HOUSTON, Oct. 28, 2015 /PRNewswire/ -- Service
Corporation International (NYSE: SCI), the largest provider of
deathcare products and services in North
America, today reported results for the third quarter 2015.
Our unaudited consolidated financial statements can be found at the
end of this press release. The table below summarizes our key
financial results:
(In millions,
except for per share amounts)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
|
$
|
714.5
|
|
|
$
|
718.3
|
|
|
$
|
2,217.0
|
|
|
$
|
2,210.6
|
|
Operating
income
|
|
$
|
124.6
|
|
|
$
|
135.1
|
|
|
$
|
393.2
|
|
|
$
|
387.3
|
|
Net income
attributable to common stockholders
|
|
$
|
47.4
|
|
|
$
|
17.7
|
|
|
$
|
161.4
|
|
|
$
|
84.7
|
|
Diluted earnings per
share
|
|
$
|
0.23
|
|
|
$
|
0.08
|
|
|
$
|
0.78
|
|
|
$
|
0.39
|
|
Earnings from
continuing operations excluding special
items(1)
|
|
$
|
45.9
|
|
|
$
|
49.6
|
|
|
$
|
168.7
|
|
|
$
|
159.9
|
|
Diluted earnings per
share from continuing operations excluding special
items(1)
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.82
|
|
|
$
|
0.74
|
|
Diluted weighted
average shares outstanding
|
|
203.4
|
|
|
213.0
|
|
|
206.0
|
|
|
215.4
|
|
Net cash provided by
operating activities
|
|
$
|
114.1
|
|
|
$
|
85.4
|
|
|
$
|
396.6
|
|
|
$
|
256.2
|
|
Net cash provided by
operating activities excluding special
items(1)
|
|
$
|
124.9
|
|
|
$
|
123.2
|
|
|
$
|
424.6
|
|
|
$
|
385.3
|
|
|
|
(1)
|
Earnings from
continuing operations excluding special items, diluted earnings per
share from continuing operations excluding special items, and net
cash provided by operating activities excluding special items are
non-GAAP financial measures. A reconciliation to net income,
diluted earnings per share, and net cash provided by operating
activities computed in accordance with generally accepted
accounting principles in the United States (GAAP) can be found
later in this press release under the headings "Cash Flow and
Capital Spending" and "Non-GAAP Financial Measures".
|
Quarterly Highlights:
- Diluted earnings per share from continuing operations excluding
special items was $0.23 in both the
third quarter of 2015 and the third quarter of 2014. The favorable
impact of higher cemetery sales production, a lower share count,
and a lower tax rate was offset by the negative effect of lower
funeral case volume, the devaluation of the Canadian dollar, and
lower trust fund income related to financial market conditions
during the quarter.
- Net cash provided by operating activities excluding special
items increased 1.4% to $124.9
million in the third quarter of 2015 compared to
$123.2 million in the prior year
quarter, despite a $24.9 million
increase in cash taxes paid.
- During the third quarter, we returned $177.4 million to our shareholders through a
combination of share repurchases and dividends.
Tom Ryan, the Company's
President and Chief Executive Officer, commented on the third
quarter of 2015:
"Coming off a strong first half of 2015 benefiting from an
elevated flu season, we expected the quarter over quarter earnings
comparisons would be challenging in the back half of the year. For
the quarter, continued success in driving preneed cemetery sales
production, growth in the non-funeral home channel, and shrinking
our equity base was offset by lower funeral case volume, negative
currency trends, and challenges in the financial markets. We
believe our long-term value creation plan is on track as we
continue to drive customer value, grow differentially through
preneed sales, and deploy our capital wisely as we continue to be
increasingly impacted by the aging of the baby-boomer
generation."
REVIEW OF RESULTS FOR THIRD QUARTER AND FIRST NINE MONTHS OF
2015
Consolidated Segment Results
(See definitions
of revenue line items later in this earnings release.)
