Good morning, welcome to the SCI Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your touchtone phone. To withdraw your question, please press Star then two. Please note, this event is being recorded. I would now like to turn the conference over to SCI Management. Please go ahead. Thank you. I appreciate that. Good morning. This is Debbie Young. I'm the Director of Investor Relations. Today, we're gonna be providing an overview of business results for our fourth quarter, as well as some thoughts about our outlook for 2023. As usual, I'll quickly go over the safe harbor language. Any comments made by our management team that state our plans, beliefs, expectations, or projections for the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include, but are not limited to, those factors identified in our earnings release and in our filings with the SEC that are available on our website. During this call, we'll also discuss certain non-GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures can be found in the tables at the end of our earnings release and also on our website under the Investor Webcast Events section. With that, let me now turn it over to Tom Ryan, our Chairman and CEO, for opening remarks. Thanks, Debbie. Hello, everyone, and thank you for joining us on the call today. Before I begin, I want to express my sincere appreciation to our entire SCI family. Your dedication and commitment to helping our client families gain closure and healing through the process of grieving, remembrance, and celebration are what makes our company great. To our pre-need teams, your efforts to provide peace of mind for families, securing final arrangements, has never been more important than at times like these. Thank you. This morning, I'm going to begin my remarks with some color on our business performance for the year and for the quarter, with some detail around our funeral and cemetery results. I'll then provide some thoughts about our 2023 financial outlook. In terms of the full year 2022 results, we are proud to report adjusted earnings per share of $3.80, which was at the high end of our most recent guidance range. While this is below our prior year, that was meaningfully impacted by COVID-19, it's an incredible 26% earnings per share compounded annual growth rate from a pre-COVID 2019 base year of $1.90. This accelerated growth was achieved by a combination of the incremental COVID learnings and efficiencies we highlighted in our Investor Day last May by increased volumes driven by excess deaths and the net positive impact from COVID-19. In the funeral segment, volume was down 4.6% for the year, but well exceeded our expectations and represents a 5% compounded annual growth rate from 2019 levels. We continue to be impacted by excess deaths, which we have consistently defined pre- and post-COVID as deaths above an approximate 0.5%-1.5% annual compounded growth. These excess deaths are identified officially as COVID, heart disease, and diabetes, among other causes. Some percentage of these deaths could be the early impact of baby boomers, SCI-specific market share gains, or temporary fluctuations caused directly by COVID or the ripple effects on health from the pandemic lockdown. Funeral sales averages remained strong for the year, we experienced some inflationary cost increases associated with labor and energy. In the cemetery segment, revenues were down slightly by $39 million or 2% versus the prior year. Pre-need recognized revenues grew primarily due to a 2.4% increase in pre-need cemetery sales production, which we had anticipated based upon our incremental COVID learnings around sales and marketing, which we touched upon at Investor Day. Our pre-need cemetery sales production has grown by an impressive 14.5% compounded annual growth rate from 2019. This pre-need growth was offset by a 7% decline in at-need revenues, as well as a $31 million decline in merchandise and service and endowment care trust fund income. Timely, meaningful action in our share purchase program of over $660 million throughout the year more than offset higher interest expense and a slightly higher tax rate. Just as importantly, we delivered these results while at the same time making strategic investments in our facilities, our cemetery inventory, our digital platforms, our customer experience and engagement, and most importantly, our people. For the fourth quarter, we generated adjusted earnings per share of $0.92, which was ahead of our expectations, but down from prior year, which benefited from a significant pandemic impact. Most of this decline in earnings can be attributable to lower operating results on a reduced impact from COVID, some increased inflationary costs, as well as a decrease in trust fund income. Below the line, the favorable impact of lower share count offset higher interest expense and a slightly higher tax rate. Now let's take a deeper look into the funeral results for the quarter. Total comparable funeral revenues declined $30 million or about 5% over the prior year quarter, primarily due to a decline in comparable core funeral revenues. Although comparable core funeral volume declined over 6% during the quarter, volumes were higher than we anticipated and about 12% higher than fourth quarter 2019 levels. Our core average revenue per service grew over the prior year by about 1%. However, that does not reflect the true success and enhanced value being delivered to our customers. The negative effects of currency translation, trust fund income, and cremation mix almost equally diluted the 4.6% organic growth rate into the reported 1%. From a profit perspective, funeral gross profit decreased about $35 million, while the gross profit percentage declined to about 23%. The revenue decline due to the lower volume versus 2021 accounted for the