Service Corporation International

21 earnings conference call. All participants will be in 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 and then one on your telephone keypad. To withdraw your question, please press star and then two. Please note, this event is being recorded. I would now like to turn the conference over to the STI management. Please go ahead.

Thank you. Good morning. This is Debbie Young, Director of Investor Relations for STI. Welcome to our company's review of business results for the first quarter of 2021. Before we jump into the prepared remarks from Tom and Eric, let me remind you that we'll be making some forward-looking statements today. 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 on our filings with the SEC that are available on our website. During this call, we will also discuss certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the appropriate GAAP measures is provided on our website under the Investors, Webcasts, and Events section. It's also in our earnings press release and AK that were issued yesterday. With that out of the way, I'll now pass it on to our Chairman and CEO, Tom Ryan.

Thanks, Debbie. Hello, everyone, and thank you for joining us on the call today. We hope you and your families are staying safe and healthy these days. It's hard to believe it, but it's been a little over a year since the onset of the pandemic, and we are thankful that our associates and our communities are beginning to experience some relief from the overwhelming effects of COVID-19. Before I begin, I want to once again express my heartfelt thanks and appreciation my SCI family. It is your courage and commitment that positioned us for the results we posted this quarter. You have continued to stay relentlessly focused on what we do best, helping our client families gain closure and healing through the process of grieving, remembrance, and celebration. I want to assure you that your health, safety, and well-being continues to be a top priority for us. Now to the quarter. This morning, I'm going to begin my remarks with a high-level overview of the quarter, followed by a more detailed analysis of our funeral and cemetery results, and finally, comment on our guidance and outlook for this year. For the first quarter, we generated adjusted earnings per share of $1.32 compared to 43 cents in the prior year for an extraordinary increase of more than 200%. This strong earnings per share growth was driven by two factors, significant funeral volume increases, which we anticipated based upon December volume increases of 31%, and a substantial increase in cemetery property sales, particularly pre-need cemetery property sales, which exceeded our expectations and significantly enhanced our earnings per share results for the first quarter of 2021. At a high level, both the funeral and cemetery segments in the Corps had margin improvement of over 1,000 basis points, driven by a double-digit top-line percentage growth coupled with a more efficient cost structure. We also benefited from a lower share count and lower interest expense, which was more than offset by a higher adjusted tax rate. Let's take a look at the funeral results for the Corps. Total comparable funeral revenues grew $109 million or almost 22% over the same period last year. These favorable results were driven by our core funeral businesses as well as SCI Direct. Core funeral revenues grew $95 million due to a 22% increase in the number of core funeral services performed and a 0.5% improvement in the core funeral sales average. In the first three months of the year, we continued to see a meaningful increase in the number of services performed due to COVID-19, with January and February showing very strong year-over-year growth and then tapering off somewhat in March as comparisons to the prior year became more challenging and as the effects of the vaccine rollout began to impact this year. For over a year now, our frontline team has been serving record numbers of client families and continue to do so with compassion, commitment, professionalism, and agility. We were very pleased with the core funeral sales average growth of 0.5% in the quarter. This was achieved despite a modest 20 basis point increase in the core cremation mix, which is well below our typical annual expectation of 100 to 150 basis points. In March, the funeral average rose an impressive 8% when compared to the prior year, and more than offset the more difficult pre-pandemic comps in January and February. Additionally, when you look at the core average in absolute dollars in the month of March, it is pretty much in line with pre-COVID levels. I believe this is a testament to the value our families continue to place on remembrance and celebration, which is very encouraging to us. As restrictions are easing, and both our client families and their guest comfort levels about larger gatherings improved due in part to the vaccine rollout, we should expect that improvement to continue. Pre-need funeral sales production for the first quarter grew an impressive $35.3 million, or 16%, which exceeded our expectations. Both our core funeral homes and SCI direct businesses posted strong increases, after a challenging 2020. The