Good morning, and welcome to the SEI Second Quarter 2021 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to SCI Management.
Please go ahead.
Thank you and good morning. This is Debbie Young. Welcome today to our company's review of business results for the Q2 of 2021. I I hope everyone has had a chance to review our press release issued yesterday. Before the prepared remarks from Tom and Eric, Let me remind you that we will be making some forward looking statements today.
Any comments made by our management team that state our plans, beliefs, Expectations or projections for the future are forward looking statements. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include, but are not limited to those factors identified in our earnings release and in our filings with the SEC that are available on our website. During this call, we will also discuss certain non GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures With that out of the way, I'll now pass it on to our Chairman and CEO, Tom Lyne.
Thanks, Debbie, and hello, everyone, and thank you for joining us on the call today. I'll apologize in advance for my voice. Eric promises me I live worse than I sound. This This morning, I'm going to begin my remarks with a high level overview of the quarter, followed by a more detailed analysis of our funeral and cemetery results, And finally, comment on our guidance and outlook for
the year.
But before I begin, I want to give special thanks again to my SCI family. You worked so hard to deliver the impressive operating results you reported this quarter. But more importantly, You continue to stay relentlessly focused on what we do best, helping our client families and the communities that we serve gain closure And healing through the process of grieving, remembrance and celebration. During these difficult times, I just can't say enough About how you continue to rise to the occasion, you truly are my heroes and you have my heartfelt appreciation. So let's get right to the highlights.
For the Q2, we generated adjusted earnings per share of $0.92 59% increase over the prior year. The primary driver of earnings per share growth was our 34% increase In cemetery revenues for the quarter, which was generated by our continued strength in preneed cemetery property sales production, atneedcemeteryrevenuegrowthandhighlyprofitableincreasesinrecognizedpreneedmerchandisingservicerevenue. The funeral segment delivered strong funeral sales average growth, which more than offset expected declines in funeral volumes When compared against a quarter severely impacted by COVID-nineteen and the commercial restrictions imposed at the time. Preeni funeral sales productions came roaring back with a 57% increase over the prior year quarter. At a high level, adjusted operating income grew $58,000,000 and contributed over 70% of the increase in adjusted earnings per share.
The remaining increase was the result of fewer shares outstanding, lower interest expense And a lower adjusted tax rate. Now let's take a look at the funeral results. Overall, the Funeral segment performed better than we expected. Total comparable funeral revenue grew $48,000,000 10%, primarily due to significant improvements in the sales average, which helped to offset anticipated lower volumes when compared to the elevated pandemic volumes of last year. Core funeral revenues grew $25,000,000 led by an impressive 14% increase in the core funeral sales average, more than offsetting a 7% decline in volume.
We are very encouraged by the rebound in the funeral sales effort. Our core average revenue per service is up almost 3% Versus the 2019 pre COVID second quarter. You'll recall that in last year's Q2, We saw a concerning drop in the percentage of customers with a service when services were limited by COVID-nineteen and the related restrictions. We have seen this percentage approach pre COVID levels as our client families continue to place significant value on memorialization And celebration. Preneed funeral sales production for the Q2 grew an impressive $106,000,000 or 57 which exceeded our expectations.
Both our core Funeral Home and SCI Direct Businesses Posted strong increases, we guess an easier comparison quarter in 2020. We continue to see significant growth in marketing leads For both digital and direct mail that very successfully generated preneed sales production. In addition, lead growth from seminars Grew over 5 times from the same quarter in 2020, which was severely impacted by COVID and related restrictions. On the non marketing lead front, we saw significant rebound in grassroots events At both our locations and venues, as well as enhanced willingness of the customer to meet with us at our location or the privacy of their homes. With these more robust leads, our highly effective sales teams have increased the lead to sale rate to almost 17% Versus historical average, which hovered in and around the 14% range.