preponderance of the profit decline. We also experienced increased inflationary growth rates in our employee and energy-related costs. Preneed funeral sales production grew over $13 million or more than 5% over Q4 2021. Both the core and the SCI Direct channels showed impressive growth in contract velocity and increased sales averages. Shifting to cemetery. Comparable cemetery revenue was essentially flat in Q4. In terms of breakdown, core revenues increased $3 million compared to the prior year as recognized preneed revenue growth of about $18 million, which absorbed a $6 million merchandise and service trust fund income decline, was partially offset by a $15 million decline in at-need cemetery revenue. Other revenue consisting primarily of endowment care trust fund income decreased by about $4 million over the prior year quarter due to lower capital gains. Preneed cemetery sales production declined by $9 million or 3% in the fourth quarter. This was in line with our expectations for the quarter as the comparison quarter was a very strong one, more acutely impacted by COVID-19. To better understand the level at which our sales teams are operating, our fourth quarter preneed sales production was about 28% above our 2019 fourth quarter, representing an 8.6% CAGR over the three-year period. Cemetery gross profits in the quarter declined by about $18 million, and the gross profit percentage dropped to 33% from 37% in the prior year quarter. While revenues were essentially flat, the $11 million decline in high-margin trust fund income from both merchandise and service and endowment care trusts had a more pronounced effect on profits. Inflationary increases in merchandise, labor, and maintenance expenses also put some downward pressure on the gross profit line. Let's shift to discussion about our outlook for 2023. As you saw in our earnings release, we confirmed our 2023 guidance that we introduced to you last quarter of an adjusted earnings per share range of $3.45- $3.75 or a mid-point of $3.60. I think the easiest way to understand what we're assuming for 2023 is to compare the $3.60 projected mid-point for 2023 to the $3.80 earnings per share result from 2022. While the impact from COVID is not an exact science, we do our best to quantify it for you. We believe there is $0.45 per share attributable to COVID in the 2022 earnings per share, about $0.30 in funeral, and call it $0.15 in cemetery. That results in an adjusted 2022 base of $3.35 per share. It is our belief that in 2023, we can grow off that adjusted base at the high end of our historical earnings per share growth range of 12%. We expect higher recognized preneed cemetery property revenue from completed inventory projects in 2023 and a lower share count from accelerated share purchases made in 2022 will more than offset the declining impact from COVID and other excess deaths projected in 2023. This $0.40 per share growth results in a $3.75 per share base for 2023. Increased interest expense is projected to have a $0.25 negative impact on 2023 earnings per share. While we would typically assume interest expense to grow accordingly with increased debt levels as the company grows, we attribute approximately $0.15 of this increase as a unique year-over-year headwind associated with the aggressive Fed hikes impacting our variable rate debt. Removing this $0.15 from the $3.75, we arrive at our $3.60 midpoint. This $3.60 midpoint is a 17% compounded annual growth rate from a pre-pandemic 2019 base of $1.90. As you think about the cadence of the earnings for the year, we expect a meaningful decline in the first quarter as early last year was still being impacted acutely by COVID. This decline is anticipated to be mostly offset by year-over-year growth in each of the remaining quarters. As you think about some of the segment assumptions for this year, in our funeral segment, we're anticipating a comparable volume decrease in the mid-single-digit percentage range. This reflects the waning effect from COVID and other excess deaths, which should be more pronounced in the first quarter comparisons. We expect the average revenue per case to continue to compare favorably, growing in the low single-digit percentage range. We expect to see inflationary pressures lessen, but still be above our recent historical trends in the 3%-4% range, resulting in funeral margins of around 20%. We're forecasting preneed funeral sales production growth in the 3%-5% range for the year. On the cemetery side of the business, cemetery at-need revenues should correlate somewhat with funeral volumes, and we expect them to be down in the mid- to high-single-digit percentage range. For preneed cemetery, given our success in 2022, creating a new higher base and expected lack of COVID lead activity in 2023, we expect preneed cemetery sales production to grow a little less than historical trends, but still grow in the low-single-digit percentage range. We have enjoyed tremendous success during 2022 in selling into unconstructed inventory projects, which should continue into early 2023. As these projects are completed throughout the year, this should result in favorable preneed property revenue when compared to 2022. We expect inflationary pressures to lessen around labor and maintenance, but still exceed recent historical trends and anticipate margins in the low to mid 30% range. As we look to 2024, we would expect to return to normalized earnings per share growth off of this 2023 base. Finally, I'd like to thank the entire SCI team for all that you do every day for our families, our communities, and each other. You are what makes this company great. With that, operator, I'll now turn the call over to Eric Tanzberger. Thanks, Tom. Good morning, everybody. You know, kind of as Tom ended his remarks before I address the quarter, I