growth predominantly came in the month of March, and we did have an easier comp in the back half of March, but we also saw significant growth in leads from digital and direct mail, increased location traffic due to higher-at-need services performed, and from the gradual return of in-person seminars. From a profit perspective, funeral gross profit increased $85 million in the gross profit percentage increased more than 1,000 basis points to 31%, realizing a 78% incremental margin on our revenue growth. We continue to benefit from growth in our high incremental margin core business, coupled with the efficiencies that have favorably impacted our cost structure. Now shifting to cemetery. Like I referenced earlier in the quarterly overview, we experienced significant growth in cemetery revenues in the back half of 2020 and anticipated carrying momentum into the first quarter of 2021. But our cemetery performance this quarter even exceeded our lofty expectations. Comparable cemetery revenue increased almost $161 million or 54% in the first quarter. In terms of breakdown, at-need cemetery revenue accounted for $40 million, or about 25% of the growth, driven by more interments performed due in part to the effects of COVID-19. And recognized pre-need revenues accounted for about $120 million, or the remaining 75% of the revenue growth, due to higher than expected pre-need cemetery sales production during the quarter. Pre-need cemetery sales production grew an astounding $130 million, or 67% in the first quarter. The majority of this growth, or about $85 million, was driven by an increase in core velocity, or the number of pre-need contracts sold. The remaining growth of about $45 million was about evenly split between increases in large sales activity, as well as a higher quality core average sales. Consumer reception and demand for our products and services remained very strong. We saw significant lead growth this quarter, which was the combination of higher traffic from our at-need services and acceleration of leads from multiple lead channels, including digital and traditional lead sources, as well as a record impact in certain markets from the Qingming holiday that drove elevated pre-need cemetery sales from our aging communities. We also continue to see a more productive and efficient sales force with better utilization of our customer relationship management system and improved conversion rates from our lead campaigns. Cemetery gross profits in the quarter grew by approximately $111 million, and the gross profit percentage increased more than 1,500 basis points to nearly 41%, realizing a 69% incremental margin. Now I'll speak to our revised outlook and provide a little color. Back in February, recall that we issued adjusted earnings per share guidance of $2.50 to $2.90 per share. We had qualified this guidance and provided a wider range than we have historically, as we felt it was difficult to predict the timing and the efficacy of the vaccine rollout. funeral volume comparisons the rest of the year resulting in down mid single digit percentages for the entire 2021 in a favorable remaining nine months of funeral sales average resulting in the return to 2019 pricing levels showing low to mid single digit percentage growth over 2020 averages however Based upon our pre-need cemetery sales production for the first four months of the year, we are increasing our guidance for the year from a decline in the mid-single digits to finish the year in a range of flat to potentially low single-digit percentage growth. Primarily from this pre-need cemetery sales production guidance increase, we are adjusting our annual earnings per share guidance to $2.70 to $3, thereby raising our midpoint by 15 cents. As we noted in our guidance from last quarter, we still expect future periods of earnings per share and cash flow results to be negatively impacted temporarily by the pull forward of funeral case volumes and at-need cemetery sales into 2020 and early 2021. Still, efficiencies we have gained by improving processes and leveraging technology have allowed us to produce a more competitive and profitable operating platform. This combined with the capital structure improvements we've made over the last 15 months are expected to allow us to produce earnings per share compounded annual growth returns in the low or even potentially mid-teen percentage range for 2022 and 2023, off of a pre-COVID 2019 earnings per share base of $1.90, even while absorbing these temporary pull-forward effects. From there, we anticipate that we will begin to see the impact of baby boomers entering their late 70s and realize the benefits of our investments in technology to stay relevant with the next generation of consumers. These investments will enhance our ability to drive market share to improve both the physical and digital customer experience and in a more effective and efficient manner. In closing, I just want to say what an honor it is to work with such a great team and that I am proud to call my SCI family. Your selfless dedication to our families and communities is so appreciated, especially in times like these. My heartfelt thanks to each of you. With that, operator, I'll now turn it over to Eric.

