrier to entry and make it especially challenging to find enough qualified talent. If we are unable to maintain a qualified and productive sales force and team of licensed funeral professionals, our revenues may decline and our cash available for distribution may decrease.
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In addition, the impacts of inflation are also felt by consumers who face rising prices for a variety of goods and services, which could reduce the amount of discretionary spending that would otherwise be available to our client families and potential client families to spend on our services.
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Our failure to attract and retain qualified sales personnel and licensed funeral professionals could have an adverse effect on our business and financial condition. Our ability to attract and retain a qualified sales force, licensed funeral professionals and other personnel is an important factor in achieving future success.
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We sell price-guaranteed preneed contracts through various programs providing for future services at prices prevailing when the agreements are signed. For preneed contracts funded through life insurance or annuity contracts, we receive in cash a general agency commission from a third-party insurance company that typically averages approximately 25% of the total sale.
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The rapid advancement and widespread adoption of artificial intelligence technologies, combined with emerging innovations and the increasing frequency and sophistication of cyberattacks, could substantially elevate cybersecurity risks for us and our vendors, associates, contractors or third parties with whom we do business.
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Additionally, we receive an increasing death benefit associated with the contract of approximately 1% per year in cash at the time the service is performed.
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FORM 10-K 17 PART I • It could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under our Bank Credit Facilities, bears interest at floating rates. • It could make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness.
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There is no guarantee that the increasing death benefit will cover future increases in the cost of providing a price-guaranteed service and merchandise, and any such excess cost could be materially adverse to our financial condition, results of operations, and cash flows. The financial condition of third-party insurance companies that fund our preneed contracts may impact our future revenue.
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Our average revenue for cremations is lower than that for traditional burials.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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We cannot predict how changes to trade policy may affect trade agreements or tariffs, nor can we predict the effects that any such changes would have on our supply chain. Regulatory and Legal Risks Regulation and compliance could have a material adverse impact on our financial results.
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In addition, our online operations at our websites depend upon the secure transmission of confidential information over public networks, including information permitting electronic payments. The U.S. regulatory environment surrounding information security and privacy is dynamic and increasingly demanding.
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The funeral industry is regulated at the federal level by the FTC, which has been under review by the FTC since 2020. We are also subject to financial and compliance audits of preneed sales practices and state trust funds. Our facilities are also subject to stringent health, safety, and environmental regulations.
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Moreover, a security breach could require that we expend significant additional resources to upgrade further the security measures that we employ to guard such important personal information against cyberattacks and other attempts to access such information and could result in a disruption of our operations.
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If we are not able to respond effectively to changing consumer preferences, our market share, revenue, and/or profitability could decrease. Future market share, revenue, and profit will depend in part on our ability to anticipate, identify, and respond to changing consumer preferences.
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For example, the funeral industry is regulated at the federal level by the FTC, which requires funeral service locations to take actions designed to protect consumers. Although the FTC is considering updates to the Funeral Rule, the rulemaking process is ongoing. State law regulates preneed sales and imposes licensing requirements.
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Our pay practices, including wage and hour overtime pay, are subject to federal and state regulations. Violations of applicable laws could result in fines or sanctions against us. FORM 10-K 19 PART I In addition, from time to time, governments and agencies propose to amend or add regulations or reinterpret existing regulations, which could increase costs and decrease cash flows.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The AVP, IT Security is a Certified Information Security Manager (CISM) and his cybersecurity expertise is a valuable resource for Company executive leadership and the Board. Monitoring Cybersecurity Incidents The AVP, IT Security manages the information security program responsible for the regular monitoring of our information systems for cybersecurity risks.
The AVP, IT Security is a Certified Information Security Manager and his cybersecurity expertise is a valuable resource for Company executive leadership and the Board. Monitoring Cybersecurity Incidents The AVP, IT Security manages the information security program responsible for the regular monitoring of our information systems for cybersecurity risks.
Third-party risks are documented as part of a risk management process that follows an industry standard framework with a goal of remediation or mitigation. Cybersecurity Threat Risks We have not experienced a cybersecurity incident or data breach that has had a material impact on our operations or financial standing.
Third-party risks are documented as part of a risk management process that follows an industry standard framework with a goal of remediation or mitigation. 20 Service Corporation International PART I Cybersecurity Threat Risks We have not experienced a cybersecurity incident or data breach that has had a material impact on our operations or financial standing.
Our information security program is designed to evaluate, identify, and manage risks from cybersecurity threats and vulnerabilities, including malware, phishing, hacking, social engineering, and data breaches. Our program is regularly assessed using the NIST Cybersecurity Framework, and information security training is provided to our employees.
Our information security program is designed to evaluate, identify, and manage risks from cybersecurity threats and vulnerabilities, including malware, phishing, hacking, social engineering, data breaches, and emerging risks associated with artificial intelligence. Our program is regularly assessed using the NIST Cybersecurity Framework, and mandatory information security training is provided to our employees.
These briefings highlight various cybersecurity topics, including new cybersecurity threats, incidents, risks, risk management solutions, strategy pivots, or proposed governance changes. The Audit Committee actively participates in cybersecurity-related business decisions. Risk Management Expertise With over 22 years of experience working on information technology and cybersecurity teams, the AVP, IT Security is the lead architect of the company’s security infrastructure.
These briefings highlight various cybersecurity topics, including new cybersecurity threats, incidents, risks, risk management solutions, strategy pivots, or proposed governance changes. Risk Management Expertise With over 23 years of experience working on information technology and cybersecurity teams, the AVP, IT Security is the lead architect of the company’s security infrastructure.
The cyber security incident response plan guides the AVP, IT Security and includes immediate actions to escalate an incident based on its seriousness, to mitigate the impact, and to enact long-term strategies for remediation and prevention of future incidents.
The cyber security incident response plan guides the AVP, IT Security and includes immediate actions to escalate an incident based on its seriousness, to mitigate the impact, and to enact long-term strategies for remediation and prevention of future incidents. Reporting Cybersecurity Risk The AVP, IT Security is responsible for informing executive management of cybersecurity risks and incidents.
Management’s Role in Managing Cybersecurity Risk The Assistant Vice President, Information Technology Security reports to the Vice President of Information Technology and is responsible for briefing the Audit Committee on information security risks. The AVP, IT Security provides comprehensive briefings to the Audit Committee on a regular basis.
Management’s Role in Managing Cybersecurity Risk The Assistant Vice President, Information Technology Security, who also functions as the company's data protection officer, reports to the Vice President of Information Technology and is responsible for briefing the Audit Committee on information security risks. The AVP, IT Security provides comprehensive briefings to the Audit Committee on a quarterly basis.
Any cybersecurity incident or data breach that is determined to be material will be reported to the Audit Committee and the Board of Directors. Item 2. Properties Information regarding properties is set forth in Part I, Item 1. Business. Item 3. Legal Proceedings Information regarding legal proceedings is set forth in Note 9 of Part II, Item 8.
Our highest levels of management are actively aware and involved in shaping the company’s cybersecurity position and analyzing potential risks. Any cybersecurity incident or data breach that is determined to be material will be reported to the Audit Committee and the Board of Directors. Item 2. Properties Information regarding properties is set forth in Part I, Item 1. Business.
The Cyber Security and Data Governance Executive Steering Committee includes members from the senior leadership team, such as the Chief Operating Officer, the Senior Vice President of Operations Services and the General Counsel. Our highest levels of management are actively aware and involved in shaping the company’s cybersecurity position and analyzing potential risks.
