I think we're going to get started a few minutes early just get some of the housekeeping out of the way. On behalf of the entire management team here today, I want to welcome you to our Investor Day. I'm Debbie Young, Director of Investor Relations, and we also want to thank those who are going to join us on the webcast. Before we begin, let me just briefly introduce to you some of the people that you're going to be hearing from today. For those who don't know my background, I've been with the company a little over 30 years, which I know is crazy. I've held a variety of financial roles along the way, and I've been in the IR function since 1999. Moving on to the executive management team.
Many of you already know Tom Ryan, our Chairman and CEO, and Eric Tanzberger, our CFO. We also have Mike Webb with us today, President and Chief Operating Officer. These three have been in their roles for about 12 to 13 years now. I think their successful track record speaks for themselves. From the significant turnaround of the company in the early to mid-2000s, to the development of the growth strategies that we have today, to the superior total shareholder return that we have consistently achieved, I think these guys are to be commended. Moving on to our operations and sales expertise. We're lucky to have Jay Waring and Steve Tidwell with us today. Jay is a fifth-generation funeral director. He came to us in 1996 when SCI acquired his family's well-known business in the New England area.
Steve has over 35 years of experience in the industry. He was the former CEO of Keystone, which many of you may know was a company we bought in 2010. At that time, they were the fifth-largest public company. To a couple of strong leaders supporting our operations, we have Elisabeth Nash and John Faulk. Elisabeth is our Senior Vice President of Operations Services. She's been with the company since 2002. She's led our efforts in leveraging scale and leveraging technology. She's going to talk more about that today. John Faulk is our Vice President of Business Development. John joined SCI in 2010. At the time, he was working with Bain Consulting. We did a project with Bain to help identify and form our customer strategy.
John's going to be speaking to our business development strategies as well as a high-level summary of our footprint and what we think is working well, areas that we think we have room to improve. From a financial perspective, many of you have interacted with Aaron Foley. He's our Vice President and Treasurer. In addition to all things treasury and IR, Aaron oversees our trust and insurance processes. He will be speaking about those topics today. Last but not least, we have Anastasia Jones, our Director of Financial Services. Anastasia joined the company in 2008 in the treasury group. I got to give her credit, she's the creative genius behind the slide deck you're about to see. It's amazing to us to know that someone who has a financial background can be so creative.
Anastasia will be providing an overview of our deferred revenue backlog today. Moving on to slide four. Our last Investor Day was about three years ago. If you came to that or if you've seen the presentation from then, you're going to see some similar slides and topics here in our presentation this afternoon. We understand this is a lot of material. You've seen the books. You could use it as a weapon. It's intended to be a reference book. We still refer to our Investor Day deck from three years ago. We know it's a lot of material. We're going to try to go through it quickly and hit the high points for you, but our purpose is for you to have a leave-behind to help give you a detailed roadmap of our strategy and our company.
Just a little housekeeping to get out of the way before we begin. Please refer to slide five for our safe harbor language. For more information about risk factors, please see our filings with the SEC on our website. We have also provided a reconciliation of non-GAAP measures at the back of this presentation. Beginning with the global overview, first, some high-level information about the industry. Slide eight shows you that the death care industry in the United States and Canada, which we're going to refer to as North America throughout this presentation, it's about a $20 billion revenue industry when you combine the funeral homes and cemeteries. The data's not perfect, but we estimate there's about 22,000 funeral homes and about 5,000 cemeteries of size that handle nearly three million deaths. A little bit more about the funeral segment, which is the larger segment.
First thing to understand is funeral employees, by nature, are very caring and empathetic. They help families every day deal with the most difficult circumstances of losing a loved one. The funeral home model itself is a little bit inefficient, with the average funeral home in the United States only doing about 130 funerals per year. That averages out to about two to three per week, so you can see there's a lot of idle time. This is where we think we have an advantage with our scale because we have the ability to share resources within a marketplace and help eliminate some of those inefficiencies. Part of the reason why you see such a large number of funeral homes is that customers have varying needs when they select a funeral provider, which Jay is going to touch on in his section.
Some are driven by ethnic or religious preferences, while others may want prestige, and some just want convenience. As far as barriers to entry, we believe the barriers are high at the funeral home channel level. There's a significant capital investment in the land and in the facilities, and then you have pretty onerous licensing requirements. Finally, when you think about the funeral business, this is a retail service business. It's very fundamental. It's a consumer staple. We provide a necessary and essential service. People are coming to us, a time of death has occurred, and on average, we're spending two to three days between the time of arrangement to the ultimate disposition. Now let's look at the smaller cemetery segment on slide 10, which has more of a sales-centric approach. This is really by necessity.
You have all this capital tied up in a big chunk of land, it's costly to maintain, you have to sell today rather than wait for the business to come to you. The barriers to entry are pretty high, as you might imagine. You have to find a chunk of land near a population. There's a significant capital investment, not to mention zoning restrictions, because nobody wants to have a cemetery in their backyard. As it relates to capacity, we believe the industry is in good shape, you don't really see many new startups, new builds. For SCI in particular, we think we have ample capacity. On average, our cemeteries have 50-plus years of life remaining. Finally, think of the cemetery business as a retail consumer discretionary business. Although obviously, we believe it's less affected by swings in the economy than other retail companies.
We believe the way you should operate cemeteries is similar to a real estate play, where you have a tiering of options that's priced from small to big, Steve is set to talk about that more in his section. Slide 11 gives you a glimpse into the various products and services that we offer through our funeral homes and cemeteries. All of these products are not only sold on an at-need basis or when the death occurs, but we're also marketing them on a pre-need basis. I know pre-need is where the accounting can get a little bit complicated, but I just want to have you keep in mind one simple rule in that pre-need sales or pre-need revenue is deferred until delivery. Typically, that's at death, which is 10 to 14 years down the road.
As it relates to cemetery property, we still follow the delivery rule, but we're generally able to recognize this pre-need revenue at the time of sale. Why is this? As long as that property, so the ground burial space or mausoleum space, as an example, as long as that property is ready and available for interment, even though the customer's not going to use it today, if it's ready, it's considered delivered under our accounting rules, we're able to recognize the revenue at the time of sale. Because delivery has occurred, there's no trusting requirements, it's also cash flow to us at the time of sale. This has been a key driver of our earnings and cash flow growth, we will be highlighting this more in our discussions today.
Slide 12 reflects the aging demographic wave that has us excited today, it's really the foundation of our growth strategies going forward. Let's just take a quick look at the three buckets of SCI customers. First, on the left in the gray bars, you can see that the late 50s, early 60s are generally when people tend to purchase their cemetery property. This event's generally first because of adjacency issues, which you've heard us say before. By adjacency, I mean if mom dies and the rest of the family wants to be buried around mom, they've got to buy those spaces today because they might be gone tomorrow. This is generally why we see this event occurring first. In the late 60s, early 70s, represented by the navy blue bars, people tend to think about pre-arranging a funeral.
This could be triggered by a health scare, or maybe someone's just experienced the death of a family member or friend. Maybe wife died and husband has had to spend the last two days making all kinds of decisions. It's been a very emotional time for him. He decides, I'm going to pre-need so that my kids don't have to do this for me. That's generally happening in the late 60s, early 70s. Finally, our at-need customers are those that use our services when a death occurs, the orange bucket. They're generally in their late 70s, early 80s. Just stepping back and taking a look at this, why are we so excited about this graph? The baby boomers in 2018 are aged 54 to 72, and there are 74 million of them.
We're already seeing the influence of them coming through the pre-need cemetery segment already with a significant tailwind to come. Now they're beginning to enter the sweet spot of our pre-need funeral customer, and ultimately, they will affect our at-need business. Finally, in this section, let's talk a little bit about what's been happening with deaths in the U.S. and where we think they're headed. The number of deaths in recent years has been affected by a few things. First, we know that life expectancy continues to increase with advances in healthcare, and that's good news for all of us. Second, let's just take a look at the chart on the left of slide 13, which reflects births in the U.S. As you can see, the number of births dropped significantly in the late 20s, early 30s.
Of particular note, we see a 23% decline from the period 1924 to 1933. If you think about life expectancy in the U.S. today, it's around 79 years of age. 79 years ago, or 1939, it's kind of where we are on this birth chart. Even though you see it on the rise, the absolute numbers are still much lower than the previous generation. We still have a ways to get out of this dearth of birth. We're very excited about the baby boomer tailwind that's coming our way. Let's move to the chart on the right. This gives us a look at the historical deaths in the U.S. and projections of future deaths. As many of you know, we've been partnering with Dr. King at Harvard University since 2010 to form our own opinion of what we think future mortality looks like.
As you can see from the graph, we continue to see a divergence between what the Census Bureau is projecting and what Dr. King is modeling. Why is this? Generally speaking, the government uses more qualitative judgments, which can sometimes, as you know, be subject to political pressure and human bias. Dr. King's forecast model is a more robust model. He looks at a number of factors like the impacts of smoking, what that's done to numbers of deaths, the obesity problem that we have here in the U.S., and other known demographic patterns. Including this extra information makes a substantial difference in the forecast. One thing that I think is interesting about what he does is he applies his methodology backwards. You can see comparing the blue line to the black line, which represents actual historical deaths, that there's a pretty good fit.
There's a good high correlation there, which lends credibility to his forecast. Big picture, we're very encouraged by the steadily increasing demand for our services that are projected. In particular, when we look at Dr. King's projections where our businesses are located and where our footprint is, we think we're poised to grow differentially. With that, I'm going to turn it over to Tom, who will give us an overview of SCI, our performance, and our strategy.
Thank you, Debbie, and welcome everyone. Debbie doesn't give herself enough credit. I think one of the things I hear consistently when we meet with investors is how we have the best investor relations person they've ever met, and that's because of Debbie, and I want to thank her for everything that she does. I saw a lot of you kind of scratching your heads when she said she's been with the company 30 years, I want to explain that. We used to have a after-school work program for a local kindergarten. Debbie started with us then, and the child labor laws changed, but she got grandfathered. It's good. I'm going to provide for you today a high-level overview of SCI and how we compare to the rest of the industry.
Next thing, I'm going to go review with you our recent financial performance over the last few years, and then close out with an overview of the company strategy. Beginning here on slide 15, there's a lot of data on the slide. The first key takeaway that I would say is the fact that while we're differentially larger than our consolidating competitors, we're still only 15%-16% of the market. There's really ample room to continue to consolidate within North America, and John Faulk is going to touch upon that in his comments. Next, you'll notice that we have over 23,000 employees with GAAP revenues of $3.1 billion. We're a very people-centric business, where distributed strategy and appropriate policies and standards and controls are truly paramount to our success.
Our GAAP revenues are slightly deceiving in that we generate $1.7 billion in pre-need sales, of which $1.2 billion gets deferred into our backlog. Think of us as a sales business approaching about $2 billion a year, and a fulfillment business that's about $3 billion. Finally, our $10.7 billion backlog adds tremendous stability to our revenues and our cash flows, as well as providing additional value creation opportunities for our shareholders. Next, moving to slide 16, we highlight our funeral segment, which generates about 60% of our consolidated revenues. We own almost 1,500 locations, some with unique national brands, but most with a very valuable local brand name that's co-branded with our national brand, Dignity Memorial. We utilize the brand internally, driving operating and ethical standards, and externally, we can create brand awareness through market-based advertisement and utilizing the brand in offering Dignity packages with uniquely branded benefits.
Our average location at SCI does over 200 funeral calls versus an industry average of about 130. To convey to you the power of our current scale and what ultimately scale could be, I like to point out this fact. We own almost 7% of the funeral locations. We perform over 10% of the funerals in North America, and we believe that we write over 22% of the pre-need sales production as we now begin to interact with the baby boomer generation on the funeral side of the business. Another advantage of our scale is that through our 23,000 employees, we can transport our knowledge and experience of specific ethnic and religious customs from one market in the U.S. or Canada to another, further leveraging the value of our footprint. Cremation's a topic we're going to touch upon, and it's nothing new to this industry.
It's been growing for almost 30 years, and most of our customers today, over 50%, choose cremation as their means of disposition. Having said that, cremation mix change is a revenue and profit headwind each year that we have to manage within our funeral home channel. Jay Waring, who's going to speak behind me, will explain in more detail how through SCI Direct's asset-light pre-need strategy, we found a way to partially offset that headwind with a new customer that we were not previously accessing. Finally, remember that practically all revenue recognition for funeral is deferred until death. Therefore, until demographics impact the number of funeral services that we perform, we should expect slow revenue growth and consistent margins. Our cemetery segment, you'll see up here is on slide 17, it generates about 40% of our revenue.
Our 473 cemeteries, as you'll see on the slide, are generating much larger revenues and numbers of burials than our competitors. We're about 330 in our average cemetery of burials compared to an industry average of about 200. On a revenue basis, the difference is even more noticeable when you think about the parts that we actually own. We generate about 30% of the industry's revenues through 10% of the locations. We've been able to accomplish this through our unique tiered cemetery offerings, combined with our world-class sales force, which Steve Tidwell will go into in a little more detail later in our presentation. As we mature in our use and understanding of Salesforce, which is our customer relationship management platform, and as we roll out Beacon, our customer-facing presentation technology, we'll continue to enhance the efficiency of our team.
Steve will talk about beginning to build a larger sales force to meet the needs of our increasing numbers of customers. Finally, remember, from a customer sale perspective in cemetery, as shown on the table, property is 65% of the customer spend, and it can be recognized as soon as we sell it. Our success selling property has been the primary factor in our recent growth, as it can grow both earnings per share and cash flow immediately. Pre-need merchandise and services are deferred until delivery or performance, like funeral revenues. These future revenues are poised to grow, both from an increased average spend due to cumulative trust earnings, as well as a higher mix versus at-need products and services. Now I'm going to turn you to slide 19 in the presentation.
In here you'll notice that SCI's operating and financial performance, you see that we've grown earnings per share over the last four years from $0.92 in the orange bar on the left, to $1.46 at the orange bar on the right, resulting in a 12% CAGR at the high end of our long-term guidance range. The 2014 growth, you'll notice, is a little higher bar movement over 2013, and it's 21%. It was accelerated by the impact of our Stewart acquisition and integrating those businesses into ours. In 2015, you'll notice that it decelerates a bit, and our earnings per share growth is about 6%, and it was muted by the fact that we were required under the Federal Trade Commission to divest of some really nice properties, which contributed to 2014, but were gone in 2015.
I think the important takeaway of the last two years, in 2016 and 2017, were we grew at 9% and 13% respectively, without any significant acquisition activity, in line with what we believe the business should be able to do. Moving to slide 20, you'll see the gray bar at the bottom, notice that operating cash flows have been relatively flat after 2014. This does not reflect the underlying growth of the business. As you can see from the orange bar, we've been slowly moving towards becoming a full cash taxpayer. If you follow the blue bars, and there's a debate whether those are blue or brown, I admit, amongst us, you'll notice that the cash flows before taxes have grown consistently over the four-year period at a 10% compounded annual growth rate.
Keep in mind, the previous chart with earnings per share had the benefit of share repurchases, and this chart would not, thereby the difference. Later, Eric's going to address the impact of tax reform as it relates to that. I'll just click back. The impact on our future cash flows. Finally, for those of you that value companies on a free cash flow basis, and I'm sure you do in many ways, our free cash flow per share is about $0.30 higher than the computation of our earnings per share in a semi-permanent difference. This is the result of our depreciation and amortization expense of $250 million annually, outpacing our maintenance CapEx of $180 million.
This is caused by intangibles that were created when we acquired businesses, along with the re depreciation of acquired facilities, which is required under GAAP, as we record those assets at their fair value. To slide 21. Here you'll see the result of what we think executing well operationally, growing our pre-need cemetery business, and deploying capital wisely. Our total shareholder returns are well in excess of the returns of the S&P 500, as you can see on the slide. For each period presented, the one-year, the three-year, the five-year, and the 10-year periods. Particularly, I think longer term is the most important. If you focus on five and 10, we've actually had a 50% premium return to the S&P returns. I'm going to turn you to slide 23. This really is the beginning of the overview of our strategy.
On here, we display our three core strategies, which haven't changed, centered around the customer and our competitive advantages. The first one is revenue growth, by remaining relevant to our customers and driving pre-need sales. The second strategy is leveraging our scale, driving revenues through developing our sales force, managing our almost $11 billion backlog for enhanced value, driving down costs, and improving customer interactions with technology. The third core strategy is capital deployment, which is a blended approach deploying capital to its highest and best use. Now on slide 24, you'll see where we talk about remaining relevant. We know the trends of the business are first and foremost increasing cremation. We know that there's less demand for caskets every year. Second, we know that ethnic population growth, particularly Hispanic and Asian.
