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Financial Statements and Supplementary Data.
−Removed: 14 Service Corporation International
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.
As of December 31, 2024, no such charge was required in any reported period.
+Added: 14 Service Corporation International
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.
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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.
−Removed: 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.
+Added: 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.
Our ability to execute our strategic plan depends on many factors, some of which are beyond our control.
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Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure or by reducing the amount of discretionary income consumers have available to spend on our services.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
Although we may take measures to mitigate the effects of inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected.
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Our results may be adversely affected by significant weather events, natural disasters, catastrophic events or public health crises.
−Removed: Three of our largest states by total revenue are California, Texas, and Florida, areas where natural disasters are more prevalent.
−Removed: 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.
+Added: Three of our largest states by total revenue are California, Texas, and Florida, areas where natural disasters may be prevalent.
+Added: 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.
Our credit agreements contain covenants that may prevent us from engaging in certain transactions.
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There can be no assurance that we would be able to obtain replacement coverage at a similar cost or at all.
−Removed: 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.
−Removed: We sell price-guaranteed preneed contracts through various programs providing for future services at prices prevailing when the agreements are signed.
−Removed: 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.
−Removed: 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.
−Removed: 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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The customer/policy holder assigns the policy benefits to us as payment for their preneed contract at the time of need.
−Removed: 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.
+Added: 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.
Failure to collect such proceeds could have a material adverse effect on our financial condition, results of operations, and cash flows.
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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.
−Removed: 16 Service Corporation International
−Removed: Our failure to attract and retain qualified sales personnel could have an adverse effect on our business and financial condition.
−Removed: Our ability to attract and retain a qualified sales force and other personnel is an important factor in achieving future success.
−Removed: 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.
−Removed: We cannot give assurance that we will be successful in our efforts to attract and retain a skilled sales force.
−Removed: If we are unable to maintain a qualified and productive sales force, our revenues may decline and our cash available for distribution may decrease.
+Added: Our failure to attract and retain qualified sales personnel and licensed funeral professionals could have an adverse effect on our business and financial condition.
+Added: Our ability to attract and retain a qualified sales force, licensed funeral professionals and other personnel is an important factor in achieving future success.
+Added: 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.
+Added: We cannot give assurance that we will be successful in our efforts to attract and retain a skilled sales force and licensed funeral professionals.
+Added: 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.
+Added: 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.
We use a combination of insurance, self-insurance, and large deductibles in managing our exposure to certain inherent risks;
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These unanticipated changes could have a material adverse effect on our financial condition, results of operations, and cash flows.
+Added: 16 Service Corporation International
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.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: 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.
−Removed: 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.
−Removed: There is an expectation that we will adequately protect that information.
−Removed: In addition, our online operations at our websites depend upon the secure transmission of confidential information over public networks, including information permitting electronic payments.
−Removed: regulatory environment surrounding information security and privacy is dynamic and increasingly demanding.
−Removed: New laws and regulations governing data privacy, security, cybersecurity, and the unauthorized disclosure of confidential information, including recent legislation in several U.S.
+Added: 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.
+Added: 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.
+Added: In addition, our online website operations depend upon the secure transmission of confidential information over public networks, including information permitting electronic payments.
+Added: 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.
−Removed: 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.
+Added: 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.
A significant theft, loss, or fraudulent use of the personally identifiable information we maintain or failure of our vendors to use or maintain such data in accordance with contractual provisions could result in significant costs, fines, litigation, and reputational damage.
−Removed: 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.
+Added: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
Further, our associates, contractors, or third parties with whom we do business may attempt to circumvent our security measures to misappropriate such information and may purposefully or inadvertently cause a breach, corruption, or data loss involving such information.
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as well as our operations, results of operations, financial condition, and cash flows;
−Removed: and could result in litigation against us or the imposition of penalties.
−Removed: 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.
+Added: and could result in litigation or penalties.
Our Canadian business exposes us to operational, economic, and currency risks.
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If we are unable to successfully compete, our financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: 18 Service Corporation International
If the number of deaths in our markets declines, our cash flows and revenue may decrease.
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Our average revenue for cremations is lower than that for traditional burials.
−Removed: 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.
+Added: 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.
+Added: 18 Service Corporation International
Our funeral and cemetery businesses are high fixed-cost businesses.
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If our fulfillment network does not operate properly, if a supplier fails to deliver on its commitments, or if delivery networks have difficulty providing capacity to meet demands for their services, we could experience merchandise delivery delays or increased delivery costs, which could lead to lost sales and decreased customer confidence, and adversely affect our results of operations.
−Removed: 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.
+Added: 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.
+Added: 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
1 unchanged sentence
Our operations are subject to regulation, supervision, and licensing requirements under numerous foreign, federal, state, and local laws, ordinances, and regulations, including extensive regulations concerning trust funds, preneed sales of funeral and cemetery merchandise and services, and various other aspects of our business.
−Removed: 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.
−Removed: Although the FTC is considering updates to the Funeral Rule, the rulemaking process is ongoing.
−Removed: State law regulates preneed sales and imposes licensing requirements.
−Removed: Accordingly, we are subject to financial and compliance audits of preneed sales practices and state trust funds.
+Added: The funeral industry is regulated at the federal level by the FTC, which has been under review by the FTC since 2020.
+Added: 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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Violations of applicable laws could result in fines or sanctions against us.
−Removed: 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.
+Added: 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.
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To the extent these contracts will not be funded with the assignment of the proceeds of life insurance policies, depending on applicable state laws, we could be responsible for escheatment of the portion of the funds paid that relate to contracts which we are unlikely to fulfill.
−Removed: For additional information, see Unclaimed Property Audit in Note 9 in Item 8, Part II of this Form 10-K.
+Added: For additional information, see Unclaimed Property Audit in Note 9 in Part II, Item 8.
+Added: 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.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.