The AVP, IT Security presents quarterly briefings to the Cyber Security and Data Governance Executive Steering Committee on all issues related to cybersecurity risks and incidents. The Cyber Security and Data Governance Executive Steering Committee includes members from the senior leadership team, such as the Chief Operating Officer, the Senior Vice President of Operations Services and the General Counsel.
Our information security program features risk management strategies, security awareness training, security operations, incident response, security governance, third-party risk management, IT security risk management, security architecture, and vulnerability management. 20 Service Corporation International PART I Managing Material Risks & Integrated Overall Risk Management Cybersecurity risk management is integrated into our broader enterprise risk management system, and cybersecurity risk is strategically reviewed, monitored and managed alongside other enterprise risks on a regular basis.
Managing Material Risks & Integrated Overall Risk Management Cybersecurity risk management is integrated into our broader enterprise risk management system, and cybersecurity risk is strategically reviewed, monitored and managed alongside other enterprise risks on a regular basis.
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FORM 10-K 21 PART I Reporting Cybersecurity Risk The AVP, IT Security is responsible for informing executive management of cybersecurity risks and incidents. The AVP, IT Security presents quarterly briefings to the Cyber Security and Data Governance Executive Steering Committee on all issues related to cybersecurity risks and incidents.
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Our information security program features risk management strategies, security awareness training, security operations, incident response, security governance, third-party risk management, IT security risk management, security architecture, and vulnerability management.
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Financial Statements and Supplementary Data. Item 4. Mine Safety Disclosures Not applicable. 22 Service Corporation International

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock has been traded on the New York Stock Exchange since May 14, 1974. On December 31, 2023, there were 3,088 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock has been traded on the New York Stock Exchange since May 14, 1974. On December 31, 2024, there were 2,939 holders of record of our common stock.
In calculating the number of stockholders, we consider clearing agencies and security position listings as one stockholder for each agency or listing. At December 31, 2023, we had 146,323,340 shares outstanding, net of 1,973,702 treasury shares. Our common stock is traded on the New York Stock Exchange under the symbol SCI.
In calculating the number of stockholders, we consider clearing agencies and security position listings as one stockholder for each agency or listing. At December 31, 2024, we had 144,694,887 shares outstanding, net of 1,973,702 treasury shares. Our common stock is traded on the New York Stock Exchange under the symbol SCI.
The following graph assumes the total return on $100 invested on December 31, 2018, in SCI Common Stock, the S&P 500 Index, the S&P MidCap 400 Index, and a peer group selected by the Company (the “Peer Group”). The Peer Group comprises Carriage Services, Inc., Hillenbrand Inc., Matthews International Corp., and Park Lawn Corporation.
The following graph assumes the total return on $100 invested on December 31, 2019, in SCI Common Stock, the S&P 500 Index, the S&P MidCap 400 Index, and a peer group selected by the Company (the “Peer Group”). The Peer Group comprises Carriage Services, Inc. and Matthews International Corp. Total return data assumes reinvestment of dividends.
Total return data assumes reinvestment of dividends. For equity compensation plan information, see Part III of this Form 10-K.
For equity compensation plan information, see Part III of this Form 10-K.
FORM 10-K 23 PART II The following table summarizes our share repurchases during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (2) Approximate Dollar Value of Shares That May Yet be Purchased Under the Program (2) October 1, 2023 — October 31, 2023 (1) 1,818,681 $ 54.96 1,800,992 $ 148,384,812 November 1, 2023 — November 30, 2023 (2) 1,395,540 $ 58.65 1,395,540 547,671,399 December 1, 2023 — December 31, 2023 354,267 $ 64.10 354,267 524,963,678 3,568,488 3,550,799 (1) Includes 17,689 shares purchased in October 2023 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans.
FORM 10-K 23 PART II The following table summarizes our share repurchases during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Program October 1, 2024 — October 31, 2024 (1) 351,558 $ 75.72 337,273 $ 305,436,818 November 1, 2024 — November 30, 2024 (2) 54,657 $ 85.71 54,341 300,779,114 December 1, 2024 — December 31, 2024 244,171 $ 82.76 244,171 280,570,967 650,386 635,785 (1) Includes 14,285 shares purchased in October 2024 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans.
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These repurchases were not part of our publicly announced program and do not affect our share repurchase program. (2) On November 8, 2023 we announced that our Board of Directors increased our share repurchase authorization to $600.0 million. Item 6. [Reserved]
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(2) Includes 316 shares purchased in November 2024 in connection with the surrender of shares by associates to satisfy certain tax withholding obligations under compensation plans. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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We do not reflect the unfulfilled insurance-funded preneed contract amounts in our Consolidated Balance Sheet. The proceeds of the life insurance policies or annuity contracts will be reflected in funeral revenue as we perform these funerals. FORM 10-K 27 PART II The table below details our results of insurance-funded preneed production and maturities.
We do not reflect the FORM 10-K 27 PART II unfulfilled insurance-funded preneed contract amounts in our Consolidated Balance Sheet. The proceeds of the life insurance policies or annuity contracts will be reflected in funeral revenue as we perform these funerals. The table below details our results of insurance-funded preneed production and maturities.
The income approach, which is a discounted cash flow method, uses 34 Service Corporation International PART II projections of future cash flows and includes assumptions concerning future operating performance and economic conditions that may differ from actual future cash flows.
The income approach, which is a discounted cash flow method, uses projections of 34 Service Corporation International PART II future cash flows and includes assumptions concerning future operating performance and economic conditions that may differ from actual future cash flows.
As of December 31, 2023, approximately 95% of our trusts were under the control and custody of five large financial institutions. The U.S. trustees primarily use four managed limited liability companies (LLCs), one for each merchandise and service trust type and two for the cemetery perpetual care trust type, each with an independent trustee as custodian.
As of December 31, 2024, approximately 95% of our trusts were under the control and custody of five large financial institutions. The U.S. trustees primarily use four managed limited liability companies (LLCs), one for each merchandise and service trust type and two for the cemetery perpetual care trust type, each with an independent trustee as custodian.
The majority of the equity allocation is managed by institutional investment managers that specialize in an objective-specific area of expertise. Our equity securities are exposed to market risk; however, we believe these securities are well-diversified. As of December 31, 2023, the largest single equity position represented less than 1% of the total securities portfolio.
The majority of the equity allocation is managed by institutional investment managers that specialize in an objective-specific area of expertise. Our equity securities are exposed to market risk; however, we believe these securities are well-diversified. As of December 31, 2024, the largest single equity position represented less than 1% of the total securities portfolio.
The average revenue per funeral contract is influenced by the mix of traditional and cremation services because our average revenue for cremations is lower than that for traditional burials. To further enhance revenue opportunities, we continue to focus on our cremation customers' preferences and remaining relevant by developing additional memorialization merchandise and services that specifically appeal to cremation customers.
The average revenue per funeral contract is influenced by the mix of traditional and cremation services as our average revenue for cremations is lower than that for traditional burials. To further enhance revenue opportunities, we continue to focus on our cremation customers' preferences and remaining relevant by developing additional memorialization merchandise and services that specifically appeal to cremation customers.
We manage our footprint by focusing on strategic acquisitions and building new funeral service locations where the expected returns are attractive and exceed our weighted average cost of capital by a meaningful margin. We target businesses with favorable customer dynamics and/or where we can achieve additional economies of scale.
We manage our footprint by focusing on strategic acquisitions and building new funeral service locations where the expected returns are attractive and exceed our weighted average cost of capital by a meaningful margin. We target businesses with favorable customer dynamics and/or where we can achieve the benefits of economies of scale.