From a profit perspective, funeral gross profit Decreased approximately $8,000,000 resulting in a lower gross profit percentage of 20.5%. The incremental margin generated from the core revenue increase was slightly reduced by elevated staffing and service level comps Associated with operating a full service facilities in the current quarter as compared to the limited service structure We operated under during the Q2 of 2020. Additionally, facilities costs were higher As temporarily deferred repairs and maintenance expense from the pandemic and the Texas freeze combined with higher utility costs Put additional pressure on our margins. Remember, dollars 15,000,000 of our revenue increase this quarter was other revenue, Primarily general agency revenues associated with our 70% increase in insurance funded preneed funeral sales production. These revenues are almost entirely offset by sales costs and therefore have a negative impact in the immediate term on our funeral profit percentage.
Finally, this quarter saw elevated expense associated with incentive compensation For our field leadership, as financial results for the first half soundly exceeded both prior year and our own expectations. Now shifting to cemetery. Our cemetery sales performance continues to exceed even our lofty expectations. Comparable cemetery revenue increased $117,000,000 or 34% in the 2nd quarter. In terms of breakdown, recognized preneed revenues accounted for about $89,000,000 or 76% of the revenue growth.
This remarkable increase was driven by higher than expected preneed cemetery property sales production As well as higher recognized preneed merchandise and service revenue, as cumulative trust earnings on delivered contracts We're significantly higher during the quarter. Patent and cemetery revenue accounted for $18,000,000 or 15% of the growth, driven by more term is performed due in part to the effects of COVID-nineteen. Additionally, we experienced a $10,000,000 increase perpetual care trust fund income due to the timing of capital gains. Prenade cemetery sales production We're an impressive $94,000,000 or 36% in the 2nd quarter. Core velocity for the number of preneed contracts sold Increased by more than 20% and accounted for 56% of the quarterly preneed cemetery sales production increase.
Large sales production increased over $25,000,000 or 60% over the prior year quarter, accounting for 27% of the quarterly increase. While the higher quality core average sale contributed the remaining 17% of the sales production growth. As I mentioned in my preneed funeral discussion earlier, we continue to see improvements in the lead to sales rates Across various marketing channels, coupled with a more productive and more efficient sales team, utilizing Tools like Beacon and Salesforce CRM to drive superior sales performance. Cemetery gross profits in the quarter grew by approximately $57,000,000 and the gross profit percentage Increased 4.90 basis points to over 35%. The incremental margin on the revenue increases More than offset slightly elevated staffing and service level costs associated with operating full service cemeteries as compared to the limited service structure during the Q2 of 2020.
Similar to the Funeral segment, This quarter saw elevated expense associated with incentive compensation for our field leadership, as financial results for the first half Soundly exceeded both prior year and our expectations. Now let's talk about our revised outlook for 2021. Back in May, we raised our adjusted earnings per share guidance to a range of $2.70 to $3 Based upon results in the first half, we're again raising our guidance range to $3.20 to 3.50 This increases the midpoint by an additional $0.50 and represents a 17% increase over our 2020 results. The 2 most significant adjusted assumptions for the back half of the year from our previous guidance are number 1, Higher preneed cemetery sales production and secondly, higher funeral case volumes than we'd originally anticipated, As the impact of COVID-nineteen variants have put upward pressure on the adjusted IHME projections for COVID deaths in the back half of twenty twenty one. Within our Funeral segment, we're anticipating comparable volume decreases In the high teen percentages for the back half of twenty twenty one versus 2020, resulting in being down mid single digit percentages for the year 2021.
Meanwhile, we would expect the average revenue per case To continue to compare very favorably in the back half of the year, resulting in mid single digit percentage growth for the year 2021. Finally, we would expect preneed funeral sales production to continue growing in the high single digit to low teen percentages For the back half of twenty twenty one, resulting in a mid to high teen percentage growth for the entire year. As this sales production revenues deferred, it will have a slightly negative impact on funeral margin percentages in the near term As selling costs should offset general agency commission, but it will enhance our market share, funeral revenue and profits in future years. On the cemetery side of the business, we would expect patent eat cemetery revenues to decline in the mid to high teen percentages In the back half of the year, similar to the funeral volume trends. However, at levels that are well above 2019 revenues, resulting in low to mid single digit percentage growth for the entire year versus 2020.