(In millions,
except funeral services performed and average revenue per
service)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Funeral:
|
|
|
|
|
|
|
|
Atneed
revenue
|
$
|
254.3
|
|
|
$
|
266.9
|
|
|
$
|
820.4
|
|
|
$
|
832.8
|
|
Funeral home matured
preneed revenue
|
124.5
|
|
|
128.6
|
|
|
404.1
|
|
|
431.4
|
|
Core revenue
|
378.8
|
|
|
395.5
|
|
|
1,224.5
|
|
|
1,264.2
|
|
Non-funeral home
matured preneed revenue
|
5.7
|
|
|
5.2
|
|
|
18.0
|
|
|
16.2
|
|
Recognized preneed
revenue
|
25.7
|
|
|
22.6
|
|
|
74.2
|
|
|
65.1
|
|
Other
revenue
|
39.0
|
|
|
35.6
|
|
|
111.7
|
|
|
102.0
|
|
Total
revenue
|
$
|
449.2
|
|
|
$
|
458.9
|
|
|
$
|
1,428.4
|
|
|
$
|
1,447.5
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
77.0
|
|
|
$
|
89.7
|
|
|
$
|
298.9
|
|
|
$
|
310.1
|
|
Gross margin
percentage
|
17.1
|
%
|
|
19.5
|
%
|
|
20.9
|
%
|
|
21.4
|
%
|
|
|
|
|
|
|
|
|
Funeral services
performed
|
73,874
|
|
|
76,306
|
|
|
239,153
|
|
|
245,216
|
|
Average revenue per
service
|
$
|
5,205
|
|
|
$
|
5,251
|
|
|
$
|
5,195
|
|
|
$
|
5,221
|
|
|
|
|
|
|
|
|
|
Cemetery:
|
|
|
|
|
|
|
|
Atneed
revenue
|
$
|
74.4
|
|
|
$
|
74.6
|
|
|
$
|
225.6
|
|
|
$
|
228.5
|
|
Recognized preneed
revenue
|
162.5
|
|
|
152.4
|
|
|
461.5
|
|
|
432.4
|
|
Core revenue
|
236.9
|
|
|
227.0
|
|
|
687.1
|
|
|
660.9
|
|
Other
revenue
|
28.4
|
|
|
32.4
|
|
|
101.5
|
|
|
102.1
|
|
Total
revenue
|
$
|
265.3
|
|
|
$
|
259.4
|
|
|
$
|
788.6
|
|
|
$
|
763.0
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
64.9
|
|
|
$
|
58.6
|
|
|
$
|
187.7
|
|
|
$
|
160.3
|
|
Gross margin
percentage
|
24.5
|
%
|
|
22.6
|
%
|
|
23.8
|
%
|
|
21.0
|
%
|
Comparable Funeral Results
The table below details comparable funeral results of operations
("same store") for the three months ended September 30, 2015 and 2014. We consider
comparable operations to be those owned for the entire period
beginning January 1, 2014 and ending September 30, 2015.
(Dollars in millions, except average revenue per service and
average revenue per contract sold)
|
|
Three Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Comparable
revenue:
|
|
|
|
|
|
|
|
|
Atneed
revenue(1)
|
|
$
|
251.6
|
|
|
$
|
261.6
|
|
|
$
|
(10.0)
|
|
|
(3.8)
|
%
|
Funeral home matured
preneed revenue(2)
|
|
123.8
|
|
|
124.1
|
|
|
(0.3)
|
|
|
(0.2)
|
%
|
Core
revenue(3)
|
|
375.4
|
|
|
385.7
|
|
|
(10.3)
|
|
|
(2.7)
|
%
|
Non-funeral home
matured preneed revenue(4)
|
|
5.6
|
|
|
5.2
|
|
|
0.4
|
|
|
7.7
|
%
|
Recognized preneed
revenue(5)
|
|
25.2
|
|
|
22.3
|
|
|
2.9
|
|
|
13.0
|
%
|
Other
revenue(6)
|
|
38.7
|
|
|
35.3
|
|
|
3.4
|
|
|
9.6
|
%
|
Total comparable
revenue
|
|
$
|
444.9
|
|
|
$
|
448.5
|
|
|
$
|
(3.6)
|
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
|
|
Comparable gross
profit
|
|
$
|
77.8
|
|
|
$
|
89.3
|
|
|
$
|
(11.5)
|
|
|
(12.9)
|
%
|
Comparable gross
margin percentage
|
|
17.5
|
%
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable funeral
services performed:
|
|
|
|
|
|
|
|
|
Atneed
|
|
45,308
|
|
|
46,901
|
|
|
(1,593)
|
|
|
(3.4)
|
%
|
Funeral home matured
preneed
|
|
21,491
|
|
|
21,435
|
|
|
56
|
|
|
0.3
|
%
|
Total core
|
|
66,799
|
|
|
68,336
|
|
|
(1,537)
|
|
|
(2.2)
|
%
|
Non-funeral home
matured preneed
|
|
6,249
|
|
|
5,660
|
|
|
589
|
|
|
10.4
|
%
|
Total comparable
funeral services performed
|
|
73,048
|
|
|
73,996
|
|
|
(948)
|
|
|
(1.3)
|
%
|
|
|
|
|
|
|
|
|
|
Comparable average
revenue per service:
|
|
|
|
|
|
|
|
|
Atneed
|
|
$
|
5,553
|
|
|
$
|
5,577
|
|
|
$
|
(24)
|
|
|
(0.4)
|
%
|
Funeral home matured
preneed
|
|
5,760
|
|
|
5,790
|
|
|
(30)
|
|
|
(0.5)
|
%
|
Total core
|
|
5,620
|
|
|
5,644
|
|
|
(24)
|
|
|
(0.4)
|
%
|
Non-funeral home
matured preneed
|
|
897
|
|
|
913
|
|
|
(16)
|
|
|
(1.8)
|
%
|
Total comparable
average revenue per service
|
|
$
|
5,216
|
|
|
$
|
5,282
|
|
|
$
|
(66)
|
|
|
(1.2)
|
%
|
|
|
|
|
|
|
|
|
|
Total comparable
average revenue per service, excluding the impact of foreign
currency fluctuations
|
|
$
|
5,335
|
|
|
$
|
5,322
|
|
|
$
|
13
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
Comparable preneed
sales production:
|
|
|
|
|
|
|
|
|
Total preneed
sales
|
|
$
|
200.5
|
|
|
$
|
190.2
|
|
|
$
|
10.3
|
|
|
5.4
|
%
|
Total preneed
contracts sold
|
|
43,441
|
|
|
41,168
|
|
|
2,273
|
|
|
5.5
|
%
|
Average revenue per
contract sold
|
|
$
|
4,615
|
|
|
$
|
4,621
|
|
|
$
|
(6)
|
|
|
(0.1)
|
%
|
Average revenue per
contract sold, excluding the impact of foreign currency
fluctuations
|
|
$
|
4,695
|
|
|
$
|
4,652
|
|
|
$
|
43
|
|
|
0.9
|
%
|
|
|
(1)
|
Atneed revenue
represents merchandise and services sold and delivered or performed
once death has occurred.