think it's most appropriate to first just say thank you to all of our 25,000+ field and home office associates, whose continued hard work and efforts have produced our impressive financial results that we're talking today. The compassion, dedication you always provide to our client families and our communities is second to none in this industry. We truly appreciate all that you do. With that, in my comments today, I will discuss our cash flow results and capital investments for the quarter and for the full year and provide some brief commentary on our trust funds as well as our corporate G&A expenses. I'll then provide some color on our cash flow and capital investment outlook for 2023 as we move forward. I'll end the call with some comments about our financial position. During the quarter, we generated adjusted operating cash flow of $170 million, which is at the high end of our guidance range we talked about last quarter, $20 million lower than the prior year. This decline was driven by a year-over-year $52 million decline in operating income. Again, that's normalized for gains on divestitures and the impact of estimated legal charges as the prior year was impacted by more pronounced COVID activity. Additionally, we had a headwind of $21 million of payroll tax payments in the current quarter related to the deferral of about $42 million of payroll taxes under the CARES Act for the full year of 2020. We've talked about this for a couple of quarters. With this payment, we have repaid all deferred amounts at this time. Cash interest payments were also higher by about $10 million, with higher rates driving the predominance of that, driving about $9 million of the increase, and the remainder due to anticipated higher debt balances. Somewhat offsetting these headwinds were $60 million of lower cash taxes, primarily due to the lower earnings that we just mentioned. As we step back and look at the full year of 2022, we generated $826 million in adjusted operating cash flow, which is almost $200 million or 30% higher than our 2019 pre-COVID results. This enabled us to invest capital to grow our company as well as to enhance shareholder value. Of capital investment activity, during the quarter, we invested $330 million into our current businesses first, then new build opportunities and accretive acquisitions, in addition to continuing to return capital to our shareholders. Specifically, during the quarter, we invested $117 million in total capital expenditures, which is $9 million lower than the prior year. The timing of growth projects drove an $8 million decline in growth capital, while our maintenance CapEx was generally flat at about $109 million. For the full year 2022, as it relates to our maintenance CapEx, we invested about $75 million more in 2022 compared to 2021. The breakdown of the $75 million consists of three components. First, $25 million of the increase is driven in large part by increased technology infrastructure spend, as well as capital improvements to maintain our best-in-class locations. This technology infrastructure spend relates to upgrading the hardware, wireless and network capabilities at all of our funeral homes and cemeteries to accommodate current as well as planned digital enhancements. The bulk of this spend now is now complete, which I'll speak to in a moment when I discuss our 2023 outlook. Second, $30 million of the increase relates to our cemetery development spend as we continue to replenish our cemetery property inventory that our sales team sold during the COVID pandemic. Finally, the remaining $20 million of the increase relates to our digital investments and corporate spend. We've really been discussing this spend for several years now and have now broken it out separately from field maintenance capital expenditures to really just give better visibility. This spend relates to ongoing support for and enhancements of existing systems like Salesforce, HMIS Plus, Beacon, and our 2,000+ websites, which continue to enable sales growth in our pre-need and at-need sales areas, as well as new digital initiatives to improve our future customer experiences and field operations. From a growth capital perspective, we deployed $16 million during the quarter towards the purchase of real estate, construction of new facilities, and expansion of existing funeral homes and cemeteries across our footprint. This brings the total 2022 spend on new builds and real estate to about $52 million, which will also help drive additional earnings and cash flow growth for the company with low double digits to mid-teen IRRs. On the acquisition front, we're excited today to report that we had a very active fourth quarter, investing almost $90 million in acquiring three combination operations and 11 standalone funeral homes in four separate transactions, bringing our full-year spend to just under $105 million. These businesses acquired during the quarter are located in California, Pennsylvania, and Ontario, Canada. We're excited to welcome all of our new associates to the SCI family. We continue returning capital to shareholders with nearly $116 million being returned this quarter alone through $42 million of dividends and $74 million towards share repurchases. For the full year, we returned an impressive $821 million to shareholders. Let's shift gears and talk about our trust funds a little bit. We saw some improvements to the value of our trust assets in the fourth quarter. Again, year-to-date, they declined about $800 million- $5.7 billion in total at year-end. Deposits on the new sales that go into the trust funds and withdrawals from maturities generally offset each other during 2022. The decline is primarily associated with the change in market value of our trust assets, really reflecting the 11.5% decline in trust performance that