管理層發言
Good day, and welcome to the SCI Third Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to SCI management team. Please go ahead.
Good morning. This is Trey Bocage, AVP of Investor Relations and Treasury. Welcome to our third quarter earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute. But before that, let me 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. Today, we might also discuss certain non-GAAP financial measures. A reconciliation of these measures can be found in the tables at the end of our earnings release and on our website. With that out of the way, I will now turn it over to Tom Ryan, Chairman and CEO.
Thanks, Trey. Hello, everyone, and thank you for joining us on the call today. This morning, I'm going to begin my remarks with some high-level color on our business performance for the quarter, then provide some greater detail around our funeral and cemetery results. I will then close with some thoughts about our earnings expectations for the rest of 2025. For the third quarter, we generated adjusted earnings per share of $0.87, which is a more than 10% increase compared to the $0.79 in the prior year period. We saw impressive increases in cemetery revenue and gross profit as well as lower corporate, general, and administrative expense, which was partially offset by slightly lower funeral revenues and gross profits, which when combined, resulted in $0.10 of earnings per share growth from operating income. Below the line, the favorable impact of a lower share count was more than offset by a higher tax rate and a slightly higher net interest expense, resulting in a negative $0.02 decline in earnings per share.
The higher tax rate was the result of the nondeductibility of certain excess tax benefits from the settlement of stock option awards. If the tax rate had remained constant, we would have had an additional $0.04 in earnings per share, resulting in 15% earnings per share growth over the prior year quarter. Now let's take a deeper look into the funeral results for the quarter. Total comparable funeral revenue declined by almost $2 million or less than 1% compared to the prior year quarter. Comparable core funeral revenue declined by $3 million or just under 1%, primarily due to a 3.5% decrease in core funeral services performed, partially offset by a 3% increase in the core average revenue per service. The core cremation rate increased modestly by 50 basis points to 57.3%. Non-funeral home revenue increased by $3 million, primarily due to a 13.4% increase in the average revenue per service.
We expect this impressive growth in the average revenue per service to continue as older preneed contracts that are maturing out of our backlog have higher cumulative trust earnings, and more recent preneed contracts written will mature with higher value in the backlog due to our 2024 operational decision to no longer deliver preneed merchandise at the time of sale. Non-funeral home preneed sales revenue decreased by $4.6 million, primarily due to our decision to stop delivering preneed merchandise at the time of sale, as I previously mentioned. This quarterly decline should cease later in 2026 as we anniversary the date of not delivering merchandise preneed. And the non-funeral home average revenue per service will have a meaningful compounded growth in the coming years as each year, a higher percentage of contracts with higher value mature out of the backlog. The decline in merchandise revenue this quarter was partially offset by higher general agency revenue due to our conversion from selling a trust-funded preneed product to an insurance-funded preneed product.
Core general agency and other revenue grew by $3 million or 6%, primarily driven by higher preneed insurance sales production. This positive impact from higher sales production was slightly offset by a modestly lower average general agency rate as we decided to offer a noninsured flex product in several West Coast markets, which generates a lower general agency commission rate in the current period. Funeral gross profit decreased by $9.5 million, while the gross profit percentage declined by 170 basis points to about 18%. This gross profit decrease was attributable to the slight decline in revenues for the quarter, coupled with higher selling costs and a moderate fixed cost increase. Declines in higher-margin merchandise revenue were somewhat offset by increases in general agency revenue. This general agency revenue is substantially offset by a higher portion of our selling costs being recognized currently for GAAP purposes.
We continue to manage our fixed costs below inflationary trends to about a 1.4% increase for the quarter as we continue to focus on leveraging our scale, both in the field operations through staffing metrics and in our overhead support functions. Preneed funeral sales production increased by $6 million or about 2% over the third quarter of 2024. Core preneed funeral sales production increased by $20 million or 9% as we have now lapsed the anniversary date of the transition to Global Atlantic, and we experienced growth in both insurance and trust-funded sales production. Non-funeral home preneed sales production decreased by $14 million or almost 20% as SCI Direct transitions from the sale of trust to insurance-funded preneed contracts. This transition has required many of our sales counselors in certain states to go through extensive training, obtain insurance licenses, both of which contributes to the temporary reduction in the number of contracts written.