For a discussion of our results of operations and liquidity and capital resources for the fiscal year ended December 31, 2021, see Management’s Discussion and Analysis of Financial Condition, Liquidity and Capital Resources and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year December 31, 2022, filed with the Securities and Exchange Commission on February 15, 2023. 24 Service Corporation International PART II Financial Condition, Liquidity, and Capital Resources Capital Allocation Considerations We rely on cash flow from operations as a significant source of liquidity.
For a discussion of our results of operations and liquidity and capital resources for the fiscal year ended December 31, 2023, see Management’s Discussion and Analysis of Financial Condition, Liquidity and Capital Resources and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year December 31, 2023, filed with the Securities and Exchange Commission on February 13, 2024. 24 Service Corporation International PART II Financial Condition, Liquidity, and Capital Resources Capital Allocation Considerations We rely on cash flow from operations as a significant source of liquidity.
The tables below detail our results of preneed production and maturities, excluding insurance contracts, for the years ended December 31, 2023 and 2022.
The tables below detail our results of preneed production and maturities, excluding insurance contracts, for the years ended December 31, 2024 and 2023.
An increase in the valuation allowance would result in additional income tax expense in such period. As of December 31, 2023, foreign withholding taxes have not been provided on the estimated $247.6 million of undistributed earnings and profits ("E&P") of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in the respective businesses outside the United States.
An increase in the valuation allowance would result in additional income tax expense in such period. As of December 31, 2024, foreign withholding taxes have not been provided on the estimated $254.8 million of undistributed earnings and profits ("E&P") of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in the respective businesses outside the United States.
As of December 31, 2023, the difference between the backlog and total assets at fair value represents $0.19 billion related to contracts for which we have posted surety bonds as financial assurance in lieu of trusting, $1.31 billion collected from customers that were not required to be deposited into trusts, and $0.19 billion in allowable cash distributions from trust assets partially offset by $1.51 billion in amounts due on delivered property and merchandise.
As of December 31, 2024, the difference between the backlog and total assets at fair value represents $0.17 billion related to contracts for which we have posted surety bonds as financial assurance in lieu of trusting, $1.38 billion collected from customers that were not required to be deposited into trusts, and $0.20 billion in allowable cash distributions from trust assets partially offset by $1.57 billion in amounts due on delivered property and merchandise.
This compares to the SCI trusts that increased 16.3% during the same year-end period, which exceeded our internal custom benchmarks. The SCI trusts have a diversified allocation of approximately 58% equities, 28% fixed income securities, 10% alternative and other investments with the remaining 4% in money market funds.
This compares to the SCI trusts that increased 12.3% during the same year-end period, which exceeded our internal custom benchmarks. The SCI trusts have a diversified allocation of approximately 59% equities, 27% fixed income securities, 10% alternative and other investments with the remaining 4% in money market funds.
As of December 31, 2023, we had fixed lease payment obligations of $70.3 million, of which $10.0 million is due in the next twelve months. See Note 8 in Part II, Item 8. Financial Statements and Supplementary Data for additional details related to our leases.
As of December 31, 2024, we had fixed lease payment obligations of $69.0 million, of which $10.1 million is due in the next twelve months. See Note 8 in Part II, Item 8. Financial Statements and Supplementary Data for additional details related to our leases.
These trustees, with input from SCI's wholly-owned registered investment advisor, FORM 10-K 29 PART II establish an investment policy that serves as an operating document to guide the investment activities of the trusts including asset allocation and manager selection. The investments are also governed by state and provincial guidelines.
These trustees, with input from SCI's wholly-owned registered investment advisor, establish an investment policy that serves as an operating document to guide the investment activities of the trusts including asset allocation and manager selection. The investments are also governed by state and provincial guidelines.
We perform our goodwill impairment test by comparing the fair value of a reporting unit to its carrying amount, including goodwill. We determine fair value of each reporting unit using both a market and income approach.
We perform our goodwill impairment test by comparing the fair value of a reporting unit to its carrying amount, including goodwill. We determine fair value of each reporting unit using an income approach.
The table does not include the backlog associated with businesses that are held for sale. 28 Service Corporation International PART II The table also reflects our preneed receivables and trust investments associated with the backlog of deferred preneed contract revenue including the amounts due from customers for undelivered performance obligations on cancelable preneed contracts.
The table does not include the backlog associated with businesses that are held for sale. The table also reflects our preneed receivables and trust investments associated with the backlog of deferred preneed contract revenue including the amounts due from customers for undelivered performance obligations on cancelable preneed contracts.
The trustees that have oversight of their respective alternative LLCs work closely with the investment advisor in making all investment decisions. 30 Service Corporation International PART II Trust Performance During the year ended December 31, 2023, the Standard and Poor’s 500 Index increased 26.3% and the Bloomberg’s US Aggregate Bond Index increased 5.5%.
The trustees that have oversight of their respective alternative LLCs work closely with the investment advisor in making all investment decisions. 30 Service Corporation International PART II Trust Performance During the year ended December 31, 2024, the Standard and Poor’s 500 Index increased 25.0% and the Bloomberg’s US Aggregate Bond Index increased 1.3%.
We strive to offer families exceptional service in planning life celebrations and personalized remembrances. Our Dignity Memorial® brand serves approximately 600,000 families each year with professionalism, compassion, and attention to detail. Our financial position is enhanced by our $14.8 billion backlog of future revenue from both trust and insurance-funded preneed sales at December 31, 2023.
We strive to offer families exceptional service in planning life celebrations and personalized remembrances. Our Dignity Memorial® brand serves approximately 700,000 families each year with professionalism, compassion, and attention to detail. Our financial position is enhanced by our $16.0 billion backlog of future revenue from both trust and insurance-funded preneed sales at December 31, 2024.
Results of Operations — Years Ended December 31, 2023 and 2022 Management Summary In 2023, we reported consolidated net income attributable to common stockholders of $537.3 million ($3.53 per diluted share) compared to net income attributable to common stockholders in 2022 of $565.3 million ($3.53 per diluted share).
Results of Operations — Years Ended December 31, 2024 and 2023 Management Summary In 2024, we reported consolidated net income attributable to common stockholders of $518.6 million ($3.53 per diluted share) compared to net income attributable to common stockholders in 2023 of $537.3 million ($3.53 per diluted share).
The aggregate principal excludes $35.8 million in unamortized non-cash debt issuance costs and original issuance discounts and premiums. Future interest payments associated with the debt and finance leases total $1.2 26 Service Corporation International PART II billion, of which $250.9 million is payable in the next twelve months.
The aggregate principal excludes $44.0 million in unamortized non-cash debt issuance costs and original issuance discounts and premiums. Future interest payments associated with the debt and finance leases 26 Service Corporation International PART II total $1.2 billion, of which $239.2 million is payable in the next twelve months.
As of December 31, 2023, insurance loss reserves were $103.3 million. Recent Accounting Pronouncements and Accounting Changes For discussion of recent accounting pronouncements and accounting changes, see Note 2 in Part II, Item 8. Financial Statements and Supplementary Data.
As of December 31, 2024, insurance loss reserves were $105.8 million. Recent Accounting Pronouncements and Accounting Changes For discussion of recent accounting pronouncements and accounting changes, see Note 2 in Part II, Item 8. Financial Statements and Supplementary Data.
Our financial covenant requirements and actual ratio as of December 31, 2023 are as follows: Per Credit Agreement Actual Leverage ratio 5.00 (Max) 3.58 We have the financial strength and flexibility to reward shareholders with dividends while maintaining a prudent capital structure and pursuing new opportunities for profitable growth.