we've disclosed year-to-date. As of today, our trust assets have increased by just over $250 million in 2023. Keep in mind, this market volatility has a muted effect on our near-term earnings as well as our cash flows. Again, I'd also like to reiterate, we have an accounting white paper and a one-page summary on pre-need in the investor section of our website, which I think will really help illustrate the cash flows associated with these trust funds. Now let's talk about corporate G&A. After adjusting for the $64 million pre-tax estimated charge for certain legal matters, corporate G&A of $43 million in the current quarter was about $2 million higher than the prior year and slightly higher than our expectation, primarily due to workers' compensation and general liability insurance costs that were a little bit higher than what we expected. As I mentioned on our last call, as we look forward in 2023, we continue to expect corporate G&A to be lower than we experienced in 2022 at approximately $38 million-$40 million per quarter, as incentive compensation is expected to be lower than our COVID impact 2022. The actual results within this quarterly range will depend on company performance during the year, which will affect our incentive compensation plans. Let's move to a few comments about our cash flow outlook about 2023. In our press release, our guidance for adjusted operating cash flow for the full year of 2023 is a range of $740 million-$800 million, with a mid-point of $770 million. As Tom just mentioned, while we're expecting some nice normalized growth in our businesses in 2023, the headwind from lower expected COVID volumes generally offsets this growth and leads to modest growth in 2023 EBITDA. There are a couple of items that I'd like to highlight, though, when thinking about our adjusted cash flow in 2023. First, as we've said previously, we'll have higher interest costs on our floating-rate debt. Last quarter, we mentioned it could be a headwind of about $50 million, but I now think it'll be closer to about $55 million, primarily on higher expected rates and somewhat higher balances. Cash tax payments in 2023 are anticipated to be about $165 million at the midpoint of our guidance, or $15 million lower than 2022 on the lower earnings. By the way, from an effective tax rate standpoint, we continue to model in the range of 24%-25% for 2023. From a working capital perspective, we're expecting $20 million-$25 million incremental use of working capital as uses from strong preneed cemetery sales and strong incentive compensation cash payments are partially offset, having the no CARES Act payments in 2023 that I mentioned before is now behind us. To look about investing capital in 2023, our first investments will be, as usual, back into our businesses. We expect maintenance CapEx will drop from $335 million- $300 million, which is primarily due to the declines in technology infrastructure spend at our field locations that I already mentioned. At the mid-point, investments in our locations make up about $120 million. Cemetery development CapEx comprises about $130 million, and the remaining $50 million is being deployed towards digital investments and corporate needs. In addition to this maintenance CapEx that I just described, we expect to deploy $75 million-$125 million towards acquisitions and roughly $45 million in new funeral home construction and real estate opportunities, which together will drive low-to-mid-teen after-tax IRRs, which, again, is well in excess of our cost of capital. We feel we have the financial flexibility and liquidity to continue much of the same successful capital investment strategy in 2023 as you've seen us do over the past few years. We will continue to follow a disciplined and balanced approach, investing to the highest relative value for our shareholders. Of course, this strategy is predicated on our stable free cash flow, our strong liquidity, as well as our favorable debt maturity profile. In closing, I'd like to provide some commentary on exactly that, our liquidity and financial position. I'd first like to highlight that in January of this year, we entered into a new $2.175 billion bank credit agreement, which consists of a $675 million term loan and a $1.5 billion revolving credit facility, both maturing now in January 2028. This transaction increased our liquidity by over $600 million. Today, that stands at about $1.2 billion in liquidity, and it also improved our debt maturity profile substantially. Finally, our leverage at the end of the quarter was about three and a quarter net debt to EBITDA. Our EBITDA continues to normalize as COVID activity wanes, and we expect to enter our targeted leverage range of 3.5 to four times by the end of this year. In conclusion, 2022 was a really great year for us. We begin this year with a very strong financial position. Most importantly, I echo Tom's comments that none of this would have been possible without the hard work and compassionate caring of all of our dedicated frontline associates. We appreciate all of your efforts and again say thank you. With that, operator, we'll now conclude our prepared remarks, and we'll now open it back to you for questions. Thank you. We will now begin our question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will be from Joanna Gajuk from Bank of America. Please go ahead. Good morning. Thanks for taking the question. I guess, maybe clarify the comment you made on 2024. Did I hear right you say you expect to grow at a normalized rate off of the earnings base? I don't know, did you mean from off of the 360 mid-point, or there was another number? Joanna, what I was referencing to is we think this 360 is kind of a level-off year for, you know, with all the COVID impacts and the like. You know, based on what we know today, I