|
(2)
|
Funeral home matured
preneed revenue represents merchandise and services sold on a
preneed contract through one of our funeral homes and delivered or
performed once death has occurred.
|
(3)
|
Core revenue
represents merchandise and services sold on an atneed contract or
sold by one of our funeral homes on a preneed contract and
delivered or performed once death has occurred.
|
(4)
|
Non-funeral home
matured preneed revenue represents services sold on a preneed
contract through one of our non-funeral home sales channels and
performed once death has occurred.
|
(5)
|
Recognized preneed
revenue represents merchandise and travel protection sold on a
preneed contract and delivered before death has
occurred.
|
(6)
|
Other revenue
primarily comprises General Agency revenue, which is commissions we
receive from third-party insurance companies for life insurance
policies sold to preneed customers for the purpose of funding
preneed arrangements.
|
- Comparable funeral revenue decreased by $3.6 million in the third quarter of 2015
compared to 2014 primarily from a $10.3
million decrease in core revenue. The core revenue decrease
was due to a 2.2% decline in core funeral services performed and
the 0.4% lower average revenue per service described below. This
decrease was partially offset by growth in non-funeral home matured
preneed revenue, recognized preneed revenue, and General Agency
revenue.
- Core average revenue per service decreased 0.4% as inflationary
pricing growth was offset by an unfavorable Canadian currency
impact, an increase in cremation mix, and lower trust fund income
related to the negative financial market conditions during the
third quarter. Our comparable cremation rate of 51.7% in the third
quarter of 2015 increased from 50.9% in the same period of
2014.
- Comparable gross profit decreased $11.5
million, or 12.9%, compared to the prior year quarter
primarily due to the decrease in core revenues and inflationary
increases in our fixed cost structure.
- Comparable preneed funeral sales production increased
$10.3 million, or 5.4%, in the third
quarter of 2015 compared to 2014.
Comparable Cemetery Results
The table below details comparable cemetery results of
operations ("same store") for the three months ended September 30, 2015 and 2014. We consider
comparable operations to be those owned for the entire period
beginning January 1, 2014 and ending September 30, 2015.
(Dollars in
millions)
|
|
Three Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Comparable
revenue:
|
|
|
|
|
|
|
|
|
Atneed
revenue(1)
|
|
$
|
73.2
|
|
|
$
|
72.3
|
|
|
$
|
0.9
|
|
|
1.2
|
%
|
Recognized preneed
revenue(2)
|
|
161.4
|
|
|
149.5
|
|
|
11.9
|
|
|
8.0
|
%
|
Core
revenue(3)
|
|
234.6
|
|
|
221.8
|
|
|
12.8
|
|
|
5.8
|
%
|
Other
revenue(4)
|
|
28.0
|
|
|
31.3
|
|
|
(3.3)
|
|
|
(10.5)
|
%
|
Total comparable
revenue
|
|
$
|
262.6
|
|
|
$
|
253.1
|
|
|
$
|
9.5
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
Comparable gross
profit
|
|
$
|
64.0
|
|
|
$
|
57.9
|
|
|
$
|
6.1
|
|
|
10.5
|
%
|
Comparable gross
margin percentage
|
|
24.4
|
%
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable preneed
and atneed sales production:
|
|
|
|
|
|
|
|
|
Property
|
|
$
|
156.1
|
|
|
$
|
140.0
|
|
|
$
|
16.1
|
|
|
11.5
|
%
|
Merchandise and
services
|
|
129.3
|
|
|
121.5
|
|
|
7.8
|
|
|
6.4
|
%
|
Discounts
|
|
(34.0)
|
|
|
(27.0)
|
|
|
(7.0)
|
|
|
25.9
|
%
|
Preneed and atneed
sales production
|
|
$
|
251.4
|
|
|
$
|
234.5
|
|
|
$
|
16.9
|
|
|
7.2
|
%
|
Recognition
rate(5)
|
|
93.3
|
%
|
|
94.6
|
%
|
|
|
|
|
|
|
(1)
|
Atneed revenue
represents property, merchandise, and services sold and delivered
or performed once death has occurred.
|
(2)
|
Recognized preneed
revenue represents property, merchandise, and services sold on a
preneed contract that have been delivered or performed.
|
(3)
|
Core revenue
represents property, merchandise, and services that have been
delivered or performed.
|
(4)
|
Other revenue is
primarily related to merchandise and service trust fund income,
endowment care trust fund income, royalty income, and interest and
finance charges earned from customer receivables on preneed
installment contracts.
|
(5)
|
Represents the ratio
of current period core revenue recognition stated as a percentage
of current period sales production.
|
- Comparable cemetery revenue grew $9.5
million, or 3.8%, in the third quarter of 2015 compared to
2014 primarily from an increase in net preneed cemetery property
sales production that was somewhat offset by lower recognized trust
fund income related to financial market conditions during the
quarter. Excluding an unfavorable Canadian currency impact, revenue
grew $12.5 million, or 4.9%.