Finally, the other trend I'll speak to is a shift away from the traditional Judeo-Christian mourning into more contemporary celebrations of life. These changing trends require us to be much more flexible in providing products and services that meet the modern needs. On the funeral front, these needs may or may not include a casket. We're focusing on unique celebration services, counseling, estate planning, and adherence to religious and ethnic traditions. In the cemetery business, we must provide property and merchandise with a variety of customer options that meet the baby boomer generational needs that are increasingly requiring exclusivity, privacy, elevation, or a view, as well as meeting the specific needs of our growing ethnic-centric consumers. All the while, we're embracing technology that our customers have come to expect in their daily lives, with a focus on visualization and simplification.
Our focus on SCI Direct is addressing the growing needs of the non-funeral home customer, and we're doing this in a very profitable way. Finally, driving revenue through pre-need is our competitive advantage, as our scale affords us the ability to capture customers before our competitors can. Slide 25 presents our second core strategy, leveraging scale. Using our powerful sales organization, we can take the game where our competition cannot play. We can sell pre-need in a cash flow neutral way as we have the scale of a massive sales force and favorable terms with our insurance partner, Assurant. Most of our competition does not have or want pre-need counselors, and for those that do, it's a negative cash flow undertaking. Our pre-need backlog, consisting of insurance-funded and trust-funded product, allows us to grow the future revenues at a faster pace than inflationary pricing.
We are continuously driving down costs through the supply chain and improving service levels. Our recent investments in our customer-facing technology that Elisabeth Nash will cover in more detail later, will enhance our customer interactions with our funeral directors in the funeral home, on the road with our sales counselors, and directly with our customers through our enhanced websites. Our third core strategy, that's now up on the screen, of deploying capital is right here on slide 26. It presents our disciplined approach, working within targeted leverage ratios and liquidity parameters. The opportunities with the highest current returns are in our growth capital. We expect to spend $50 million-$100 million a year on acquisitions that have internal rates of return in the mid-to-high teens. Another $20 million on new builds, which will have lower teen type returns, but have nice long-term growth trajectories.
Another $80 million on cemetery property development, which is taking existing undeveloped cemetery property and creating inventory. Everything from roads, drainage, irrigation, to tiered inventory like mausoleums and private estates. These incremental investments have internal rates of return in the 40%-80% range. Next on our capital deployment strategy, we believe in growing our dividend with the business growth. We target a 30%-40% payout ratio of earnings per share, and last week we raised our quarterly dividend by $0.02 per share to $0.17. Finally, we believe very strongly in the future of SCI. We currently grow at a healthy rate organically and are building our backlog of future revenues. We also understand the power of demographics, and we believe they will favorably impact our business even more so in the future.
We want to own as many businesses as we can that are going to match our strategy. Still, we are blessed with abundant excess free cash flow. We believe that shrinking our equity through share repurchases will create value for our remaining shareholders. Having said that, we take a measured approach, attempting to accelerate and decelerate our repurchases based upon our view of fair value. Finally, on slide 27, we show you our long-term growth framework, where we believe we can consistently grow earnings per share in the 8%-12% range. We believe we can achieve half of this growth, or 4%-6%, organically through our existing businesses. Next, with our free cash flow, we can add 2%-3% through business acquisitions, which are accretive immediately, or to a lesser extent, through new builds.
Finally, it's our firm belief that based on SCI's future prospects, and in our view of our stock's value, we will continue to shrink the equity through share repurchase, which should add another 2%-3% to earnings per share. Now I'd like to turn the presentation over to Jay Waring, our Senior Vice President of Operations.
Thank you, Tom. Good afternoon. Today we'll cover some strengths that give us a great foundation for future growth. We'll cover some customer trends, and we'll cover how we're listening to our customers to be relevant today and to be relevant for the future. On slide 30, what are some strengths that give us a great foundation for future growth? Well, one of our strengths is, unlike most of our competition, we have not one, but two different channels to serve our customers through. The first channel is our funeral homes. We find these customers want quality, these customers want location convenience, and these customers want us to serve their religious or cultural needs. The second channel is our non-funeral homes, and these are our no-frills, direct cremation brands with names like Neptune Society, Trident Society, and National Cremation Society.
We find these customers want simplicity, these customers want to pre-plan, and these customers do not want to go to a funeral home. Another strength is both the size and reach of our network. Because of our size and reach, we serve every cultural, every ethnic, and every religious customer segment in North America today. There are two key points on Slide 31. First, if you look at the bottom footnote, 76%, or 123,000 of our cremation customers, use our funeral home channel. Second, if you look at the second line from the bottom, total non-funeral home, this channel makes up 13% of our volume, but 39% of our pre-need contract volume. We find these customers want to pre-plan, and we don't have much pre-need competition here, and are growing very quickly. On Slide 32, another strength is the power of our operating model.
We have national scale and can leverage centralized accounting and centralized payroll, and we can also leverage our tremendous buying power. For example, we have over 7,000 vehicles, so we get factory direct pricing. Another example is we purchase over 150,000 caskets each year, so we get deep supplier discounts. We have local scale and can leverage our crematories, our personnel, and our vehicles. We find our operating model helps to support better consistency, better customer satisfaction, and better quality, and we find our operating model helps to lower both our variable and fixed costs, so our breakeven point comes much earlier in the year than our competition. These are some strengths that give us a great foundation for future growth. What are some customer trends, and how are we listening to our customers to be relevant today and to be relevant for the future?
We'll start with changing customer preferences. Historically, our profession has been very slow to change. A lot of our profession's services have been the same, a lot of our profession's facilities have been the same. Today we live in a much different world. On Slide 35, to adapt to our changing customer preferences, we've identified four customer types, and they are: customs-conscious, full service, neighborhood, and price sensitive. I'll leave you with four important points on Slide 35. First, full service and customs-conscious combine for 39% of the customer base, but 50% of the market spend, and we do very well serving these customers. Second, as we survey the market every five years, we are seeing a slight shift out of neighborhood and into customs-conscious and into price sensitive. Third, while price sensitive is 23% of the customer base, this percentage has been increasing very slowly over time.
Fourth, we find that three out of these four customers will drive a long way to be served by our company. Full service and customs-conscious drive for quality, and price sensitive drive for price. Let's take a deeper look at each. On Slide 36, our customs-conscious customers want us to meet their religious or cultural needs. We give them large visitation spaces, and we give them tremendous service from our associates who are from their community, who speak their language, and who understand their culture. For example, in our funeral homes that serve the growing Asian population in our markets like Vancouver and San Francisco and Los Angeles and Orange County and Houston, our chapels are all set up so families can burn ceremonial incense. Another example is our funeral homes that serve the growing Hispanic population.
We have a brand called Funeraria del Angel, or Funeral Home of the Angels. We have 120 locations in California, Arizona, Texas, Florida, and Puerto Rico. We have large funeral homes with large visitation spaces, and we offer culturally specific catering. Our full-service customers want very high quality with lots of service, so we give them premier first-class facilities, and we give them very high quality in every aspect of their customer experience. For example, if you go to our funeral homes like Frank E. Campbell here on Madison Avenue or Geo. H. Lewis in Houston or Pacific View in Newport Beach, you will see and you will feel excellent quality and excellent attention to detail. On slide 38, our neighborhood customers want location, so we give them location convenience with quality, with simplicity. Think of a family using the local funeral home in the community where they live.
In many cases, these families grew up in the community, have deep roots in the community, and want to have their funeral and memorial service in that community. Our price-sensitive customers want simplicity, they want fewer options, and they want less cost. We give them a no-frills service experience and keep both our retail prices and operating costs low. That's a summary of how we're listening to our customers and how we're meeting their changing needs by giving them what they want. Another customer trend is the growth of families who are selecting cremation. Why are we so confident about our future even as we face a rise in cremation rate? On slide 41, one of the reasons we're confident is we have quantified the full impact on our funeral home channel.
What this slide shows is holding all else equal, a 1% shift from burial volume to cremation volume can impact revenues by $11 million and impact EBITDA by $8 million. The good news is we do a great job mitigating this impact because our operating model is set up to address the shift. Another reason we're confident is the voice of the customer. We have wonderful customer feedback from our J.D. Power surveys in our funeral home channel. Whether a family selects burial or selects cremation, the reasons they choose us are virtually the same, and their recommendation rates are virtually the same. On slide 43, we're confident because cremation is really a core competency of our company. Going back to the early 1980s, our company has been leading the way through a rise in cremation rate of about 100 basis points per year.
The key to our success is our proven operating model that maintains high margins in high-cremation markets and high-cremation states like California and Florida. For example, what slide 44 shows is over a number of years, as the cremation rate slowly rises, because of our scale advantage that I mentioned earlier, we can rationalize our location footprint, we can rationalize the size of our vehicle fleet, and we can use staffing metrics so we can have the best cost structure and we can have the best margins. While this slide shows that we can maintain margins on a lower revenue base, remember we can also reduce our overall investment as we can sell our real estate and reduce our vehicle count. We're confident because our pre-need strategy in our funeral home channel is a great leading indicator.
Our pre-need backlog and our pre-need sales are both showing that future cremation rate increases will be very manageable, very predictable, and very slow. We're confident because, unlike most of our competition, we now have a second channel to serve these customers through. As some background, if you go back to 2005, we were finding it very challenging to serve these customers through our funeral home channel. In 2011, we acquired Neptune. Neptune was founded in California in the early '70s and is the original direct cremation brand. Neptune has the halo effect of a very strong name, has a fabulous pre-need model, has a fabulous business model, and since 2011, we have grown our revenues from $45 million to $161 million. On slide 47 is a picture of our Neptune office in Pompano Beach, Florida.
Our locations are generally in a strip mall or in an office park and average about 2,500 square feet. To open a new office, we invest about $150,000, which is for the lease build-out and for office equipment and for office furniture. We offer simple packages, we offer a no-frills service experience, and we offer the sale pre-need through multiple channels. We are significantly growing this business. We're growing because we open where we have existing scale, we're growing because we don't need much capital, and we're growing because our comparable volume, our comparable pre-need averages, and our bottom line are all growing. To highlight the orange line on the bottom of slide 48, with SCI Direct's operating profit growth of $4 million to $5 million annually, with SCI Direct alone, we can overcome half of the $8 million EBITDA headwind in our funeral home channel.
To summarize cremation, we're listening to our customers. We have a proven operating model. We have a second channel now with SCI Direct, and we are confident that we'll continue our leadership position in this growing cremation market. Slide 50, another customer trend is moving away from the mourning of death and moving towards the celebration of life. We're seeing more and more families who are looking to capture that spirit and that zest for life that they lived. To help capture that spirit, we've developed a contemporary service offering called Life Well Celebrated. Here's a brief Life Well Celebrated video.
Each one of us is a unique story, the chapters filled with achievements, passions, and people. How do you celebrate a life? How do you tell someone's story in a single ceremony? Begin with what they loved. Was it gardening? The outdoors? Cooking? Think about how to highlight that passion in a meaningful way. We can help you design a fitting tribute from beginning to end, one that perfectly captures the individual, coordinating everything from calla lilies to catering, to a three-piece band. That's why we're here, to see that every life is well celebrated.
Whether a family wants a traditional church funeral or wants a celebration of life with their favorite foods and their favorite hobbies and their favorite mementos, or wants just a simple gathering on the beach, our role is to listen to what they want, offer advice, offer options, offer resources, and give them what they want. On slide 52, for our product offerings, we also listen. For example, our customers wanted a way to have more convenient access to grief therapy. We now offer our 24-hour Compassion Helpline, staffed with professionally trained grief counselors. Last year, we received over 150,000 calls, with the average call lasting 43 minutes. Another example is catered receptions. Families can now have a catered reception at our funeral home, at their home, or an outdoor venue. Our sales are approaching $30 million and another $12 million pre-need.
These are a few examples of how we're listening to our customers and responding with creativity and responding with sensitivity. On slide 53, in the near term, as we wait for the demographic wave, and as we wait for the backlog velocity to increase, we'll continue to deliver solid margins and deliver solid cash flow. As our funeral homes are a high fixed cost business, even small amounts of revenue growth will really expand our margins. Along the way, we'll always continue to listen to what our customers want so we can deliver on what our customers need. That's an overview of the funeral business. Now please welcome Steve Tidwell.
Good afternoon, everyone. Thank you, Jay. It's great for you to be with us this afternoon, either here in the room or on the webcast. In this next section of the presentation, I want to be providing you with some greater insights into the cemetery segment of our business, the types of customers that we serve, the products and services we offer, and most importantly, the key drivers of the cemetery business. Afterwards, I'll turn to pre-need sales and provide you with some more detailed insights into the pre-need sales strategy and growth initiatives. We begin here on slide 56, where you can see that we interact with nearly 300,000 customers each year. We do that through our network of 473 cemeteries, of which 281 of these are what we refer to as a combination operation.
That's where we have a funeral home either on the grounds or adjacent to the grounds of an SCI cemetery. We believe that our combos provide a strong competitive advantage because of the convenience it provides our customers. Combos are also where we have the greatest opportunity to grow our pre-need sales under the banner of such highly regarded and recognizable cemetery brands, such as Rose Hills and El Camino in Southern California, Arlington in Atlanta, Georgia, Ocean View in British Columbia, or National Memorial Park in Washington, D.C., just to name a few. If you move down the slide in the first disposition column, you can see that we serve nearly 158,000 customers on both an at-need and a pre-need fulfilled basis last year.
For clarity, the nomenclature that we use on at-need and pre-need to discern service type, that's identical to that of our funeral segment. Pre-need units, depicted in the middle disposition column, illustrates that just under 140,000 pre-need cemetery property units were sold in 2017. Each unit constitutes the sale of an interment right, and it's associated with the sale of one of our property options. In other words, last year, we replaced about 88% of all of the at-need and matured pre-need units with one new pre-need unit. Turning to slide 57. Our cemeteries generate revenue from three distinct sources, property, merchandise, and services. I'll describe each of those to you in a little greater detail. Property types are classified into 3 categories, ground burial, mausoleum, and cremation property.
I'll provide a little more detail about types of property and tiered offerings in the next few slides when we go into our discussion about our 3 customer types. In addition to property, we offer a full line of merchandise and services, which generally include grave markers and other forms of permanent memorialization, as well as outer burial containers or what we refer to as burial vaults, along with professional services, which in layman's terms include the administrative functions along with the cemetery staff and specialized equipment needed to prepare the final resting place. In the next three slides, that's 58, 59, and 60, I'm going to describe cemetery property customer preferences, which are generally categorized into 3 types. 1, custom and premier, 2, mid-tier, and 3, basic.
Here on slide 58, the custom and premier customer is primarily interested in privacy, exclusivity, and adjacency, which provides the ability to accommodate multiple generations of their extended family within a defined block of property. For these customers, we typically offer a 4 to 6-tier offering set, which includes various types of custom walled, benched, and gated estates, as well as private mausoleum. As a frame of reference, we've outlined price ranges along the bottom of each of these images for these 6 property types. The custom and premier cemetery customer generally aligns with the customs-conscious and full-service funeral customer, which my colleague Jay Waring described earlier in his description of funeral customer types. Moving to slide 59, the mid-tier customer. The mid-tier customer generally prefers a cemetery that's, 1, close to their residence, and 2, offers a good balance of price and quality.
Our experience would indicate that adjacency is not as important to these customers as it is to the premium and custom customer. We offer a full line of 3 to 5-tiered offerings, which include lawn crypts, lot gardens, interior and exterior community mausoleum, as well as various cremation niche offerings. You can also see that the various price points for each of these property types along the top of each frame, and we find that this mid-tier cemetery customer most often aligns with the neighborhood funeral customer. The basic customer, described on slide 60, they most often prefer simplicity at an entry-level price. This customer generally doesn't express a need to be close to their place of residence, adjacency is even less important, and they typically have little to no religious preferences.
For the basic customer, we offer 2 to 3 tiers of offerings, including basic lot gardens, entry-level lawn crypts, as well as exterior brick niche and columbarium. Price ranges for basic offerings can be seen across the top of each of these images, and the basic cemetery customer generally aligns with the price-sensitive funeral customer. Let's take just a moment now and watch a short 2-minute video which summarizes our various property options and types of merchandise. We recently developed this video to be shared with customers when utilizing our new pre-need sales enablement platform, which we refer to as Beacon. We'll share much more about Beacon a little later in this presentation.
