SERVICE CORPORATION INTERNATIONAL The Company
We areNorth America's largest provider of deathcare products and services, with a network of funeral service locations and cemeteries unequaled in geographic scale and reach. AtSeptember 30, 2022 , we operated 1,463 funeral service locations and 488 cemeteries (including 300 funeral service/cemetery combination locations), which are geographically diversified across 44 states, eight Canadian provinces, theDistrict of Columbia , andPuerto Rico . Our funeral and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and other related businesses, which enable us to serve a wide array of customer needs. We sell cemetery property and funeral and cemetery merchandise and services at the time of need and on a preneed basis. We strive to offer families exceptional service in planning life celebrations and personalized remembrances. Our Dignity Memorial® brand serves approximately 600,000 families each year with professionalism, compassion, and attention to detail. Our financial position is enhanced by our$13.3 billion backlog of future revenue from both trust and insurance-funded preneed sales atSeptember 30, 2022 . Preneed selling provides us with a strategic opportunity to gain future market share. We also believe it adds to the stability and predictability of our revenue and cash flows. While revenue on the majority of preneed merchandise and service sales is deferred until the time of need, sales of preneed cemetery property provide opportunities for full current revenue recognition to the extent that the property is developed and available for use.
We have adequate liquidity and a favorable debt maturity profile, which allow us to reinvest and grow our business as well as return capital to shareholders through share repurchases and dividends.
Factors affecting our operating results include: demographic trends in terms of population growth and average age, which impact death rates and number of deaths; establishing and maintaining leading market share positions supported by strong local heritage and relationships; effectively responding to increasing cremation trends by selling complementary services and merchandise; controlling salary and merchandise costs; and exercising pricing leverage related to our atneed revenue. The average revenue per funeral contract is influenced by the mix of traditional and cremation services because our average revenue for cremations is lower than that for traditional burials. To further enhance revenue opportunities, we continue to focus on our cremation customers' preferences and remaining relevant by developing additional memorialization merchandise and services that specifically appeal to cremation customers. We believe the presentation of these additional merchandise and services through our customer-facing technology improves our customers' experience by reducing administrative burdens and allowing them to visualize the enhanced product and service offerings, which we believe will help drive increases in the average revenue for a cremation in future periods.
Recent Trends
Like most businesses world-wide, COVID-19 and recent inflationary and economic pressures are impacting various aspects of our business operations; however, we cannot, with certainty, predict the scope, severity, or duration with which COVID-19 and these inflationary and economic pressures will continue to impact our business, financial condition, results of operations, and cash flows. As these trends continue, we are actively monitoring the potential impact on our business operations from both a revenue and cost perspective. In 2022, the families we serve are generally selecting to have funerals and celebrations of life either with the same service and merchandise levels we experienced before the COVID-19 pandemic or are choosing to celebrate with even more robust services. The increase we have seen in the number of families who desire more comprehensive memorial services has driven growth in our preneed sales as well as positively affected our average revenue per funeral service. We view this as evidence that our customers continue to value what our team does best, which is helping our client families gain closure and healing through the process of grieving, remembrance, and celebration.
For further discussion of our key operating metrics, see our " Cash Flow " and " Results of Operations " sections below.
Financial Condition, Liquidity, and Capital Resources
Capital Allocation Considerations
We rely on cash flow from operations as a significant source of liquidity. Our cash flow from operating activities provided$655.4 million in the first nine months of 2022. As ofSeptember 30, 2022 , we had$551.3 million in remaining borrowing capacity under our Bank Credit Facility. Our Bank Credit Facility requires us to maintain certain leverage and interest coverage ratios. As ofSeptember 30, 2022 , we were in compliance with all of our debt covenants. Our leverage ratio has recently benefited from the strong earnings FORM 10-Q 27
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associated with the increase in funeral services performed throughout the COVID-19 pandemic; however, as these impacts subside in future years, we expect leverage to return to our 3.5 to 4.0x target leverage range.
Our financial covenant requirements and actual ratios as ofSeptember 30, 2022 were as follows: Per Credit Agreement Actual Leverage ratio 4.75 (Max) 3.05 Interest coverage ratio 3.00 (Min) 8.61
We believe we have the financial strength and flexibility to reward shareholders through share repurchases and dividends while maintaining a prudent capital structure and pursuing new opportunities for profitable growth.