- Preneed cemetery sales production increased $15.1 million, or 9.2%, in the current quarter
compared to same period last year. This increase was driven by
strong growth in the number of preneed property contracts sold as
well as a healthy increase in the average sale, which was partially
offset by an unfavorable Canadian currency impact.
- Comparable cemetery gross profit increased $6.1 million and the gross margin percentage
increased 150 basis points to 24.4% in the current quarter
primarily driven by the increases in recognized cemetery property
sales. Excluding an unfavorable Canadian currency impact, gross
profit increased $8.0 million, or
13.7% and the gross margin increased 190 basis points to
24.8%.
Other Financial Results
General and administrative expenses decreased $11.6 million to $28.2
million in the third quarter of 2015 compared to the same
period of 2014. The prior year included $10.7 million of costs related to the integration
of Stewart and $2.9 million of system
integration and other costs. Excluding these one-time costs,
general and administrative expenses increased an anticipated
$2.0 million over the prior year,
which is primarily due to collections on insurance claims in the
third quarter of 2014 that did not recur in 2015.
Cash Flow and Capital Spending
Set forth below is a reconciliation of our reported net cash
provided by operating activities prepared in accordance with GAAP
to net cash provided by operating activities excluding special
items (or sometimes referred to as adjusted operating cash flow).
We do not intend for this information to be considered in isolation
or as a substitute for other measures of performance prepared in
accordance with GAAP.
(In
millions)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net cash provided by
operating activities, as reported
|
$
|
114.1
|
|
|
$
|
85.4
|
|
|
$
|
396.6
|
|
|
$
|
256.2
|
|
Premiums paid on
early extinguishment
|
6.5
|
|
|
—
|
|
|
6.5
|
|
|
24.8
|
|
Stewart acquisition
and transition costs
|
—
|
|
|
8.0
|
|
|
3.7
|
|
|
55.0
|
|
Legal defense fees
and other matters
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
Excess tax benefits
from share-based awards
|
4.3
|
|
|
8.2
|
|
|
17.3
|
|
|
20.7
|
|
Income tax payments
associated with divestitures
|
—
|
|
|
18.1
|
|
|
—
|
|
|
18.1
|
|
Other
|
—
|
|
|
3.5
|
|
|
0.5
|
|
|
0.2
|
|
Net cash provided by
operating activities excluding special items
|
$
|
124.9
|
|
|
$
|
123.2
|
|
|
$
|
424.6
|
|
|
$
|
385.3
|
|
Net cash provided by operating activities excluding special
items increased $1.7 million to
$124.9 million for the third quarter.
The increase was due primarily to enhanced working capital from
higher cash receipts associated with the increase in cemetery
comparable preneed sales production and a decrease in payroll
funding as a result of the timing of the Independence Day holiday. This increase was
largely offset by higher cash tax payments of $24.9 million quarter over quarter.
A summary of our capital expenditures is set forth below:
(In millions)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Capital improvements at
existing locations
|
$
|
22.3
|
|
|
$
|
21.3
|
|
|
$
|
62.5
|
|
|
$
|
50.6
|
|
Development of cemetery
property
|
14.5
|
|
|
13.6
|
|
|
36.4
|
|
|
34.3
|
|
Construction of new
funeral home facilities
|
3.2
|
|
|
2.9
|
|
|
5.8
|
|
|
10.3
|
|
Total capital
expenditures
|
$
|
40.0
|
|
|
$
|
37.8
|
|
|
$
|
104.7
|
|
|
$
|
95.2
|
|
TRUST FUND RETURNS
Total trust fund returns include realized and unrealized gains
and losses and dividends. A summary of our consolidated trust fund
returns for the three and nine months ended September 30, 2015 is set forth below:
|
|
Three
Months
|
|
Nine
Months
|
Preneed
funeral
|
|
(6.3)%
|
|
(4.0)%
|
Preneed
cemetery
|
|
(6.5)%
|
|
(3.9)%
|
Cemetery perpetual
care
|
|
(2.8)%
|
|
(1.3)%
|
Combined trust
funds
|
|
(5.2)%
|
|
(3.0)%
|
OUTLOOK
Our outlook for potential earnings and cash flow is as
follows:
(In millions
except per share amounts)
|
|
Fourth Quarter
2015 Outlook
|
|
2016 Preliminary
Outlook
|
Diluted earnings per
share from continuing operations excluding special items
(1)
|
|
$0.36 to
$0.39
|
|
$1.24 to
$1.36
|
Net cash provided by
operating activities excluding special items
(1)
|
|
$75 to
$100
|
|
$475 to
$525
|
Capital improvements
at existing facilities and development of cemetery
property
|
|
Approx.