We target a leverage ratio of 3.5x to 4.0x. Our financial covenant requirements and actual ratio as of December 31, 2024 are as follows: Per Credit Agreement Actual Leverage ratio 5.00 (Max) 3.65 We have the financial strength and flexibility to reward shareholders with dividends while maintaining a prudent capital structure and pursuing new opportunities for profitable growth.
Additionally, the table reflects our backlog of unfulfilled insurance-funded contracts (which are not included in our Consolidated Balance Sheet) at December 31, 2023 and 2022. The backlog amounts presented include amounts due from customers for undelivered performance obligations on cancelable preneed contracts to arrive at our total backlog of deferred revenue.
Additionally, the table reflects our backlog of unfulfilled insurance-funded contracts (which are not included in our Consolidated Balance Sheet) at December 31, 2024 and 2023. The 28 Service Corporation International PART II backlog amounts presented include amounts due from customers for undelivered performance obligations on cancelable preneed contracts to arrive at our total backlog of deferred revenue.
However, if we were to repatriate such foreign E&P, the foreign withholding tax liability is estimated to be $12.8 million.
However, if we were to repatriate such foreign E&P, the foreign withholding tax liability is estimated to be $13.2 million.
As of December 31, 2023, the backlog of insurance-funded contracts of $7.78 billion was equal to the proceeds we expect to receive from the associated insurance policies when the corresponding contract is serviced.
As of December 31, 2024, the backlog of insurance-funded contracts of $8.37 billion was equal to the proceeds we expect to receive from the associated insurance policies when the corresponding contract is serviced.
At December 31, 2023, we operated 1,483 funeral service locations and 489 cemeteries (including 305 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico.
At December 31, 2024, we operated 1,493 funeral service locations and 496 cemeteries (including 308 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico.
Funeral Revenue Consolidated revenue from funeral operations was $2,303.0 million for the year ended December 31, 2023, compared to $2,332.0 million in 2022. This $29.0 million, or 1.2%, decrease in revenue is primarily attributable to a $54.9 million decrease in comparable funeral revenue, partially offset by a $26.6 million increase in revenue contributed from newly constructed and acquired properties.
Funeral Revenue Consolidated revenue from funeral operations was $2,324.2 million for the year ended December 31, 2024, compared to $2,303.0 million in 2023. This $21.2 million, or 0.9%, increase in revenue is primarily attributable to a $25.8 million increase in revenue contributed by newly constructed and acquired properties, partially offset by a $1.1 million decrease in comparable funeral revenue.
Investing Activities Cash flows from investing activities used $469.4 million and $447.9 million, in 2023, and 2022, respectively.
Investing Activities Cash flows from investing activities used $620.9 million and $469.4 million, in 2024, and 2023, respectively.
Years Ended December 31, 2023 2022 (In millions) Preneed funeral $ 67.8 $ 68.4 Preneed cemetery: Merchandise and services 141.3 141.5 Pre-construction 54.6 42.5 Bonds supporting preneed funeral and cemetery obligations 263.7 252.4 Bonds supporting preneed business permits 7.6 7.1 Other bonds 25.4 23.9 Total surety bonds outstanding $ 296.7 $ 283.4 When selling preneed contracts, we may post surety bonds where allowed by state law.
Years Ended December 31, 2024 2023 (In millions) Preneed funeral $ 226.8 $ 67.8 Preneed cemetery: Merchandise and services 135.6 141.3 Pre-construction 56.4 54.6 Bonds supporting preneed funeral and cemetery obligations 418.8 263.7 Bonds supporting preneed business permits 8.1 7.6 Other bonds 27.5 25.4 Total surety bonds outstanding $ 454.4 $ 296.7 When selling preneed contracts, we may post surety bonds where allowed by state law.
Debt & Finance Leases As of December 31, 2023, we had $4.7 billion in aggregate principal outstanding on our notes, term loan, revolving credit facility, finance leases, mortgages, and other debt (collectively "debt and finance leases"), of which $63.3 million is payable in the next twelve months.
Debt & Finance Leases As of December 31, 2024, we had $4.8 billion in aggregate principal outstanding on our notes, term loan, revolving credit facility, finance leases, mortgage notes, and other debt (collectively "debt and finance leases"), of which $83.9 million is payable in the next twelve months.
Our floating rate debt carried a weighted average interest rate of 7.11% for the full year 2023, which is 416 basis points higher than the weighted average rate for our floating rate debt for the full year 2022 of 2.95%.
Our floating rate debt carried a weighted average interest rate of 7.34% for the full year 2024, which is 23 basis points higher than the weighted average rate for our floating rate debt for the full year 2023 of 7.11%.
Subsequent to December 31, 2023, we repurchased 310,581 shares for $20.9 million at an average cost per share of $67.39. Managing Debt. We continue to focus on maintaining optimal levels of liquidity and financial flexibility. We generate a relatively consistent annual cash flow stream that is generally resistant to down economic cycles.
Subsequent to December 31, 2024, we repurchased 467,208 shares for $36.3 million at an average cost per share of $77.74. Managing Debt. We continue to focus on maintaining optimal levels of liquidity and financial flexibility. We generate a relatively consistent annual cash flow stream that is generally resistant to down economic cycles.
Independent trustees manage and invest the majority of the funds deposited into the funeral and cemetery merchandise and service trusts as well as the cemetery perpetual care trusts. The majority of the trustees are selected based on their respective geographic footprint and qualifications per state and provincial regulations. Most of the trustees engage the same independent investment managers.
FORM 10-K 29 PART II Independent trustees manage and invest the majority of the funds deposited into the funeral and cemetery merchandise and service trusts as well as the cemetery perpetual care trusts. The majority of the trustees are selected based on their respective geographic footprint and qualifications per state and provincial regulations.
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $158.2 million and $143.8 million for the years ended December 31, 2023 and 2022, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $86.6 million and $85.1 million for the years ended December 31, 2023 and 2022, respectively.
Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $185.7 million and $158.2 million for the years ended December 31, 2024 and 2023, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $96.4 million and $86.6 million for the years ended December 31, 2024 and 2023, respectively.
The $21.5 million increased outflow from 2023 over 2022 is primarily due to the following: • a $39.3 million increase in cash spent on real estate acquisitions, • a $16.2 million decrease in cash receipts from divestitures and asset sales, • a $7.9 million increase in other investing activities, partially offset by • a $30.0 million decrease in cash spent on business acquisitions, • a $7.9 million decrease in total capital expenditures, which comprises: • $10.5 million decrease in maintenance capital expenditures: • a $46.1 million decrease in expenditures for capital improvements at existing field locations, • a $28.4 million increase in expenditures for cemetery property development, • a $7.2 million increase in expenditures for digital investments and corporate, • a $2.6 million increase in expenditures for growth capital expenditures/construction of new funeral service locations, and • a $4.0 million increase in proceeds for Company-owned life insurance policies, net of repayments.
The $151.5 million increased outflow from 2024 over 2023 is primarily due to the following: • a $108.7 million increase in cash spent on business acquisitions, • a $27.3 million increase in total capital expenditures, which comprises: • a $23.4 million increase in maintenance capital expenditures, consisting of: • a $20.2 million increase in expenditures for capital improvements at existing field locations, • a $11.8 million increase in expenditures for cemetery property development, • a $8.6 million decrease in expenditures for digital investments and corporate, • a $3.9 million increase for growth capital expenditures/construction of new funeral service locations • a $7.3 million increase in other investing activities primarily for investments in renewable energy tax credits, • a $5.7 million increase in cash spent on real estate acquisitions, • a $1.4 million decrease in cash receipts from divestitures and asset sales, and • a $1.1 million decrease in proceeds for Company-owned life insurance policies, net of repayments.