We expect in early 2026, we will experience year-over-year sales production growth again for SCI Direct as a whole. Now shifting to cemetery. Comparable cemetery revenue increased by $31 million or almost 7%. Higher core revenue was the primary driver, complemented by higher other revenue. Our core revenue increase of $27.5 million or 7% over the prior year quarter was primarily due to a $27 million increase in total recognized preneed revenue, of which $21 million resulted from higher property revenue and $6 million from higher merchandise and services revenue, which includes recognized merchandise and service trust fund income. Other revenue, primarily internal care fund trust income increased as well by $3.5 million or 10%. Total recognized preneed revenue benefited from growth in comparable cemetery preneed sales production of $30 million or almost 10%. Large sales grew by an impressive $8 million or 19% over the prior year quarter.
Maybe more impressively, core sales accounted for $22 million of the sales production increase as solid velocity growth was complemented by higher sales averages. Cemetery gross profit in the quarter grew by $18 million, and the gross profit percentage increased by 160 basis points, generating an operating margin percentage of 34%, primarily due to the strong growth in cemetery revenues. Now let's shift to a discussion about our outlook for the remainder of 2025. As you saw in our earnings release, we are confirming the midpoint of our normalized earnings per share guidance and narrowing the range to $3.80 to $3.90 for 2025, and we are slightly raising our cash flow outlook due to stronger working capital trends in the business as well as anticipated lower cash taxes. Therefore, the fourth quarter range would be $1.09 to $1.19 in normalized earnings per share. In the funeral segment, we expect volumes to range in the slightly down 1% range to the slightly up 1% range, bringing the 12-month volume for 2025 to slightly below flat.
This is 200 basis points better than 2024, and we believe now the pull-forward effect going forward will be negligible and can begin to see the effects of demographics, our premier locations, outstanding people, and the impact of our tremendous preneed funeral backlog to affect volume growth in the years to come. We would expect the sales average in the quarter to continue to see solid growth. We expect our core general agency revenues to slightly decline, even though we anticipate preneed funeral sales production growth as the average commission rate should decline due to certain markets having the ability to sell noninsured flex products this year that carry a lower commission rate. Overall, we expect modest funeral revenue and gross profit growth as compared to the fourth quarter of 2024. In the cemetery segment, we would expect to see low to mid-single-digit cemetery preneed sales production growth, but a lower construction revenue recognition rate as we should have a slightly muted effect on the recognized cemetery revenue growth.
Overall, we expect flat to low single-digit revenue growth, resulting in flat to slightly down gross profits as compared to the fourth quarter of 2024. Below the line, we expect the impact from our share repurchase program to have a favorable effect on earnings per share as compared to the prior year, which will be somewhat negated by a slightly higher tax rate in the fourth quarter. We feel very good about our momentum that we will carry into 2026. We expect favorable trends in funeral volume, funeral average, SCI Direct, preneed cemetery sales, and lower interest rates and believe that we can achieve earnings per share growth within our long-term growth framework of 8% to 12%. In conclusion, I want to acknowledge and thank the entire SCI team for their daily commitment to our customers, our communities, and to one another. Your skill, dedication, compassion and attention to detail are the foundation of our success. Thank you all for making a difference every day. And with that, operator, I will now turn it over to Eric.
Good morning, everyone. Thanks, Tom. Thank you, everybody, for joining the call today. And as I usually do, I'm going to kick it off the way Tom just ended. So before I start my prepared remarks, I'd like to extend my sincere appreciation to all our dedicated and talented associates. Your commitment, your compassion enable us to serve client families with care and professionalism during some of life's most challenging moments, which ultimately makes a meaningful difference in the communities that we serve. I am truly proud of the work you do every day and continue to be grateful for your continued dedication to our client families and to the communities that we serve. So with that, I'm going to begin today by providing highlights on our cash flow and our capital investments during the quarter. And then I'll make a few comments on corporate G&A and then touch on our remaining 2025 cash flow expectations and then conclude with an update on our overall very positive financial position here at SCI.
So we generated adjusted operating cash flow of $268 million in the quarter, neutralizing for an expected $11 million of higher cash taxes, adjusted operating cash flow increased $10 million from the prior year. So let's break that down a little bit more. Our underlying business supported adjusted operating cash flow by generating higher operating income of about $14 million during the quarter that Tom just walked you through in his comments. Cash interest was also lower by about $13 million, but that was due largely to cash interest payment timing associated with the note refinancing that we completed in September of 2024 and coinciding reduction of our drawn bank credit facility. Additionally, lower rates on our floating rate debt were offset by higher floating rate balances. So offsetting these favorable impacts were working capital uses of about $17 million, which really related to just normal timing of payables and receivables during the 3-month period.