There are many ways to celebrate a person's life, the range of possibilities at a Dignity Memorial Cemetery might surprise you. Let's take a look. Mausoleums can be designed for an individual, couple, or entire family. They're easy to customize and can include features such as stained glass, benches, and secluded gardens. Private walk-in mausoleums provide a distinguished eternal place of remembrance, there are other types as well, such as community mausoleums, which can be equally functional and beautiful. For those choosing cremation, there are a variety of interment options, whether ashes are present or not. These include indoor and outdoor columbaria, pedestals, custom memorials, and more. Traditional burial is another remembrance option that can be carried out in a variety of elegant, enduring ways. A family estate, for example, is an exclusive, tranquil area within a cemetery where loved ones can be together.
Such estates may be bordered by handsomely crafted stone walls or lush hedges. Bench estates also offer families a way to enjoy the natural beauty of a memorial site in a semi-private setting. Other options include community lawn gardens and upright gardens. A final resting place can serve as a powerful expression of one's life and legacy for generations to come and can be tailored to fit any budget and to reflect customs, beliefs, and personal preferences. Contact us today to learn more about the options available at your local Dignity Memorial Cemetery.
We hope that that short video helped you to visualize the lineup of property options and how we describe them to our customers. We'd like to provide some data to support the success of our property tiering strategy and how the baby boomer demographic is influencing the cemetery segment. Here on slide 61, you can see that our pre-need property sales production, that's the primary driver of our cemetery revenue success, has grown at a CAGR of 7%, that's driven by 2 components. First, our tiering strategy, which supports a growing demand of something a bit more unique and personalized than we experienced with the World War II and silent generations, also supporting this growth is our ability to pass along modest inflationary price adjustments. You can see the light blue bubbles and how unit average has grown steadily over the last 4 years.
We classify pre-need property production into two distinct categories. Production generated from the sales that are less than $40,000, that's the dark blue bars. Production generated from sales that are greater than $40,000 are the smaller orange bars here on the bar graph. Said another way, the dark blue represents standard inventory sales production. This is inventory developed each year to replenish the same or similar type of inventory, which we've obviously sold through. The orange portion represents non-standard production. Meaning it's a specialized type of inventory that has unique features and attributes when compared to standard inventory, or it's inventory that is truly a unique and one-of-a-kind special development built to the detailed specifications of the customer. Experience has taught us that while the much smaller orange portion can be somewhat sensitive during an economic downturn, it rebounds as customer confidence improves.
While the much larger blue portion of the pre-need property production tends to be more stable and predictable. On an at-need basis, the velocity CAGR is down slightly over this three-year period. We continue to see nice average sale growth from both inflationary pricing as well as a growing number of customers who are selecting from the higher valued tiers. On a pre-need basis, the velocity CAGR is essentially flat, with a sales average CAGR of 7.2%. It's interesting to note that when we exclude the non-standard sales, again, that's the orange portion of the data, the average sale CAGR of standard inventory is about 100 basis points lower to about 6.2%, of which approximately is attributable to our property tiering strategy, and the other half from inflationary pricing.
If you take a step back, all in all, we believe our property tiering strategy continues to resonate well with our customers. As we look to the future, we believe that we can expand our tiering strategy, enabling us to address the changing needs and the desires of our three very important customer types. Let's take just a moment and specifically focus on cremation property and how we're addressing this important and growing segment of our business. You can see here on slide 62 that our sales teams continue to do a very nice job selling the value of cremation memorialization. This trend supports our belief that more and more cremation customers are drawn to the benefits of permanent memorialization, and they find value in the property offerings that we're developing specifically for them.
Over the last four years, we've seen pre-need cremation property velocity grow at a healthy 6.3%, an average sale at around 3.5%. In fact, last year alone, nearly 27,000 cremation customers purchased cemetery property, and they spent on average about $3,000. We believe that this is driven by better educating the customer about cremation memorialization and providing various tiers of cremation inventory that are both relevant and contemporary. While we're making progress on the at-need side with velocity, customers selecting memorialization find value in our offerings as reflected in the sales average growth of 4.3%. Let's break down our GAAP cemetery revenue for the last few years and look at the components of this growth trend. On slide 63, you can see three very specific streams of cemetery revenue.
The pre-need and at-need property revenue stream that's highlighted by the largest two shades of blue have generated a blended growth rate of 6.7% over the last four years. As we previously mentioned, property revenue continues to be the primary driver of our cemetery segment's revenue and profit growth. It's important to note that our sales teams continue to be very focused on building heritage with existing and prospective customers by ensuring that the cemetery property discussion is the centerpiece of all sales presentations. As we look at merchandise and services revenue, that's highlighted by the two shades of orange, you can see that these two important revenue streams also contribute very nicely to revenue growth with a blended growth rate of about 5.5%.
In recent years, our pre-need merchandise and services revenue stream has been growing at a slightly higher rate, which we attribute to a few things. I'll give you three. First, higher quality of merchandise and services contracts that are coming out of the backlog. Two, a customer service initiative that requires us to either manufacture and deliver or store memorials and markers in advance of need. Three, stronger returns from our merchandise and services trust funds fueled by the overall strength of the financial markets. As for the other gray section here at the bottom of it, that's the other revenue. This is for the most part our endowment care revenue, and my colleague, Aaron Foley, is going to cover that in more detail much later in the presentation. Take a step back and aggregate all three streams of this revenue.
You can see that our cemetery segment has produced an overall CAGR of 5.5%. I just want to recap that while cemetery property production has been and will continue to be the primary driver of revenues and profits, let's not forget that merchandise and services revenue will continue to contribute incrementally to both revenues and profits. On slide 64, you can see sequentially how our cemetery revenue and margins have grown over the last four years. Based on our track record, we expect to grow cemetery revenue by about 4%-6% as we continue to drive pre-need property sales production, resulting in margin growth of 50-130 basis points per year. The blue bars here illustrate how cemetery margins have grown steadily over the last four years, ending 2017 at 28.6%.
With new sales tools, a growing sales force, and a proven property tiering strategy, we believe that mid-single digit growth in cemetery revenue, again, driven primarily by pre-need property production, is a very, very realistic expectation. Ladies and gentlemen, we are very excited about the future of our cemetery segment and the opportunity to serve more customers while continuing to grow revenues and profits in the coming years. I'd now like to transition and take you through our pre-need funeral and cemetery sales strategy, including an overview of favorable demographic trends, the makeup of our sales team, and how we're really beginning to leverage the power of our customer relationship management system, or CRM. On slide 67, we thought it might be helpful to frame the many benefits of pre-arranging. We believe that pre-arranging allows the customer to remove uncertainty for those left behind.
It provides the customer with an opportunity to protect loved ones from financial and emotional decisions associated with the loss. Finally, it's a decision that provides tremendous peace of mind. In fact, results of our J.D. Power Pre-Need Customer Satisfaction survey tell us that financial and emotional considerations are the number one and number two reasons why customers choose to pre-arrange. As mentioned earlier by my colleague, Debbie Young, our pre-need sales strategy continues to benefit from current and forecasted economic trends. Today, there are an estimated 74 million baby boomers in the U.S., and they make up about 23% of the total population. With that in mind, you can see across the top of slide 68 that the average age of our pre-need cemetery customer is late 50s to early 60s, and our pre-need funeral customer is late 60s to early 70s.
Based on this data from our backlog, coupled with favorable demographic trends, we will continue to develop and expand our pre-need sales strategy to serve this ever-growing base of customers. In addition, we believe our size and scale allow us to take the pre-need game to a field where many other industry players simply don't have the ability to play. On Slide 69 here, we highlight a few of our differential advantages. First, we have the largest sales force in the industry, which numbers over 4,300 sales professionals. We provide our sales force with a combination of best-in-class virtual and classroom training. We enable our sales teams with a world-class CRM, Salesforce. And we recently began deploying a tablet-based pre-need sales enablement tool that facilitates and streamlines the entire pre-need sales process for the customer.
We also believe that we can, and in fact, we do attract high-quality counselors, not only because of these tools that I just mentioned, but because we own and operate some of the larger and most recognized cemeteries and funeral homes in North America. These advantages provide our counselors with plentiful opportunities to share our story of financial and emotional protection. On slide 71, I'll take just a moment and describe our sales force in a little greater detail. At the grassroots level, we ended 2017 with approximately 3,800 market and location-based sales counselors. We have 2 types of counselors, broadly defined as inside sales and outside sales. Our inside sales force are known as Family Service Counselors or FSCs, and they're based at an SCI location.
Their objective is to radiate and establish stronger relationships with existing customers and to serve new customers who may be attending a service or visiting one of our locations. Second, we have our outside sales force, known as Pre-Planning Advisors. These advisors are not based at a specific location. They're based in and around the market area with an objective of developing relationships with targeted customer segments, allowing us to expand our reach into these important areas of growth. Typically, Pre-Planning Advisors have an established relationship with a church, a civic organization, or an ethnic group, which we've already identified as a growth opportunity. Both types of sales counselors can earn commissions in the range to 10%-14%, depending on whether that's pre-need production coming from funeral or from cemetery.
FSCs receive a biweekly draw should commissions earned fall below a certain level, PPAs earn commissions on the higher end of the range, but keep in mind that these advisors have no guaranteed base wage. Our sales management team, as you can see, consists of about 615 professionals, and on average, the team size is about six to eight counselors per manager. With this growing sales force, we want to ensure that our lead programs can continue to support our sales strategy. Here on slide 72, you can see leads continue to be generated primarily through three channels. The predominant channel is what we refer to as customer and family engagement. Our post-service follow-up program allows us to be in touch with friends and family members who we've recently served.
We also benefit from a significant number of customers coming to one of our locations who know our brand and express a preference to do business with us based upon our physical location and favorable reputation. Second, prospecting. Prospecting includes referrals from existing and new customers. This is also where many of our preplanning advisor teams go door to door and where we occasionally utilize telemarketing services in certain instances. Finally, marketing and education. It's through this channel that we sponsor various community events, such as our Your Life, Your Legacy preplanning seminar. For specific lead campaigns, we purchase various forms of print, radio, and television media. It's important to note that we also receive a growing number of website inquiries. We believe our digital channel is poised for incremental growth with the introduction of our refreshed and mobile-enabled websites, which we'll launch later this quarter.
These various lead sources add to a growing CRM database that has approximately five million names of current and prospective customers that can be nurtured using various marketing campaigns. We strongly believe that cultivating a relationship with these and all other potential customers will continue to present our sales team with tremendous opportunities to grow pre-need sales production. I'd like to point out just a couple of metrics related to our CRM, and how it's helping our sales leaders to drive really good selling behaviors. You can see here on slide 73, we measure three very specific items with our CRM. The number of leads created. The number of attendees at an appointment, and the number of activities generated by counselors. Over the last three years, we've grown the volume of these activities, and we've done that with slightly fewer counselors.
We believe that these metrics support the making of a more efficient and effective sales force, which helps already productive counselors become even more productive, and it informs us as to where we should focus our training resources. Here on slide 74, another key metric we measure with our CRM is the number of days before taking action on a new lead, which is the blue line here on the graph. The other orange line shows the number of days before a counselor makes their first sale. You can see that both have improved nicely over the last couple of years, from 30 days to around one day to first contact a new lead. You can see that counselors have also reduced the length of time it takes to complete their first sale from over 90 days to around 21 days.
We believe that getting counselors productive sooner is key to the sustainability of their success. Improvement with both of these key metrics indicate a more effective and productive sales force. Suffice it to say, we are very excited about the power of our CRM, we believe that our sales counselors understand better than ever before how daily utilization of this powerful tool is helping them to become even more successful. In conclusion, I'd like to review some historical pre-need selling trends, I'll provide some color as to where we've been, better yet, our strategy to get to the next level. Here on slide 76, you can see an 8-year trend of pre-need funeral sales production. From 2010 until 2013, sales production in our core business was steady with an 8% CAGR.
It's important to mention that this growth trend was buttressed by expanding the number of cities where we developed additional outside sales teams. Look to the right side of the slide. You can see the most recent 4 years in a growth trend of about 2%. In 2014, we began integrating the Stewart properties, we really began to ramp up selling activities in our non-funeral businesses. During this time frame, former Stewart locations, that's the orange section of the graph on the right, experienced an 8.6% CAGR, our non-funeral home segment drove an 11.5% CAGR. After integrating former Stewart locations with SCI legacy locations, we've made several changes to better align and improve key facets of our pre-need sales strategy. Just to mention a few, we made changes to sales counselor and sales manager compensation plans.
We set out to improve our contract quality standards. We fully integrated our CRM, we managed through a very significant consolidation of pre-need insurance vendors. While these changes were disruptive, we believe they were the right long-term decisions to support and to streamline our pre-need funeral sales program. In 2018, I'm very happy to report that these changes are behind us, we've worked through the disruption that comes with change. While for now it might be challenging to repeat the tremendous growth of 2010 to 2013 without opening new markets with additional outside sales teams, that's those PPAs I mentioned a little earlier, we believe that we can and that we in fact will get back to a new normal level of pre-arranged funeral production growth in the 3%-5% range.
As it relates to pre-need cemetery production, you can see here on slide 77 a CAGR that's been around 8% over the last 4 years. You might recall that in 2015, we posted a growth of about 13%. It's because we experienced a really nice lift from executing our property tiering strategy in the former Stewart locations. That's now normalized, we've seen better than 5% growth in both 2016 and 2017. With the enhancements made with the sales team and the introduction of new tools and technology, we believe mid-single digit growth is clearly within our reach. I'd like to wrap up by summarizing here on slide 78 why we believe our pre-need sales program is poised better than ever before to achieve our stated growth objectives. We've divided these reasons into 3 categories: technology, people, and products.
You've heard me mention Beacon a few times in my presentation, and you'll hear more about it again shortly from my colleague, Elisabeth Nash. While this technology has just recently been introduced to a handful of key markets, we're encouraged by the early results. First and foremost, we believe that Beacon is a better experience for the customer, and it also enables sales counselors to educate and describe all the various options while simplifying the overall pre-need sales process. Early results indicate a slightly higher customer spend, improving close rates, and a modest increase in the selection of ancillary services such as travel protection plans and celebrate services. We've also embarked on a strategy to expand the size of our sales force. In fact, since the end of November, we've added approximately 170 new counselors to the sales team.
These counselors are now completing their training, and they're beginning to meet with customers. I want you to know that we're growing our sales force in a disciplined way to ensure that our existing efficiencies and effectiveness are maintained while also onboarding this new incremental headcount. We're confident that strategically placed incremental headcount will substantially support our growth objectives and overall pre-need sales production. Finally, as it relates to products, we believe that the cemetery property we develop, along with the packages and merchandising tiers that we design, will continue to support our revenue growth strategy while also offering relevant and contemporary offerings to this growing demographic base of customers. As we state at the bottom of this closing slide, we really believe that the future is bright and the best is yet to come.
Thank you very much, and I'm now going to turn the presentation over to my colleague, Mr. John Faulk, for the business development presentation.
Thanks, Steve. For business development strategy, I'm going to talk about two areas. The first is our footprint and market strategy, which is effectively how do we use our footprint to win in any given market? Then secondly, is our acquisition and new build strategy. What are we doing to grow our presence in our markets? Let's start by looking at our footprint. As you can see on page 81, we have close to 2,000 locations across the U.S. and Canada. As you see from the map on the left side, where our locations are generally reflects where the population lives. Our footprint is 60% standalone funeral homes, 30% combo locations. Again, as Steve mentioned, those are locations that a cemetery and a funeral home are co-located on. 10% are standalone cemeteries. I'll make two points about that.
Most of our locations are funeral homes. That's reflective of the overall industry dynamics. Secondly, you'll notice that most of our cemeteries have been converted to combo locations with the construction of a funeral home. I think to really understand the power and the advantage of our footprint, you have to look at a local market. In this case, we've chosen Dallas. The map on the left, let me highlight a few things. The blue dots are our standalone funeral homes. The red dots are our combos. The green dots are our standalone cemeteries. The yellow sole dot is our SCI Direct or our non-funeral home location. I'll make a couple of comments about this. First, you see we have a geographic representation all over the market, which is important for us.
Secondly, you'll notice again, we have the most standalone funeral homes. There's more competition in this area, lower barriers to entry, and we have to be closer to our customers. You'll also notice, of our 8 cemeteries, 5 of them are combo locations. In fact, if you study the customer data on the right, of the 7,500 customers that we serve in Dallas, two-thirds of them are through our 5 combos. I'm going to speak, in a few pages, a little more about the power of the combo and why it's so important to our network. The one thing as you look at Dallas, again, we talk about the strength of the network.