As of December 31, 2023, the fair value of the total backlog comprised $4.23 billion related to cemetery contracts and $10.61 billion related to funeral contracts. As of December 31, 2023, the fair value of the assets associated with the backlog of trust-funded deferred revenue comprised $4.26 billion related to cemetery contracts and $2.62 billion related to funeral contracts.
As of December 31, 2024, the fair value of the total backlog comprised $4.56 billion related to cemetery contracts and $11.45 billion related to funeral contracts. As of December 31, 2024, the fair value of the assets associated with the backlog of trust-funded deferred revenue comprised $4.61 billion related to cemetery contracts and $2.85 billion related to funeral contracts.
December 31, 2023 December 31, 2022 Fair Value Cost Fair Value Cost (In billions) Deferred revenue, net $ 1.70 $ 1.70 $ 1.62 $ 1.62 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts 0.95 0.95 0.85 0.85 Deferred receipts held in trust 4.67 4.18 4.16 4.12 Allowance for cancellation on trust investments (0.26) (0.24) (0.24) (0.23) Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation 7.06 6.59 6.39 6.36 Backlog of insurance-funded revenue (1) 7.78 7.78 7.35 7.35 Total backlog of deferred revenue $ 14.84 $ 14.37 $ 13.74 $ 13.71 Preneed receivables, net and trust investments $ 6.19 $ 5.70 $ 5.58 $ 5.54 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts 0.95 0.95 0.85 0.85 Allowance for cancellation on trust investments (0.26) (0.24) (0.24) (0.23) Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation 6.88 6.41 6.19 6.16 Insurance policies associated with insurance-funded deferred revenue (1) 7.78 7.78 7.35 7.35 Total assets associated with backlog of preneed revenue $ 14.66 $ 14.19 $ 13.54 $ 13.51 (1) Amounts are not included in our Consolidated Balance Sheet.
December 31, 2024 December 31, 2023 Fair Value Cost Fair Value Cost (In billions) Deferred revenue, net $ 1.76 $ 1.76 $ 1.70 $ 1.70 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts 0.99 0.99 0.95 0.95 Deferred receipts held in trust 5.16 4.50 4.67 4.18 Allowance for cancellation on trust investments (0.27) (0.24) (0.26) (0.24) Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation 7.64 7.01 7.06 6.59 Backlog of insurance-funded revenue (1) 8.37 8.37 7.78 7.78 Total backlog of deferred revenue $ 16.01 $ 15.38 $ 14.84 $ 14.37 Preneed receivables, net and trust investments $ 6.74 $ 6.08 $ 6.19 $ 5.70 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts 0.99 0.99 0.95 0.95 Allowance for cancellation on trust investments (0.27) (0.24) (0.26) (0.24) Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation 7.46 6.83 6.88 6.41 Insurance policies associated with insurance-funded deferred revenue (1) 8.37 8.37 7.78 7.78 Total assets associated with backlog of preneed revenue $ 15.83 $ 15.20 $ 14.66 $ 14.19 (1) Amounts are not included in our Consolidated Balance Sheet.
Absent strategic acquisitions or new opportunities, we intend to return excess cash to shareholders through dividends and our share repurchase program. Our quarterly dividend rate has steadily grown from $0.025 per common share in 2005 to $0.29 per common share at the end of 2023.
In addition to any strategic acquisition or new build opportunities, we continue to return cash to shareholders through dividends and our share repurchase program. Our quarterly dividend rate has steadily grown from $0.025 per common share in 2005 to $0.30 per common share at the end of 2024.
The $66.9 million decreased outflow from 2023 over 2022 is primarily due to the following: • a $116.0 million decrease in the purchase of Company common stock, partially offset by • a $33.8 million increase in debt repayments, net of proceeds, • a $7.9 million increase in payments of dividends, • a $3.8 million change in bank overdrafts and other, and • a $3.6 million decrease in proceeds from exercises of stock options.
The $61.5 million decreased outflow from 2024 over 2023 is primarily due to the following: • a $291.1 million decrease in the purchase of Company common stock, and • a $32.5 million increase in proceeds from exercises of stock options, partially offset by • a $253.3 million increase in debt repayments, net of proceeds, • a $6.3 million increase in payments of dividends, and • a $2.5 million change in bank overdrafts and other.
We continue to pursue strategic acquisitions and build new funeral service locations in areas that provide us with the potential for additional scale. We invested $72.5 million in acquiring 17 funeral service locations and 2 cemeteries in 2023. Return Excess Cash to Shareholders.
We continue to pursue strategic acquisitions and build new funeral service locations in areas that provide us with the potential for additional scale. In 2024, w e invested $181.2 million in acquiring 26 funeral service locations and 6 cemeteries, which included 3 combination locations. Return Excess Cash to Shareholders.
Estimates and assumptions affect the carrying values of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date. Actual results could differ from such estimates due to uncertainties associated with the methods and assumptions underlying our critical accounting measurements.
See Note 2 in Part II, Item 8. Financial Statements and Supplementary Data, for more information. Estimates and assumptions affect the carrying values of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date. Actual results could differ from such estimates due to uncertainties associated with the methods and assumptions underlying our critical accounting measurements.
Years Ended December 31, 2023 2022 (Dollars in millions) Preneed insurance-funded: Sales production (1) $ 704.8 $ 664.6 Sales production (number of contracts) (1) 113,095 107,553 General agency revenue $ 185.6 $ 164.3 Maturities $ 394.5 $ 397.8 Maturities (number of contracts) 63,839 64,962 (1) Amounts are not included in our Consolidated Balance Sheet.
Years Ended December 31, 2024 2023 (Dollars in millions) Preneed insurance-funded: Sales production (1) $ 725.0 $ 704.8 Sales production (number of contracts) (1) 120,434 113,095 General agency revenue $ 232.5 $ 185.6 Maturities $ 408.0 $ 394.5 Maturities (number of contracts) 65,202 63,839 (1) Amounts are not included in our Consolidated Balance Sheet.
Years Ended December 31, 2023 2022 (Dollars in millions) Funeral: Preneed trust-funded (including bonded): Sales production $ 541.5 $ 506.2 Sales production (number of contracts) 132,268 125,457 Maturities $ 372.7 $ 353.1 Maturities (number of contracts) 84,572 84,392 Cemetery: Sales production: Preneed $ 1,333.9 $ 1,376.7 Atneed 421.9 451.1 Total sales production $ 1,755.8 $ 1,827.8 Sales production deferred to backlog: Preneed $ 651.6 $ 669.0 Atneed 297.2 315.6 Total sales production deferred to backlog $ 948.8 $ 984.6 Revenue recognized from backlog: Preneed $ 503.0 $ 444.1 Atneed 307.3 309.8 Total revenue recognized from backlog $ 810.3 $ 753.9 Backlog of Preneed Contracts The following table reflects our backlog of trust-funded deferred preneed contract revenue, including amounts related to Deferred receipts held in trust at December 31, 2023 and 2022.
Years Ended December 31, 2024 2023 (Dollars in millions) Funeral: Preneed trust-funded (including bonded): Sales production $ 480.0 $ 541.5 Sales production (number of contracts) 113,686 132,268 Maturities $ 378.0 $ 372.7 Maturities (number of contracts) 84,373 84,572 Cemetery: Sales production: Preneed $ 1,356.3 $ 1,333.9 Atneed 425.9 421.9 Total sales production $ 1,782.2 $ 1,755.8 Sales production deferred to backlog: Preneed $ 636.7 $ 651.6 Atneed 301.1 297.2 Total sales production deferred to backlog $ 937.8 $ 948.8 Revenue recognized from backlog: Preneed $ 485.8 $ 503.0 Atneed 304.5 307.3 Total revenue recognized from backlog $ 790.3 $ 810.3 Backlog of Preneed Contracts The following table reflects our backlog of trust-funded deferred preneed contract revenue, including amounts related to Deferred receipts held in trust at December 31, 2024 and 2023.