As far as preneed cemetery sales production goes, we would expect a mid single digit percentage decline in the back half of twenty twenty one as compared to the robust levels of 2020. However, sales production should be at double digit percentage growth Over 2019 levels, resulting in mid to high teen percentage growth for the year 2021 over 2020. As far as the future years, I wish I had a crystal ball for you. Not having one, I will convey what we expect with the information that we have at this time. We still expect future periods earnings per share and cash flow results To be negatively impacted temporarily by the pull forward of funeral case volumes in atneed cemetery sales into 2020 early 2021.
Still, efficiencies we have gained by improving processes, Leveraging technology has allowed us to produce more competitive and profitable operating platform. This combined with the capital structure improvement, particularly the share buyback activity, should allow us to produce Exceptional earnings per share compounded average growth rates even in these negatively impacted years. And once those pull forward effects fade Demographic set in, the mid and longer term outlook for SCI is even more impressive. As an example, even in 2022, where we might expect funeral case volume to be down double digit percentages versus 2021, Performing some 25,000 fewer funerals in 2022 than we did in 2019. Remember, we generated earnings per share of $1.90 in 20.19.
We would expect 20.22 earnings per share Even with a high single digit percentage volume decline compared to 2019 to be in the 11% to 15% compounded growth range, Off that $1.90 20.19 pre COVID earnings per share base, that would equate To a $2.60 to $2.90 per share approximate result for 2022. Our models post 2022 would say the pull forward effect should begin to wane and an Accelerated year over year growth should begin as we approach a favorable demographic impact with a leaner or technologically efficient In effective operating model, last quarter, I mentioned we can see 20.23 earnings per share approaching $3 to 3 point I believe we're even more comfortable with the 3.25 percent possibility today. In closing, I just want to say thank you again to our entire SBI team for your selfless dedication To our client families and the communities that place their trust in us. With that operator, I'll turn it over to Eric.
Thanks, Tom, and good morning, everybody. First, we hope that you, your friends and your family are remaining safe and healthy During these really trying times, I want to first and most importantly echo Tom's comments that our positive quarterly results discussed today All right, testament to the dedication and hard work of all of our team members here at SCI, which are putting our client families first In one of their most dire times of need. We appreciate each and every one of you. So this morning, I'd like to begin by walking you through our cash flow results and capital deployment for the quarter And then briefly touch upon our revised full year cash flow guidance and financial position. So let's start with cash flow.
We generated adjusted operating cash flow of $192,000,000 in the current quarter compared to $184,000,000 in the prior year, Which exceeded our expectations, primarily due to the strong preneed symmetry sales production As you saw yesterday in our release and Tom just walked you through. In addition to strong operating cash flow results, which again resulting from EBITDA growth of over $60,000,000 We also benefited by a decrease in cash interest payments of about $25,000,000 primarily resulting from the timing of our recent debt refinancing transactions. I want to go ahead and highlight the transaction that we completed after our last earnings call. In light of the continued historic low interest rates, We took the opportunity to issue new 10 year $800,000,000 senior notes at a 4% rate. We use these proceeds to refinance our 2021 notes set to mature later this year It improved our liquidity tremendously by repaying the $450,000,000 outstanding On our revolver, creating almost $1,000,000,000 of availability.
We also experienced a net source of working capital during the quarter, which is primarily due to a timing difference of cash related to 1 less payroll funding this quarter, partially offset by an increase in payroll taxes as we were able to defer these taxes last year under the CARES Act. These positive cash flow items more than offset an increase cash taxes of about $89,000,000 partly associated with the higher earnings and partly due to timing of quarterly cash tax payments Last year, recall that in the Q2 of last year, we were able to defer close to $50,000,000 of federal and State income tax payments as allowed by the IRS into the Q3 of 2020. So let's talk about capital deployment. We deployed $185,000,000 of capital during the quarter, reinvesting in our businesses, expanding our footprint And returning capital to shareholders. Now in terms of the breakdown, we invested $51,000,000 in our businesses with $36,000,000 of maintenance capital $15,000,000 of cemetery development capital spend.