If you think about the scale advantages that Jay mentioned on the national level, but more importantly at the local level, you can see how we're set up to take advantage of efficiencies in vehicles, staffing, and marketing in the Dallas market. A couple of other points I would make. In Dallas, we own the Sparkman-Hillcrest brand. If you were to visit Dallas, that is the premier funeral and cemetery brand in that market. That gives us a huge advantage by owning that asset. The other thing is we have 2 González-branded locations that are customs-conscious and have a high appeal to the Hispanic network in Dallas. Finally, only one SCI Direct location. The beauty is we can serve a market as large as Dallas out of one location because customers don't often visit those locations. They don't want to come into the facility.
It lowers our cost to serve and enables us to be extraordinarily competitive in that market that wants a low price. Let's talk a little bit about cemetery and the role it plays in our footprint. As Steve mentioned, cemetery is the growth engine of our footprint. There are a few reasons why that is. First, I'll come back to the quality of our assets. Our 470 cemeteries average 335 burials per cemetery, as opposed to the industry average, which is closer to 200. That's a tremendous scale advantage in a high fixed cost business. There are other industry dynamics that other speakers have spoken about. Very high barriers to entry, also the beauty of the recognition of all the pre-need growth that Steve mentioned on the property side with the baby boomers, we can recognize that on our profit and loss statement.
There are two other advantages that I'll reiterate unique to SCI as a company. One is our unique scaled approach, or excuse me, tiered approach to offerings. If you were to drive through one of our cemeteries, I'll go back to Dallas, and those of our competitors, and as you saw in the video, customers see a clear difference in the offerings they can get at our cemeteries versus the competition. Additionally, our progressive sales model. Come back to the Dallas market. Our ability across multiple properties to run one marketing campaign, generate leads, get those leads into salespeople's hands, and then make sales across that market is a significant advantage for us. You can see that in the results of the cemetery segment on page 84. For the last three years, comparable growth from 5%-6%.
How do we contrast that against the funeral business? You can see funeral is a much more steady business. The reason that is that volumes and revenues in the funeral business are driven by death rates. As Debbie shared with us, death rates over the last five to 10 years have been extraordinarily steady. All the pre-need growth we've been able to achieve, that Steve spoke about in baby boomers, we can't recognize on our P&L statement until those pre-needs mature. We know that those deaths are coming and the future is bright. One of the things that we look at in business development is, what if we could grow that funeral segment like we do the cemetery segment as we wait for that demographic bubble to come?
We're always looking at ways to grow that side, and that's only going to come through share growth while deaths are relatively flat. We want to share a few things we're looking at on this front, but let me start with how we think about the funeral business, and I'm going to come back to those combo locations. You can see the chart on the left. What we look at is combos represent 19% of our funeral locations, yet they're 33% of our revenues and 49% of our profits. Very important and very powerful assets within our footprint. There's three reasons I'll highlight that they do so well. First, it's convenience. If you think about a family having to arrange both a cemetery service and a funeral service, the ability to do that in one location is an extraordinarily convenience to them.
You think about actually having the service, to have that co-located in one facility is a significant advantage versus our competition. Secondly, the customers that tend to use our combo locations tend to be more traditional, and that's because by and large, they've probably purchased at our cemetery, and those customers purchase more services on the funeral side and more merchandise. Lastly, these locations tend to be larger and slightly newer than our average standalone funeral home. This is because over the last 15 to 20 years, we've built a number of these to create the combos.
They're newer buildings, they're a little bit larger because if you think about the cost of land to build a funeral home, if we're building it on our cemetery, we don't have the cost of land, you can expend a little bit more area in building these locations. You might say if the combos are that strong, what about the other 75% of locations that are standalones? We think about these in three buckets, these line very closely to the customer types that Jay spoke about earlier. Full service, customs- conscious, and neighborhood funeral home. As you can imagine, the full service and customs- conscious locations are set up from a facility standpoint, staffing and offerings to appeal to those unique needs that those customers have that Jay mentioned.
Our full service and customs- conscious locations, while they're not easy to differentiate, we have a playbook that we've been very successful operating, we feel very good about the performance of those. The neighborhood funeral homes are a little bit more competitive. The reason that is, as Jay mentioned, the customers that tend to go to a neighborhood funeral home don't have such unique needs as the full service and customs- conscious customers. As a result, they tend to select the funeral homes that are in their neighborhood and community. A little more difficult for us to differentiate. What's important to those customers? The facility needs to be nice. The price needs to be competitive. You hope that they're in a growing community of the town that's socioeconomically positive.
We have great locations in this model, but we also have some that are more challenged. The facilities may be a little more dated. They may have a very difficult competitor that prices aggressively. It could be a market that's socioeconomically on the decline. As we look at the funeral business, this is where we think our biggest opportunity is. I want to talk through a few initiatives that we're looking at, that we're testing, that we wanted to share today. That's three of them. The first two relate to pricing, one A and one B. The question on those is, can we actually lower prices to steal share versus the competition? The second one is about our facilities, the third one is about pre-need. Let me talk about one A and one B in particular. One A is about cremation pricing and repositioning.
Why is this an opportunity? If you go back to the 2005-2007 timeframe in our company's history, we made a decision to stop competing aggressively for what we refer to as the value direct cremation business. As Jay mentioned, we now serve that through our SCI Direct non-funeral home channel. We believe there is an opportunity to go after the mid-tier cremation customer. Secondly, on burial, one of the things we're always doing is looking at different consumer metrics, one of those is discounting. One of the things we looked at in certain markets is we saw a little bit higher discounting than others. As we looked at those markets, we saw pricing a little bit too homogeneous between our neighborhood funeral home segments and our full service and customs- conscious.
On the burial side, we think there may be a little opportunity to create a clearer tier and again, go after share in that segment. I'm going to share a little bit more on 1A and 1B on the next page with some tests we've done. Number 2 is around addressing facilities in the neighborhood funeral home segment. We're very proud of the way our facilities look, and we've invested a lot of capital to make them state-of-the-art. What I would say is, historically over the last 5 or 10 years, we have differentially invested in our combos and our full service and customs- conscious locations. The reason we've done that, I've really addressed on the prior slides. If you look at our combo locations, we want to make sure those assets are in great shape. They're very important to us.
Again, we want to make sure our full service and customs- conscious model is set up correctly from a facility standpoint. What we're finding is the neighborhood funeral home facility is also very important, arguably more important. Again, I'll share an example in a couple slides of what we've done here. Finally, pre-need Steve's addressed, but we wanted to feature it on this slide because at the end of the day, this will be the number 1 initiative that we have to grow volume and grow share, and we know that it's coming in the future. Let's talk more about 1A and 1B. In late 2016, in October, we went to two markets to test the theory that I mentioned on the prior page. Can we reposition our pricing and actually go after share?
I want to share some of the results that we're excited about. In the bottom left chart, you can see two bars for each segment that I'll walk through. One is a lighter blue bar, which represents total volume change in 2017, and the darker blue bar represents cremation volume change. You can see for SCI in our core locations, total volume was up a half point, cremation volume was up 3%. In our test markets, you can see significantly improved performance. Test market 1, volume was up almost 11%, cremation volume up 27%. In test market 2, volume up 2%, cremation volume up close to 14%. You can see we outperformed on both burial and cremation. If you specifically look at the 1A, cremation, we significantly outperformed.
You might say, "Well, John, sure, you grew volume, but what happened on the revenue and profit side?" Again, I'm going to focus on 1A. If you look at the chart on the bottom right, we were actually able to overcome the decrease in price with the incremental volume. This chart breaks out the revenue variance between volume impact and sales average impact. You can see in both test market 1 and test market 2, we had revenue impact from volume that more than offset the decrease in average price. Since these two markets, we're into six additional markets. Three of those are burial and cremation, so it's the 1A and the 1B opportunity that we mentioned. Three of them are cremation only, so that's the 1A opportunity. While it's too early to feature them, directionally, we're seeing very similar results.
This is not something that we think we need to do in a prevalence of markets. We're looking at this market by market. Where we think there could be an opportunity to go after share with this, we're absolutely looking at it closely. Facilities. Again, very similar to pricing. We don't think this is a predominant issue across our neighborhood funeral homes. Where we feel the facility could be a little bit dated, and that intersects with the community that is socioeconomically strong and growing, we think there's an opportunity to invest in our facilities and get a clear return. The difficult thing is you do have to measure this over a couple of years because of death rate variances. We want to show an example in Florida.
This was a location that was a bit dated and hadn't had a renovation in some time, and we invested $800,000 in that facility in early 2014. $800,000 would be a lot for a standalone funeral home. You can see on the right some of the improvements that we made. Creation of a new catering event room, new arrangement rooms, and a full refresh of the facility in terms of paint and carpet and furniture. If you look at the chart at the bottom, the yellow bars represent year-over-year volume change, and the blue bars represent year-over-year revenue change. If you look before 2014, at the end of the day, a lot of the bars are going down. If you look after 2014, a lot of the bars are going up. It's a direct linkage to what we did at that facility.
Again, we're reviewing our neighborhood funeral homes, putting in the criteria that we had against this one, and we're excited about the opportunity here. At this point, I'm going to move on to acquisitions and new builds, I hope this has given you a sense of what we're doing in our local markets to increase our competitiveness, particularly on the funeral side. Acquisitions. There's a lot on this chart, let me talk about two things. Where do we want to grow in terms of markets, and then what type of businesses? The chart on the left shows our framework for thinking about markets, and it's pretty simple, but it's important that we stick to it. On the horizontal axis, you can see customer and market attractiveness.
What that is effectively measuring is, do I have more of those full service and customs- conscious customers in a market or more neighborhood funeral home and price sensitive customers? We do see a variance of that across markets. The vertical axis, potential for scale, which simply says, can I have an environment like Dallas where I can take advantage of efficiencies? The long and short of it is, I want utopia markets, high on the vertical axis, high on the horizontal axis. When we're in utopia markets, what do we look at from a target? First and most importantly is we want scale acquisition. On a per property basis, at least $1 million in revenue per rooftop on the funeral side and $1.5 million on the cemetery side.
Of course, we like acquisition targets that are having attractive market and customer dynamics, then proximity to our existing network. When you have those criteria, you get two things. You get all the synergies that Jay Waring spoke about in his presentation, both national and regional, you get IRRs in the 14%-18%. For us, it's an excellent deployment of capital, as Tom Ryan mentioned. If you look at our history, we've been very successful in deploying capital in this manner. On the top yellow part of the chart, over the last eight years since 2009, you'll notice we completed two public acquisitions consisting of over $1.3 billion of capital. In 2010, that was Keystone, and in 2013, Stewart Enterprises. The tuck-in acquisitions are also significant. If you look over the eight years, this is over a half billion dollars of capital deployment.
With every year, with the exception of when we did large public players, we're spending in the $75 million-$100 million range. You can see the mix of properties that we've purchased, primarily funeral homes, but when we have combos and cemeteries that meet our criteria, we're very excited to capture those too, coming back to the growth dynamics. You can see at the bottom of each year, our weighted average IRR for those deals in that 14%-18% range that we mentioned earlier. In 2017, these are just a few example acquisitions we wanted to share. In the top left, Arlington Park Cemetery was part of a four-cemetery business that we acquired, serving close to 900 families in Milwaukee, where we had a large cemetery presence. Weed-Corley-Fish on the bottom left was a five-funeral home business, serving over 1,000 families in the Austin area.
Austin, one of the highest growth markets in the U.S. Allnutt Funeral Service, primarily in Fort Collins, Colorado. That was 12 funeral businesses in one combo. Again, Fort Collins, one of the largest growth markets in the U.S. This is a representative mix at what we want to buy, and again, fits the criteria that we spoke about earlier. One of the questions that I get a lot is, what do you do to generate this activity, and how can you make sure that you're getting quality acquisitions in the future? On the left side of this page, you'll notice we have a target acquisition list, and that represents approximately $1 billion of revenue that we would like to purchase into the future, and we feel confident about.
Our job in business development is to maintain relationships with these business owners and make sure that when the time comes, they trust SCI, they're comfortable with us, and that they're going to come to us. Most of these businesses are family-owned businesses that have been passed down generation to generation. The way that we look at it, we're going to partner with them on their timeline. Generally, a sale is not going to take place until a succession planning event occurs. When that occurs, again, those businesses aren't going to trade hands a lot. We want to be the purchaser of choice. The other question we get is, why not buy more? If you all own 1,500 funeral homes and there's 22,000, roughly, as Debbie mentioned, seems like there'd be opportunity to buy a lot more. There absolutely is, per the acquisition list.
The thing that I would say is, of those 22,000 funeral homes, there is a wide variance in the quality of those assets, and a lot of them are in those Smallville-type communities that I mentioned on that framework slide. We feel like our footprint and the quality of our assets is a tremendous advantage for our company. We want to make sure that that quality stays at where it is to now, or frankly, improves. We're going to be selective about who we buy, and again, the timeline has to be right for both ends. Let's, in closing, talk a little bit about new builds. You can see from the chart at the bottom, our spend represents a more modest but growing deployment of capital relative to acquisitions. At the end of the day, we would rather buy a business than build it.
There are circumstances where we like new builds, and it is a very good deployment of capital, as you can see from the 11%-14% IRRs we achieve. Number 1 is, can we build a funeral home on a cemetery and create a combo? As I mentioned earlier, a lot of those opportunities have been executed on, but we're constantly looking at our standalone funeral homes, and as they are growing, they more and more hit the filter for creating a combo. Secondly, we like to build standalone funeral homes in markets where we already operate, and there's a growing community that doesn't have a funeral home already. We like to be the first entrant into there, and we feel like when we do, it gives us a distinct competitive advantage.
Those funeral homes tend to be $2 million-$4 million of spend, roughly 6,000-10,000 sq ft of building on one and a half to two acres. The nice thing is they're cash flow positive within two years and earnings per share positive within three years. Similar acquisitions, we wanted to show off a few examples from 2017. On the top, El Paso, Texas. That's one of those utopia markets that we mentioned earlier. We bought a cemetery there called Evergreen East in the growing part of town, and it was serving 400 families. One of the first things we did when we completed that acquisition was to build a funeral home on it, Evergreen East Funeral Home. We are very happy with the success it's had.
March of 2017, it's a great facility for our customers in El Paso and for our associates at the cemetery. A similar example on the bottom left, Pinecrest Funeral Home in Little Rock, Arkansas. This was a Stewart cemetery about the same size as Evergreen East. We built a funeral home on it, opened about the same time, and it's also done very well. A standalone example on the bottom right, Palm Southwest Las Vegas. Palm, our brand in Las Vegas, is the leading funeral provider in that market. We did not have a presence in the southwest portion of town. We built that location. It opened in February of 2016, and it's far exceeded our expectations. These are examples of the type of new builds that we're going after. In closing, we've talked about two things in business development. Excuse me.
Footprint and market strategy, acquisition, and new build strategy. The thing I want to leave you with on footprint and market strategy is pre-need is critical, but we're always looking at data from our markets and from our customers on how we can improve. We've shared a few initiatives we're looking at to improve performance, and we have a pipeline of initiatives we want to test and really drive that funeral home needle. On acquisitions and new builds, we think the pipeline of opportunities is very strong, and we're very confident about the ability to continue to execute on that $75 million-$100 million of capital deployment and potentially grow it into the future. With that, I'd like to turn it over to Elisabeth Nash, our Senior Vice President of Operations Services. Oops.
Thanks, John. Good afternoon, everybody. As you've heard, remaining relevant is a key strategy for SCI. One component of that is investing in consumer-facing technologies that ensure we remain current and fresh in how we interact with consumers. I'd like to share some exciting developments in this area of focus. Over the last three to five years, we've made significant investments in technology, shown on slide 101, that have automated and streamlined processes, reduced errors and cycle times, and improved our operations and sales processes. Through these efficiencies, we've not only reduced expenses, but we've reduced the amount of administrative activities in our processes. In some cases, we've chosen to use the world-class systems that are available in the marketplace, such as Salesforce for managing our customer contacts and Oracle to provide our accounting and financial reporting system.
However, where we've needed a system that was more tailored to our specific business, we've invested capital to design and develop customized solutions, most recently in customer-facing applications. We have some additional detail about those investments on page 102. Our focus with new consumer-facing technology is to continuously improve the experiences our customer are having, whether that's in an at-need arrangement, during a pre-need transaction, or online. Just like consumer interactions in so many other buying experiences, the consumer today is expecting to communicate and conduct business in a way that incorporates technology. The expectation is that by leveraging technology, we can provide a faster, easier, less stressful process for our client families. HMIS Plus is our new at-need arrangement system used in our funeral homes to guide client families through the arrangement process using a modern, digitized presentation of products and services.