Cemetery Revenue Consolidated revenue from our cemetery operations increased $20.1 million, or 1.1%, in 2023 compared to 2022 primarily due to a $16.7 million, or 0.9%, increase in comparable cemetery revenue and a $3.7 million increase in revenue contributed by newly constructed and acquired properties.
Cemetery Revenue Consolidated revenue from our cemetery operations increased $65.5 million, or 3.6%, in 2024 compared to 2023 primarily due to a $53.2 million, or 3.0%, increase in comparable cemetery revenue and a $14.3 million increase in revenue contributed by newly constructed and acquired properties.
In 2023, we repurchased 8,700,767 shares of our common stock at an aggregate cost of $549.6 million, which is an average cost per share of $63.17. In 2022, we repurchased 10,356,250 shares of our common stock at an aggregate cost of $661.1 million, which is an average cost per share of $63.84.
In 2024, we repurchased 3,439,551 shares of our common stock at an aggregate cost of $249.8 million, which is an average cost per share of $72.63. In 2023, we repurchased 8,700,767 shares of our common stock at an aggregate cost of $549.6 million, which is an average cost per share of $63.17.
Interest Expense Interest expense increased $67.3 million to $239.4 million in 2023 primarily due to higher interest on our floating rate debt as well as higher balances.
Interest Expense Interest expense increased $18.3 million to $257.8 million in 2024 primarily due to higher interest rates on our floating rate debt as well as higher debt balances.
This decrease in gross profit is due to the expected decline in revenue mentioned above combined with higher selling costs on higher preneed insurance sales production during the current year. 32 Service Corporation International PART II Cemetery Results Years Ended December 31, 2023 2022 (In millions) Consolidated cemetery revenue $ 1,796.7 $ 1,776.6 Less: revenue associated with acquisitions/new construction 4.8 1.1 Less: revenue associated with divestitures 0.8 1.1 Comparable (1) cemetery revenue $ 1,791.1 $ 1,774.4 Consolidated cemetery gross profit $ 594.7 $ 608.9 Less: gross (loss) profit associated with acquisitions/new construction (1.5) (0.1) Comparable (1) cemetery gross profit $ 596.2 $ 609.0 (1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2022 and ending December 31, 2023.
This decrease in gross profit is due to the decline in revenue mentioned above combined with higher employee-related inflationary costs, higher overhead costs including incentive compensation costs, and higher facility costs on increased maintenance expenses from damages incurred at locations impacted by natural disasters during the year. 32 Service Corporation International PART II Cemetery Results Years Ended December 31, 2024 2023 (In millions) Consolidated cemetery revenue $ 1,862.2 $ 1,796.7 Less: revenue associated with acquisitions/new construction 14.5 0.2 Less: revenue associated with divestitures (0.2) 1.8 Comparable (1) cemetery revenue $ 1,847.9 $ 1,794.7 Consolidated cemetery gross profit $ 625.4 $ 594.7 Less: gross profit (loss) associated with acquisitions/new construction 7.5 (2.0) Less: gross (loss) profit associated with divestitures (0.3) 1.0 Comparable (1) cemetery gross profit $ 618.2 $ 595.7 (1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2023 and ending December 31, 2024.
FORM 10-K 31 PART II Funeral Results Years Ended December 31, 2023 2022 (Dollars in millions, except average revenue per service) Consolidated funeral revenue $ 2,303.0 $ 2,332.0 Less: revenue associated with acquisitions/new construction 33.8 7.2 Less: revenue associated with divestitures 2.5 3.2 Comparable (1) funeral revenue 2,266.7 2,321.6 Less: non-funeral home preneed sales revenue 133.1 146.4 Less: core general agency and other revenue 179.6 161.4 Adjusted comparable funeral revenue $ 1,954.0 $ 2,013.8 Comparable services performed 350,610 371,319 Comparable average revenue per service (2) $ 5,573 $ 5,423 Consolidated funeral gross profit 497.1 545.7 Less: gross profit associated with acquisitions/new construction 2.5 2.0 Less: gross losses associated with divestitures — (3.1) Comparable (1) funeral gross profit $ 494.6 $ 546.8 (1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2022 and ending December 31, 2023.
FORM 10-K 31 PART II Funeral Results Years Ended December 31, 2024 2023 (Dollars in millions, except average revenue per service) Consolidated funeral revenue $ 2,324.2 $ 2,303.0 Less: revenue associated with acquisitions/new construction 34.5 8.7 Less: revenue associated with divestitures 2.1 5.6 Comparable (1) funeral revenue 2,287.6 2,288.7 Less: non-funeral home preneed sales revenue 103.5 134.7 Less: core general agency and other revenue 211.3 180.2 Adjusted comparable funeral revenue $ 1,972.8 $ 1,973.8 Comparable services performed 347,894 356,782 Comparable average revenue per service (2) $ 5,671 $ 5,532 Consolidated funeral gross profit 465.3 497.1 Less: gross profit associated with acquisitions/new construction 1.5 0.5 Less: gross loss associated with divestitures (0.3) (0.1) Comparable (1) funeral gross profit $ 464.1 $ 496.7 (1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2023 and ending December 31, 2024.
Financing Activities Financing activities used $381.1 million in 2023 compared to $448.0 million in 2022.
Financing Activities Financing activities used $319.6 million in 2024 compared to $381.1 million in 2023.
This cash flow stream and our significant liquidity allow us to opportunistically manage our debt maturity profile as we maintain a target leverage ratio of 3.5x to 4.0x.
This cash flow stream and our significant liquidity allow us to opportunistically manage our debt maturity profile as we maintain a target leverage ratio of 3.5x to 4.0x. Cash Flow Our ability to generate strong operating cash flow is one of our fundamental financial strengths and provides us with substantial flexibility in meeting operating and investing needs.
This is especially true with respect to liability and workers’ compensation exposures due to the extended period of time that transpires between when the claim might occur and the full settlement of such claim, which is often many years.
This is especially true with respect to liability and workers’ compensation exposures due to the extended period of time that transpires between the time claim occurs and the full settlement of such claim, which is often many years. We continually evaluate loss estimates associated with claims and losses related to these insurance coverages falling within the deductible of each coverage.
These results were impacted by certain significant items including: Years Ended December 31, 2023 2022 (In millions) Pre-tax gains on divestitures and impairment charges, net $ 9.8 $ 10.0 Pre-tax losses on early extinguishment of debt, net $ (1.1) $ (1.2) Pre-tax foreign currency exchange loss $ — $ (1.5) Pre-tax estimate of certain legal matters (1) $ — $ (64.6) Tax effect from significant items $ (2.3) $ 14.0 Change in uncertain tax reserves and other (2) $ 1.6 $ 0.7 (1) Estimate of certain legal matters in the fourth quarter of 2022 included an estimate of $64.6 million related to a private litigation matter in Florida and settlement discussions with the California Attorney General.
These results were impacted by certain significant items including: Years Ended December 31, 2024 2023 (In millions) Pre-tax (loss) gain on divestitures and impairment charges, net $ (12.5) $ 9.8 Pre-tax loss on early extinguishment of debt, net $ — $ (1.1) Pre-tax estimate of reduction in legal reserve (1) $ 20.3 $ — Pre-tax estimate of restructuring charge $ (11.5) $ — Tax effect from significant items $ 0.4 $ (2.3) Change in uncertain tax reserves and other (2) $ 4.0 $ 1.6 (1) The fourth quarter of 2024 includes a reduction of our legal reserve of $20.3 million related to previously disclosed legal matters in California that have now been resolved.
