Daniel Hultberg: It’s Daniel on for Scott. Could we elaborate a little bit on funeral volume expectations for next year? How you see the range there — how do you think about the pull forward impact at this point, where we are in that cycle? Are we looking at 2024 as the last transition year before normalizing in 2025.
Thomas Ryan: No. I think Eric has probably got a much better number statistics, but I’d say philosophically, the way we’re thinking about this, that pull-forward effect diminishes each year. So we do think there’s a pull forward effect of ’24. We think it’s going to be in ’25 and ’26, but it becomes pretty de minimis as you get further out. So in that regard, year-over-year, it’s actually an improvement when you think about 2024. Having said that, in 2023, we continue to see some COVID deaths, we continue to experience some excess deaths. And so as we think about those trends, those are beginning to go away as you get into ’24 to ’25. So the net-net is a slightly negative. That’s what we’re trying to point you towards is we think there’s still a bit of a drag on 2024.
But probably in the call it, 1% to 2% range as you think the year-over-year decline versus what we’re seeing this year, about a 5% decline. Then as you get out to ’24 and ’25, our assumption would be that you begin to climb back up and see favorable year-over-year trends getting back to kind of that, call it, 1% growth in the numbers of deaths and then our competition for market share.
Daniel Hultberg: Got it. Switching gears to margin. Could you please speak to margin expectations for next year across both segments I know I think a pretty good cost performance on the funeral side this quarter. And in the past, you talked about the efficiency you gained during the pandemic. So if you please can get an update on how you think about the segment margins looking into next year.
Thomas Ryan: I think on a segment margin overall, we would expect for the year, both those to kind of point positive, more so on the cemetery side than on the funeral side when you think of year-over-year. I would caution you that I think the first quarter of last year — I’m sorry, first quarter ’23, that may be a tough comparison is my memory of what happened in those quarters when you think about volumes because of sales production and because of funeral volume. So — but overall, as you think of 24, I think you can model flat to slightly up type of margins is the way we’re thinking about it.
Operator: [Operator Instructions]. Our next question comes from John Ransom with Raymond James.
John Ransom: Looking at the midpoint of your guide next year, the $3.65, how do we think about the cemetery recognition rate, which was certainly elevated this year? And where does that go relative to this year, I’d say, last year?
Eric Tanzberger: No. I think last year, when you look at what’s in the press release, the recognition rates were probably in the low 90s, John. I think they’re probably going to be in the mid-90s is kind of where we’re going to end this year. And I would probably say that 2024 will probably be in that ballpark. So I think of it as kind of we’re starting to get back and completing the construction projects, recognizing the revenues. You saw that in the quarter that we were on plan and what we expected to do. And I think you’ll see more of the same in ’24. So think of it as kind of ’24 being kind of a mid-90% type recognition rate similar to I think how ’23 will end.
John Ransom: Okay. So that’s higher than — like you said, that’s higher. Is that kind of the new normal? Or is it just still burning off some of the big construction projects?
Eric Tanzberger: No. I think there’s more to come beyond that. But I think that for right now, what we have on our radar and visibility for the next 18, 24 months, I think that’s a good metric to use.
John Ransom: Okay. And then just a couple of other — again, using the midpoint of your guide, how are you thinking about share count next year just given your accelerated repo activity so far this year?
Eric Tanzberger: Yes. I mean it depends on what happens and what the price is because as you’ve seen us, we kind of throttle up and throttle back based on what we think the value is in that. We’ve already purchased, as we gave you the numbers through October already. We’re already in the 6.5 million-ish share range as what we repurchase back. I think there’s potentially more of that to come during the fourth quarter as we’ve already described to you. So it just depends on going forward, I think right now, that 6.5 million has brought our basic shares outstanding. Let’s just talk about that as opposed to getting a dilutive calculation to about 148 million to 149 million shares outstanding. So I think we’re very happy to finally pierce through that 150 million, and I think we’ll go from there.
But will it moderate in ’24, that — there’s a lot of assumptions to that in terms of what are there other opportunities with a higher return to deploy the capital to and what the share price is.
John Ransom: You’re kind of into that by low thing? Is that what you’re telling me?
Eric Tanzberger: We kind of are [indiscernible]
John Ransom: And then just I hope this is the last time I asked this question because it is — I know it was tedious, but — just update on putting your prices online, FTC competitor behavior, if you’re seeing any sort of fallout from that? And what are you thinking about for next year in that regard?
Eric Tanzberger: Yes. It’s really more of the same, John. There was subsequent to what we’ve talked about last quarter. There is a public workshop in early September that a lot of people from the industry and some people outside the industry visited with the FTC, and we had a seat at that table. Subsequent to that, we sent a letter just kind of memorializing what we said in that workshop, which is consistent with what we said before. We sent that letter in early October. In terms of pricing online, we haven’t changed our position, but again, I would say right now of our 1,500 funeral homes, we probably have 1,000 to 1,100 of those with prices online. We have different levels of pricing, whether it’s starting at or just the absolute full-blown premium experience, drill down into what exactly the pricing is, pick menus of — for celebrations, all kinds of things, and it’s going to move and fluctuate because we’re learning.
We like it. We love interacting with our consumers using our very powerful Dignity Memorial website. And we’ll continue to invest digitally into those websites and more to come. But from an FTC perspective to come full circle, whatever they decide, as I’ve said, moving forward, I think we’re well ahead of the curve, and I just don’t see it having a material effect to our company in one way or the other.
John Ransom: So just to put a fine point on this in the markets where you’ve done this, you’re not seeing any knock-on effect from the online pricing?
