Service Corporation International

year. Let's talk about that. The primary contributor of that increase was expected in the form of lower cash tax payments of about $60 million. That's due to the tax accounting method change related to the timing of recognition of cemetery property revenue for tax purposes. And as a reminder, this tax accounting method change will result in the deferral of cash taxes in the future years when these installment payments for the cemetery property are are received. We've talked about that now for several quarters, but as we look forward to 2025 and perhaps beyond 2025, we expect cash taxes to revert toward a more normalized trend that you'd expect from us with an anticipated increase of $150 million in cash tax payments going forward compared to 2024 levels. So if you get outside of these cash taxes, though, in terms of cash flow, Cash flow is generally flat to the prior year with net favorable working capital, and that was primarily associated with premium installment sales that were more than offsetting the operating income decline that we talked about and slightly higher cash interest payments. And while we're on the topic of cash interest, assuming the rates remain at the current levels, we continue to expect an increase in cash interest in the second half of this year of about $5 to $10 million, and that really relates to higher floating rate debt balances compared to prior year. That's really not new, but I just want to remind you of that. So, shifting now to capital investment activity during the quarter, we invested just over $300 million of capital to grow our business and return value to our shareholders. Let's look at the components. First, let's start with our maintenance capital. We invested $40 million into high-returning new cemetery inventory development projects, again, to benefit future pre-need sales group, $29 million of maintenance capital into our facilities, and $18 million into digital systems and initiatives. We also invested about $9 million in growth capital towards the construction of new funeral homes and expansion of some existing funeral homes and cemeteries. From an M&A perspective, we're successful in closing three transactions. One was in Illinois, one was in Kentucky, and one was in Western Canada for a total spend of about $23 million. That brings our first half acquisition spend to about $38 million. And it's kind of how I alluded to last quarter. We continue to remain very optimistic about our momentum here. and investment opportunities and are expected to end the year above our targeted range of $75 to $125 million of capital invested in mergers and acquisitions. In addition to acquiring businesses, we also spent $15 million purchased in real estate, including $8 million for expansionary cemetery land in the western United States. Finally, In terms of capital invested or deployed to shareholders, we return nearly $170 million of capital to our shareholders in the court through $43 million of dividends and just under $130 million of share purchases. So speaking of that, year-to-date, we have purchased about 2.4 million shares at an average price of about $70. This resulted in just over 144 million shares outstanding for our company as of June 30th. Now moving on to our cash flow outlook for the full year. Even with the lower than anticipated volumes impacting our earnings during this quarter, our cash flows have proven resilient, as I've already mentioned, due to the continued support of cash receipts on both premium installment sales and the underlying cash receipts from our funeral and cemetery at-need businesses. Accordingly, as reflected in our press release yesterday, it is important to note that we are reiterating today our adjusted cash flow from Operation Guidance Range of $900 to $960 million with a midpoint of $930 million. So in closing our prepared remarks, I'd like to just do a couple more items and highlight about our solid financial position. We continue to have a favorable debt maturity profile and liquidity of just under $800 million at the end of the quarter. This consists of $185 million of cash on hand, plus just over $600 million available on our long-term bank credit facility. Our leverage at the end of the quarter increased slightly to about 3.7 times. And again, that's on a net debt to EBITDA basis. And cash flow continues to be our strength. And together with our solid balance sheet position, we are well positioned to continue delivering value to our shareholders. Once again, I want to express my gratitude to our entire SDI team for their invaluable contributions each and every day to the communities and the client families we are so lucky to serve. With that, this concludes our prepared remarks. And with that, operator,

I'd now like to turn this call over to questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble a roster. The first question comes from Joanna Gadzik from Bank of America. Please, go ahead.