All offerings are presented and discussed in the presentation, and the process facilitates all the decisions that have to be made. Beacon, a very new pre-need sales system, which we've just started rolling out to our sales force, is similar. It uses a guided pre-need sales presentation to walk a consumer through a pre-need sale. Our refreshed websites, which will go live early next month, have been redesigned to provide a more mobile experience, easier search, and more localized content. All three of these systems create more innovative, creative ways for us to communicate with and engage with the consumer. For HMIS Plus and Beacon, the use of technology, coupled with the intelligent, thoughtful design of the presentations, has changed the way we present our merchandise and services. You can see on slide 103 the before and after images of the experience.
In the at-need arrangement, we've replaced the sometimes unsettling experience of walking through a casket room with high-quality images of our products, which creates a less stressful situation for our client families while still providing them the product details that they need to help make their choices. HMIS Plus presents products and services in a guided way. However, it does allow some flexibility for the funeral director to accommodate how the family wants to progress through the discussion. The system also facilitates receipt of payment and interfaces the transaction into our point-of-sale system. As a side benefit, we've been able to repurpose some of those casket rooms into reception areas that provide catering as a new service to our client families. You'll also notice that the physical space in which we talk to a family has changed.
It has become more of a living room-type setup, coupled with large monitors that allow everyone in the room to see the presentation. With Beacon, where we used a multitude of paper collateral before, we will now use a seamless digitized presentation done on a tablet with beautiful imagery and high-quality videos. Beacon was also designed with a focus on mobile usage, so it can be used not only in our locations, but anywhere the customer might prefer, be that at a Starbucks, at a library, or in the convenience and comfort of their own home. Both of these applications provide a more streamlined, simplified, and convenient experience for the consumer. In addition to that improved customer experience, leveraging technology generates other benefits, as shown on slide 104.
One of the most impactful changes for us is that these systems, both the at-need arrangement and pre-need sale application, are designed to ensure that the consumer is shown our entire suite of products and services. With HMIS Plus and Beacon, the arrangement and sales conversations led by the funeral director and sales counselors include everything we have to offer. We're assured that the consumer is well-informed about their options. We have a wide array of offerings, and in the past, it might have been difficult for us to be sure that the consumer was hearing about all of them. The new systems also accelerate the availability of new merchandise and services. Previously, to add a new item across the network could have taken months given the paper collateral that needed to be updated.
With HMIS Plus and Beacon, we can add a new item and make it available within just a number of days. Lastly, worth mentioning is that both systems give us visibility that we've never had before into the productivity of our staff. For example, we can now see data about where a funeral director is spending his or her time in a conversation with the family. Did they only spend a few minutes talking about the urn options? Did they skip catering option altogether? So on. This helps us with training, and we can also use that data to determine the optimum length of the arrangement conference. In sum, there are many benefits from these investments, be they for the consumer or for our associates. In addition to those benefits, slide 105 presents measurable improvements in two key metrics that we've been monitoring for HMIS Plus.
We've seen a 1.4% increase in our average customer satisfaction, or CSI score, which is material given that we started with a very strong score of 942. Also, our package selection rate has increased over 20%, which we know is a key driver of increases in our funeral sales average. Although it's too early to report these metrics for Beacon, as Steve mentioned, we fully expect to see similar increases once it is fully rolled out to our sales force later this year. As I mentioned earlier, very soon we will introduce our refreshed location websites for all of our funeral homes and cemeteries in the U.S. and Canada. You can see from the example on slide 106 that the current sites are a bit dated, present an overwhelming number of content choices on the home page, and don't highlight well the specifics of the individual location.
Now contrast that to the updated version on slide 107, which is more sleek and uncluttered and provides more local content in the form of photos of the location and a more prominent display of information about the location. There are other benefits as well. We've added the ability to better interface obituary and other information about loved ones to social media sites like Facebook, which are increasingly becoming a key means of communication between family and friends. We've also put a lot of time and thought into building out the content and keywords so consumers can find our locations quickly and easily when they search. Lastly, there is an emphasis on mobile in this new design, reflecting, again, changing consumer behaviors as they do more and more business online.
Overall, these sites will be a much richer source of information and is another way for us to remain relevant with the consumer. On slide 109, we share some details about customer satisfaction survey results. I'd like to shift gears a bit and talk about how our culture of service excellence is driving customer satisfaction, which is measured through a J.D. Power survey that is sent to each of our funeral home and cemetery customers. We're very proud of our customer survey results. We have a 30% return rate, which is five times higher than that of the average response rate for J.D. Power's other clients. Since implementation of the survey 10 years ago, we've received over a million responses providing invaluable insights and feedback. Two are worth calling out here.
On the most important question, would you recommend us to your friends or a relative, 97% of our customers say they definitely or probably would, which speaks to the success of our culture of service excellence. In addition, three out of four consumers state that our prices met or were below their expectations. Overall, truly outstanding customer satisfaction results that are a constant focus for us, and we're always trying to improve. On slide 110, you see a ranked list of other companies for whom J.D. Power conducts customer surveys. Although we can't share specific company names with you can see the categories of some of the other highly rated companies. We're very proud that our locations rank so high on this list. With our funeral home scoring 52 points or 6% above a major luxury hotel brand that is known for its excellent service to guests.
Our CSI score is the ultimate gauge of the service we provide, it's something not only that we monitor closely, but we use it as a key input into other important business decisions, including design of compensation plans and the allocation of capital. Our commitment to service excellence has been recognized by J.D. Power, as you can see on slide 111. In 2016, SCI was awarded the J.D. Power President's Award, which is their highest honor recognizing commitment and results of customer satisfaction and loyalty. In their 47-year history, this award has only been given to 12 companies, and our receipt of it puts us into a world-class group of companies, including Edward Jones, General Motors, and USAA Insurance. A remarkable achievement that we're extremely proud of.
In summary, we'll continue to keep our eyes on the horizon for changing customer preferences and emerging trends in technology to ensure that we're supporting our key strategy of remaining relevant to consumers. We'll continue to invest in that technology to improve the customer experience and support our culture of service excellence. With that, I'd like to introduce Anastasia Jones, our Director of Financial Services.
Good morning, and thank you, Elisabeth. I am Anastasia Jones, the Director of Financial Services, I will now kick off the final component of our second core strategy, leveraging scale. I will first begin with an overview of our deferred revenue backlog, also known as the pre-need backlog, I will explain in detail how our insurance backlog mechanics help us achieve a cash flow neutral organic growth strategy. Aaron Foley, our Treasurer, will then follow by describing our investment strategy for the trust backlog mechanics, he will also walk you through the uniqueness of our cemetery perpetual care trust. Aaron will be followed by Eric Tanzberger, our CFO, who will present an outlook of how we believe our backlog will grow over the next decade. With that, let's talk about how the backlog is being driven.
As we move on to slide 115, I would like to explain why pre-need arrangements are beneficial to both our customer and to SCI. As Steve explained earlier, our customers value pre-arrangement because planning provides price protection, time to pay, and peace of mind for their final arrangements. The pre-need value proposition for SCI is clear. Leverage scale to create better quality sales, which drive revenue growth. Our research shows that individuals spend more on themselves than their descendants would spend on them. This additional spend, coupled with financing options, allows us not only the opportunity to have better quality of sales going into our pre-need backlog, better than that of our at-need walk-in sales, but we have also locked in an at-need service in the future. These are the drivers for our pre-need backlog.
Let's now move on to slide 116, where we take a bird's-eye view of our entire backlog. Through the execution of our pre-need funeral and cemetery sales strategy, we have developed a backlog of almost $11 billion, which is four times larger than our annual at-need revenues of $2.5 billion. These deferred revenues will be recognized upon the delivery of merchandise and performance of services that were pre-arranged. Until these deferred revenues are ready for delivery or performance, they are supported by our insurance and trust backlogs. As you can see on the graph to your left, our deferred revenue backlog is well-balanced between both insurance and trust backlogs. In a couple of minutes, Aaron will explain our trust backlog mechanics, but if you follow me to slide 118, I will walk you through our insurance backlog mechanics.
Our insurance is a little over half or $5.7 billion of our total backlog. We believe that it is because of our scale and our footprint that we are able to benefit differentially from our competition with this very predictable and stable economic structure. Our exclusive partnership with Assurant guarantees us a 1% growth factor over the life of all insurance contracts sold by SCI, as well as an average 25% general agency selling commission structure, which comes to us in the form of both revenues and cash flows upon the sale of a pre-need funeral contract. For our newbies in the audience, insurance is only applicable to our pre-need funeral business. We currently do not allow insurance financing for our cemetery business. The insurance policies are administered completely by BBB+ rated Assurant.
We are solely the agent in the transaction between the customer and Assurant, this portion of our backlog is not included on our balance sheet. Because of the upfront general agency commission that we receive, in many instances, the insurance product provides SCI with an NPV that is better than our trust option. Also, this insurance product provides the consumer with an additional layer of protection if they're financing over time. The sale of the pre-need insurance policies do not expose us to market risk, but we do have some credit risk exposure with Assurant. Now, how do we manage this risk?
We talk to Assurant quarterly to ensure that their portfolio investment allocation has not significantly changed quarter-over-quarter, and we have the benefit of the more formal nationwide guarantee fund, which requires Assurant to contribute to for every policy that they sell to cover the risk of default. With this, let's take a look at our total production on slide 119. Let's start with the right side of the slide, which shows we produce about $1.7 billion in annual pre-need funeral and cemetery production. Of this $1.7 billion, $1.2 billion goes into our backlog, and the remaining $500 million of cemetery property production is not a component of our backlog. As Debbie explained earlier, we generally recognize cemetery property upon the time of sale, this item is not required to be trusted.
Of the $1.2 billion production that goes into our backlog, it's about 45% insurance and 55% trust. Again, our insurance backlog is 100% funeral business, whereas our trust backlog is 50/50 funeral and cemetery business. We like this balance between insurance and trust because the stability of our insurance backlog partially hedges the financial market volatility that our trust backlog is exposed to. With this, let's switch gears to illustrate how this mix of insurance and trust for our pre-need funeral business translates into a cashflow-neutral organic growth strategy. As you can see at the bottom of the table on slide 120, insurance aids heavily in funding the financing program.
Let's go back to the top of the table where we can see that the immediate cash flows from our general agency commissions generate, on average, about 25% of cash inflows, whereas our average trust retainage, which is set by each state, generates on average about 10% of cash inflows. As an offset to these cash inflows, we have pre-need funeral selling costs of about 21% for our insurance option and about, on average, 16% for our trust option. We are able to produce a higher general agency selling commission for our insurance for certain customers that we sell insurance to, we share this added value with our sales team through the commission structure.
When we net the inflows against the outflows for both insurance and trust options, we can see that our insurance general agency commissions cash inflows are significantly offsetting the cost of both insurance and trust finance options. Our unparalleled scale and our insurance-funded pre-need funeral production are the key components of our financing offering, which enables us to yield a cashflow-neutral organic growth strategy that cannot be matched by our competition. This concludes the insurance backlog mechanics discussion, Aaron will provide insights into our trust backlog mechanics. Thank you.
Thank you, Anastasia, good afternoon, everyone. I'm going to give you a little more detail on our trust funded pre-need backlog and then discuss another set of trust funds that aren't related to our pre-need backlog at all, which are cemetery perpetual care trusts. Shifting to slide 122, you can see on the left-hand side of this slide that about half, a little under half, or about $5 billion, relates to our deferred pre-need revenue backlog on our trust side. From customer proceeds on pre-need contract sales, we are able to retain as operating cash flow about 10% of funeral and 30% of cemetery collected amounts in the form of retainage, with the remaining funds being deposited into trust based on state and provincial regulations. Keep in mind, none of these proceeds are recognized through our income statement until those contracts mature.
These trust funds are primarily backed by marketable securities of about $3.5 billion, which are managed by 25 professional investment managers across 22 different investment strategies. While we are subject to market risk, we appreciate the potential upside capture from the market returns on these assets. Our trust asset allocation is based on the average length of time a contract is in our backlog, which is about 10 to 14 years. As you can see on the left-hand side of this slide, the funeral contracts are generally in our backlog for about 10 to 12 years, while the cemetery contracts have a 12 to 14-year life. During the time the assets are invested, all gains and losses are flowing through our balance sheet. It's not until maturity or the time the products and services are delivered, do these trust returns impact our earnings and our cash flow.
This 10 to 14-year investment horizon allows these trust assets to be invested through multiple market cycles. On slide 124, you can see the blueprint of our trust asset allocation strategy. As you would expect, given the 10 to 14-year life, the assets are weighted about two-thirds toward equities with a sizable component of fixed income, some trust insurance contracts, which are really just insurance policies that are held within the trust, some alternative investments, and a portion of cash for the current period inflow and outflow that occurs for normal trust deposits and withdrawals. This strategy, as you can see on the bottom left, has driven a real return of about 4.5% over the past 10 years. Adjusting out the impacts of the 2009 financial downturn, look at our seven-year real return, rises nicely to just over 6%.
Ultimately, this real return is adding both future margin and cash flow to SCI beyond regular inflationary pricing. I'd like to shift now to an overview of our management structure for our trust assets. Members of SCI management and board oversee the trust structure, which includes an internal registered investment advisor, Trust Advisors Inc., or TAI, as we refer to it. TAI performs several functions in addition to providing investment advice that I'll get into in a little bit. Our trust structure also includes an external registered investment advisor, LCG Associates, who are based out of Atlanta. There are also five independent trustees who are large financial institutions that you would recognize, who have fiduciary responsibilities around the trusts.
They each follow an investment policy influenced by a variety of state and provincial laws with an asset allocation strategy that guides them to invest directly with our 25 professional investment managers. On slide 126, I'd like to address how we manage our trust operationally. Distributions from trust funds help to cover fees charged by our trustees and for trust taxes on any taxable events that occur within our trusts. SCI also performs accounting, record keeping, and analysis functions for our trust with the help of both internal and external resources. These activities' costs are all housed within TAI and are funded from distributions from the trusts. In total, these fees have almost a 200-basis-point impact on our annual trust returns, as you can see on the table to the right. About 125 basis points of these fees come to SCI through our internal registered investment advisor, TAI.
We set this structure up earlier this decade to be reimbursed from the trust for internal costs associated with managing, tracking, and analyzing our trust assets that I just noted. The section I just covered addresses our trust assets associated with our deferred revenue backlog related to our funeral and cemetery merchandise and service trusts. I'd now like to shift to another portion of our trusts that are unique and are not related to our deferred revenue backlog, which are our cemetery perpetual care trusts. On slide 128, we've laid out some aspects of how these trust assets are generated, how they've historically been managed, and where they're heading. The cemetery perpetual care trusts are funded whenever we sell cemetery property for generally about 10% of the cemetery property sales proceeds, as required by state and provincial laws.
The purpose of these trust assets are to generate funds to cover cemetery maintenance expenses into perpetuity on behalf of our customers. Historically, due to these state regulations, we were generally only able to withdraw realized earnings, interest, and dividends, which led to a heavy fixed income-focused asset allocation due to their yield orientation. Over the past year or so, however, as you can see on the right-hand side of the slide, we've been pursuing the implementation of a more traditional total return asset allocation structure, working with many states to adjust laws and regulations to allow for a set annual distribution percentage of the asset base, which is similar to how a university endowment is operated. Shifting to this next slide, you can see that today, about half of our assets remain invested in the historically yield-focused, income-heavy asset allocation.
The remainder, or just under $700 million, is now under the new total return investment structure, which is more heavily weighted toward equities. Ultimately, these shifts lead to higher yields to cover cemetery maintenance costs and the longer-term growth of the trust corpus, which leads to further protections for our customers. On these assets that have been shifted, we are able to generate an annual incremental 1% yield that will help defray cemetery maintenance expenses by increasing trust income and creating more consistency of our earnings as we were able to distribute a fixed percentage on a growing asset base. We continue to work with states to enable more perpetual care assets to be shifted over to this total return structure, more to come here.
With that, I'd like to now introduce Eric Tanzberger, who will walk you through how we expect these pre-need trust and insurance contracts to impact SCI going forward. Thank you.
Good afternoon, everybody, and thank you, Aaron. I think Aaron and Anastasia did a wonderful job giving you the background of the $10.7 billion backlog today, especially about the components of it, split between trust and insurance, and then specific to trust, getting specific into the asset allocations as well, and the strategy over the 10-to-12-year investment life. We're going to kind of pivot off of that background, though, and I'm going to really talk about the future of the backlog. I'm going to talk about the value. Remember, this is our number one long-term organic growth strategy at SCI. John had mentioned that to you earlier in terms of both pre-need cemetery as well as pre-need funeral. This $10.7 billion backlog, we're very excited about the future growth associated with that. Now, to talk about that, we have to bifurcate the conversation between funeral and cemetery.