Our cemetery development capital spend It's still a little lower than our expectations as we talked about with you last quarter, as we've continued to experience certain construction delays, primarily on the permitting side on some of our larger development projects. Even with that said, we believe we will still achieve our target Around $105,000,000 for the full year. From a growth capital perspective, we invested about $10,000,000 towards the new build and Expansion of several funeral homes. These new builds should provide us with great low double digit percentage returns going forward And expand our footprint in desirable markets. So touching on the acquisition pipeline for a moment, Through today, our acquisition spend is just under $10,000,000 in 2021.
On the heels of COVID, We're coming out of the gate with acquisitions a bit slower than we would have hoped for, but we have a really good pipeline of opportunities. And we believe we can hit our targeted capital deployment range for acquisitions of $50,000,000 to $100,000,000 for the full year. Finally, we deployed $116,000,000 of capital to shareholders through dividends and share repurchases. Dividend payments in the 2nd quarter totaled $35,000,000 or $0.21 per share. Now I'd like to shift to a few comments on our updated outlook.
On the expected higher earnings that Tom just described, We are increasing our cash flow guidance from $650,000,000 to $725,000,000 to a new revised guidance range of $700,000,000 to $775,000,000 This increases the midpoint by $50,000,000 to 738,000,000 Or just over 7%. Pulling the pieces together, the $50,000,000 increase in cash flow guidance at the midpoint It's driven by approximately $100,000,000 increase in cash earnings, which associates with the $0.50 increase at the midpoint in today's revised earnings per share guidance. This increase is partially offset by $30,000,000 of increase And cash taxes that are expected and $20,000,000 of other working capital uses. And when you think about cash taxes, we are now expecting closer to $210,000,000 of cash tax payments in 2021 For an additional $30,000,000 over the $180,000,000 we've guided to you in May as a result of these higher earnings we've been describing today. Our expectations for maintenance and cemetery development capital spending for the year remained unchanged at 235 To $255,000,000 So in closing, let me just say a few words about our financial position.
We continue to have a solid balance sheet bolstered by a tremendous amount of liquidity, consistent of about $400,000,000 of cash on hand, Plus about $1,000,000,000 available on our long term bank's credit facility. On the continued growth in EBITDA, Our leverage ratio at the end of the quarter remains below 3 times, actually at about 2.5 times. As we look beyond the impacts of this pandemic, we continue to expect to naturally lever back up to our targeted leverage range of 3.5 times to 4 times net debt to EBITDA. The underlying stability of our cash flows As well as our strong financial position that I just described to you gives us tremendous confidence and flexibility to continue Being opportunistic in deploying capital to the highest return opportunities for the remainder of this year. And as we conclude the first half of this year, we are extremely proud of the achievements that we have accomplished.
And again, The credit goes to all of our 24,000 SCI associates out in the field, serving the families and putting the families first at their time of need. We entered the second half with a lot of momentum, and I'm confident we will continue to execute our strategy And deliver strong operational and financial results throughout the remainder of this year. So with that operator, that concludes Tom's and my remarks, and we'll go ahead and pass it back to you and open the call up for questions.
We will now begin the question and answer The first question is from Joanna Gajuk from Bank of America. Please go ahead.
Good morning. Thanks so much for taking the question here. So I guess, I appreciate all the commentary about the second half Growth rates and what it implies for the year. And can you just flush out a little bit more the dynamics around the segment there pre sales Strength? I mean, clearly said that it surprised you.