$40
|
|
$140 to
$150
|
|
|
(1)
|
Diluted earnings per
share from continuing operations excluding special items and net
cash provided by operating activities excluding special items are
non-GAAP financial measures. We historically reconcile these
non-GAAP financial measures to diluted earnings per share and net
cash provided by operating activities, however, diluted earnings
per share and net cash provided by operating activities calculated
in accordance with GAAP are not currently accessible on a
forward-looking basis. Our guidance for 2015 and 2016 excludes the
following because this information is not currently available:
Gains or losses associated with asset divestitures, gains or losses
associated with the early extinguishment of debt, potential tax
reserve adjustments, acquisition and transition costs, and
potential costs associated with settlements of litigation or the
recognition of receivables for insurance recoveries associated with
litigation. The foregoing items could materially impact our
forward-looking diluted EPS and net cash provided by operating
activities calculated in accordance with GAAP, consistent with the
historical disclosures found in this press release under the
headings "Cash Flow and Capital Spending" and "Non-GAAP financial
measures".
|
This outlook reflects management's current views and estimates
regarding future economic and financial market conditions, company
performance and financial results, business prospects, the
competitive environment, and other events. This outlook is subject
to a number of risks and uncertainties, many of which are beyond
the control of SCI, that could cause actual results to differ
materially from the potential results highlighted above. A further
list and description of these risks and uncertainties and other
matters can be found later in this press release under "Cautionary
Statement on Forward-Looking Statements".
NON-GAAP FINANCIAL MEASURES
Earnings from continuing operations excluding special items and
diluted earnings per share from continuing operations excluding
special items (or sometimes referred to as normalized earnings per
share) shown above are non-GAAP financial measures. We believe
these non-GAAP financial measures provide a consistent basis for
comparison between quarters and better reflect the performance of
our core operations, as they are not influenced by certain income
or expense items not affecting continuing operations. We also
believe these measures help facilitate comparisons to our
competitors' operating results.
Set forth below is a reconciliation of our reported net income
attributable to common stockholders to earnings from continuing
operations excluding special items and our GAAP diluted earnings
per share to diluted earnings per share from continuing operations
excluding special items. We do not intend for this information to
be considered in isolation or as a substitute for other measures of
performance prepared in accordance with GAAP.
(In millions,
except diluted EPS)
|
Three Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Net income
attributable to common stockholders, as reported
|
$
|
47.4
|
|
|
$
|
0.23
|
|
|
$
|
17.7
|
|
|
$
|
0.08
|
|
After-tax reconciling
items:
|
|
|
|
|
|
|
|
(Gains) losses on
divestitures and impairment charges, net
|
(6.8)
|
|
|
(0.03)
|
|
|
25.9
|
|
|
0.12
|
|
Acquisition and
transition costs
|
—
|
|
|
—
|
|
|
5.3
|
|
|
0.02
|
|
Losses (gains) on early
extinguishment of debt
|
4.2
|
|
|
0.02
|
|
|
(1.0)
|
|
|
—
|
|
Other
|
1.1
|
|
|
0.01
|
|
|
1.7
|
|
|
0.01
|
|
Earnings from
continuing operations excluding special items and diluted earnings
per share from continuing operations excluding special
items
|
$
|
45.9
|
|
|
$
|
0.23
|
|
|
$
|
49.6
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding (in thousands)
|
|
|
203,444
|
|
|
|
|
213,010
|
|
|
|
|
(In millions,
except diluted EPS)
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Net income
attributable to common stockholders, as reported
|
$
|
161.4
|
|
|
$
|
0.78
|
|
|
$
|
84.7
|
|
|
$
|
0.39
|
|
After-tax reconciling
items:
|
|
|
|
|
|
|
|
(Gains) losses on
divestitures and impairment charges, net
|
(1.2)
|
|
|
—
|
|
|
20.1
|
|
|
0.10
|
|
Acquisition and
transition costs
|
1.8
|
|
|
0.01
|
|
|
24.6
|
|
|
0.12
|
|
Losses on early
extinguishment of debt
|
4.2
|
|
|
0.02
|
|
|
17.4
|
|
|
0.08
|
|
Legal defense fees and
other matters
|
—
|
|
|
—
|
|
|
7.3
|
|
|
0.03
|
|
Other
|
2.5
|
|
|
0.01
|
|
|
5.8
|
|
|
0.02
|
|
Earnings from
continuing operations excluding special items and diluted earnings
per share from continuing operations excluding special
items
|
$
|
168.7
|
|
|
$
|
0.82
|
|
|
$
|
159.9
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding (in thousands)
|
|
|
205,950
|
|
|
|
|
215,365
|
|
Conference Call and Webcast
We will host a conference call on Thursday, October 29, 2015, at 8:00 a.m. Central Time. A question and answer
session will follow a brief presentation made by
management. The conference call dial-in number is (847)
619-6441 with the passcode of 40989264. The conference call will
also be broadcast live via the Internet and can be accessed through
our website at www.sci-corp.com. A replay of the conference
call will be available through November 12,
2015 and can be accessed at (630) 652-3042 with the passcode
of 40989264#. Additionally, a replay of the conference call
will be available on our website for approximately ninety days.