So let's move on to capital investment. We invested $140 million in the quarter into our existing locations, new builds, funeral home and cemetery acquisitions, and real estate purchases. So let's break that down a little bit. We invested $86 million of maintenance capital primarily into our current funeral homes and cemeteries in the quarter, which was in line with our internal expectations. $45 million of this was allocated to highly profitable cemetery development projects, $35 million into our current funeral and cemetery locations and then $6 million into digital investments and some corporate spend as well. We also invested $17 million of growth capital in the quarter, primarily for the construction of new funeral homes and crematories. Finally, we invested $37 million into business acquisitions during the quarter, bringing our full year business acquisition investment to $65 million.
Also, subsequent to quarter end, we invested an additional $3 million for a few locations in Canada, bringing us currently just shy of the low end of our full year acquisition target range. The pipeline of acquisition opportunities today as we speak continues to be robust, and we fully expect to achieve our $75 million to $125 million acquisition investment range target for 2025. So moving on to capital distributions. We returned $123 million of capital to shareholders in the quarter through $45 million of dividends and $78 million of share repurchases. We repurchased just under 1 million shares at an average price of about $79 during the quarter. This brings the number of shares outstanding to just over 140 million shares at the end of the quarter. Year-to-date, though, we returned $538 million in capital to shareholders, repurchasing 5.1 million shares at an average price of $78, which totals right around $400 million and an additional $135 million of dividends.
And by the way, we currently still have about $410 million of remaining share repurchase authorization as we speak today. So shifting gears now for the quarter, I'm going to now make some comments about our corporate G&A expense, which decreased $5.4 million quarter-over-quarter, which was primarily due to timing of incentive compensation accruals versus the prior year quarter. We remain very comfortable with our fourth quarter 2025 range of $39 million to $41 million for corporate G&A expense. Although as you've seen in the past, we fully expect some variability in this due to our long-term incentive compensation plans that could push us above or below this range slightly during any particular quarter. So shifting now to the rest of 2025 and as you saw in the release, we updated our 2025 adjusted operating cash flow guidance range to $910 million to $950 million with a midpoint of $930 million.
That is a $20 million increase over our midpoint of $910 million, which we talked about last quarter. $10 million of this increase is related to lower cash taxes and $10 million is related to better working capital expectations. So after deducting $315 million of expected maintenance capital at the midpoint of our ranges, we expect to achieve very impressive adjusted free cash flow of $615 million, which, by the way, approximates about $4.40 of free cash flow per share. And as I've discussed in prior quarters, cash taxes have continued to return to more normal levels in 2025 after the tax accounting method change that benefited cash flow since the third quarter of '23. While this normalization created an expected headwind, the impact of this is now partially offset by the newly enacted federal tax legislation during this year. We now expect the full year amount of cash taxes to be approximately $135 million, which compares to the $145 million that I anticipated last quarter.
And again, this is $115 million greater than the $20 million of cash taxes paid in 2024. Lastly, as we've addressed in prior quarters, we expect our effective tax rate to be 25% to 26% as excess tax benefits are no longer recognized on the settlement of certain executive share-based compensation awards. So I'm now going to conclude my comments with an update on our financial position. We continue to have a favorable and manageable debt maturity profile with ample liquidity. We ended the quarter with liquidity of just under $1.5 billion, consisting of about $240 million of cash on hand and approximately $1.2 billion available on our long-term bank credit facility. Additionally, leverage at the end of the third quarter was 3.6x net debt to EBITDA, which is down from almost 3.8x at the end of the third quarter of 2024 and remains toward the lower end of our long-term leverage target range of 3.5 to 4x.
So our strong balance sheet position and its liquidity, combined with the robust cash flows continue to support our ongoing capital investment program, which provides us tremendous flexibility to invest opportunistically for the long-term benefit of SCI's customers, our associates and our shareholders. So in closing, I want to again emphasize how proud we are of our entire SCI team. Your unwavering commitment to supporting our customers as they plan and as they manage through their most difficult times is truly inspiring. Thank you again for all that you do. So with that, operator, this concludes Tom and I's prepared remarks, and we'd like to go ahead and open the call up now to questions.