We're going to talk to you about, when we talk about funeral, the same type of metrics or components that we talk to you about every day or on a quarterly earnings call, and that is volume or the number of funeral services performed, and sales average or the average price of that funeral home, especially coming out of the backlog in this example. From a cemetery driver, similar to the way we talk about on a quarterly basis, we're going to talk about pre-need production. But instead of what you normally hear us talk about in terms of pre-need property production, what produces the backlog is actually not property, but cemetery merchandise and services, which has created a $2.8 billion backlog out of the $10.7 billion. So let's start with slide 131, and we'll talk about funeral.
To be able to talk about what's coming out of the backlog, we first have to talk about what's going into the backlog, which is a function of the pre-need sales force. And we're going to talk about this in comparison to the at-need average. The lower part of the slide, the gray area, are the at-need averages, both historical on the left as well as the projections on the right. And then you have two of the pre-need averages, sales averages. The blue is pre-need trust, and the orange is pre-need insurance. Now notice starting on the bottom part of slide 131, we have five-year CAGRs, so from 2012 to 2017. And what you're going to see is the at-need average is growing about 60 basis points per year.
But notice in the lower right-hand part of slide 131 that what's going into the backlog in that same year, what the pre-need sales force is selling to consumers on a prearranged basis, is actually growing 90 basis points on a five-year CAGR from 2012 to 2017. So a nice differential of about 30 basis points in terms of what's going into the backlog. Now, the left-hand part of the slide, you could tell the historical part gets to be a little bit noisy, especially in that 2007 to 2012 period. Remember, as we talked about before, we took on a tremendous amount of very large acquisitions and integrating those acquisitions during that period. Alderwoods in 2007. Other examples were Palm in 2009 out of Las Vegas, and then Keystone being the fifth largest in 2010.
Anytime you're integrating that, you're really shifting that sales force that we inherited over from predominantly a trust sale over to the insurance model for the overall cash flow neutrality of the company that Anastasia walked you through in one of her earlier slides. The right-hand part of this slide on slide 131, excuse me, is the projection. What you're going to see is that we expect the at-need sales average or the CAGR to continue very similar to what it is historically, that growing about 50 to 60 basis points. What you'll also see is we expect the pre-need average going into the backlog to also grow similar to the historical average, which is about 100 basis points per year. Why is that? Let's talk about.
First of all, when you talk about the consumer, whether it's a pre-need situation or an at-need situation, that consumer is generally going to communicate their wants and wishes and spend about the same, whether it's in a pre-need environment or an at-need environment. However, the prearranged consumer, though, by definition, cares a lot about the merchandise and the services, and therefore they're more prone to memorialize. Any type you have a customer that's prone for memorialization, you're probably going to capture a customer with a slightly average sale, and you can see that in the growth rate. Secondly, our sales force is very good at using the customer satisfaction initiative of packaged funeral plans. That adds ancillary products and services that the customer is asking for, drives customer satisfaction, but also drives the average price as well.
Lastly, as we described earlier with the footprints that Steve talked about as well as John talked about, the sales force of over 4,000 counselors is more heavily concentrated in the larger markets. In the larger markets, you're going to have those combination facilities as well. Anytime you have a customer coming in on a pre-need basis related to a combination facility, there's probably going to be more of a propensity to the burial consumer as opposed to the cremation consumer. In fact, what's going into the backlog in the pre-need environment actually has a mix of about 54% of burial consumers versus the at-need environment of only about 49% in terms of burial consumers. You could see how that would drive a larger average sale.
On slide 132, we're shifting gears here, staying with funeral, staying with sales average, this is what's coming out of the backlog, the historical on the left, the projections on the right. You see some of that same kind of noise in the 2007 and 2012 area related to taking on those acquisitions and integrating those acquisitions. The blue line, which is matured trust sales average, were also affected in the 2008, 2009 time frame in terms of the markets and the Great Recession as well, which is why the slope slightly leveled out before it regained its growth from 2012 and beyond.
The right-hand part of the slide is the projection, that's the new information that we're really sharing with you today, really trying to communicate what we view as very exciting value coming out of this backlog, again, in terms of sales average on this particular slide. You're going to see that the CAGRs that you see at the bottom, again, the at-need sales average growing about 60 basis points, notice the trailing five-year CAGR on what's coming out of the backlog is growing about 1.9%. We expect those historical figures to really kind of continue into the future, the way we're modeling this. We expect the at-need sales average to grow about 50 to 60 basis points. We also expect the pre-need contract coming out of the backlog to continue differentially growing by about 190 basis points.
You have a nice 130 to 140 basis point differential. Why is that? First of all, it's what I just described in the previous slide about what's going into the backlog. Good memorialization customer, high utilization of packages by the sales force, a slightly higher burial mix at 54% versus 49% that I just described to you. Remember what Aaron was talking about in terms of how we're investing these monies. On average, it's about a 10 to 12 year life that a contract stays in the backlog. That takes that trust contract exposes it to a positive financial market return over a long-term basis. It also takes that insurance contract exposes it to a very stable increase in insurance benefit of about 1%-1.5% per year.
Notice on the upper right-hand corner while we're talking about those returns on slide 132. You're going to see that the trust contract, in fact, exceeds the insurance contract in our projections. Obviously, that's because of the financial market returns being greater than the 1%-1.5% that we have on a very stable increase in insurance benefit. On one of Aaron's slides, after the TAI fees and such, you'd see that we have a 10-year return of about 4% after those fees, that, in fact, is what is built in to this particular model. Slide 133 is shifting gears, staying with funeral, again, we're shifting away from sales average now going to the number of funeral services performed or the volume aspect.
Notice in the bottom right-hand corner, something I want to point out on 133, is that the number of funeral services that were performed on one of Jay's slides earlier, were just over 263,000 in 2017. We kept that constant for purposes of this illustration. There's no opinion that we're putting into this illustration in terms of demographics or any type of market share change as well, just to hold it constant for purpose of this. What you're seeing on the left-hand part of this slide, which is the historical part of it, is you're seeing a mix change. About 10 years ago, about 32% of the contracts were coming out of the backlog versus an at-need walk-in family. That's grown all the way to just under 36% in 2017.
Notice the right-hand part of slide 133, we expect that mix to continue, growing about to 38% in the next five years and actually to about 40% 10 years from now. That is a very nice trend for us. That is going to be a revenue tailwind. Why? Because of the slide I just showed you before. What's coming out of the backlog has actually a higher sales average than the at-need walk-in call. Because there's going to be a mix change with more and more coming out of the backlog, that bodes very well for our future revenues. What's also interesting about this, if you look in the upper right-hand corner of slide 133, you'd see most of this mix change is coming from the orange part of it, which is matured insurance.
In other words, what's coming out of the backlog in terms of matured trust is actually pretty stable. The growth in the mix change is coming from the insurance contracts. That's primarily what we described to you earlier in Steve's presentation, where from the core funeral home perspective, about three out of every four contracts that are sold in the pre-arranged funeral environment are actually insurance contracts. Just stepping back, though, and talking about SCI as a whole, we take a very balanced approach in this part of the equation. Remember, as Jay mentioned, SCI Direct is 100% trust contracts. From a cemetery perspective as well, from a pre-need basis, that is also 100% trust. Overall, it's a cash flow neutral program, but it's also very balanced in terms of how we choose insurance over trust at the highest levels of SCI.
Now we're going to shift to the cemetery side of things. Again, when you hear us mostly talk about cemeteries, as I said earlier, we usually talk about pre-need cemetery property production. We're going to point you to a very nice sales production story today, as well as a very nice revenue stream now and in terms of growth going into the future, and that's related to merchandise and services in the cemetery pre-need area. This is a big part of our business. This is $2.8 billion backlog out of the total $10.7 billion. As you can see, we're communicating to you today about what's going into the backlog using sales production growth. Why is that?
It's because there is a plethora of units that are being sold in merchandise and services, and there's really no common unit to really break this down effectively between units and sales average, like we're able to do on the funeral side. You'll have units such as large granite markers all the way down to small bronze vases or small bronze scrolls with dates on them as well. The way to really look about this is similar to funeral. Let's talk about what's going into the backlog and what's going out of the backlog. In terms of sales production growth, as you see on the top of slide 134, you're seeing a very nice 11% CAGR over the past four years in terms of what we are selling on a pre-need basis, cemetery merchandise and services going into this backlog.
Notice the big jump between 2014 and 2015 in the lower left-hand corner of slide 134. That's really us taking on in 2015, the Stewart cemeteries, and incenting that sales force like they were not incented before the acquisition to really build this backlog for future value. If you really understand that and you take a three-year CAGR of 2015 to 2017, that 11% becomes much more of a normalized 6%-7% production growth of cemetery merchandise and services going into the backlog. On the very far right of slide 134, we expect the future to be somewhat the same as what you're seeing historically here on this. We expect to see mid-single digit sales production growth in this area continue in that 6%-7% range that I just described to you.
Similar to funeral, what's going into the backlog has to go out at some point in time. Slide 135 is exactly that. The lower part of this slide is actually the at-need revenue of merchandise and services. The upper part of this slide in the orange section is what are the merchandise and services for cemetery that's coming out of the backlog. Notice in the upper center to the right, a nice CAGR over the past four or five years of 9% in terms of this revenue stream coming out. Steve Tidwell mentioned to you before that over the past couple years, we've had a customer satisfaction initiative related to a merchandise delivery program in this area. If you take that into account, that's pushed that about a 7% normalized CAGR up to this 9% that you see on this slide.
If you think about the 7%, that compares over 500 basis points in growth over the nice stable growth of the at-need down at the bottom of slide. As you can see, the three-year CAGR being 2%. A couple reasons why for that. First of all, as I just mentioned in the previous slide, there's high-quality contracts that are growing in terms of production going into the backlog, so that lends itself to coming out of the backlog at a higher growth rate. Lastly, just like I explained to you in funeral, these monies that are invested into these trust funds are exposed from a long-term perspective into positive financial market returns. Ultimately, on the right-hand part of slide 135, we expect this to continue. We expect low to mid-single digit growth in total from this revenue stream.
It's going to be disproportionate, that growth coming out of the backlog for the reasons I just mentioned. Call that a 5%-7% growth going forward. You also have this very nice 2% at-need revenue stream that's clipping along as well. To really wrap up the backlog section of this presentation for Anastasia as well as Aaron, it really is a pillar of our growth going forward. We are just huge believers in both funeral and cemetery pre-need programs at SCI. What you're going to see the value coming forward into the future from the funeral segment, you're going to see higher volume from a mixed perspective, as I showed you, coming out of the backlog, and those are going to carry higher averages than the at-need call or the at-need situation, which is favorable.
From a cemetery perspective, you're going to see disproportionately more growth going into the backlog, and therefore, more coming out versus the at-need that I just described to you. That lends positive growth characteristics, that also lends stability to our revenue and cash flow stream as you're able to model this $10.7 billion backlog. Furthermore, as Elisabeth talked about in terms of the customer, this is very customer-centric as well. This really gives the customer peace of mind who is pre-arranging their funerals and pre-need cemetery. It also gives them the ability to finance this spend, and also gives them ability to interact and enhance conversation with a counselor with grief not being present as it is in the at-need environment. You will see us continue to put our shoulder behind this growth initiative.
You're going to see us investing into the sales force as we continue forward, that Steve talked about. We're also going to invest into technology, whether it be further invest into the CRM system or items like Beacon, which is the tablet customer-facing technology that Elisabeth walked you through. This future value of the backlog is exciting, and it's enticing for our growth perspective going forward. Okay. We're going to shift gears now in terms of the financial overview. We appreciate you hanging in with us. It's been a little bit over 2 hours now, and you're really in the home stretch. I'm going to give you a financial overview and really make it forward-looking, not only 2018, but a little bit beyond as it relates to the cash flows and capital deployment philosophy of us.
Tom's going to come back up and really talk about the overall growth of the company. Before I start with the forward-looking information, I want to just pause here on slide 138 and talk about cash taxes, since obviously tax reform affected us somewhat materially at SCI. You see in the center of slide 138 in 2017, we were not a full cash taxpayer in 2017. You can see that by the book provision on our income statement or the adjusted effective tax rate on our income statement being about 29%, and our cash tax rate, adjusted cash tax rate, I should say, of about 32%, yielding about $135 million of cash taxes during 2017.
Without tax reform, we would've been a full cash taxpayer, you can see that in the blue column in the center of the page on slide 138, with an effective tax rate both for the book provision as well as cashes in the mid to high 30s, yielding about $165 million of estimated cash taxes during 2018. After tax reform, look on the right-hand part of slide 138. What you're going to see are those rates, the adjusted book effective tax rate and the adjusted cash tax rate, coming down into the mid-20%. You're also going to see it then, therefore, yield a cash tax outflow of about $115 million. That would have been about $50 million of savings if we were a full cash taxpayer, as you can see, compared to 2018.
Since we were not a full cash taxpayer, 2017, only spending $135 million versus the $115 million, it is actually a $20 million net windfall in 2018 versus 2017. Where is that capital going to go? Well, if you listened to our call last week, we described to you a program where we are going to invest in our employees about $7 million from a wage perspective, which affects positively about 10,000 of our 23,000 employees. You also saw last Tuesday night that we raised our quarterly dividend from about $0.15 per quarter to $0.17 per quarter, which is the additional $14 million of the $20 million in terms of this investment of this tax reform. Now let's go ahead and shift gears and talk about the capital deployment and the free cash flow as we go forward.
Before we deploy any capital at SCI, we really look at two foundational areas in terms of giving us the ability to deploy capital, which you see on slide 139 is liquidity. Do we have adequate liquidity, which we define as more than $250 million-$300 million per our models? If you look at the right-hand part of slide 139, we have very substantial liquidity. We have over $200 million of cash on hand and just under $800 million of availability on our long-term bank credit facility, which expires in 2022. The second aspect that we look at before we really deploy capital from a foundational perspective is the debt maturity profile.
As you see on slide 140 in the lower left-hand corner, the first thing you will see is a $250 million bond that we refinanced back at the end of 2017 but was actually paid off in early 2018. That was shifted to the $550 million new senior bond that you see all the way to the far right of slide 140 and about 4 and five-eighths interest rates. In addition to that refinancing of $250 million, we paid off about $300 million of the old bank credit facility. What you are left with in the lower left-hand corner of slide 140 is a very favorable debt maturity profile. You really see no meaningful debt maturities until you get all the way to 2022. With that lends itself with a strong foundation to be able to deploy capital.
What are our priorities in terms of deploying that capital? You can see that in order on slide 141. The first thing are acquisitions and growth capital. Some of the statistics on the far right, you would see that were in John's presentation, where this generally returns an after-tax cash IRR of 11%-18%. Acquisitions kind of in the mid to the high end of that range, and new builds being in the low to the mid part of that range. Secondly, we feel very strongly that as the company grows, we will distribute an incremental amount of that growth in the form of dividends. In fact, the metric we use is about 30%-40% of our adjusted recurring net income is what we will distribute in the form of dividends. Lastly, having excess cash flow beyond that will go to our share repurchase program.
I think Tom described to you a little bit earlier about we look at the return, which here we want it north of 9%. Ultimately, the return in the shares, though, over the past several years have been in the low double-digit type percentage return. That's a function of our opinion of intrinsic value of the shares versus what we were able to repurchase in them. We will move that share repurchase spend up and move it down according to that relative value metric that I just described to you. Lastly, we'll continue to manage our debt maturities to keep a favorable debt maturity profile. Let's shift gears and get really specific as it relates to 2018 on slide 142. The midpoint of our cash flow guidance that you saw us announce last Tuesday is $570 million of cash flow.
You see that in the upper left-hand corner of slide 142. First, this is a good illustrative slide of how we plan on deploying that capital. About $135 million will go to maintenance, which is primarily maintenance CapEx investing back in the businesses, as well as some leases. About $180 million is estimated to go to growth, which are the acquisitions, the new builds, as well as about $80 million towards cemetery property development. Very high returns on the cemetery property development projects. The excess cash flow, which is just expected to be just over $250 million, will go back to the shareholders in the form of dividends and share repurchases.