know 2024 is still a ways off. We would expect to get back to that growth range of 8%-12% growing off that 360 base. Obviously, we'll update you as the year goes on and be in a better position to talk about that a year from now. Okay, that makes sense. I just want to clarify that. I guess on the quarter, and I guess how this relates to 2023 guidance, so clearly Q4 was stronger, and you said, you know, funeral services was the area that came in much stronger. So is there a way to think about, you know, how big were those excess death number in Q4? Also, what do you assume in your guidance for 2023? Did anything change how you think about, you know, 2023 from that angle versus how you were thinking about things, you know, three months ago? Yeah. I think three months ago, Joanna, if you really look at what's happened, we've been able to maintain our guidance. When you compare back to 2022, I'd say the big upside surprise is the funeral segment is performing more funeral cases than we would have anticipated. That's somewhat being offset by, you know, a couple of things like trust fund income, you know, interest expense that's going up. Being able to absorb those things that a year ago we wouldn't have anticipated it being so impactful. So really positive about, you know, our funeral volumes and our ability to service those. I think on the excess deaths, you know, I mentioned that what we can do is we can go to the death certificate and see why somebody's, you know, been deceased. You know, normally we expect, let's say, a 1% compounded under growth. Well, we're at five. You begin to say, "Well, what's causing that?" I think, you know, some of it could be the beginning of the baby boomers, some of it could be our market share. I think, you know, I believe most of it is either COVID-related and a lot less of that and more of this concept of excess death. Remember, the concept of excess death is really around, you know, as a society, are we less healthy mentally and physically than we were going into the COVID and the ramifications of that. Lack of access to healthcare for some period of time. It's our belief, and I think there's other data supporting this, that those trends will continue, albeit they'll lessen. As we think about these excess deaths, they'll continue into 23. They'll be less comparatively as you think about 2022, is the way we're thinking about it. Again, not an exact science, just our belief. Would you say it's like 1%, 2% of funeral services being, you know, above where they would have been otherwise? Yeah. We would expect that base to grow, you know, somewhere around, call it rounded 1%-2%. Again, I'd say that base, for a variety of reasons, is going a little bit more. Again, compared to 2022, we expect 2023 to go down. I still think we'll be operating at elevated levels if you compound growth off that 2019 number. We feel good about, you know, the revenue streams that we're projecting for 2023. Okay. That's helpful. Understood. I guess on another topic, you mentioned the settlement, this almost $65 million, that was excluding G&A, and you exclude it from the cash flow outlook. Can you give us more details on this amount? You know, it's quite sizable, actually. What exactly is being alleged? Are these the same cases really in those two states, because you mentioned Florida and California, or these are two different things? I guess with that, you know, should we think about this, you know, any indication that similar issues are, you know, happening in other states? Hi, Joanna. I'll take that. This is Eric. You know, these are two cases in California and Florida that have been previously disclosed, as we said in the press release as well. You know, the first thing I'd probably give a little bit color on is to say this relates to our SCI Direct segment that is delivering to the direct cremation consumer products and services and are doing it very well. You know, that's a segment of ours that's just over about $200 million of revenues on our total of about $4 billion in revenues, just to give you kind of a relative size perspective. What's really unique about this business is, and what we love about this business, though, is, you know, we're really delivering exactly what a direct consumer wants in terms of products and services. This is one of our segments that has some of the highest customer satisfaction surveys that we receive. Google stars as well as we measure it. I think it's something like, you know, almost 90% of the Google star feedback we get are actually five stars as it relates to it. It's a great business. It's high customer satisfaction, and we really like to continue, you know, serving that consumer in such a positive way as we have done. We've said in the press release, we've kind of broken it out for you. It's a pre-tax charge. It's very much estimated at this point in time. About two-thirds of that relates to customer cancellations, and a third of it relates to some investigative costs and other legal expenses in California. you know, when someone cancels one of these contracts, first of all, any consumer has the ability to cancel anything that we've done that has been undelivered. The undelivered service offerings could always be canceled. These specific cancellations, though, relate to what some products and services, such as merchandise, such as an urn kit, that have already been delivered. In those situations, we're gonna go ahead and open that up for a certain period of timeIf they choose to do it, to cancel it. That's our best estimate at this time. It could be bigger than this, it could actually be a lot smaller than this. This is our estimate for now in terms of customer cancellations. You know, when you think about the business then going forward, you know, I think we may rethink some of the things that we