Thanks, Tom, and good morning, everybody. We are so proud of all 24,000 of our colleagues that have managed through the challenges of the past year and a half. I am particularly thankful for how our frontline field associates have been there compassionately helping families in their greatest time of need and stepping up to support our communities through these very challenging times. Looking forward, I remain hopeful as it appears we finally might be emerging from the worst of this pandemic and soon be able to return to a more normal future. So with that most important thing said this morning, I would now like to shift to the business at hand and begin to walk you through our cash flow results and capital deployment for the quarter and then briefly touch upon our advised full-year cash flow guidance, financial position update, and capital deployment future plans. So we generated operating cash flow of nearly $300 million during the quarter, representing an impressive increase of $118 million, or 65%, over the prior year. Strong pre-need cemetery sales, increased number of funeral services performed, as well as increased ad need cemetery internment volume, led to the robust growth in operating earnings, which translated to strong operating cash flow results. Cash flow was also affected by cash interest that increased $10 million predominantly as a result of timing of payments related to the recent debt refinancing transactions, somewhat offset by lower rates on our floating rate debt. Cash tax has also increased $12 million in correlation with the higher earnings. Finally, we experienced a net use of working capital in the quarter, resulting from the tremendous growth in cemetery-printed property sales. While this drove our earnings, these sales are mostly paid for on an installment basis, which means the cash will be collected over time, including positively impacting cash for the remainder of this year. We also experienced a timing difference of cash related to an additional payroll that was funded this quarter when compared to the first quarter of last year. So now let us discuss our capital deployment of approximately $270 million during the quarter, covering reinvestment into our businesses, followed by growth capital, opportunistically reducing debt balances, and finally returning capital to our shareholders. So again, we invested $34 million into our businesses through $24 million of maintenance capital and almost $10 million of cemetery development capital spent. Our cemetery development capital was almost $15 million lower than the prior year quarter, and it was lower than our expectations, primarily due to extended cold weather in certain areas of the country that delayed several of our cemetery development projects. From a growth capital perspective, we invested about $9 million on growth capital toward the new build and expansion of several funeral homes. These new builds should provide us with great low double-digit percentage returns going forward and expand our footprint into desirable markets. We also deployed almost $6 million towards real estate purchases. We only spent a small amount of acquisition capital during the quarter, which we believe is just timing, as we continue to be confident in our targeted deployment range for acquisitions for the full year of $50 to $100 million. We also paid down our credit facility by a net amount of $80 million during the quarter, as cash flow generation during the quarter, as I've said, was very robust. Finally, we deployed over $140 million of capital to shareholders through dividends and sharing purchases. Dividend payments in the first quarter totaled about $36 million, or 21 cents per share. So let's shift into a few comments on our outlook and our financial position. Earlier, Tom, as you heard, highlighted the earning strength of our business with a strong start to this year, driving the need for us to adjust our guidance after the first quarter. Our cash flow outlook has similarly changed, so we are adjusting our cash flow guidance up from $600 to $700 million to a revised guidance range of $650 to $725 million. This represents an increase of about $40 million at the midpoint of our guidance. Higher cash earnings, as well as some positive working capital expectations that I just mentioned, are expected to be somewhat offset by higher cash taxes. And on that note, we're now expecting $180 million of cash taxes in 2021, or an additional $20 million over the $160 million we guided to in February, driven by the increase in earnings. We also continue to expect a full year normalized effective tax rate between 24% and 25%. So therefore, our expectations and guidance do not contain any federal statutory tax rate changes at this time. Our expectations for maintenance and cemetery development capital spending in 2021 remains unchanged at $235 to $255 million. Additionally, we continue planning for the deployment of 50 to 100 million towards acquisitions and around 50 million in new funeral home construction projects. Supporting these capital deployment expectations is our strong balance sheet. We continue to be very well positioned with a significant amount of liquidity of roughly 765 million at the end of the quarter, consistent of approximately 245 million of cash on hand plus just over 520 million available on our long-term bank credit facility. On the continued growth in EBITDA, our leverage at the end of the quarter fell below three times to 2.61 times. This leverage level was somewhat less than our expectations as EBITDA came in stronger than expected during the first quarter. This calculation now reflects a full four quarters of strong pandemic impacts to our EBITDA. So as we look beyond the impacts of this pandemic, we expect to settle into our targeted leverage range of three and a half to four times. So in closing, we're off to a great start to 2021. Our teams across the company continue to deliver great care to our client families and communities we serve in this challenging environment. We began 2021 on very firm footing, reporting even stronger earnings and cash flow results than initially expected. I am pleased that we were able to increase our 2021 guidance, and looking forward, I am also impressed with how much we have learned and adapted during these trying times as an organization. We have evolved to become a much stronger organization, and while there are some expected headwinds in the near future, as we look forward to 22 and 23, I expect our improved foundation will continue to add even more value going forward than we initially expected. Finally, we're most honored to be able to help our client families and our communities during their most difficult days in these very unusual times and deliver peace of mind to those who wish to develop plans for their future. So with that, operator, that concludes our prepared remarks. I'd now like to turn it back over to you for questions.

Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star and then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star and then 2. Our first question is from AJ Rice of Credit Suisse. Please go ahead.

Thanks. Hi, everyone. I appreciate the comments that Tom made about his updated thoughts on the longer term outlook, 22 and 23. I'd be curious if there's any way that you could flesh out maybe some of the underpinnings in your assumptions that give you the confidence that those numbers are achievable even as we look that far out.

Sure, Ajay. Thanks a lot for that question. It is awfully difficult I think right now to try to decipher what a normalized earnings per share might be in 2023, considering all the dramatic swings in earnings of late and could be in the future from the impact of COVID. So let me try to explain why I'm so excited about the future outlook for our company. For years, you've heard us talk about our long-term earnings per share growth framework of 8% to 12%. I think if you go back and use 2019 as a base in order to make some assumptions around growth, this has the effect of removing the noise around COVID. And for me, it provides a lot of clarity about where we could be as a company in a few years, which I believe could potentially be above our 8% to 12% range. On the funeral side, AJ, based upon our best projections, the impact of the pull forward will likely have us performing about, say, the same number of funeral services in 2023 as we did in 2019. Now, those are assumptions, but it's our best guess at this time. So, assuming reasonable growth from SCI Direct and minimal inflationary funeral prices, coupled with managing our expenses well, we would expect the contribution from the funeral segment to be relatively flat as the funeral volumes are flat to 19. But remember, true earnings growth from funeral will require increased funeral services, so think baby boomers. However, keep in mind that a very significant learning from the COVID experience was that when we get volume in the related revenue, 70 to 80% will drop to the bottom line. This in and of itself is exciting. But for this hypothetical, I'm assuming that the baby boomers haven't arrived yet in 2023, and they might. So then shifting to cemetery, like we said for a long time, our opportunity to drive meaningful near-term earnings per share is tied to our success in generating pre-need cemetery sales. So if you start at a 2019 base and assume we can grow pre-need cemetery at 5.5% to 6.5% compounded over a four-year period, like we have in the past, the cemetery segment could likely add 75% to, say, 85% per share to our 2019 earnings per share base of $1.90. Then, if you take the impact of our strategic capital deployment over this four-year period between the opportunistic share purchases and acquisitions, we add another, call it, $0.35, $0.45 to our 2019 base. This would result in a 2023 earnings per share approaching, call it, $3 to $3.25. And again, this would absorb the pull forward effect and reflect no impact from potential market share gains or baby boomer volume expansion. So that's my simpleton way to think about it, and hopefully that's helpful in clarifying why I'm so excited about the future of this great company.

Yeah, no, that's very helpful. Thanks a lot. Maybe one other follow-up. I know Eric ran through the capital deployment priorities and what you've done in the current quarter, I guess, and part of your long-term plan. opportunities are these two areas so share repurchase i think the target for the year was 150 million you already did 106 in the first quarter a million uh and then i think on the acquisitions there wasn't there's only a little bit of a tuck in and you've still got a goal of 50 to 100 for the year can you just update us as the targets change are you still confident on those is there upside to the share repurchase aspect and And maybe are you confident on the 50 to 100 on the acquisition front?

Yeah, let's take acquisitions first. I mean, we are confident with that, AJ, and I kind of alluded to that in my remarks because, you know, there's not much there during the quarter as it relates to deployment, you know, on the cash flow statement, as you correctly just mentioned. But we really believe it's more of a timing issue. You know, we're excited about the pipeline. There's definitely deals that are out there. that we and our teams are looking at, and we're somewhat excited about it, frankly. And so, yes, we believe $50 to $100 million is good for right now, which means that that activity should pick up from a capital deployment perspective as we go through the remainder of 2021. You're also correct on the sharing purchases. You know, we think that was a great opportunity in producing a nice, you know, frankly low double-digit type return. you know, for us at the levels that we saw earlier in 21. We did spend just over $100 million. You know, what does the future look like? You know, I think you should continue seeing us, you know, continue to put capital in that section, in that area, with absent any type of other relative return opportunity that is higher return. I mean, frankly, we're going to deploy capital to the highest relative return opportunity And if M&A, for example, is much bigger or there's even larger new build deployment opportunities, for example, hypothetically, that type of return is probably going to exceed your share repurchase program. So from that perspective, if you're following me, we're going to deploy capital. We're going to have good double-digit type, even low to mid-teen type returns with the menu that we have. But in terms of the exact mix, you know, it's very hard for me to tell you specifically, but I agree with you definitely out of the gate. We've strongly deployed towards the sharing purchase program in the first quarter.

All right. Thanks a lot.