分析師問答
The first question comes from Scott Schneeberger from Oppenheimer.
It's Daniel on for Scott. I'd like to start with the cemetery preneed sales production. I mean, velocity was clearly good in the quarter. Could you discuss how velocity trended in this quarter on a year-on-year basis versus last quarter? It sounds like it's accelerating. So some perspective on that, please? And what do you think that means for the consumer? And as we look into next year, your comfort level with this trend to be sustained?
Yes. I think if you look at our results and then some of the other retailers that are out there, it doesn't jive very well because we really saw across the board a lot of great velocity in the quarter. And again, quarter is a quarter, it's not a year. But I think, one, having the flexible financing plans for our consumers to the extent we can has made a big difference. I think just focusing on the basic metrics that we utilize in order to generate leads, good leads and bring them to close. So a lot of it is just good fundamental sales management and sales techniques that are bringing in more customers and accommodating them with financing terms that work. But I think you're right. I mean, what's really great about this quarter is we saw great growth on the high end with large sales up almost 18%. And then within the core itself was the primary growth. And we saw more of an effect from velocity than from sales average, which is very inspiring when you think about that component of what we do. So right now, based on what we see, we see continued ability to focus on growing velocity, getting these inflationary cost increases, and we're still seeing a lot of activity at the large sales level. So we feel good about those trends going into the fourth quarter and as we head into 2026.
Got it. Following up on that, I mean, it sounds like you're targeting your typical 8% to 12% EPS growth range for next year. Could you please discuss your confidence level in achieving that? And is there anything on the cash flow side that's unique or different for next year that we should be thinking about?
I'll address the 8% to 12% growth, and then I'll let Eric discuss cash flow. Our usual level of assurance in a typical year is about 85% to 90%. Historically, we've frequently achieved or exceeded that range. I can't predict what 2026 will bring, so there's no guarantee. However, looking back over various periods, like 20, 10, or even 6 years, we've generally seen a compound growth rate of around 14%. We usually tend to exceed our targets, but it requires certain conditions to align. Ultimately, it's largely about revenue growth. If we see an increase in volume and maintain averages, we can expect to see improved margins on the funeral side. The cemetery business will mainly be influenced by pre-need sales, especially for property. A lot of the merchandise and services that are being fulfilled from our backlog have become a strong growth driver as well. But to truly enhance cemetery margins, those sales are essential. We still hold to our 85% to 90% confidence level. I can't forecast what 2026 will entail, and now I'll pass the cash flow question to Eric.
Yes, I think you need to understand the relation of cash flows to cash taxes. Without considering cash taxes, there’s nothing unusual regarding working capital. As EBITDA and company growth continue, cash flow from operations will also grow, historically around 4% to 6% CAGR. We started the year facing a cash tax headwind of about $150 million. Last year, we paid $25 million and initially expected to pay $175 million, but that has decreased by about $40 million due to new federal tax legislation. Some of the changes are recurring, like accelerated depreciation based on our asset investments, while others may be more one-time adjustments. I believe we might recover about $20 million to $30 million of that amount, but we’ll provide more specific guidance in February. In terms of investment, we don’t anticipate significant changes in our maintenance capital expenditures, which are about $315 million this year. Therefore, our free cash flow should still exceed $4 a share, possibly reaching $4.25 a share, which is a significant achievement for our company.
The next question comes from Joanna Gajuk from Bank of America.
So I guess maybe just to follow-up on the cemetery preneed sales production sounds like a very robust number. And I guess you gave us some details on this. So thanks to that. And how should we think about next year? I mean, it sounds like you believe you're on track for the 8% to 12% EPS growth. So should we assume mid-single-digit growth next year for cemetery preneed sales doesn't make sense? Or is there any reason to think about a different number?
Yes. I think, Joanna, thanks for the question. Overall, we do expect cemetery sales will trend like they kind of have historically. We feel very good about low to mid-single-digit growth. A component of that is large sales. That's the one that tends to have a little more volatility to it quarter-to-quarter. But overall, we would expect to be able to grow that again in the kind of low to mid-single digits with each of these categories. We just feel very good. I think the inventory is out there. The sales force is doing a tremendous job of taking people through there and educating them. The one component, we talked a little bit about this, is the cremation consumer continues to be a high-growth opportunity in our cemeteries. We're seeing more cremation consumers pick either cremation gardens, cremation niches. We have a lot of products that I'd tell you, consumers really don't have familiarity with.