You see on the right-hand part of slide 142, it's really a balanced approach, with the orange part of this pie chart on the right side being growth capital, the navy blue being more maintenance and reinvesting in the businesses, and the light blue about returning to the shareholders. Also on the lower left-hand corner of 142, this is illustrative of the free cash flow, but we should have actually some more capital to deploy. As you know with our philosophy, we should maybe even have as much as $50 million to $100 million more in capital. As our company grows, our EBITDA grows, and we maintain our leverage, we'll be able to deploy that additional capital in 2018 going forward. What's the result of all that historically in terms of how we deploy capital? You really see that's illustrated on slide 143.
On the upper left-hand corner of this, we've deployed about $3.3 billion back to our shareholders since we really started these programs back in 2004. You can see on the bottom part of this slide, you'll see the orange is the number of shares and how it has decreased over the past over 10 years. In fact, it's decreased about 23%, you can see on the slide, since 2010 alone. The dividends has also grown proportionally, as I described to you, as the EBITDA growth has occurred. You can see in the blue part of the slide, you see dividends per share growing over time, in fact, over that same time period since 2010, actually has a 20% CAGR as well.
This is before you get to more excess cash flow, as you see at the bottom of slide 143, which we expect to have $185 million-$235 million deployed in this way towards share repurchase to continue this trend. That particular metric at the bottom of 143 actually includes the $50 million-$100 million that I just described to you of maintaining our leverage as the EBITDA growth also continues. Lastly, just to wrap up this financial overview, the message I'd really give to you is what you've seen historically, you're going to see more of the same. We're going to continue to deploy our capital to the highest relative return opportunities. Acquisitions and new builds with the higher returns would all likelihood come first.
We'll continue to grow the dividend as the company grows, we'll continue to deploy our cash flow towards the share repurchase program in a meaningful way, always ramping it up and ramping it down as a relative statistic in terms of value does. With the foundation of that, of having a favorable debt maturity profile, at any point in time, have an adequate liquidity. With that, we're going to keep going on the growth outlook of the company, now I'm going to shift it back to Tom as he talks about future growth of the company.
Thanks, Eric. I want to point you guys to slide, if I can get it to go there. Okay, 146. You'll notice on here from our earlier comments, this shows the building blocks of our consistent 8%-12% earnings per share growth guidance. Now I want to define with a little more precision the assumptions behind the building blocks of our long-term growth framework. Now on slide 147, we break down for you that we anticipate that we'll continue to generate funeral revenue growth of about 1%-2% annually as relatively flat core funeral volumes and slightly increasing core funeral average are aided by mid-single-digit growth from SCI Direct. Margins should ebb and flow around the 20% level. Cemetery revenue should grow in the mid-single digits as the effects of our strong pre-need sales production impact property as well as merchandise and services revenue.
This should afford us the opportunity to grow our margins 50-130 basis points a year, together, funeral and cemetery should provide a base of 4%-6% growth in earnings per share on an annual basis. The next building block on slide 148 captures the effect of deploying our capital into growth opportunities, both through acquisition of existing businesses as well as new construction of funeral homes. As you can see, we've deployed capital within a range of $80 million-$100 million over the last three years. The acquisitions tend to have IRRs in the mid-teens, while the new builds have them in the lower teens. Acquisitions are immediately accretive to earnings per share, while the new builds will take a few years to begin to contribute.
We continue to see a strong pipeline of candidates, as well as ample opportunities to continue to grow through construction of new builds. Therefore, we have raised the annual anticipated impact from business growth to 2%-3% a year from the previous 1%-2%. Our final building block on page 149 is the impact of shrinking our equity base through share repurchase. Our annual program's velocity and speed will be first a function of available cash and liquidity, so it can be impacted by how much we spend on acquisitions in a given year. Second, it's a function of working within our leverage ratio. Finally, it's a function of our assessment of the value of our stock at a point in time. The bigger the perceived discount, the faster we'll go.
As you can see from the share repurchase program, it has impacted us in earnings per share around 4% in recent years, until 2017, where you see it had about a 2% impact. Here we're a victim of our own success in that our share price has risen as much as it has, and our available cash flows do not have the same effect. Therefore, we've lowered our annual earnings per share growth impact to 2%-3% from the previous 3%-4%. Slide 150 brings it all back together to show you the most recent four years and our compounded growth rate of 12%. We are confident we can continue to grow and deliver earnings per share growth within our guidance range. Moving to slide 151, you can see the details of our annual guidance for the year 2018.
When using the midpoint of our 2018 annual earnings per share guidance of $1.81, we are growing earnings per share by about $0.26 or 17% over the 2017 earnings per share of $1.55. $0.14 of the $0.26 improvement relates to a $0.04 favorable impact from an accounting change and a $0.10 favorable impact from a lower tax rate as a result of recent tax reform. The remaining $0.12 growth represents a greater than 8% growth rate over the prior year, and this earnings per share growth rate translates into a 7% increase at the midpoint of our cash flow guidance for 2018. Core funeral revenue should grow around 1% this year, while SCI Direct should grow in the mid-single digits, resulting in total funeral revenue growth of 1%-2%. This should allow us to report funeral margin percentages of 20% or slightly higher.
Cemetery revenue growth for 2018 should be in the mid-single digits, as we experience nice growth in both property revenues as well as merchandise and service revenues, resulting in an expanding cemetery margin percentage somewhere around 29% or 30%. We definitely noticed a pickup in activity during the month of January. We believe this is primarily a result of the effect of the nasty flu season that we've all experienced. While this should drive revenue growth in the first quarter, it's too early to tell how much we may give back in revenue growth as we enter the warmer months. Now I normally ask for a drum roll or something to that effect because this is supposed to be the sizzle part of our presentation, I was told. Too bad it's me giving it.
On slide 152, we thought we'd do a little what if for you to understand. 152 tries to capture the impact of demographics when they begin to affect our funeral operations. For instance, you'll see under 2018 guidance, if 1%-2% funeral revenue growth goes to 3%-4%, it improves our funeral margins by over 100 basis points. It adds $0.11 to earnings per share and improves our earnings per share growth rate by 600 basis points or 6%. While we believe this will happen, it's very difficult to predict when or how fast it can ramp up to these levels. On slide 153, we attempt to show the same for cemetery. What if we can grow cemetery revenues an additional 200 basis points? This would add an additional 70-80 basis points to cemetery margin percentage.
It would add over $0.06 to earnings per share, improving, as you can see on the bottom right-hand side, the earnings per share growth rate by 300 basis points or 3%. The difference here from the funeral assumption is that this could happen in any given year. If we can experience a little more property revenue growth, a higher growth rate from the merchandise and service revenues coming out of the backlog into reasonable growth and income from our new perpetual care income strategy, we could surprise to the upside in any given year. In conclusion, on slide 154, just remember, we will continue to focus on growing our revenues, leveraging our scale, which will result in growth in cash flows.
We'll deploy those cash flows and that capital to its highest and best use with the intention of continuing to deliver to you, our shareholder, superior shareholder returns. Thank you for being with us today, and we're going to be happy to take some questions now. I know we did apparently Debbie picked on the sell side. She ranked her questions by her favorite analyst first. That would be Chris Riggs.
I'll take it.
I think she said.
I'll take that. Just one clarifying question first. I don't know if you can get it up, but slide 63. It's the slide where you show the comparable cemetery revenue breakdown. Eric touched on it a little bit as well. The at-need merchandise and services growth versus the pre-need services or merchandise and services growth, big difference, and there's an inverse relationship to even the property growth on the at-need and the pre-need side. I'm just wondering what the difference is.
Yeah. A couple of things there. On the pre-need side, one of the big components is the compounding income effect as it relates to the cemetery trust funds. Remember, those are all trusts, and over a long period of time, you're going to get better, much better than inflationary pricing, as Aaron's slide showed, if you remember. The real return on some of those assets are in the 4% and 5%. That's a big component of it. Remember, that's still there. Even in a down year, you're going down against a compounded 7-year good time. That should be relatively stable. Obviously, in a tough year, it would come down. The other thing is what Eric was talking about. We're selling more and more of this stuff through our sales force.
If you think about it, we're selling it at a very good price, high-quality stuff with very good salespeople. Historically, Chris, we may have acquired that backlog from an acquisition, and it may have been sold not in a very aggressive way or not put enough money in there in the trust fund. We're getting a higher quality of business coming out of the backlog, which is causing the other piece. The other thing I would just tell you as an example, Stewart didn't sell Services pre-need. As we went in and started selling pre-need services, we also were very good at selling pre-need merchandise today. The advent of that is, in the old days, people would sell property with the hope of, hey, we'll sell them merchandise when they come in later, or we'll sell the services later.
What you find is a monument store may open up right around the corner from your cemetery. Now as they walk in, they say, "Oh, now I need a monument. There's a store. I'm going to go price shop." On a pre-need basis, we'll sit down and say, cover the whole thing, finance it over time, and we get the marker sale. We also sell the services that are full price and invest those over time and have the benefit of the trust earnings. That's why we continue to believe it's going to be there, and at-need's going to grow at the kind of low single-digit rate.
Just one more. On the new builds, is that a combination of combination facilities-
Very-
just replacing existing homes and just a straight up de novo, like a brand-new home and a new market, or what's the breakdown there? How do we think about that? Thanks.
When we talk about new builds, that Chris talked about, those are actually new funeral homes. They would not be. John mentioned in his presentation the refreshing of a funeral home. That would not fall under that category. That's capital we would spend that we probably historically would've called maintenance capital. You may see us want to bump that up as the years go on to say, we're going to go refurbish those homes. Because it's not a new home, we're not going to pull it in the new build. That would be something different, Chris. Think of those as standalone funeral homes, either on a cemetery or a new home built on land that we've purchased or acquired. Thank you, Chris. Obviously, you're Debbie's favorite. Who's the last? Scott, you're last. That's interesting. Joanna, I think you're next.
Thank you. I guess I'm second favorite. That's good.
Yeah, at least.
Thanks for taking the question. Just to harp on a little bit on the pricing dynamic, right, and the property growing 7%, can you just flesh out or break it into two different pieces, which I guess you mentioned in terms of the tiering of your property and also the inflationary updates, and how do you think that could kind of play out over a longer term in terms of property pricing?
Sure. If you look at our slide, I think where Steve was talking about that. We've seen our pre-need property sales grow at a compounded average rate of, call it rounded 7%. If you break out that orange bar that he had on there, remember, the orange bar was the over $40,000 sales, and you just look at what we'll call the more basic cemetery property sales, they're growing at about 6%. If you take that 6%, and the volumes are relatively flat, if you take that 6%, again, rounding, we believe about 3% of that is inflationary pricing. As you can imagine, the cemetery business, as Debbie talked about in her comments, there's not a lot of new cemeteries. Cemeteries that are needed are built.
There'll be a few communities where you will, but you just don't see the type of price shopping, and there aren't as many options when you look out at the cemetery business. Passing along inflationary price increases is actually pretty simple in most of these places. Beyond that cushion, we talk about the tiering inventory. You saw what Steve said, and John referenced it, too. We're spending capital in our cemeteries to create very differential product. Very high end, just below the high end, just below that kind of high end, all these different tiers which raise the overall quality of what we're selling. That component of itself, we believe, has driven about a 3% and sometimes 4% increase year-over-year.
What we're trying to explain is we had access to 200 of Stewart cemeteries to go do that too back in starting in 2013 and 2014, and you really saw that impact in 2015. As you got into 2016 and 2017, they became part of the base. We're seeing the growth rates, as you think of property on a pre-need basis, probably coming back to that, what we'll call mid-single digit. Let's call it 5 for middle of the road. 3% of that might be inflation, and 2% of that would probably be continued mix change as we're constantly going in and opening new sections of cemeteries, which will have water features. You saw some of the beautiful things that we have. We feel pretty confident that that can continue.
The only other thing I'd add, Joanna, and this is just Steve Tidwell being the person he is and the commitment he gave me. He says, "Watch for that velocity to go up.
170 new salespeople.
All kidding aside, we do believe, I think, with the new sales tools, that we'll be able to talk to some growth in that velocity number as time goes forward. Again, if you look at that velocity, we've stayed flat. If you look at what's happened in funeral over four years, it's down, right? We do think that through our outreach program and through more baby boomers, we're doing better than what would walk into our store. At the same time, we can do more.
The second question on slide 76, you mentioned about on the funeral side, the sales production there that was sort of lackluster in a 2% range, but you expect improvement up to 3%-5%. Can you just spend a little more time fleshing it out, why you're so confident that it could accelerate to that degree?
Sure. As Steve mentioned on that slide, if you remember, there was a nice growth rate on the front end of that slide of about 8% a year. Then he picked a point, I think it was 2013, 2014, really, where a lot of change began to happen. We took on Stewart Enterprises, which is a very big integrated acquisition. They had different sales compensation programs. They sold different things. They had a different insurance provider. As you can imagine with any big integration, and we took that time to say, not only, and this was again, I think the bold vision of Steve and Jay and others that said, "Look, let's build this thing to last." There's things you can do around the edges to try to maintain your growth rates.
What we did is we said, let's take a new approach to how we compensate our sales managers, how we compensate our sales counselors. Let's recalibrate what value is provided by cemetery versus funeral. Let's look at the quality of business that we're writing in the backlog and make sure that that's better. All these are fine-tunings to our training, fine-tunings to our compensation programs. Oh, by the way, let's launch salesforce.com as our customer relationship management tool. There was a drastic amount of change being introduced into the sales force that we believe caused us to slow down, if you will, as you think about those growth rates. What Steve was referencing before is saying, we're not so sure we can get back to that 8% growth rate because part of that was going into these market-based sales.
We'd go into new markets, and that growth would help us achieve that 8. We think with really relatively no new market-based programs going into new markets, that we're now poised with having Salesforce in place in the training, having a few years under our belt with the tweaks of the compensation, getting the training up and running. We're very confident that we can return to those, call it low single-digit to mid-single-digit growth rates on pre-need funeral. Next was Duncan, right? Yes, there's Duncan.
I was interested what you guys were saying on the, I guess, what you're classifying as the neighborhood market and some changes sounds like you're making there on some pricing strategy. Sounds like it's in early stages and only a few markets, but I wonder if you give us a better flavor on maybe how much pricing is going down on average and what the strategy thought process there is.
Sure. As you referenced to pricing, the first thing that comes to my mind is fake news. I'm kidding. I just wanted to say fake news. I've been wanting to say that my entire life. Anyway, Duncan, back to your question. Just too tempting. As we think about pricing, I think John did a great job of kind of bifurcating that. What he tried to show you was when you look at our combo facilities and our customs- conscious and our full service, we're really not seeing a lot of pricing issues. We generally are holding our own on share. We're passing along inflationary pricing. The one thing that may be happening in those buckets is a little bit of conversion from burial to cremation, and therefore put a little bit of a headwind on what we're charging. Everything is generally good in those pieces.
Jay showed you the same thing on SCI Direct. We're actually growing volume in that bucket. As you think about challenges as it relates to price and how that might affect volume, what John was concentrating on was saying, you really got to go to the neighborhood funeral home. I think what John was saying is probably the majority of our neighborhood funeral homes are in good shape because they're either good facilities, we got a good pre-need program, we have a good manager, and they compete very effectively. What we're finding, and John, again, as part of his role of business development, is finding ways to improve the way we operate and helping Jay and Steve's teams transport that knowledge that we find in different markets.
What John's team did is they went in and searched and said, "Let's go find places where we may be losing more volume than we think and places where we see higher discounting." They found two markets that kind of jumped off the screen at first, and they went in and John showed you what they did. They found, really, I'd say for the most part, we're finding more of our pricing issues centered around that cremation consumer. We'll call it the low to mid-tier cremation consumer. It's somebody that's not going to be a full service, robust buyer of our services, but somebody that says, "I still care about a funeral home. I don't want to go non-funeral-home channel, but I just don't want to spend very much.
Do you have an offering for me, SCI?" I think what we're finding is when we find that sweet spot of what is the package that's desirable to them, what's the price point that we can do? John showed you that we can convert that into an opportunity to grow share for that business. The other side said, "Hey, what if my demographics say customers are willing to spend, have the money, want it. Our problem is our facility doesn't represent what they want." That's the opportunity that Chris was talking about. We should go refurbish more of those. John showed you one from 2014 because we had a lot of data. I visited one in Baltimore probably about four or five months ago, and it was so impressive what they've done, and they've seen the exact same statistics.
They just haven't been there for as long. We're doing that from time to time. I think our opinion is, John shared with you, we've gone to six other markets. There'll be more that we go to, I would generally say we feel good about pricing in this industry. I think it will always maintain a competitive nature, we feel like for the most part, we're priced right for the level of service and products and services we can provide to our client families. We will deal with situations where we feel like we may be losing share. We're going to take these types of learnings and apply them to those markets. I would tell you today, we don't believe it's a big issue, particularly on the cemetery side and really not on the funeral side either, Duncan.
