Robert Waltrip

Abstract

Service Corp. International's (SCI) Robert Waltrip has built his family's single-home funeral business into a $643 million company comprising 661 funeral homes and 166 cemeteries in the US. A typical SCI funeral in a major city costs about $3,500, $200 less than the national average. Waltrip deplores the misconceptions surrounding his industry. The reality is that SCI, which handles some 160,000 funerals a year, is run much like any other company. In an industry with high fixed costs, SCI has lowered its break-even point in metropolitan areas by distributing the costs of personnel and equipment among its facilities. Wall Street has taken a shine to SCI and some observers describe the company as recession-proof, partly because it services the fastest growing segment of the US population, those over 85 years old. One of Waltrip's more successful ventures is Provident, a fledgling subsidiary that helps to finance expansion-minded funeral homes and cemeteries.

"You know how kids say they want to be a policeman or a fireman? I always wanted to be a funeral director," says Robert Waltrip. He was following family tradition, but the chairman and CEO of Service Corp, International has more than fulfilled his childhood ambition. He's built his family's single-home funeral business in Houston. TX, into a $643 million company comprising 661 funeral homes and 166 cemeteries nationwide.

In the mid-1960s, Waltrip saw growing numbers of old-time, family-run funeral homes up for sale as the new generation went off to college and other careers. With an insider's knowledge of a little-understood industry, he's been picking off the best of the lot ever since, but the biggest leap forward came when SCI doubled its size by acquiring the funeral services division of Kinney Systems, a company once run by Steven Ross, the late chairman and co-CEO of Time Warner.

A typical SCI funeral in a major city costs about $3,500, $200 less than the national average. But the jewels of its empire, such as Frank Campbell's in New York and Joseph Gawler Sons in Washington, have long conducted elaborate funeral rites for the rich and famous, from President John F. Kennedy to Howard Hughes and Elvis Presley (who really is dead and buried).

Waltrip, 62, declines to discuss industry "legends," including that regarding a lady who wanted to be buried in her Ferrari. He deplores the misconceptions surrounding his industry, the result, he claims, of ghoulish, inaccurate stories in the press on cremation and society's reluctance to talk about death. The reality is that Service Corp. International, which handles some 160,000 funerals a year, is run much like any other company. In an industry with high fixed costs, it has lowered its break-even point in metropolitan areas by distributing the costs of personnel and equipment among its facilities. "A hearse costs $100,000, so if you can use it five times a day, it's better than five times a month," Waltrip says.

Meanwhile, Wall Street has taken a shine to SCI. Some observers describe the company as recession-proof, partly because it services the fastest growing segment of the U.S. population--those over 85 years old. That's not to say the company hasn't taken is lumps. SCI went on the acquisitions trail in the 1980s, picking up a casket manufacturer and an insurance group. "They were the best thing on paper I ever saw," Waltrip says. What he didn't count on was that competing funeral homes--less than enthusiastic about buying caskets from SCI--would take their business elsewhere. Sales slumped, and the company was sold in 1990--along with the insurance operation. "We went back to basics," Waltrip says.

A more successful venture is Provident, a fledgling subsidiary that helps to finance expansion-minded funeral homes and cemeteries. Banks fear to tread this ground, the CEO says. "They think, what would I do if I had to foreclose on a cemetery with all those people buried out there?"