We believe that our unencumbered cash on hand, future operating cash flows, and the available capacity under our Bank Credit Facility will give us adequate liquidity to meet our short-term needs as well as our long-term financial obligations. Due to cash balances residing inCanada and minimum operating cash requirements, a portion of our cash on hand is encumbered.
We consistently evaluate the best uses of our cash flow that will yield the highest value and return on capital. Our capital allocation strategy is prioritized as follows:
Investing inAcquisitions and Building New Funeral Service and Cemetery Locations. We manage our footprint by focusing on strategic acquisitions and building new funeral service locations where the expected returns are attractive and exceed our weighted average cost of capital by a meaningful margin. We target businesses with favorable customer dynamics and/or where we can achieve additional economies of scale. We continue to pursue strategic acquisitions and build new funeral service locations in areas that provide us with the potential for scale. Managing Debt. We may seek to make open market debt repurchases when it is opportunistic to do so relative to other capital allocation opportunities and to manage our near-term debt maturity profile. We have a relatively consistent annual cash flow stream that is generally resistant to down economic cycles. This cash flow stream and our significant liquidity are available to substantially reduce our long-term debt maturities should we choose to do so. Return Excess Cash to Shareholders. Absent strategic acquisition or new opportunities, we intend to return excess cash to shareholders. Our quarterly dividend rate has steadily grown from$0.025 per common share in 2005 to$0.25 per common share in 2022. We target a payout ratio of 30% to 40% of after tax earnings excluding special items and intend to grow our cash dividend commensurate with the growth in our business. While we intend to pay regular quarterly cash dividends for the foreseeable future, all future dividends are subject to limitations in our debt covenants and final determination by our Board of Directors each quarter upon review of our financial performance.
Cash Flow
We believe our ability to generate strong operating cash flow is one of our fundamental financial strengths and provides us with substantial flexibility in meeting operating and investing needs.
Operating Activities
Net cash provided by operating activities was$655.4 million and$730.4 million for the nine months endedSeptember 30, 2022 and 2021, respectively. Excluding a$8.3 million cash receipt from a vendor waiver and release agreement in the prior period, cash flow from operations decreased$66.7 million for the nine months endedSeptember 30, 2022 versus the same period in 2021. The 2022 decrease over 2021 comprises:
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Investing Activities
Cash flows from investing activities used
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Financing Activities
Financing activities used$496.6 million for the nine months endedSeptember 30, 2022 compared to using$368.6 million for the same period in 2021. The$128.0 million increased outflow from 2022 over 2021 is primarily due to the following:
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Financial Assurances
In support of our operations, we have entered into arrangements with certain
surety companies whereby such companies agree to issue surety bonds on our
behalf as financial assurance and/or as required by existing state and local
regulations. The surety bonds are used for various business purposes; however,
the majority of the surety bonds issued and outstanding have been used to
support our preneed sales activities. The obligations underlying these surety
bonds are recorded on our unaudited Condensed Consolidated Balance Sheet as
Deferred revenue, net. The breakdown of surety bonds between funeral and
cemetery preneed arrangements, as well as surety bonds for other activities, is
described below.
September 30, 2022 December 31, 2021
(In millions)
Preneed funeral $ 68.4 $ 89.2
Preneed cemetery:
Merchandise and services 141.5 147.0
Pre-construction 26.0 24.8
Bonds supporting preneed funeral and cemetery obligations 235.9 261.0
Bonds supporting preneed business permits 7.1 7.0
Other bonds 23.0 20.4
Total surety bonds outstanding $ 266.0 $ 288.4
When selling preneed contracts, we may post surety bonds where allowed by state
law. We post the surety bonds in lieu of trusting a certain amount of funds
received from the customer. The amount of the bond posted is generally
determined by the total amount of the preneed contract that would otherwise be
required to be trusted, in accordance with applicable state law.
Surety bond premiums are paid annually and the bonds are automatically renewable
until maturity of the underlying preneed contracts, unless we are given prior
notice of cancellation. We discontinued using surety bonds in lieu of trusting
for new sales of preneed funeral and cemetery merchandise and services in 2020.
As a result, we expect to see continued decreases in the outstanding surety bond
amounts for these items. We continue to use surety bonds for pre-construction
sales of cemetery property where permitted.
Except for cemetery pre-construction bonds (which are irrevocable), the surety
companies generally have the right to cancel the surety bonds at any time with
appropriate notice. In the event a surety company were to cancel the surety
bond, we are required to obtain replacement surety assurance from another surety
company or fund a trust for an amount generally less than the posted bond
amount. Management does not expect that we will be required to fund material
future amounts related to these surety bonds due to a lack of surety capacity or
surety company non-performance.