Thank you. The next question is from Joanna Godrick of BOA. Please go ahead.

Thank you. Good morning. Thanks for taking the question, and thanks, Tom, for... Yes, sharing your views around the forward-looking kind of outlook or at least the base scenario there for earnings. But to your point, you don't assume market share gains, but clearly the company did gain market share based on these growth rates that we've seen. So can you kind of flash it out to us a little bit? I know it's very precise, but any color or any numbers even in terms of how you think about the market share you gained last year into this year in both segments.

Here, Joanna. I'll try to do that. As you think about market share and really trying to tie back to CDC accurate data, it's really difficult to do it in real time. So we have to do it based upon know our ability to get information in certain markets and i have a couple of observations to make you feel better about that and again my example was just saying i think we can achieve those goals even without market share and i'm with you i think we've gained a little bit particularly in the markets where we had scale so where you saw big cities that were impacted dramatically by covid we experienced for sure surges in market share and touching customers and helping them at very, very challenging times, you know, when you think about the New Yorks and the LAs and the places like that. The other thing that's interesting, we track, as you know, funeral volume by at-need and then pre-need turning at-need. So if you think about those two buckets, the thing we've been experiencing over the last couple of quarters and more acutely in the first quarter this year, I think our at-need walk-in, forgive me, I'm speaking from memory, was up 24%. And our pre-need backlog change was 16. So there was a noticeable difference of more customers coming in that above and beyond what we're seeing our backlog. That normally tells me that you're out there performing for customers that probably would not have come to you when you think about the radius that we draw from. So I feel really good. I think we definitely believe in certain markets we've gained share. I can't say that across the nation. We surely have created a lot more visibility, and I think based upon, you know, our Google star reviews and the like, Yelp, I think we have an opinion that we have a very favorable impression in the communities where we operate.

Okay. I appreciate that, Collar. And I guess a little bit different topic. On pricing, I think I missed that part. There were some technical difficulties. I think you were talking about the outlook for the year for the funeral average that you expect to return to 2019 pricing levels, I think. So can you talk about, you know, would you experience this critically? March was strong because of the comps, and you said that... of pricing, the absolute number was back to the pre-pandemic level. So I guess, is that correct? And can you talk about kind of, you know, how pricing is trending in markets that are more open versus, you know, still where maybe there's more restrictions or fewer vaccinations and whatnot? And specifically, you know, I guess the impact on Canada, maybe if you can frame it, you know, ex-Canada, how pricing, you know, played out this quarter?

Sure. So First of all, you're correct. The average we saw in March was effectively the same as January of 2020, so pre-COVID US, Canada. So we're very pleased that we've been able to get back to that number. So as you think about the comps in the back half of the year, we would expect the average year over year from here on out to grow in the low to almost approaching mid-single-digit percentages on a comparable basis, but look a lot like 2019. And I think as we go forward, we feel very good about our ability to pass through inflationary pricing and expand the menu of products and services as it relates to that. On specific markets, you're right, there is a big difference in temporary timing of whether a market is open or not. Because I think, again, people are, we surely are complying with local laws and regulations and suggestions. So if you can't have a big gathering, that's going to have an impact. We've seen that, I'd say, more profoundly in the Canadian markets. For a while, we saw it in California, but clearly California's opening up, New York's opening up. So we have a lot of good momentum with these markets opening up. I do think Canada's experiencing a little more difficulty, and so we'll get there. We're confident that we are. So I feel really good about the average as we think about 22 and 23, if we learn something from this crisis is that people value what we provide. And you can see the cremation average only moved 20 basis points, which is, again, shocking when you think about your immediate reaction to what will people choose to do through this COVID crisis. And I think, again, they want to celebrate, they want to remember, they want to get through the grieving process. So I think good news on the average.

Right now, and actually, that was my other follow up on the other cremation, right? The shift was pretty much nonexistent this quarter. But I know it's hard to, you know, say whether this is here to stay. But I guess, do you have any views there in terms of what do you expect for the year? In terms of the cremation percentages? And I guess, what is the cremation percentage, you know, in your in your revenue backlog that you create? It has that change?