do to deliver prior to the at-need event in this particular line of business as we move forward. In doing that, it could have an effect on some of the revenue recognition. It could have some effect where we trust more monies as we move forward. Again, just to put that in perspective as we move forward, those are not very material. I think that's probably worth maybe $0.05-$0.07 a share in the total $3.60 guidance, and that's included in the model. Going forward, we may tweak our policies or how we interact with consumer a little bit going forward in terms of the pre-delivery of merchandise and such. Again, a very happy customer is what you have to get from this, and we wanna continue delivering to a very satisfied customer that finds value in the products and services that this particular segment delivers. In terms of the cash flow in 2023, the outflows, this is still, you know, a moving target. We don't have the settlement. One of the settlements in Florida has not been completely approved yet. We're still in discussions with the State of California on a settlement in the other ones as well. You know, just in terms of timing, that's why we chose not to include it. Again, the cancellations is our best guess at this point. It could be a little bit heavier or it could be a lot lighter than this as well. For all of those reasons, we'll keep you informed. We don't think this is ultimately gonna have, you know, material effect. It's a really good business, and we look forward to providing great service to that customer that appreciates it moving forward. Thank you. Our next question will be from John Ransom from Raymond James. Please go ahead. Hey, good morning. Maybe an unfair question because it would involve math, and I know that's challenging for the team. If you were to look at 2019 to 2023, obviously, you know, if we compounded 2019, you know, at 10%, you know, versus where your 360 is, we're a lot lower than 360. Could you give your best guess as to how much of that is just elevated volumes on the funeral side? How much of that is cost and then how much of that is pre-need cemetery and other? Just trying to get a sense of, you know, kind of detailing out the outperformance, you know, versus, you know, controllable versus, you know, just higher than expected volumes. Yeah, John. I think when you go to the 360, there's not a lot of higher than expected volumes left. Obviously, in the 380, there's still some. As we think about it, if you remember in Investor Day last year, we had that slide that showed the $0.65 of improvement, the new base that we're operating on. 75% of that was tied to cemetery sales related to, you know, marketing and sales improvements. Then we had another 10% and 15%, which related to cost efficiencies and related to accelerated share buybacks. As we sit here, I'd say that's the preponderance of the improvement. Combined with that, to your point, there's probably another $0.10 or $0.15 worth of, I'll call it excess death, impact. That's where I go back to, I don't know if that whole $0.10 and $0.15 goes away one day because it all related to ripple effects of COVID, and how much of it stays because it's our market share gain or it's the baby boomers beginning to impact the projection. The most of it, I think we'd identified before. You're right, there's a little bit of excess death still in that 2023 projection, not as much as we saw in 2022 or as much as we saw in 2021. Well, I mean, it's kind of remarkable because you would also add in the higher interest expense, which wouldn't have been contemplated. It's really the base is even a little better than that. Yeah. Okay. Just a squishy question on the consumer. I mean, you know, pre-need cemetery is the ultimate, you know, fairly large ticket item that can be deferred. Are you seeing kind of as you went through 2022 with the ebbs and flows of the stock market in 2023, you mentioned the lower end consumer, some changes, but what are you seeing in your core kind of 73-year-old boomer, you know, relatively affluent when you approach him or her about a pre-need, big ticket pre-need cemetery? What are you seeing in terms of behavior changes, if any, from the peak? I'd say generally, John, seeing very favorable. I mean, we're still seeing good stuff at the high end. We're seeing good stuff, you know, in the, you know, generally in the core. You touched upon it. I'd say we're still seeing at kind of that lower entry point sale, a little more difficulty in getting people to, like you said, sign on the dotted line versus defer. That segment continues to be a little bit challenging. I think by the results you're seeing, we're overcoming it with a lot of other things which are, you know, more plentiful leads, more effective leads. Mm-hmm. -take these marketing, leads and have learnings and be able to test. Mm-hmm. You know, leveraging the utilization of our technology to enhance kind of real-time training and productivity. I think a lot of this we're overcoming. Still feel very strong about it. You know, my thought is if we don't enter into a recession, and inflation begins to tamper back down, we'll see that customer come back and feel really good about, you know, back half of 2023 and particularly as we get into 2024. Yeah. Then, you know, you've touched in the past on sales productivity. You know, in short, you're selling more stuff with fewer people, but do you have like, again, take a point in time, 2019 maybe is our pre-baseline. What's a useful way just to think about the average productivity per salesperson, you know, today versus pre-COVID? How much of that would you say is just using more modern tools like, contact, you know, contact management and, you know, moving inventory online and streamlining your product flows, versus just good old-fashioned kind of more rigorous