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PART I
Preneed Activities and Backlog of Contracts
In addition to selling our products and services to client families at the time of need, we enter into price-guaranteed preneed contracts, which provide for future funeral or cemetery merchandise and services. Because preneed funeral and cemetery merchandise and services will generally not be provided until sometime in the future, most states and provinces require that all or a portion of the funds collected from customers on preneed contracts be deposited into merchandise and service trusts until the merchandise is delivered or the service is performed. In certain situations, as described above, where permitted by state or provincial laws, we may post a surety bond as financial assurance for a certain amount of the preneed contract in lieu of placing funds into trust accounts. Alternatively, we may sell a life insurance or annuity policy from third-party insurance companies.
Insurance-Funded Preneed Contracts
Where permitted by state or provincial law, we may sell a life insurance or
annuity policy from third-party insurance companies, for which we earn a
commission as general sales agent for the insurance company. These general
agency revenues are based on a percentage per contract sold and are recognized
as funeral revenue when the insurance purchase transaction between the preneed
purchaser and third-party insurance provider is complete. All selling costs
incurred pursuant to the sale of insurance-funded preneed contracts are expensed
as incurred. We do not reflect the unfulfilled insurance-funded preneed contract
amounts in our unaudited Condensed Consolidated Balance Sheet. The proceeds of
the life insurance policies or annuity contracts will be reflected in funeral
revenue as we perform these funerals.
The table below details our results of insurance-funded preneed production and
maturities.
Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
(Dollars in millions)
Preneed insurance-funded:
Sales production(1) $ 170.0 $ 172.1 $ 508.3 $ 485.7
Sales production (number of contracts)
(1) 27,864 28,694 82,710 82,919
General agency revenue $ 41.6 $ 41.8 $ 126.4 $ 119.0
Maturities $ 93.8 $ 94.9 $ 296.8 $ 293.7
Maturities (number of contracts) 15,459 15,671 48,737 49,320
(1) Amounts are not included in our unaudited Condensed Consolidated Balance Sheet.
Trust-Funded Preneed Contracts
The funds collected from customers and required by state or provincial law are deposited into trusts. We retain any funds above the amounts required to be deposited into trust accounts and use them for working capital purposes, generally to offset the selling and administrative costs of our preneed programs. Although this represents cash flow to us, the associated revenues are deferred until the merchandise is delivered or services are performed (typically at maturity). The funds in trust are then invested by professional money managers with oversight by independent trustees in accordance with state and provincial laws.
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The tables below detail our results of preneed production and maturities, excluding insurance contracts:
Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
(Dollars in millions)
Funeral:
Preneed trust-funded (including bonded):
Sales production $ 125.9 $
114.6 $ 387.5
30,505 29,247 96,922 89,716
Maturities $ 84.5 $
88.7 $ 265.4
20,185 20,598 62,904 62,822
Cemetery:
Sales production:
Preneed $ 341.5 $ 325.7 $ 1,055.1 $ 1,009.6
Atneed 106.1 130.2 346.4 372.5
Total sales production $ 447.6 $
455.9
$ 161.6 $
151.6 $ 511.1
74.4 86.7 241.6 255.8
Total sales production deferred to backlog $ 236.0 $
238.3 $ 752.7
$ 101.8 $
86.5 $ 310.3
76.3 79.4 234.6 237.3
Total revenue recognized from backlog $ 178.1 $
165.9 $ 544.9
Backlog of Preneed Contracts
The following table reflects our backlog of trust-funded deferred preneed contract revenue, including amounts related to deferred receipts held in trust atSeptember 30, 2022 andDecember 31, 2021 . Additionally, the table reflects our backlog of unfulfilled insurance-funded contracts (which are not included in our unaudited Condensed Consolidated Balance Sheet) atSeptember 30, 2022 andDecember 31, 2021 . The backlog amounts presented include amounts due from customers for undelivered performance obligations on cancelable preneed contracts to arrive at our total backlog of deferred revenue. The table does not include the backlog associated with businesses that are held for sale. The table also reflects our preneed receivables and trust investments associated with the backlog of deferred preneed contract revenue, including the amounts due from customers for undelivered performance obligations on cancelable preneed contracts. We believe that the table below is meaningful because it sets forth the aggregate amount of future revenue we expect to recognize as a result of preneed sales, as well as the amount of funds associated with this revenue. Because the future revenue exceeds the assets, future revenue will exceed the cash distributions actually received from the associated trusts and future collections from the customer. FORM