The cremation percentage in the revenue backlog is pretty consistent. What we have seen that's a little bit different is the burial consumer has basically come back almost completely as it relates to their percentage in choosing service. And the percentage in choosing service in cremation, while cremation hasn't moved that much, we still see a little bit of a holdback as it relates to the percentage of people choosing service. So we're seeing that in the pre-need backlog too. I think it kind of coincides with the at-need that as I'm sitting there thinking about it at this moment, it's hard to envision a big service because COVID's happening. So we definitely saw that. I would expect as markets open up that that begins to move back to traditional changes. And again, I think on the at-need funeral side, I'm sorry, cremation mix side, clearly 20 basis points is probably smaller than what we anticipate, so we would expect that to gradually move back towards that 100, 150 at some point. I do think, again, you're using comparable numbers, probably the biggest cremation mix change happened in late March and early April when a lot of markets around the US were shut down. So I think April should see a pretty favorable, maybe even a positive change in that cremation mix. But then I think you begin to normalize a little more as you get to the back half of the year.

Great. Thank you for the call.

Thank you. Thank you very much. Ladies and gentlemen, just a reminder, if you wish to ask a question, please please start from the bottom. The next question is from John Ransom of Raymond James. Please go ahead.

Hey, good morning. Can you hear me?

Yeah. I can't even hear the lawnmowers.

Exactly. Well, thanks for all the good news. The question I have is, as we move through this year, and I know it's short term, how do we think about the correlation of tough funeral comps to pre-need cemetery sales? It seems like there was a relationship that was a good guy Is there a bad guy you're expecting? And then secondly, going back to Joanna's question, it looks like, you know, the correlation of your numbers with CDC was pretty good until this quarter. And I know it's hard for you to say in real time, but do you think the CDC numbers showing, you know, high single-digit declines in deaths in the first quarter was just off, or did you really think you took that much share? Thanks.

You know, from your second question, John, this is Eric. I'll answer it for you. I'm not sure those numbers have been updated completely, would be my first comment. And my second comment would be, you have to also take into account that we had some ability of a lag. We were so busy. When you take the West Coast, for example, and you take Southern California, you take Arizona, you take Nevada as well, we ultimately had to employ ability for storage for decedents and such and our families our client families were to a large degree very patient because there was a backlog of us able to perform those funerals especially in places like California where you couldn't even have a funeral service indoors so that's where we talked about before about deploying tents and such to do that but remember you're not recognizing revenue until you perform the services and deliver the product. So from that perspective, you had deaths that occurred in CDC and back half of November and December, which was very robust, which actually was revenue recognized in January and the first part of February, for example. So I think you have to take into account both those factors, but I do agree with you. When we went and looked at the underlying data, It was hard for us to frankly recognize that underlying data, John, to be frank about it. Thanks. John?

Yeah, your first question was around cemetery, pre-need cemetery growth. First, let me say that I think at-need cemetery correlates very closely with funeral volumes because, again, they're relying upon the same customer. What we would see in the pre-need side is a bit of a lag, what we'd expect. The reason for that is, while some pre-needs may be companion sales, some of them may take a month or two months, it's a lead that we're going to follow up on. We would expect, even as case volume comes down, that you still have a number of good leads that you can work as you think about pre-need cemetery. When you really try to peel this back, and I think this is a helpful way to look, and again, I apologize, I keep going back to, I'm using 2019 as a base just to think about what would I expect in normal circumstances. So if you take this quarter, we grew Preening Cemetery sales $130 million for 67%. If you go back to 19 in production levels and say, let's grow it 7% a year for two years, that would tell you that of your $130 million of growth, about $55 million of that is what you would have expected, and that $75 million would be COVID or COVID-related. And what I mean by COVID or COVID-related is I think some of it may be directly related to a death in COVID, and therefore we can generate sales. That probably is going to have, again, a two-month lag of volume. But then there's a component of COVID that I'll call is the awareness of the consumer. And the awareness of the consumer is really strong. And that's the piece I don't think we can tell, right? I don't know if because COVID is so fresh in our minds and, you know, I would expect that to have a longer tail, that people are going to be aware of, you know, taking care of their affairs, managing this part of it. So that's the piece that I think is a little more difficult, but For me, easily, 55 of this 130, in my opinion, we'd have gotten with or without COVID. And it's the other piece that we've got to kind of, we're still figuring out, but I think we feel confident about our ability to execute.

Great. Thanks so much.

Thanks, John. Thanks, John.

Thank you very much. So we have no further questions. Can I come back to management for closing comments?

Okay. Thank you, everyone, for being on the call with us today. Stay safe. We look forward to talking to you again in about three months. Take care.

Thank you very much. Ladies and gentlemen, that concludes this conference. Thank you for attending today's presentation.