So any kind of ideas in terms of what's driving that and What gives you confidence that we will continue in second half? Are those kind of pull forward sales as in like Just people obviously are thinking more about their own mortality and whatnot, so kind of making these decisions faster than in the prior years. So Can you flesh out those dynamics for us? Thank you.
Sure, Joanna. Thank you. First of all, I would say, obviously, we believe that COVID deaths have had an impact on our ability Generate leads and generate production. So some of this is, for lack of a better term, pull forward. But I guess, the preneed cemetery sales side With so many potential customers, I don't even it's not like it's really an opportunity to capture it.
We still think a significant portion of this Relates to, I think, people's realization and focus on what we do. And I think as long as COVID is around and Maybe a while after that, I think their aperture for what we do is going to continue to be available. And the last piece that I think is just true and I think Jerry heard who runs our sales force would agree with this comment. We have found a better way to manage and we're managing with less travel, leveraging technology, Focused on leads, what we do with those leads to success. So you heard me reference the lead to sale percentage is at 17% It used to be at 14%.
So we're getting better leads. We're following up better. We're utilizing our tools, sales force, Customer relationship management of Beacon. And so I think there's an element of continuation. The other thing that gives me confidence on the We referenced this a little bit on the cemetery side.
We've been selling a lot of merchandise and services. Remember, those get deferred and put into trust funds. And if you look at our numbers this time, those are up pretty significantly. Why is that? We've sold a lot of preneed customers And those monies get invested in trust funds.
There's some cumulative trust earnings in there that roll out as we deliver merchandise and services. So That again will be something that ought to benefit the back half of the year in 2022 going forward for all those reasons. So hopefully Joanna that helps answer your question.
Right. No, that's good color. And I guess, because to your point, Similar dynamics, the preemphenols, sales production also up very nicely, right. So I guess it's kind of similar dynamics as in just like you have obviously mentioned The salespeople being more efficient, but just the whole point of them being out there, right, and more kind of able to do Those events in person, right, that's driving that specific bucket, right?
Exactly. So and I think what's Slightly different about funeral that's made it a better comparison in growth and probably will be as you think about the back half of the year. Funeral leads, a lot of them were dependent upon seminars. Remember the seminar is effectively shut down last year. The other thing about funeral is we do follow-up events with the family.
So once we've had a funeral, we'll follow-up and that typically generates leads. Well, last year, no one was going to let us in their home to follow-up. So I think the dynamics of Markets opening up again, people feeling more comfortable. That tends to give a boost back to funeral, maybe More relatively than even cemetery, because again, in cemetery, we can do it outside. You're generally showing people through the cemetery.
So There's just a different dynamic, but we feel very positive about the momentum in both channels. And I just think funerals got an easier comparison as you think about the second half of the year versus cemetery. The cemetery will continue to be very strong.
Well, I appreciate it. If I can squeeze a follow-up to something you said before in terms of the funeral average sales, essentially slightly above 2019 levels. So things really came back really nice there. Are there still some markets essentially closed for activities or you're pretty much open? Thank you.
It's pretty much open. The last one to Canada was pretty shut. California has gone back in certain pockets So masked inside, but as of right now, we're seeing people, as you can see in the numbers, Choosing to celebrate, memorialize, get into gatherings and we think that's such a positive thing. I mean, You probably noticed in here the cremation rates flat in the last couple of quarters. I don't expect that to continue, but I do think people are focusing on what's important in their lives and the people that's important and that aligns well with what we do.
So We're happy to be of service to our families.
Great. Thank you.
The next question is from Scott Schneeberger from Oppenheimer.
Good morning. Hi, it's Daniel on for Scott. Could you guys elaborate a little bit on the expectations for Senator, if you know margins please in the back half and also discuss the efficiencies you guys have gained that could be Sustained with some perspective on how margin should expand a little bit longer term as well, please? Thank you.
Sure. Derek, do you have some margin stuff, you want to talk to you? Yes.