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September 30, 2022 December 31, 2021
Fair Value Cost Fair Value Cost
(In billions)
Deferred revenue, net $ 1.60 $ 1.60 $ 1.53 $ 1.53 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts
0.83 0.83 0.72 0.72
Deferred receipts held in trust 3.92 4.10 4.77 3.93
Allowance for cancellation on trust investments (0.27) (0.28) (0.33) (0.27)
Backlog of trust-funded deferred revenue, net of estimated allowance for cancellation
6.08 6.25 6.69 5.91
Backlog of insurance-funded revenue (1) 7.24 7.24 6.97 6.97
Total backlog of deferred revenue $ 13.32 $ 13.49 $ 13.66 $ 12.88
Preneed receivables, net and trust investments $ 5.28 $ 5.46 $ 6.02 $ 5.18 Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts
0.83 0.83 0.71 0.71
Allowance for cancellation on trust investments (0.27) (0.28) (0.33) (0.27)
Assets associated with backlog of trust-funded deferred revenue, net of estimated allowance for cancellation
5.84 6.01 6.40 5.62
Insurance policies associated with insurance-funded deferred revenue (1)
7.24 7.24 6.97 6.97
Total assets associated with backlog of preneed revenue
$ 13.25 $ 13.37 $ 12.59
(1) Amounts are not included in our unaudited Condensed Consolidated Balance Sheet.
The fair value of our trust investments was based on a combination of quoted market prices, observable inputs such as interest rates or yield curves, and appraisals. As ofSeptember 30, 2022 , the difference between the backlog and asset market amounts represents$0.18 billion related to contracts for which we have posted surety bonds as financial assurance in lieu of trusting,$1.26 billion collected from customers that were not required to be deposited into trusts, and$0.15 billion in allowable cash distributions from trust assets partially offset by$1.35 billion in amounts due on delivered property and merchandise. As ofSeptember 30, 2022 , the fair value of the total backlog comprised$3.64 billion related to cemetery contracts and$9.68 billion related to funeral contracts. As ofSeptember 30, 2022 , the fair value of the assets associated with the backlog of trust-funded deferred revenue comprised$3.59 billion related to cemetery contracts and$2.25 billion related to funeral contracts. As ofSeptember 30, 2022 , the backlog of insurance-funded contracts of$7.24 billion was equal to the proceeds we expect to receive from the associated insurance policies when the corresponding contract is serviced.
Trust Investments
In addition to selling our products and services to client families at the time of need, we enter into price-guaranteed preneed funeral and cemetery contracts, which provide for future funeral or cemetery merchandise and services. Since preneed funeral and cemetery merchandise or services will generally not be provided until sometime in the future, most states and provinces require that all or a portion of the funds collected from customers on preneed funeral and cemetery contracts be paid into trusts and/or escrow accounts until the merchandise is delivered or the service is performed. Investment earnings associated with the trust investments are expected to mitigate the inflationary costs of providing the preneed funeral and cemetery merchandise and services in the future at the prices that were guaranteed at the time of sale. Also, we are required by state and provincial law to pay a portion of the proceeds from the preneed or atneed sale of cemetery property interment rights into perpetual care trusts. For these investments, the original corpus generally remains in the trust in perpetuity and the earnings or elected distributions are withdrawn as allowed to defray the expense to maintain the cemetery property. While many states require that net capital gains or losses be retained and added to the corpus, certain states allow the net realized capital gains and losses to be included in the earnings that are distributed. Additionally, some states allow a total return distribution that may contain elements of income, capital appreciation, and principal. Independent trustees manage and invest the majority of the funds deposited into the funeral and cemetery merchandise and service trusts as well as the cemetery perpetual care trusts. The majority of the trustees are selected based on their respective geographic footprint and qualifications per state and provincial regulations. Most of the trustees engage the same independent investment managers. These trustees, with input from SCI's wholly-owned registered investment advisor, establish an investment policy that serves as an operating document to guide the investment activities of the trusts including asset allocation and manager selection. The investments are also governed by state and provincial guidelines. All of the trusts
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seek to control risk and volatility through a combination of asset classes, investment styles, and a diverse mix of investment managers.