Cautionary Statement on Forward-Looking Statements
The statements in this press release that are not historical
facts are forward-looking statements made in reliance on the "safe
harbor" protections provided under the Private Securities
Litigation Reform Act of 1995. These statements may be accompanied
by words such as "believe," "estimate," "project," "expect,"
"anticipate," or "predict," that convey the uncertainty of future
events or outcomes. These statements are based on assumptions that
we believe are reasonable; however, many important factors could
cause our actual results in the future to differ materially from
the forward-looking statements made herein and in any other
documents or oral presentations made by us, or on our behalf.
Important factors, which could cause actual results to differ
materially from those in forward-looking statements include, among
others, the following:
- Our affiliated funeral and cemetery trust funds own investments
in equity securities, fixed income securities, and mutual funds,
which are affected by market conditions that are beyond our
control.
- We may be required to replenish our affiliated funeral and
cemetery trust funds in order to meet minimum funding requirements,
which would have a negative effect on our earnings and cash
flow.
- Our ability to execute our strategic plan depends on many
factors, some of which are beyond our control.
- Our credit agreements contain covenants that may prevent us
from engaging in certain transactions.
- If we lost the ability to use surety bonding to support our
preneed funeral and preneed cemetery activities, we may be required
to make material cash payments to fund certain trust funds.
- The funeral home and cemetery industry is competitive.
- Increasing death benefits related to preneed funeral contracts
funded through life insurance contracts may not cover future
increases in the cost of providing a price-guaranteed funeral
service.
- The financial condition of third-party insurance companies that
fund our preneed funeral contracts may impact our future
revenue.
- Unfavorable results of litigation could have a material adverse
impact on our financial statements.
- Unfavorable publicity could affect our reputation and
business.
- If the number of deaths in our markets declines, our cash flows
and revenue may decrease.
- If we are not able to respond effectively to changing consumer
preferences, our market share, revenue, and profitability could
decrease.
- The continuing upward trend in the number of cremations
performed in North America could
result in lower revenue and gross profit.
- Our funeral home and cemetery businesses are high fixed-cost
businesses.
- Regulation and compliance could have a material adverse impact
on our financial results.
- Cemetery burial practice legal claims could have a material
adverse impact on our financial results.
- A number of years may elapse before particular tax matters, for
which we have established accruals, are audited and finally
resolved.
- Declines in overall economic conditions beyond our control
could reduce future potential earnings and cash flows and could
result in future impairments to goodwill and/or other intangible
assets.
- Any failure to maintain the security of the information
relating to our customers, their loved ones, our associates, and
our vendors could damage our reputation, could cause us to incur
substantial additional costs and to become subject to litigation,
and could adversely affect our operating results.
- Our Canadian business exposes us to operational, economic, and
currency risks.
- Our level of indebtedness could adversely affect our ability to
raise additional capital to fund our operations, limit our ability
to react to changes in the economy or our industry, and prevent us
from fulfilling our obligations under our indebtedness.
- Failure to maintain effective internal control over financial
reporting could adversely affect our results of operations,
investor confidence, and our stock price.
For further information on these and other risks and
uncertainties, see our Securities and Exchange Commission filings,
including our 2014 Annual Report on Form 10-K. Copies of this
document as well as other SEC filings can be obtained from our
website at www.sci-corp.com. We assume no obligation to publicly
update or revise any forward-looking statements made herein or any
other forward-looking statements made by us, whether as a result of
new information, future events or otherwise.
About Service Corporation International
Service Corporation International (NYSE: SCI), headquartered in
Houston, Texas, is North America's leading provider of deathcare
products and services. At September 30,
2015, we owned and operated 1,540 funeral homes and 469
cemeteries (of which 262 are combination locations) in 45 states,
eight Canadian provinces, the District of
Columbia, and Puerto Rico.
Through our businesses, we market the Dignity Memorial® brand which
offers assurance of quality, value, caring service, and exceptional
customer satisfaction. For more information about Service
Corporation International, please visit our website at
www.sci-corp.com. For more information about Dignity
Memorial®, please visit www.dignitymemorial.com.