I think a lot of cremation consumers come in and don't really understand what we have available. So we're really focused this year with some consumer research that we've done about trying to tie that consumer in a better way to educate them about what we have because we found in the focus groups that almost 0 out of 10 knew what we had and about 8 out of 10 once they saw it said, I'm interested in looking. It doesn't mean they're going to buy, but I think there's a consumer there that we probably have not done as good a job with as we've done with the burial consumer. So tie that into cemetery over the next couple of years, I think it's a real growth opportunity, albeit not a huge one, but one that has an ability to grow at a higher growth rate.
Regarding the cremation customers purchasing into the cemeteries, is it possible to quantify that? It seems like you mentioned it could be significant, but could this contribute an additional percentage of growth each year?
Yes. Yes, I think the other parts are going to grow in traditional ways. I think we feel very good. We've really focused on the types of leads and our ability to close the leads, and this kind of gets back to sales productivity and sales growth. But our sales force has done, I think, a tremendous job. Our revenue team has helped construct some really nice inventory across our cemeteries. We spend about $160 million a year injecting new inventory into the system, and we do a real good job of converting that pretty quickly into sales. So we feel very good about next year right now based on everything we know at the high end, at the core level, and like I said, I just want to identify some of these productivity gains or velocity gains. If we can get more cremation consumers in there, it's going to drive more sales, not as high an average, obviously, but drive more velocity, more familiarity. And the nice thing about cemeteries is it's really a family tree component to this, right? Because people are going to visit the cemeteries, people are going to want to buy adjacent properties for the family. So this is really good in educating and providing future leads and opportunities to our sales force.
Okay. Great. And if I may, can you talk about the sales trends, I guess, at your largest location, the Rose Hills? It sounds like that's really running a lot of what's happening with the company. So can you flesh out how the quarter has been going and anything to flag there?
Yes. I would say Rose Hills is doing very well. Really congrats to Rachel and her sales team. They've done a tremendous job of setting the inventory up, bringing in the consumer, driving the leads. And so they had a very successful quarter, well into the double-digit growth. And we expect great things to come because, again, there's great inventory, there's great people, a great team. And so we expect Rose Hills to be a big part of our growth story into 2026 and beyond.
The next question comes from Tobey Sommer from Truist.
Good job on expense control in the quarter. Do you have pretty good confidence in being able to extend the trend in low expense growth into 2026? And are there any areas where you are seeing pressure?
Well, I think historically, Tobey, we've seen a little pressure on the cemetery maintenance front as you look over the last few years. And again, that's kind of easy to understand as you think about cost of water, cost of labor, those types of trends. We definitely have been instituting some new strategies that we believe can continue to kind of manage those costs down. But probably the biggest lever we have in the margins is our staffing metrics. And so our operating teams do a tremendous job, and it's really being able to flex when you have volume or you don't have volume. So the way I look at it is this, I would expect that if we were to get more volume in 2026, well, it's going to be hard to hold 1% to 2% cost growth, but that's okay because it's supported by the revenues. So utilizing those staff metrics, and that's both using part-time people. It's about how we're managing the staff themselves, about trying to leverage technology to take some of the burdens off our caregivers and funeral directors.
So that's really how we're managing today. It's a more challenging volume environment, and we're able to kind of flex and manage those costs. So I think that's the way I would think about the field. And then, obviously, at the home office level, we're always trying to look for ways, particularly today with AI and technology, can we begin to think about how we do our jobs differently and begin to leverage those tools to where maybe we don't have to hire an extra person or 2 person. So I think that's the way, by department, we're trying to manage the costs going forward.
I wanted to follow up on the cremation comment you made in response to a previous question. Regarding the company's efforts to educate potential customers about their options, how would you compare customer awareness of the different cemetery options to that of cremation? How quickly do you think you can make changes in this area?