Asset allocation is based on the liability structure of each funeral, cemetery, and perpetual care trust. Based on the various criteria set forth in the investment policy, the investment advisor recommends investment managers to the trustees. The primary investment objectives for the funeral and cemetery merchandise and service trusts include 1) preserving capital within acceptable levels of volatility and risk and 2) achieving growth of principal over time sufficient to preserve and increase the purchasing power of the assets. Preneed funeral and cemetery contracts generally take several years to mature; therefore, the funds associated with these contracts are often invested through several market cycles. Where allowed by state and provincial regulations, the cemetery perpetual care trusts' primary investment objectives are growth-oriented to provide for a fixed distribution rate from the trusts' assets. Where such distributions are limited to ordinary income, the cemetery perpetual care trusts' investment objectives emphasize providing a steady stream of current investment income with some capital appreciation. Both types of distributions are used to provide for the current and future maintenance and beautification of the cemetery properties. As ofSeptember 30, 2022 , approximately 94% of our trusts were under the control and custody of four large financial institutions. TheU.S. trustees primarily use four managed limited liability companies (LLCs), one for each merchandise and service trust type and two for the cemetery perpetual care trust type, each with an independent trustee as custodian. Each financial institution acting as trustee manages its allocation of trust assets in accordance with the investment policy through the purchase of the appropriate LLCs' units. For those accounts not eligible for participation in the LLCs or where a particular state's regulations contain other investment restrictions, the trustee utilizes institutional mutual funds that comply with our investment policy or with such state restrictions. TheU.S. trusts include a modest allocation to alternative investments. These alternative investments are held in vehicles structured as LLCs and are managed by certain trustees. The trusts that are eligible to allocate a portion of their investments to alternative investments purchase units of the respective alternative investment LLCs.
Investment Structures
Each financial institution, acting as trustee, manages its allocation of trust assets in compliance with the investment policy primarily through the purchase of one of four managed LLCs, matched to their trust type and each with a different, independent trustee acting as custodian. The managed LLCs use the following structures for investments:
Commingled Funds. These funds allow the trusts to access, at a reduced cost, some of the same investment managers and strategies used elsewhere in the portfolios.
Mutual Funds. The trust funds employ institutional share class mutual funds where operationally or economically efficient. These mutual funds are utilized to invest in various asset classes includingU.S. equities, non-U.S. equities, corporate bonds, government bonds, high yield bonds, and commodities, all of which are governed by guidelines outlined in their individual prospectuses.
Separately Managed Accounts. To reduce the costs to the investment portfolios, the trusts utilize separately managed accounts where appropriate.
Asset Classes
Fixed income investments are intended to preserve principal, provide a source of current income, and reduce overall portfolio volatility. The majority of the fixed income allocation for the trusts is invested in institutional share class mutual funds. Where the trusts have direct investments in individual fixed income securities, these are primarily in government and corporate instruments. Canadian government fixed income securities are investments in Canadian federal and provincial government instruments. In many cases, regulatory restrictions mandate that the funds from the sales of preneed funeral and cemetery contracts sold in certain Canadian jurisdictions must be invested in these instruments. Equity investments have historically provided long-term capital appreciation in excess of inflation. The trusts have direct investments in individual equity securities primarily in domestic equity portfolios that include large, mid, and small capitalization companies of different investment styles (i.e., growth and value). The majority of the equity allocation is managed by institutional investment managers that specialize in an objective-specific area of expertise. Our equity securities are exposed to market risk; however, we believe these securities are well-diversified. As ofSeptember 30, 2022 , the largest single equity position represented less than 1% of the total securities portfolio. Alternative investments serve to provide high rates of return with reduced volatility and lower correlation to publicly-traded securities. These investments are typically longer term in duration and are diversified by strategy, sector, manager, geography and vintage year. The investments consist of numerous limited partnerships, invested in private equity, private market real estate, energy and natural resources, infrastructure, transportation, and private debt including both distressed debt and mezzanine financing. The trustees that have oversight of their respective alternative LLCs work closely with the investment advisor in making all investment decisions. FORM
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PART I Trust Performance During the nine months endedSeptember 30, 2022 , the Standard and Poor's 500 Index decreased 23.9% and the Barclay's Aggregate Index decreased 14.6%. This compares to SCI trusts that decreased 17.5% during the same period. SCI trusts have a diversified allocation of approximately 55% equities, 29% fixed income securities, 11% alternative and other investments with the remaining 5% available in cash. Recognized trust fund income (realized and unrealized) related to our preneed trust investments was$113.1 million and$134.8 million for the nine months endedSeptember 30, 2022 and 2021, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was$64.6 million and$71.0 million for the nine months endedSeptember 30, 2022 and 2021, respectively. The decline in recognized trust fund income is primarily due to negative market returns experienced during the first nine months of 2022 and lower distributions from our cemetery perpetual care trust investments in the current year. SCI, the trustees, and the investment advisor monitor the capital markets and the trusts on an on-going basis. The trustees, with input from the investment advisor, take prudent action as needed to achieve the investment goals and objectives of the trusts.