For additional
information contact:
|
|
|
Investors:
|
|
Debbie Young -
Director / Investor Relations
|
|
(713)
525-9088
|
Media:
|
|
Marianne Gooch-
Managing Director/ Corporate Communications
|
|
(713)
525-9167
|
SERVICE
CORPORATION INTERNATIONAL
CONSOLIDATED
STATEMENT OF OPERATIONS
(In thousands,
except per share amounts)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
$
|
714,525
|
|
|
$
|
718,314
|
|
|
$
|
2,216,996
|
|
|
$
|
2,210,569
|
|
Costs and
expenses
|
(572,581)
|
|
|
(570,016)
|
|
|
(1,730,373)
|
|
|
(1,740,167)
|
|
Gross
profit
|
141,944
|
|
|
148,298
|
|
|
486,623
|
|
|
470,402
|
|
General and
administrative expenses
|
(28,158)
|
|
|
(39,748)
|
|
|
(96,781)
|
|
|
(141,885)
|
|
Gains on divestitures
and impairment charges, net
|
10,764
|
|
|
26,570
|
|
|
3,403
|
|
|
58,752
|
|
Operating
income
|
124,550
|
|
|
135,120
|
|
|
393,245
|
|
|
387,269
|
|
Interest
expense
|
(43,921)
|
|
|
(43,376)
|
|
|
(129,842)
|
|
|
(134,679)
|
|
Loss on early
extinguishment of debt
|
(6,918)
|
|
|
—
|
|
|
(6,918)
|
|
|
(29,158)
|
|
Other income
(expense), net
|
334
|
|
|
(9)
|
|
|
167
|
|
|
1,577
|
|
Income before income
taxes
|
74,045
|
|
|
91,735
|
|
|
256,652
|
|
|
225,009
|
|
Provision for income
taxes
|
(26,118)
|
|
|
(74,934)
|
|
|
(93,778)
|
|
|
(134,998)
|
|
Net income from
continuing operations
|
47,927
|
|
|
16,801
|
|
|
162,874
|
|
|
90,011
|
|
Net income (loss) from
discontinued operations, net of tax
|
—
|
|
|
884
|
|
|
(390)
|
|
|
846
|
|
Net income
|
47,927
|
|
|
17,685
|
|
|
162,484
|
|
|
90,857
|
|
Net income
attributable to noncontrolling interests
|
(479)
|
|
|
(34)
|
|
|
(1,066)
|
|
|
(6,182)
|
|
Net income
attributable to common stockholders
|
$
|
47,448
|
|
|
$
|
17,651
|
|
|
$
|
161,418
|
|
|
$
|
84,675
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
0.24
|
|
|
$
|
0.08
|
|
|
$
|
0.80
|
|
|
$
|
0.40
|
|
Basic weighted
average number of shares
|
199,310
|
|
|
210,820
|
|
|
201,729
|
|
|
212,009
|
|
Diluted earnings per
share:
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
0.23
|
|
|
$
|
0.08
|
|
|
$
|
0.78
|
|
|
$
|
0.39
|
|
Diluted weighted
average number of shares
|
203,444
|
|
|
213,010
|
|
|
205,950
|
|
|
215,365
|
|
Dividends declared
per share
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.32
|
|
|
$
|
0.25
|
|
SERVICE
CORPORATION INTERNATIONAL
CONSOLIDATED
BALANCE SHEET
(In thousands,
except share amounts)
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
(In thousands,
except share amounts)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
141,950
|
|
|
$
|
177,335
|
|
Receivables,
net
|
81,777
|
|
|
109,050
|
|
Inventories
|
29,557
|
|
|
29,697
|
|
Other
|
67,458
|
|
|
80,774
|
|
Total current
assets
|
320,742
|
|
|
396,856
|
|
Preneed funeral
receivables, net and trust investments
|
1,734,444
|
|
|
1,843,023
|
|
Preneed cemetery
receivables, net and trust investments
|
2,267,806
|
|
|
2,306,669
|
|
Cemetery
property
|
1,745,939
|
|
|
1,739,216
|
|
Property and
equipment, net
|
1,851,264
|
|
|
1,861,403
|
|
Goodwill
|
1,799,939
|
|
|
1,810,853
|
|
Deferred charges and
other assets
|
628,768
|
|
|
624,248
|
|
Cemetery perpetual
care trust investments
|
1,304,219
|
|
|
1,341,376
|
|
Total
assets
|
$
|
11,653,121
|
|
|
$
|
11,923,644
|
|
|
|
|
|
LIABILITIES &
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
449,725
|
|
|
$
|
453,042
|
|
Current maturities of
long-term debt
|
95,045
|
|
|
90,931
|
|
Income
taxes
|
1,868
|
|
|
8,035
|
|
Total current
liabilities
|
546,638
|
|
|
552,008
|
|
Long-term
debt
|
3,046,414
|
|
|
2,963,794
|
|
Deferred preneed
funeral revenue
|
548,211
|
|
|
540,164
|
|
Deferred preneed
cemetery revenue
|
1,131,506
|
|
|
1,062,381
|
|
Deferred tax
liability
|
452,610
|
|
|
448,824
|
|
Other
liabilities
|
502,980
|
|
|
502,553
|
|
Deferred preneed
receipts held in trust
|
2,932,684
|
|
|
3,148,884
|
|
Care trusts'
corpus
|
1,304,574
|
|
|
1,327,658
|
|
|
|
|
|
Equity:
|
|
|
|
Common stock, $1 per
share par value, 500,000,000 shares authorized, 208,729,693 and
205,458,331 shares issued, respectively, and 197,125,709 and
204,866,770 shares outstanding, respectively
|
197,126
|
|
|
204,867
|
|
Capital in excess of
par value
|
1,115,738
|
|
|
1,186,304
|
|
Accumulated
deficit
|
(151,491)
|
|
|
(81,859)
|
|
Accumulated other
comprehensive income
|
16,501
|
|
|
59,414
|
|
Total common
stockholders' equity
|
1,177,874
|