The margins essentially for the as you know, we had a little bit of pressure relative to The incremental revenues that Tom has already described in a lot of detail. The question is for the back half of the year, What will that look like and what will it look like as it relates The revenues in the back half because of the volume declines that will ultimately Potentially occurred during the quarters and that's hard for us to predict as it relates to the Q3 and Q4 volumes, I mean Tom did mention that we do not have a crystal ball, but we do use the IHME Statistics from the University of Washington and there's no doubt that things appear to be picking up from a COVID perspective in the back half of the year. I do think some of the things that put pressure on the margins during this quarter, Such as part time and overtime to some extent has now been ramped up. And I think There could be some pressure as a comparison in the back half of this year because of 2020. But there's other cases where ICP, for example, our incentive comp plan, I think we have that in a place where we're very comfortable with based on our projections through the Q2.
So I think the punch line is, I don't really expect it to be Too much pressure, as it relates to the back half of the year, but it really from those fixed costs that we just described. And ultimately, it's going to be a question of throughput. And what you saw in the second quarter Is that the model that we have in terms of incremental margins based on more volume, clearly worked. 80% dropped to bottom line and then we had some fixed costs pressure. So if the fixed costs relieves itself then According to what the margins are going to do, we're going to be a function of what do we think the volume is going to be in Q3, Q4 is a little bit out of our control.
Ultimately, I think we could see a little bit of headwinds related to it, but it's going to be Somewhere in the ballpark of the very high teens and maybe with some volume help, we can get into Where we kind of were in the Q2 as well.
Got it. Thank you. And I also
So I think the second
part I'm
sorry, the second part of the
question you asked about, what are the some of the sustainable Thanks from the model. And I think in that regards, what we're finding is from a selling cost perspective, both From a leads management, cost per sale, cost per lead and looking at travel and entertainment And utilizing technology to leverage more, those are tools that are allowing us to reduce the cost of sales we think about selling. The other thing is, by utilizing a lot more technology, if you look at our staffing metrics, just to give you an example, Segment. And that's pretty consistent whether you go back to 2019, 2020 or 2021. The difference is the way we utilize the part time metric.
Pre pandemic, we were 2,100 on average in a quarter, personnel for the pandemic. The pandemic dropped to 1400, so pretty significant. Now that was because we didn't have it's elaborate funerals. We had a more simple structure because we couldn't operate At full tilt, now we've moved that back to about 1700 or 1800 in this quarter where we did a lot more funerals than we did in 2019. So I think the way to think about this is, we found a staffing metric model that's more efficient, more effective in how we service clients Even in a full service mode that we're in today.
So a lot of little things like that that have, I think, allowed us learnings To over the long term manage more effectively when you think about the cost side of the equation.
Got it. Very helpful color. Thank you. Just a quick one on cremation. Not changed so much on a year over year basis recently.
I understand the comps is a factor there as well. But could you speak to where you see the Cremation mix going near term and what kind of trends you've seen in the quarter?
Yes. So what we saw was effectively flat this Last quarter, historically that range has been about 100 basis points to 150 basis points per year. There's a lot of different opinions and I trust our Chief Operating Officer very much on this. And I think what he sees and with the feedback, I think we would expect that maybe the 150 basis point move is over for a while That a lot of people are seeing value and memorialization, value in the cemetery as you're seeing in the cemetery sales production. So again, we don't know, but I think our expectation is that it will slowly begin to grow again It may be not at the historical levels we've seen.
Got it. Thank you very much. Good work.
The next question is from A. J. Rice from Credit Suisse. Please go ahead.
Hi, everybody. Just maybe quickly to follow-up on that last discussion around cremation rate. Do you think much of what you're seeing there was just that cremation was elevated a year ago because of the Inability to have normal services or do you think that's really not part of it?
I think there's a little bit of that A. J. For sure, but But I think we even saw it in the Q1 where you weren't comparing back to as much. And so again, I agree with you. I think the flat of This has a little bit of what happened last year.