I hope to respond quickly. When it comes to burial customers, they often consider cemetery options if they haven't already made arrangements. In fact, about 80% of our customers come in with a burial spot already designated. We feel confident in our ability to cater to these customers because they are actively seeking cemetery services. The cremation option at our facilities presents a unique opportunity because it's more straightforward; customers are aware that there is a cemetery nearby. We are working to increase visibility through our websites and in our lobbies, where we will display aerial views of our crematory gardens and niches. This initiative is aimed at educating consumers and training our stand-alone funeral homes to discuss these offerings effectively and set up appointments for visits. We have a range of tools to enhance awareness and conversation about cremation services, and this has been developing naturally. Some locations excel at this, while others do not, so it’s about standardizing our educational efforts across the entire network.
The next question comes from Parker Snure from Raymond James.
You guys mentioned the noninsured flex product out on the West Coast. Maybe just dive deeper there, explain the rationale of why you think that product was appropriate for that market.
The noninsured flex product is designed to be more like a trust. An insured product offers consumer protection, meaning if someone enters into a 3-year agreement and passes away at month 8, their family is covered by the insurance. This insured option is pricier than a trust product, which lacks that protection. In that case, if someone dies, their family would be required to settle the financial obligations. Our focus is on providing a product that consumers can afford, which is why we have the trust product available in many markets. In California, for instance, we've introduced a flex product that functions similarly to a trust but comes with lower commissions and no consumer protection. When we transitioned to Global Atlantic, we discontinued the flex product in specific areas, which led to unmet consumer needs. This situation highlighted the necessity of offering this product to help consumers secure contracts. However, we don't anticipate expanding this beyond its current markets since we have a trust product available in others. You’ll notice some changes and comparisons as we approach early 2026 regarding the general agency rates moving forward.
Okay. And then you mentioned that the funeral volume pull forward, you think is going to be more negligible going forward. So should we read that through that funeral volumes kind of trend slightly up next year or kind of more back to a more normal cadence? And then maybe just talk about the knock-on effect that, that provides to the preneed cemetery business as that acts as a lead source for that business?
Yes. We typically maintain a ratio around 55% regarding our ability to sell preneed services based on the funeral volume that we receive. As we experience a little growth, the incremental cemetery aspect should contribute approximately 55 basis points to that growth. There are strategies we can implement to improve this, and we aim to increase it further. However, this will also positively impact cemetery sales leads. Our modeling suggests that while the diminishing effect of the pull forward is real and noticeable year after year, we don't anticipate it to be a major factor moving forward. On the positive side, we have prime locations, skilled personnel, and favorable demographics starting to align in our favor. Additionally, we possess a significant backlog that our competitors lack, which has allowed us to capture some valuable market share. The contracts from this backlog are larger than the ones currently coming in.
All these factors indicate future incremental growth, though the exact timing is uncertain. We understand that even a slight revenue increase can significantly enhance margins. For instance, this quarter we achieved just over 4% revenue growth, which, after normalizing for taxes, translates to a 15% increase. This growth is not achievable with only 2% revenue growth. Therefore, combined with favorable demographics and our backlog, we are optimistic about generating earnings per share growth in the upcoming years.
Okay. And if I can squeeze in one more, the insurance transition on the SCI Direct side has led to some declines in production. I understand that was 100% trust before. It's a different sale. It's a different product, and it's been a phased rollout. But is there an expectation that, that will return to sort of pre-transition levels at some point? Or are we going to be kind of working off of a lower base going forward? And then also, has there been any changes or inflections in turnover with the sales force on that segment?
You're referring specifically to SCI Direct, which has undergone a significant transformation. The product is notably different and requires licensure. Looking ahead to 2026, we anticipate growth from this new foundation. However, it may take a couple of years to return to pre-change levels, but I am optimistic that we will get there. A key part of this process involves hiring a sales force where we've seen turnover, ensuring they are licensed and comfortable with the product. It's worth noting that this change relates to sales familiarity; people have been accustomed to a certain way of doing things, and we have disrupted that routine. We truly value the hard work of the sales counselors and leadership at SCI Direct, and it will pay off. While it may take a couple of years, I believe we will see significant growth rates. Additionally, we can expect increased general agency revenues, and the backlog will begin to unwind, providing both value and incremental profitability. Modeling this over the next decade reveals impressive growth rates for SCI Direct's earnings.
This concludes our question-and-answer session. I would like to turn the conference back over to SCI management for closing remarks.
Thank you, everybody, for being on the call today. We appreciate your attendance. Happy Halloween to everybody tomorrow. Have a good, safe one. And we'll speak to you in our fourth quarter call in next February. Thanks so much. Bye-bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.