|
|
1,368,726
|
|
Noncontrolling
interests
|
9,630
|
|
|
8,652
|
|
Total
equity
|
1,187,504
|
|
|
1,377,378
|
|
Total liabilities and
equity
|
$
|
11,653,121
|
|
|
$
|
11,923,644
|
|
SERVICE
CORPORATION INTERNATIONAL
CONSOLIDATED
STATEMENT OF CASH FLOWS
(In
thousands)
|
|
|
Nine Months
Ended
September
30,
|
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
162,484
|
|
|
$
|
90,857
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Loss (income) from
discontinued operations, net of tax
|
390
|
|
|
(846)
|
|
Loss on early
extinguishment of debt
|
6,918
|
|
|
29,158
|
|
Premiums paid on early
extinguishment of debt
|
(6,549)
|
|
|
(24,804)
|
|
Depreciation and
amortization
|
103,816
|
|
|
105,098
|
|
Amortization of
intangible assets
|
23,536
|
|
|
27,792
|
|
Amortization of
cemetery property
|
40,422
|
|
|
41,477
|
|
Amortization of loan
costs
|
7,221
|
|
|
6,436
|
|
Provision for doubtful
accounts
|
4,663
|
|
|
6,142
|
|
Provision for deferred
income taxes
|
13,761
|
|
|
59,614
|
|
Gains on divestitures
and impairment charges, net
|
(3,403)
|
|
|
(58,752)
|
|
Share-based
compensation
|
10,717
|
|
|
9,742
|
|
Excess tax benefits
from share-based awards
|
(17,266)
|
|
|
(20,727)
|
|
Change in assets and
liabilities, net of effects from acquisitions and
divestitures:
|
|
|
|
Decrease (increase) in
receivables
|
11,724
|
|
|
(7,038)
|
|
Increase in other
assets
|
(627)
|
|
|
(12,845)
|
|
Increase in payables
and other liabilities
|
39,546
|
|
|
38,439
|
|
Effect of preneed
funeral production and maturities:
|
|
|
|
Decrease in preneed
funeral receivables, net and trust investments
|
20,846
|
|
|
29,498
|
|
Increase (decrease)
deferred preneed funeral revenue
|
9,922
|
|
|
(24,746)
|
|
Decrease in deferred
preneed funeral receipts held in trust
|
(47,365)
|
|
|
(29,879)
|
|
Effect of cemetery
production and deliveries:
|
|
|
|
Increase in preneed
cemetery receivables, net and trust investments
|
(55,777)
|
|
|
(37,559)
|
|
Increase in deferred
preneed cemetery revenue
|
70,995
|
|
|
34,388
|
|
Increase (decrease) in
deferred preneed cemetery receipts held in trust
|
644
|
|
|
(5,355)
|
|
Other
|
—
|
|
|
1,131
|
|
Net cash provided by
operating activities from continuing operations
|
396,618
|
|
|
257,221
|
|
Net cash used in
operating activities from discontinued operations
|
—
|
|
|
(1,000)
|
|
Net cash provided by
operating activities
|
396,618
|
|
|
256,221
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(104,732)
|
|
|
(95,182)
|
|
Acquisitions
|
(41,430)
|
|
|
(10,815)
|
|
Proceeds from
divestitures and sales of property and equipment
|
11,329
|
|
|
397,297
|
|
Net withdrawals
(deposits) of restricted funds
|
8,066
|
|
|
(12,225)
|
|
Net cash (used in)
provided by investing activities from continuing
operations
|
(126,767)
|
|
|
279,075
|
|
Net cash provided by
investing activities from discontinued operations
|
987
|
|
|
4,981
|
|
Net cash (used in)
provided by investing activities
|
(125,780)
|
|
|
284,056
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of long-term debt
|
401,250
|
|
|
755,000
|
|
Debt issuance
costs
|
(5,830)
|
|
|
(10,500)
|
|
Payments of
debt
|
(145,171)
|
|
|
(222,958)
|
|
Early extinguishment of
debt
|
(197,377)
|
|
|
(762,764)
|
|
Principal payments on
capital leases
|
(20,421)
|
|
|
(21,979)
|
|
Proceeds from exercise
of stock options
|
30,491
|
|
|
27,609
|
|
Excess tax benefits
from share-based awards
|
17,266
|
|
|
20,727
|
|
Purchase of Company
common stock
|
(305,488)
|
|
|
(130,162)
|
|
Payments of
dividends
|
(64,068)
|
|
|
(53,026)
|
|
Purchase of
noncontrolling interest
|
—
|
|
|
(15,000)
|
|
Bank overdrafts and
other
|
(9,095)
|
|
|
(3,377)
|
|
Net cash used in
financing activities
|
(298,443)
|
|
|
(416,430)
|
|
Net change in cash of
discontinued operations
|
—
|
|
|
1,361
|
|
Effect of foreign
currency on cash and cash equivalents
|
(7,780)
|
|
|
(548)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(35,385)
|
|
|
124,660
|
|
Cash and cash
equivalents at beginning of period
|
177,335
|
|
|
141,599
|
|
Cash and cash
equivalents at end of period
|
$
|
141,950
|
|
|
$
|
266,259
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/service-corporation-international-announces-third-quarter-2015-financial-results-and-provides-fourth-quarter-outlook-for-2015-and-preliminary-outlook-for-2016-300168094.html
SOURCE Service Corporation International