But I think again, just from the talking to people that are in the field and what people are I think it's a sentimental thing where people are saying, life's too short and I'm going to celebrate the people I love And it's important to me. So again, I just provide that feedback. I don't know where it will normalize out again. We do anticipate it to begin to grow. Maybe just not at the levels we saw.
But you're right, there's a surely in the Q2, there's a comparison issue.
Okay. When you think about the funeral averages and the strength you saw there, is there any way to Discuss what you're seeing in terms of the averages coming out of the backlog to from preneed to addneed Versus the walk in atneed. And does that give you any gauge on how far you bounce back and how far you may still have to go as we return to normal?
Yes. Ajay, I think if you look at, for instance, for the quarter, I believe our at need walk in average was about $5,800 The core part of our business, I'm going to talk not SCI Direct in a minute. And our preneed going add and it was about $6,400 So you got about $600 delta. This is what's coming out of the backlog. And so when you think about the robust nature of that backlog and our ability We continue to grow it.
What we're putting into the backlog today is just over $6,000 on the core side. So Again, I think what that tells us is that customers are paying up for Premium, they want remembrance, they want celebration, they want to be able to grieve, they want to do a lot of The traditional thing. So, we view it as 2 things. 1, there's probably room on the atneed side for increases And we like what's coming out of our backlog and more and more will come out of our backlog as you think about how this rolled out in the future.
Okay. And then maybe finally on capital deployment. You're expressing confidence, or Eric, is on the Acquisition pipeline, does that mean that there's deals that are pretty far along? You haven't done much, but you're still saying you could think you could do $50,000,000 to $100,000,000 And then on the buyback, I know in this quarter you did about $81,000,000 That seems a little above average for sure. What is there any updated thoughts on a quarterly run rate to contemplate for that?
Hey, Joe. I'll take share repurchases first. The $81,000,000 is pretty much in line with what you've seen in the Q1. I think we did 106,000,000 Last year, we did over $500,000,000 deployed to the shares. The answer to your question is, we're going to deploy capital to the highest relative And ultimately, we believe shares are good value Where they are, and we've been purchasing through 10b5-1s all during this period and we'll continue once we get out of this period, do an open market Repurchases, but in terms of the level of those repurchases, that's going to depend on the relative valuation with other opportunities Excuse me, the relative opportunity with how we feel about the intrinsic value of the company.
But I'm trying to tell you very clearly is, We will continue our expectations are to continue to deploy capital towards our share repurchase program At these levels. So, hear that very clear subject to what I've already described
to you.
In terms of the acquisition pipeline, I think Things ebb and flow and with COVID, there's always some timing issues and things being delayed. But I think what we're trying to communicate to you is that There is a pipeline out there that we are involved in and we are active in and that gives us optimism and confidence That we will continue down that path. I don't really want to say any more than that at this point in time, but it's a good pipeline.
Okay, great. Thanks a lot.
The next question is from John Ransom from Raymond James. Please go ahead.
Hey, good morning. I was just remembering that your stock used to be $1 a share back in the late '90s. Think about that. Take that, Vezo. The question I have Eric is, I like your Yes, 25,000 fewer funerals and here's our earnings compared to 2019.
Could you just help me understand how much of that is Just structurally better cost structure, how much of that is higher pre need and how much of that is anything else you want to help us with?
Well, I think John, as you think out to 2022, The capital structure alone is probably $0.45 $0.50 and I'm doing this from memory, so forgive me if I'm off a little bit. I would think the cost side of it is again probably another 15, the high teen sense. And then I think there's real upside. Clearly, we're going to make less money on the funeral side, right? We just did $25,000 funeral And cemetery, because of the levels that we operate in today and effectiveness of our model in leads, It's going to be significantly higher.
We think about when we think about You heard me reference last time. I kind of went back and said, take a 2019 level and we believe we can grow cemetery sales 7% compounded. So If you believe that is the right way to think about it, then you can come up with a number that says, now I know my excess 2020 and 2021 sales are, But there is nothing we believe that should stop us from compounding at 7 and a lot of our models now run higher than that. When you think about what type of levels preneed cemetery should be at in the beginning year 2022, 2023. So that allows you Some pretty spectacular numbers on that lower share count, more effective operating platform.