Six markets that you're looking at it now, it's not something like you're not thinking it could be 50 in a few years or something like that?
Yeah. Even within a market, like I said, we say market, you may only adjust pricing. You may have 12 funeral homes in your market, and you may adjust pricing on three. I don't want you to think we're going in and jamming the prices in the market. What we're doing is we're looking at the tiers. Like John said, we've got a full service provider at this price point. Customers conscious may be a little bit unique. Then we say, gee, our neighborhood is really bunched up against, and it doesn't look anything like that customer. I can either step up to my pricing with some capital, or I can step down with some pricing and capture more market share, that's the kind of things we're doing.
Even within these markets, I don't want you to begin to think that we're adjusting pricing on everything as we walk in. It's tweaking it with generally locations that are having some form of issue as it relates to competition.
Great. Thanks. Then on the perpetual care trust side, I guess Aaron was talking about moving the portfolio over time. I guess I don't have a great sense, how long do you think you can get from, I forget what slide it is, but from the left side of that slide to the right side, where it's more heavily equity focused. Is that something that's going to happen pretty quickly? Then the second follow-on to that is part of the thought process here that you all will be able to pull out more of those funds and maybe help us think about that from a quantifying standpoint?
I think what Aaron showed you on that slide is 43% that are in this now. One big one is California, which apparently we've got an approved, but we can't actually execute the strategy till 2020. That will be a big move when we're able to get to 2020. I view this as the old 80/20 rule. I think we'll get to 80% pretty quick, then some of the smaller pools of capital, where you may have a little more resistance from lobbying and independent funeral directors and the like, it's hard to get the last 20. I'd say by 2020, we probably feel pretty confident we can get to that 75, 80, Aaron, wouldn't you say?
Yes.
I think he mentioned before, what we're finding is that we're going to yield about 1% more a year once we get to the strategy. If you look, I forget which slide it is, it shows you the pool of these assets that's gone from $1.3 billion to $1.4 billion to $1.5 billion. Remember, the corpus never comes out of here, so this thing just keeps growing as more people buy cemetery property and the like. Think of that as a larger pool of assets that we're going to get 1% more a year on. 1% of $1.5 billion, I was not a math major, but that's $15 million if I did that right. That's not a small amount of money, and that will, again, continue to grow as we add to that pool of assets.
I think I got through Debbie's favorites, and now I'll start with the naughty list. John Ransom, you're next.
Thanks, Tom. Being a simple guy, I used to like Eric's simple rule of thumb that every 1% in the trust return was about $1.5 million in EBITDA. Can we get an update on that stat for simple-minded people like myself?
I think we think that generally holds true. We haven't lost that. The problem with trust income, John, that I think we've tried to move away from is remember, trust income is a cumulative number. A lot of times, you guys as asset managers and people like that, you're looking at it and saying, "Hey, what happened in the market?" The trust income we're going to report happens to be a contract of cumulative earnings over the last 12 years. Even in a bad market, Tom may report to you, Tom's contract got me $4,000 of trust income. Part of that was keeping up with inflation, right? That's why we tried to steer away, there's really a disconnect between the performance of the trust and what our trust income that we report.
Remember, a lot of that trust income we report is just inflationary catch-up from what I sold 15 years ago that today costs more. We think it's just easier. John, I think generally because of the large pool of the assets, you and Eric's simple approach is still acceptable.
All right. Again, staying on the simple theme.
Yeah
if what is coming out of the backlog today is about $6,000, and it's in there for about 12 years, and you're compounding at 4% net, that means what went in 12 years ago on average is about $4,000. It's up about 60%. The question I have, the stuff you're putting into the backlog today, what is the ASP today that's going in that'll come out 12 years from now or so?
Yeah. I think if you look at slide, what is that, 132? Yeah. That's out. We got to go 131. A.J.?
131.
131 is showing you that what's going into the backlog is just above $6,000.
Oh, I see. Okay.
It's just above $6,000.
I misread that. I thought that was what was coming out. Okay, that's going in today.
Yeah. See, it's slightly above the $5,979. I can't because this is a graph, my memory is that number's in the very low $6,000s.
Unsolicited suggestion. What might be helpful is to show that, gosh, we're selling stuff at a 50% or whatever, $6,000 today, 12 years ago, it was $4,000. That's it.
Yeah. Well, that's on that slide. We just need to make it a little more simple, apparently.
It's clearly not simple enough.
Yeah. We'll simplify it next time.
Lastly, just to clarify, what's a little confusing to me at least is the 1.25% that you are pulling out of your trust as a management fee. That's the net. It doesn't compound? It's earnings today that's kind of perpetual. You're an asset manager, so you get that fee-
Yeah
It doesn't compound the trust.
It is getting pulled out. It's actually a component of trust income. When you think about our trust income, it's reimbursing ourselves for those fees-
What we're able to take out based upon state laws from an earnings perspective.
Just to be clear, do you take out, I think I know the answer to this, a capital gain in a funeral trust? Do you take out capital gains as a part of your trust income, in cash?
Yes. Remember, we only take realized capital gains that are allocated to contracts that go at-need. The fact that we have a capital gain even realized, think of it as spreading to 1 million contracts.
Now 80,000 of you are going to die this year, we'll take that portion of the capital gain out. We'll get 80,000 more next year and vice versa.
You're not pulling stuff out of a contract that has.
No.
Okay. Got it. Thank you.
Thank you, John. Next up, Mr. Rice, A.J.
Thanks. I have a handful of them here, if I could throw them out to you. Some are clarifications for what other people have asked. On the perpetual care, maybe I'll do that one first. Does what you're changing to affect what you have to defer on a sale in any way? Is that still roughly running 15%?
What that eternal care fund is, if you remember, Aaron Foley said 10% of our property sale by state law or provincial law is required to go into this trust. What you found in the old days was old cemeteries that didn't have perpetual care funds. If you see them, they look like this. They're some really old cemeteries. Because they didn't require people to put vaults into the ground to hold the casket. Over time, the casket crushes, and you've got a big hilly cemetery. They created a law a long time ago to say, we think it's important for these private cemetery operators to have a fund to maintain these in perpetuity, mow the grass, and then there's some laws around what you're putting in the ground. The eternal care fund, that 10% stays the same. It's no change.
It's required by them. What we've done historically is because the rules in the state generally say, hey, you can only take dividends and interest income. In certain states, they might let you take capital gains. What'd you do? You invested in income assets. You invested in predominantly bonds for that matter. Here we sit knowing that we've got this huge bond portfolio, it's a very low interest rate environment, and we know we can't grow that pool of assets like we want. We're being proactive, going state by state to say, hey, this is an endowment fund, no different than the University of Texas, hook 'em horns, with their funds and how they're able to distribute them. They get to rake 3%-4%-5% out every year with the idea that if you monitor it correctly, that'll last into perpetuity.
That's what we're doing. We're basically saying, we want to take that approach. It allows us to convert out of those fixed income investments into equities. Now we think we can grow that pie more. As you think about, let's say, the way it impacts our income statement, it's going to be a larger pool of assets that we'll take, call it 4% a year on a larger pool of assets. The predictability of earnings out of that fund is going to be much more stable and also have kind of a built-in growth rate as time goes on and won't be subject as much to the ebbs and flows of the market.
Okay. On Eric Tanzberger's slide, I think it was 133, where we talked about the percentage of funerals done coming out of the backlog will gradually increase over time. You're holding in your forecast period that constant, the number of overall cases. You have a period from 2010 to 2014 where you're growing sales 8%. Is that a realistic way to look at it or won't-
Well, I think what we were trying to say there, you're probably right, A.J. What we didn't want to confuse is to start predicting what volumes are going to be in the future. Instead, the point of this slide was really to show you that no matter what happens, a higher percentage is going to come out of that backlog. Again, if our volumes go up, we think the percentages stay the same. We get even more cases that come out of that backlog if that's what happens demographically as it flows through. The point of this slide was to say, hey, everyone's concerned about at-need pricing, right? We had a great question. Duncan talked about it earlier. It's tough. We do believe we'll continue to be able to do that, but in a low inflationary environment, that's tough.
What we're trying to tell you is more and more is coming out of that backlog, which is growing. I think on Eric's slide, what's coming out of the backlog is 130 basis points higher growth compounded than what we're getting on an at-need basis. There is a wind at our back as it relates to the velocity of what's coming out of the backlog, as well as the average sale that's coming out of the backlog, and that was the point of the presentation.
Sure. Is there any way to look? I'm assuming that 10-12 year average life is something of a bell curve. Can we see at all whether that 8% growth period that you have for those four or five years is driving any incremental share to you?
We don't have the ability. A.J., one of the problems, and this is why, historically, we've hesitated to get too deep into this stuff, as you can imagine, when you acquire contracts, particularly from other people, you get not great data sometimes. Quite honestly, even in SCI's historical sales, we probably didn't capture as great a data as we should. The one thing we did do is put all the money in trust that should be there. A lot of these acquisitions, you may buy somebody, and not all the money's there. Lo and behold, I'm not sure where it went. Either it wasn't a good investment, or they didn't put all the money in. Well, we got to go fix that, right? We're going to go put the monies in the trust fund. Less and less of that business is there anymore.
Most of what we're selling, that's what A.J.'s getting to, is we've had real success selling high-quality stuff. We put the monies in the trust fund. We manage the trust fund. That's why we're excited about the growth. I'd tell you, A.J., I would say that you're probably right. I couldn't quantify for you what that is that's flowing through today.
On your slide on the merchandise trust fund showing the compound annual growth rate of 11%, I know that's the one area where it's all about taking delivery. There's a little bit of, do you go after those people and have them, quote unquote, "take delivery" or not? Has there been any change? Is that in any way impacting that 11% growth rate?
Yeah, let me tell you. This is what goes in, right? This is what we sell. What you just said has nothing to do with this slide. Think of this as what goes in, then we'll talk about what comes out. What goes in grew by 11%. What Eric said on this slide, if you remember, was in 2015, we have a 13% growth rate. That 13% growth rate, if I go back-- Where was it? Man, who's messing with my slides? Okay. The 269 represents 13% growth, and that was Stewart. Now we're starting to sell services for Stewart, which they weren't doing before, or we're selling more merchandise than they used to sell. Now you get Stewart all up and running. Remember, it was 2013, 2014. Now everybody's up to speed on 2015.
2016 and 2017 is over 5% growth a year. Everybody all in, no weirdness in the numbers. Now let's talk about what's coming out, which is what you're referring to. God, they did it to me again. If you go to that slide, I think it's 134. One more. Yeah, one more. 135. 134, right there. Right there. Yeah. If you look at that slide, this is what A.J.'s talking about, if you remember, this is going at a 9%, if you look at the orange bar on the top. What we tried to say, and I know it's hard because we're compacting a lot of information here, a few years ago, we get feedback from J.D. Power. The number one complaint in J.D. Power was, when I order my marker, it takes too damn long to get that marker put up in the cemetery.
I keep waiting and calling and saying, "Where's my marker?" We find out, gee, it's backed up. It's on order. We're trying to get it from a vendor. One of the things that we partnered particularly with Matthews on is we said, can we get these things pre-ordered if the customer says they want them? If they do, we'll pre-make them. It helps Matthews, if you think about it, run their factory. Now they've got them ready to go. Tom Ryan, everything I want to say, loving, wonderful father, my favorite CEO ever, whatever else is on. Whatever comments you may want to say. Then, maybe all I got to do is put in Tom's death date, right, when I'm done. We can get the marker put in place a month ahead of what we were doing before.
By doing that with Matthews, we started that probably in 2015 or 2016, Mike? 2016? When we started doing that, it added probably ramping up to $10 million, $12 million a year where we're selling something and making it. By making it and storing it, we get the money, and we get the revenue. 2016 to 2017, that number was the same number. If you go from 2014 to 2017, it added about, what Eric Tanzberger was saying on the slide, 200 basis points to the nine. If you eliminate the Matthews marker delivery program, we're growing at about 7% on a compounded basis.
Okay.
Does that make sense?
Yeah. My last question, I'm going to do one more here, is it's been quite a while since Service Corp was big in the international markets other than Canada. Obviously, one thing you've said off and on over the years is if the pricing was right, you might revisit that. Any update in your thinking about international opportunities?
You had to ask me that question, didn't you? Not really, A.J. I think what A.J.'s referring to is probably people know that Dignity, the U.K. business, has probably lost about 65%-70% of their value, which would get closer to a fair value to A.J.'s fair point. I think the way we look at it is this: it is not a market that we have as comprehensive an understanding. I have all the confidence in the world in Mike McCollum and Peter Hanley, and I'm sure they'll figure a way to fix that. As we think about deploying our capital from a risk-reward perspective, I mean, John showed you there's $1 billion worth of stuff we could buy that we know how to run, that we can get synergies from. The U.K.'s, we're not going to get a synergy on the product side.
We got to have a management team. They've got a separate system. You just don't have the same level of synergy. As we think about it, I don't think the odds have gone up much at all. We're still very focused on the domestic market, A.J., but good question. This is really interesting because this is when you find out someone's intelligence. You get down to, there's been five questions already, and now Scott Schneeberger has had to listen to all these questions and come up with an original one. Scott?
Hi. Thanks, Tom. I'm just going to ask one. It'll be multi-part, but no one wants many more than that. All right. On page 147, the 1%-2% funeral revenue growth.
Right.
What are the core components of that? Volume, pricing, acquisition, cremation? If you could just break down how the mix looks within that 1%-2%, and then quick follow-up on that subject.
Remember, this is trying to say in any given year. This isn't based on, we don't know how long it is until we get to that what if slide. What we've experienced and what we believe is going to happen is at the core funeral level, this is the core funeral home business, that we generally are going to experience what I'll call generally flat volumes. With price increases that probably approximate 1%. Again, we'll fall on either side of that, right? We'll have a year where volume's down a little bit. I'm just trying to get you to 1% core revenue funeral business growth. That's the tough part of the business that needs one day some help. Within that, we're assuming a 100 basis point cremation mix change.
That's why you only get the 1% top line average contract, because it's probably closer to 2%, but again, gets knocked down to 1% because of the cremation mix. Now let's go to some smaller businesses that we have in our funeral portfolio, and they all center really around SCI Direct. There are two line items on your income statement. One is what I'll call the at-need fulfillment part of this business where people die, we pull monies out of trust, and we perform a service. There's another one that's really a sales-driven one. We're selling an urn, and we're selling travel protection plans. Those, when we sell them, we get to recognize them. If you look at those two businesses, they're growing their revenues somewhere between 5%-8%. The problem is they're very small compared to our core funeral revenue.
That 5 to call it mid-single digit growth, when you combine it with what's going on in core, is going to get you to this 1%-2%. We think that's the way it looks until you get to that slide 152 or 153, where we demographically begin to see volume. The other thing to keep in mind is what Eric's slide did. Remember, what's coming out of the backlog is going to grow at a higher rate and be able to lift that average revenue per case, and more is coming out of the backlog.
Great, thanks. The follow-up is right along those lines. We would appreciate it, be very nice if you would tell us when the funeral demographics arrive. Thanks.
I was saving that for this moment. Someday. That's what I was going to count. No, we don't. I would tell you that if you look at Dr. King's stuff, it makes no sense, but if you go to a graph, I would say the meaningful changes probably wouldn't occur until you get into 2022, 2024, if I remember right. Now, between now and then, and I think Debbie did a good job of showing you, we're at the bottom of this thing. You're beginning to climb out of the very bottom, and I think that's good. To get to the higher slope jump, that's probably another four or five years away. Again, things change between now and then, and these predictions are not very accurate, particularly when you look at CDC data.
I wish we could show you. Remember Debbie showed you the blue bar versus the black bar and how correlated that is. If you took the old CDC line, it would be well above that black line and that blue line. They've been wrong forever. We think we understand why. There's some political motivation behind that. How many people are we going to have to provide Social Security for? How many people are we going to have to provide medical benefits for? Well, I don't want that number to be too big if I'm a politician. They don't want to fix the number. It's tough to tell with the data that's available. I think what you'll hear us say is we think we're going to capture more share through pre-need. We're going to capture more share through the things John's talking about.
When that comes, we're going to get more than our fair share.
Great. Thanks a lot. Good job.
Thank you. Anybody else, questions? I need a lucky seventh questioner. Okay. I just want to say to all of you, both here in the room and on the internet, we really appreciate you guys as shareholders. We hope you enjoyed this Investor Day. If you have any follow-up questions, please feel free to reach out to Debbie, Eric, myself, Aaron. Happy to answer them. Thanks for coming. Safe travels back.