This high-deductible insurance program means we are primarily self-insured for claims and associated costs and losses covered by these policies. Historical insurance industry experience indicates a high degree of inherent variability in assessing the ultimate amount of losses associated with casualty insurance claims.
Historical insurance industry experience indicates a high degree of inherent variability in assessing the ultimate amount of losses associated with casualty insurance claims.
Cemetery Gross Profit Consolidated cemetery gross profit decreased $14.2 million, or 2.3%, in 2023 compared to 2022 and is primarily attributable to the decrease in comparable cemetery gross profit of $12.8 million, or 2.1%, and a $1.4 million decrease in gross profit due to an increase in gross losses contributed by newly constructed and acquired properties.
Cemetery Gross Profit Consolidated cemetery gross profit increased $30.7 million, or 5.2%, in 2024 compared to 2023 and is primarily attributable to an increase in comparable cemetery gross profit of $22.5 million, and an increase in gross profit contributed by newly constructed and acquired properties of $9.5 million.
We believe that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $1.3 million within the next twelve months as a result of concluding various state tax matters. Insurance Loss Reserves We purchase comprehensive general liability, morticians and cemetery professional liability, automobile liability, and workers’ compensation insurance coverages structured with high deductibles.
We believe that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $0.4 million within the next twelve months as a result of the resolution of certain state tax matters.
The federal statutes of limitation have expired for all tax years prior to 2020, and we are not currently under audit by the IRS. However, pursuant to the 2017 Tax Cuts and Jobs Act, the statute of limitations on the transition tax for the 2017 tax year does not expire until 2024.
The federal statutes of limitations have expired for all tax years prior to 2021, and we are not currently under audit by the IRS. Various state and foreign jurisdictions are auditing years 2020 through 2022.
Our cash flow from operating activities provided $869.0 million in 2023. In addition, as of December 31, 2023, we have $670.9 million in borrowing capacity under our revolving credit facility. As of December 31, 2023, we had $63.3 million in current maturities of long-term debt, which primarily consist of the current amounts due on our term loan and finance leases.
Our cash flow from operating activities provided $944.9 million in 2024. In addition, as of December 31, 2024, we have $1,341.0 million in borrowing capacity under our revolving credit facility.
FORM 10-K 25 PART II The 2023 increase in operating cash flows over 2022 is primarily due to the following: • a $95.8 million decrease in cash tax payments which is primarily related to a change in tax accounting method for our cemetery segment and will defer cash taxes into future years, • a $41.3 million decrease in vendor and other payments, • a $28.5 million increase in net trust withdrawals, and • a $19.5 million increase in General Agency (GA) commission and other receipts, partially offset by • a $66.3 million increase in cash interest payments, • a $33.0 million increase in employee compensation payments, • a $29.2 million decrease in cash receipts from customers, and • a $13.3 million increase in payments for certain legal matters that were expensed in the prior year.
FORM 10-K 25 PART II The $75.9 million increase in operating cash flow during 2024 comprises: • a $66.4 million increase in General Agency (GA) commission and other receipts, • a $62.9 million decrease in cash tax payments, and • a $54.6 million increase in cash receipts from customers, partially offset by • a $35.4 million increase in net trust deposits, • a $30.0 million increase in employee compensation payments, • a $16.2 million increase in payments for certain legal matters, • a $13.0 million increase in vendor and other payments, • a $11.1 million increase in cash interest payments, and • a $2.3 million increase in restructuring payments.
Both matters relate to previously disclosed litigation. (2) See Note 5 in Part II, Item 8. Financial Statements and Supplementary Data, for additional information related to change in uncertain tax reserves and other.
(2) See Note 5 in Part II, Item 8. Financial Statements and Supplementary Data, for additional information related to change in uncertain tax reserves and other. In addition to the above items, the decrease over the prior year is due to lower gross profit from lower services performed combined with higher expenses, including facility and maintenance expenses from natural disasters.
Our Bank Credit Facility requires us to maintain a certain leverage ratio with which we were in compliance at December 31, 2023. We target a leverage ratio of 3.5x to 4.0x.
As of December 31, 2024, we had $83.9 million in current maturities of long-term debt, which primarily consist of the current amounts due on our term loan, mortgage notes and other debt, and finance leases. Our Bank Credit Facility requires us to maintain a certain leverage ratio with which we were in compliance at December 31, 2024.
The increase in comparable cemetery revenue was primarily attributable to a $15.0 million increase in comparable cemetery core revenue, which was driven by a $31.2 million increase in recognized preneed revenue, partially offset by a $16.2 million decline in atneed revenue.
The $53.2 million increase in comparable cemetery revenue was primarily attributable to a $42.0 million increase in comparable cemetery core revenue. This increase was primarily a result of a $45.1 million increase in recognized preneed revenue, which benefited from growth in comparable preneed sales production and trust fund income.
Certain of these transactions resulted in the recognition of pre-tax losses of $1.1 million and $1.2 million in 2023 and 2022, respectively, recorded in Losses on early extinguishment of debt, net in our Consolidated Statement of Operations. FORM 10-K 33 PART II Provision for Income Taxes The 2023 consolidated effective tax rate was 24.1%, compared to 25.1% in 2022.
FORM 10-K 33 PART II Provision for Income Taxes The 2024 consolidated effective tax rate was 23.2%, compared to 24.1% in 2023. The decrease in the effective tax rate in 2024 was primarily due to an increase in excess tax benefits recognized on the settlement of employee share-based awards .
The decrease in the effective tax rate in 2023 was primarily due to the non-taxable gains arising from the cash surrender value of certain life insurance policies. The effective tax rate for the year ended December 31, 2023 was higher than the federal statutory tax rate of 21% primarily due to state and foreign income taxes.
The effective tax rate for the year ended December 31, 2024 was higher than the federal statutory tax rate of 21% primarily due to state and foreign income taxes. Critical Accounting Policies, Recent Accounting Pronouncements, and Accounting Changes Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation.
In addition to the above items, the decrease over the prior year is due to an expected decline in gross profit primarily due to decreases in COVID-19 related activity. Additionally, fewer shares outstanding and a lower tax rate helped to offset the impact of higher interest expense primarily due to rising interest rates.
Additionally, fewer shares outstanding and a lower tax rate helped to offset the impact of higher interest.
Cash Flow Our ability to generate strong operating cash flow is one of our fundamental financial strengths and provides us with substantial flexibility in meeting operating and investing needs. Operating Activities Net cash provided by operating activities was $869.0 million and $825.7 million for the years ended December 31, 2023, and 2022, respectively.
Operating Activities Net cash provided by operating activities was $944.9 million and $869.0 million for the years ended December 31, 2024, and 2023, respectively.
Comparable revenue from funeral operations was $2,266.7 million for the year ended December 31, 2023 compared to $2,321.6 million in 2022. This $54.9 million decrease was primarily driven by the decrease in core revenue of $67.1 million as the prior year was impacted by the COVID-19 pandemic.
Comparable revenue from funeral operations was $2,287.6 million for the year ended December 31, 2024 compared to $2,288.7 million in 2023. Our comparable funeral services performed decreased 2.5%, which was primarily offset by a 2.5% growth in the comparable average revenue per service.
Gains on Divestitures and Impairment Charges, Net We recognized a $9.8 million and a $10.0 million net pre-tax gain on asset divestitures and impairments in 2023 and 2022, respectively, primarily as the result of asset divestitures associated with non-strategic funeral and cemetery locations in the United States and Canada partially offset by impairment losses.