Results of Operations - Three and Nine Months Ended
Three Months Ended
Management Summary
In the third quarter of 2022, we reported consolidated net income attributable to common stockholders of$120.9 million ($0.76 per diluted share) compared to net income attributable to common stockholders in the third quarter of 2021 of$209.9 million ($1.23 per diluted share). These results were impacted by certain items including:
Three months ended
2022 2021
(In millions)
Pre-tax gains on divestitures and impairment charges, net $
14.4
Vendor waiver and release agreement cash receipts $ -$ 8.3 Tax effect from above items $ (3.4)$ (4.0) Change in uncertain tax reserves and other $
1.1
In addition to the above items, the decrease from the prior year is due to an an expected decline in gross profit related to decreases in COVID-19 related activity combined with higher inflationary costs and lower trust fund income impacted by negative financial market returns. Additionally, fewer shares outstanding more than offset the impact of higher interest expense.
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PART I
Funeral Results
Three months ended
2022 2021
(Dollars in millions, except average
revenue per service)
Consolidated funeral revenue $ 554.0 $ 592.3
Less: revenue associated with acquisitions/new construction 11.7 1.0
Less: revenue associated with divestitures 0.2 1.3
Comparable(1) funeral revenue 542.1 590.0
Less: comparable recognized preneed revenue 39.8 45.5
Less: comparable general agency and other revenue 36.1 37.2
Adjusted comparable funeral revenue $ 466.2 $ 507.3
Comparable services performed 85,555 93,617
Comparable average revenue per service(2) $
5,449
Consolidated funeral gross profit $ 101.8$ 168.5 Less: gross profit (loss) associated with acquisitions/new construction 0.7 0.1 Less: gross losses associated with divestitures (1.0) (1.1) Comparable(1) funeral gross profit $
102.1
(1) We define comparable (or same store) operations as those funeral locations
owned by us for the entire period beginning
(2) We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding general agency revenue, recognized preneed revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of funeral services performed during the period. Recognized preneed revenue is excluded from our calculation of comparable average revenue per service because the associated service has not yet been performed. Funeral Revenue Consolidated revenue from funeral operations was$554.0 million for the three months endedSeptember 30, 2022 compared to$592.3 million for the same period in 2021. This$38.3 million decrease is primarily attributable to the$47.9 million decrease in comparable revenue offset by the$10.7 million increase in revenue from acquired and newly constructed properties. Comparable revenue from funeral operations was$542.1 million for the three months endedSeptember 30, 2022 compared to$590.0 million for the same period in 2021. This$47.9 million , or 8.1%, decrease was primarily driven by the decrease in core funeral revenue of$40.7 million . Additionally, recognized preneed revenue decreased$5.7 million , or 12.5%, primarily driven by the timing of merchandise deliveries in the prior year. Core funeral revenue decreased$40.7 million , or 8.3%, primarily due to a 10.0% decrease in core funeral services performed as prior year was impacted by the COVID-19 pandemic, partially offset by an increase in core average revenue per service of 1.8%. Our total comparable cremation rate increased 220 basis points to 61.4% for the three months endedSeptember 30, 2022 . The comparable core cremation rate grew by 190 basis points to 54.7%.
Funeral Gross Profit
Consolidated funeral gross profit decreased$66.7 million , or 39.6%, for the three months endedSeptember 30, 2022 compared to 2021. This decrease is primarily attributable to the decline in comparable funeral gross profit of$67.4 million , or 39.8%. Comparable funeral gross profit decreased$67.4 million to$102.1 million and the comparable gross profit percentage decreased from 28.7% to 18.8%. This decrease is due to the expected decline in revenue mentioned above, combined with higher energy and employee-related inflationary costs as well as increased technology costs during the quarter. FORM
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