kind of top-down management? That's it for me. Thank you. You bet, John. As far as headcount of salespeople, I'd say we're down about, you know, 300 or 400 headcount from 2019 pre-COVID. If you look at the productivity, I think I referenced we're 28% higher than we were back then. We're able to be 28% higher with, you know, call it 7%- 8% less headcount, quite a bit of efficiency. I would tell you that, quite a bit of that, the majority of that is probably being able to leverage the tools we've invested in, be it Beacon, be it Salesforce, and the way we utilize those things. Then combining that with, I think, you know, the marketing leads growth. If you look at the lead sources, we've had the traditional channels that, you know, generally follow a pretty predictable pattern. The real increase in leads has been through the digital leads and the marketing leads, and those have become more plentiful and more effective. Again, Gerry Heard knows better than me, but I'd say over 50%, you know, it's probably approaching 60% or 70% is just the productivity of these tools. The rest of it's, you know, better leads and good old-fashioned, like you said, great sales teams that execute. I just want you to know I keep getting mailers from you guys. You know, I'm a little young. I just wanna point this out. You know, you can take me off your list for a few years. You're actually our target customer. Lifestyle- It's on Elvis. Thank you. Thank you. Our next question is from Scott Schneeberger from Oppenheimer. Please go ahead. Thank you. It's Daniel in for Scott. Good morning. Could you guys please elaborate a little bit on the on the cemetery pre-need sales production expectation for 23, as it comes to the cadence as well as how you think about velocity versus sales average and large sales activity? Thank you. Sure. As you look at our the way we're guiding on here is we believe that, again, we're back up and running and growing at what you'd expect us to do. On a normalized basis, we'd say, you know, mid-single digit growth is what we would expect. What's slightly different about 2023 is recall, particularly in the first quarter, there was a lot of COVID activity. When you have COVID activity, there's a lot of at-need, you know, arrangements or burials that are taking place, and that's a pretty productive pre-need sale because it'd be a companion sale. When we think about the cadence in the first quarter, while we expect the first quarter to be great, it's not gonna look as favorable compared to the first quarter of 2022 because of that COVID activity. As we think about it, that's the toughest sales productivity quarter. I should say sales production quarter. Then as you get to the rest of the year, the comparisons become a little more normalized. Overall, instead of thinking about it growing in the mid-single digit, we're projecting it to be in the low single digit. That's the slight difference being that first quarter comparison. Got it. Thank you. On the average, funeral per service, average revenue per service, how do you think about the components of that as we look into 2023? You're talking about particularly cemetery, correct? No, on the funeral side, the average revenue per service. The puts and the takes as we look into 2023. I think on the average revenue side, you know, we expect that to be in the low single digits. We had kind of an unusual thing happen towards the end where we had currency translation issues as it relates to Canadian operations. Obviously, the trust performance or the trust earned income was down in 2022. Those types of things as you think about, you know, 2023, I think our expectations are, you know, income is still gonna have some challenges because of the carryover impacts of what happened in 2022. Who knows on the translation side, but we feel very comfortable absent that we're gonna grow at the organic level in the low single digits and feel really good about pricing. We're not seeing, really any pushback at all in passing along some of these inflationary impacts that we're seeing in our business. Got it. Thank you. That's helpful. Final one from us. I mean, the last couple years, CMA's had a funeral assistance program, it sounds like that's gonna come to an end now in May, following the end of the public health emergency declarations. Have you seen any impact from this program? Not in any material way. I'm sure we've seen some, but I couldn't even tell you collectively what that number is. We're not seeing that in any material fashion. Okay, gotcha. Thank you so much. The next question is from Tobey Sommer from Truist Securities. Please go ahead. Hey, good morning. This is Jasper Bibb for Tobey Sommer. Just one clarification on the trust income assumptions in your EPS guidance. Obviously, it's been a pretty decent start to the year for equity returns. Are you assuming any higher trust returns now relative to your initial gain range you gave back in November, or would you say no change there? I'd say it's a great start, but it's too early to bank anything right now. You know, we've said from the beginning that, you know, we think there'll be a rebound, and we think they'll be high single digits, maybe even get to about 10% in terms of the return. It's a great start in January, but, you know, we haven't changed anything at this point in time. Jasper, just to clarify. We think we will have positive results in 2023. As you think about trust income and its impact because of the cadence of the market, declining last year, we're gonna have some tough first half year comparisons when you think about it. To Eric's point, we're gonna earn well in the first quarter, but I still anticipate trust income to be down because you've got the last nine months of last year you've got to overcome. Right. Yeah, that makes sense. Then I wanna