Gain and Loss on Divestitures and Impairment Charges, Net We recognized a $12.5 million net pre-tax loss and a $9.8 million net pre-tax gain on asset divestitures and impairments in 2024 and 2023, respectively, which includes the net impact from the sale of non-essential real estate and businesses as well as impairment of long-lived assets and intangibles.
Comparable funeral gross profit decreased $52.2 million to $494.6 million and the comparable gross profit percentage decreased from 23.6% to 21.8%.
This decrease is primarily attributable to the decrease in comparable funeral gross profit of $32.6 million, or 6.6%. Comparable funeral gross profit decreased $32.6 million to $464.1 million and the comparable gross profit percentage decreased 140 basis points from 21.7% to 20.3%.
Removed
Bolstering our flexible capital strategy, we entered into a new bank credit agreement in January 2023 that consists of a $675.0 million term loan due January 2028 and a revolving credit facility due January 2028 providing for borrowings of up to $1.5 billion, an increase of $500.0 million from our previous facility.
Added
As of December 31, 2024, we had an increase of $161.7 million in surety bonds supporting preneed funeral obligations related to certain legal matters discussed in Note 9 in Part II, Item 8. Financial Statements and Supplementary Data.
Removed
This $43.3 million increase in operating cash flow is primarily driven by a $95.8 million decrease in cash tax payments partially offset by $66.3 million increase in cash interest payments and lower operating income of $47.5 million (excluding the impact of certain significant items) as the prior year was positively impacted by the pronounced effects of the COVID-19 pandemic.
Added
Our total comparable cremation rate increased 70 basis points to 63.8% for the year ended December 31, 2024. Non-funeral home preneed sales revenue decreased by $31.1 million primarily due to a decline of non-funeral home preneed sales production impacted by our transition from trust to insurance-funded contracts.
Removed
The increase in recognized trust fund income is in part due to earnings retained related to unclaimed property audits and cancellations. Information regarding the applicable unclaimed property audit is set forth in Part II, Item 8. Financial Statements, Note 9 of this Form 10-K.
Added
Core general agency and other revenue grew $31.1 million, primarily due to growth in general agency revenue from higher commission rates, primarily as a result of our new preneed insurance marketing agreement. Funeral Gross Profit Consolidated funeral gross profit decreased $31.8 million, or 6.4%, in 2024 compared to 2023.
Removed
Our comparable funeral services performed decreased 5.6% which comprised of a 6.9% decrease in funeral services performed by our funeral service locations offset by a 1.9% increase in cremations performed by our non-funeral home channel.
Added
Additionally, comparable other revenue increased $11.3 million, primarily from higher endowment care trust fund income.
Removed
This decrease was partially offset by a $18.2 million increase in comparable core general agency and other revenue as a result of higher comparable preneed insurance sales production. Average revenue per funeral service increased 2.8% for the year ended December 31, 2023 compared to the same period in 2022.
Added
Comparable cemetery gross profit increased $22.5 million to $618.2 million, and the gross profit percentage increased 30 basis points from 33.2% to 33.5% as the growth in comparable cemetery revenue more than offset higher overhead costs, including incentive compensation, and increased maintenance expenses from damages incurred at locations impacted by natural disasters during the year.
Removed
This average revenue growth was primarily attributable to our consumer preferences for enhanced product and service offerings as well as an increase in trust fund income. Our total comparable cremation rate increased 160 basis points to 62.9% for the year ended December 31, 2023.
Added
Other Financial Statement Items Corporate General and Administrative Expenses Corporate general and administrative expenses were $139.0 million in 2024 compared to $157.4 million in 2023. During the fourth quarter, we recognized a $20.3 million reduction in our California legal reserve as the primary claim period expired.
Removed
Funeral Gross Profit Consolidated funeral gross profit decreased $48.6 million, or 8.9%, in 2023 compared to 2022 as the prior year was positively impacted by COVID-19. This decrease is primarily attributable to the decrease in comparable funeral gross profit of $52.2 million, or 9.5%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−2 removed2 unchanged
A hypothetical increase in interest rates by 10% of the rates associated with our floating rate debt would increase our interest expense by $11.0 million. See Notes 6 and 7 in Part II, Item 8. Financial Statements and Supplementary Data, for additional information.
A hypothetical increase in interest rates by 10% of the rates associated with our floating rate debt would increase our interest expense by $4.9 million. See Notes 6 and 7 in Part II, Item 8. Financial Statements and Supplementary Data, for additional information.
Market-Rate Sensitive Instruments — Interest Rate Risk At December 31, 2023 and 2022, approximately 69% and 72%, respectively, of our total debt consisted of fixed rate debt at a weighted average rate of 4.35% and 4.32%, respectively.
Market-Rate Sensitive Instruments — Interest Rate Risk At December 31, 2024 and 2023, approximately 84% and 69%, respectively, of our total debt consisted of fixed rate debt at a weighted average rate of 4.64% and 4.35%, respectively.
Market-Rate Sensitive Instruments — Currency Risk At December 31, 2023 and 2022, our foreign currency exposure was primarily associated with the Canadian dollar.
Market-Rate Sensitive Instruments — Currency Risk At December 31, 2024 and 2023, our foreign currency exposure was primarily associated with the Canadian dollar. At December 31, 2024, approximately 6% of our stockholders’ equity and debt and 6% of our operating income was denominated in the Canadian dollar.
Our views on market risk are not necessarily indicative of actual results that may occur, and they do not represent the maximum possible gains or losses that may occur.
Our views on market risk are not necessarily indicative of actual results that may occur, and they do not represent the maximum possible gains or losses that may occur. Actual fair value movements related to changes in equity markets, interest rates, and currencies, along with the timing of such movements, may differ from those estimated.
Cost and market values as of December 31, 2023 are presented in Note 3 in Part II, Item 8, Financial Statements and Supplementary Data. Also see " Trust Investments " in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Financial Conditions, Liquidity, and Capital Resources, for discussion of trust investments.
Also see " Trust Investments " in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Financial Conditions, Liquidity, and Capital Resources, for discussion of trust investments.
Actual fair value movements related to changes in equity markets, interest rates, and currencies, along with the timing of such movements, may differ from those estimated. 36 Service Corporation International PART II Marketable Equity and Debt Securities — Price Risk In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices.
Marketable Equity and Debt Securities — Price Risk In connection with our preneed funeral operations and preneed cemetery merchandise and service sales, the related funeral and cemetery trust funds own investments in equity and debt securities and mutual funds, which are sensitive to current market prices. 36 Service Corporation International PART II Cost and market values as of December 31, 2024 are presented in Note 3 in Part II, Item 8, Financial Statements and Supplementary Data.
At December 31, 2023, approximately 6% of our stockholders’ equity and debt and 6% of our operating income was denominated in the Canadian dollar. Approximately 6% of our stockholders’ equity and debt and 8% of our operating income was denominated in the Canadian dollar at December 31, 2022.
Approximately 6% of our stockholders’ equity and debt and 6% of our operating income was denominated in the Canadian dollar at December 31, 2023. We do not have any investments in foreign operations considered to be in highly inflationary economies. FORM 10-K 37 PART II
Removed
A hypothetical 10% adverse change in the strength of the U.S. dollar relative to our foreign currency instruments would have negatively affected our net income on an annual basis by $4.7 million and $5.8 million for the years ended December 31, 2023 and 2022, respectively.
Removed
We do not have an investment in foreign operations considered to be in highly inflationary economies. FORM 10-K 37 PART II

Other SCI 10-K year-over-year comparisons