So you get to these numbers, like we're saying for 2023 at $3.25 If I told you in 2019, we'll grow EPS 10% a year. I think it's like $2.68, dollars 2.70 a year, if that's right. And so I'm telling you, okay, we've got through the pandemic, Now we're at 3.25. So that tells you that's really cemetery, both property production and Merchandise and service revenue that will be delivered combined with, again, the better operating structure, better capital And we're still and now we've got a really good trend for funeral, right, because funeral is going to be challenged. But the good news is that that pull forward is going to wane.
And so your year over year comparisons are going to get actually kind of tailwinded. So I feel really good about As we think about moving out to 2025, what type of growth you could see within SEI?
Hey, Tom, did you just turn tailwind into a verb? I like that, I mean, you said. Okay. Sorry. No more.
I'll just be serious. No more comedy act. The other question I had was, The surprising thing last year to us was how much cemetery preneed correlated to stronger funeral volumes. So as you go down the other Side of that slope. Yes, just is there a rough rule of thumb, say for every 100 points of funeral volume decline That equals $6 of maybe pressure on cemetery need or is it not that easy to think about it that way?
I don't think it's so easy to think about it that way. Jerry, is there is that would you have any comment on that? So I don't think so. I mean, I think what obviously every time you have a case, there's an opportunity to follow-up, Which lead is a way to generate a lead. And I'd tell you the one thing that's slightly different Today about our model and a lot of this is with our new Chief Marketing Officer, Jamie Pierce, he's not new anymore, he's been here a while.
Jamie has really turned up the capabilities as it relates to digital leads And that actually feeds into direct mail. I know we don't think about direct mail as digital, but there's a lot of science behind the technology We have a much lower cost of direct mail and a much more effective piece. And so that has taken what used to be marketing leads in the 10% to 15 of our lead process now is in the 25% to 30%. And those are much more effective workable leads. So when you think about that, that really is a driven off a customer walking in.
So I think we're less leveraged To the funeral volume as we think about our ability to drive cemetery sales production going forward, then the Pre COVID SCI is the way to think about it. So that's why I think we're pretty confident about we can continue to do this. And one nice thing about Cemetery is it really is a heritage sale. When you get Tom There's an opportunity to get Tom's brother, Tom's sister, everybody loves Tom. And John, I know you're part of that group, but that would make you a potential customer.
Thank you, everybody. It's Raymond. So it reminds me, Beacon and Cemetery got a lot of discussion a couple of years ago. And part of that would say we can simplify our product offerings, not that 87 earns that we're selling. Where are you in that Process, is there still more upside than with the chopper you kind of through that process?
We've kind of got it in most of our 90% Of the network. And I would tell you, it's hard to understand what the impact is, but here's what I know for sure. It's a much more robust efficient sale. So when you think about our ability and you keep hearing us referenced a lot, The number of contracts. Our sales counselors can do a lot more in a day than they used to continue.
The other thing that we're finding because you have the ability to I control the price list and everything else is we're seeing less discounting. So higher average sales, More throughput through the system, and I'd say that's a big function of beacons contributing to that. I also would tell you that I think You are embracing our customer relationship management system, which we've had for a while and we were good at it. But now when you couldn't travel, it was your lifeline. I think it's become a lifeline for our sales organization and all the potential that was wrapped up in that.
So we're actually making it's so useful now we're trying to make adjustments to it to make it even more useful. People are embracing it. So while it was always embraced, I think it's embraced throughout the entire sales organization now. Those two things are very big reasons why we're confident about the future.
This concludes our question and answer session. I would like to turn the conference back over to SCI Management for any closing remarks.
I want to thank everybody for being on the call. Stay safe out there and we look forward to talking to you again in October.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.