ask about some of the cost inflation pressures you cited in the prepared remarks. Are you seeing any kind of easing of wage inflation or other input costs early this year? How are you thinking about kind of managing those inflationary trends in the guidance? Sure. I mean, the primary ones we saw last year were wages and then energy-related, predominantly utilities, some fuel. Take the easier one first. On the utilities and fuel side, I think things are trending better. Obviously, we saw a lot of increases in 2022. We've seen the dampening effect. That should begin to show up in the comparisons. On the wage front, we definitely are seeing some pressure, you know, going away. We did experience probably about a 5% wage inflation when you think about, you know, what we encountered in 2022. As we think about 2023, we'd expect that to lessen. Like I said, I don't think it's back to 1%-2% inflationary cost, though. It's probably more 3%-4%. Again, I've, I did make a passing grade in economics, but okay with an A, apparently. Appreciate the detail there. Thanks for taking the questions, guys. The next question is from A.J. Rice from Credit Suisse. Please go ahead. Hi, everybody. Just a couple questions if I could. Cremation rate up 150 basis points year-to-year this quarter. It's been running sort of at that pace for a while. Do you think that's sort of the new normal? I know you've typically had a range of 100-150, 50-150. Any thoughts on what you're seeing out there with respect to cremations? Yeah. I think, I think you're right. I think probably, you know, 120-150 is a fair way to think about it. It will ebb and flow. You know, obviously, COVID time period was a little unique, but I'd say based upon what we're seeing, we'd expect in that 120-150 range. Okay. It seems like the larger cases, higher end of the market in the cemetery side has come back. Do you think we're sort of at a normal pace, or are we seeing some reflection of pent-up demand that makes it sort of above average at this point? I don't know that it's pent-up demand 'cause we saw pretty strong throughout. I think it could be a combination of two things. You know, one, we've built a lot of fabulous inventory out there and really across the entire country. Having more availability is gonna lead to more higher-end sales. I think some of our continued growth when you think about the markets being down 20% and all that, and all the things you'd expect to happen, some of that could be the fact that, hey, look, we've got it in more places that wasn't there and maybe more spectacular stuff than we had before. That's gonna entice people into that high-end category. We feel good. There's a lot of available inventory. We're gonna, as we mentioned, flip a few of those projects, bigger projects across the country and would anticipate selling into those projects at a high rate. Okay. obviously, like last couple years, you ended up on a strong note with the acquisitions in the fourth quarter. Is that the way, you think acquisitions are just gonna be really skewed to the fourth quarter, getting ahead of the year-end taxes? Maybe just comment on your pipeline that you're seeing now. There's definitely, you know, people trying to get year-end, and I think there's some facts associated with that. The pipeline looks good. You know, we don't there's not a lot of huge deals, but I'd say the deal activity is very good. We're seeing a lot of, you know, people that we're talking to, and so we expect to have a really good 2023 and hopefully get a few more in the first three quarters of the year. It is pretty typical, like I said, for people, they really don't wanna cross that year-end threshold, so there's a real mad rush to get done. I'd say you're right. Good year coming up, we believe, and a lot of things going on. Anything different on pricing for deals that you're seeing? No, not really. I think the whole, you know, what's your normalized volume discussion was always interesting. I think that's actually getting more clarity as we get into, you know, this year versus, let say, two years ago, where you're arguing about was 2021 a good base year to grow off of, which we never believed. I'd say that part is getting easier, and I'd say the pricing expectations are still a little, you know, higher than they were three or four years ago, but manageable. Okay. Maybe last question. Any update on the discussions around the Funeral Rule, what you're hearing from the FTC or otherwise? Any commentary there? No, we You know, the comment period was up in January this year. We submitted a very similar response to reiterate, you know, our position. We had, you know, it's about 700, 750 responses that they think they have to go through at this point in time. A.J. Rice, the timing is just open. We really don't know. I mean, this started three years ago that we started talking about it. I think someone said the last time that we had a change 20 years ago or so it took eight to 10 years to even make that change. I think the timing is very uncertain. I think you could read the papers yesterday and today, the FTC has got a lot on their plate. I'm not sure that with the quality of the, industry in total, dealing with this customer and getting very, very high marks, I'm not sure this is any type of burning platform for the FTC to deal with, you know, sooner rather than later. We'll just have to wait and see. Okay, great. Thanks a lot. Thanks, A.J. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to SCI Management for any closing remarks. We wanna thank everybody for being on the call today. We look forward to speaking to you again on our earnings call, I believe is on May the first, April 30th. Early May. Early May. We'll, we'll talk to you then. Everybody, be careful. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.