SCI Corporate Communications
Phone: 1-844-220-4408
Email: Press.Room@sci-us.com

News Release

Printer Friendly Version View printer-friendly version
<< Back
Service Corporation International Announces Third Quarter 2018 Financial Results And Confirms Guidance For 2018
- Conference call on Tuesday, October 30, 2018, at 8:00 a.m. Central Time.

HOUSTON, Oct. 29, 2018 /PRNewswire/ -- Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today announced results for the third quarter of 2018. 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,


2018


2017


2018


2017

Revenue

$

778.8



$

731.3



$

2,369.4



$

2,282.3


Operating income

$

132.3



$

109.4



$

457.9



$

393.1


Net income attributable to common stockholders

$

68.9



$

56.2



$

254.2



$

299.3


Diluted earnings per share

$

0.37



$

0.29



$

1.36



$

1.56


Earnings excluding special items(1)

$

64.3



$

63.0



$

235.6



$

203.5


Diluted earnings per share excluding special items(1)

$

0.35



$

0.33



$

1.26



$

1.06


Diluted weighted average shares outstanding

185.5



192.2



187.5



192.4


Net cash provided by operating activities

$

136.9



$

167.0



$

452.3



$

389.5


Net cash provided by operating activities excluding special items(1)

$

136.9



$

167.0



$

446.7



$

430.0




(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. These items are also referred to as "adjusted earnings per share" and "adjusted operating cash flow". A reconciliation from net income attributable to common stockholders, 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 were $0.37 in the third quarter of 2018 compared to $0.29 in the third quarter of 2017. The third quarter of 2018 was positively impacted by an $8.0 million gain on divestitures. The third quarter of 2017 was negatively impacted by an $11.5 million legal settlement. Diluted earnings per share excluding special items were $0.35 in the third quarter of 2018 compared to $0.33 in the third quarter of 2017. The 6.1% increase was primarily driven by six cents of comparable operating profit partially offset by four cents of increased general and administrative expense related to our long-term incentive compensation plan that is tied to increases in total shareholder return. Higher interest expense effectively offset the impact of a lower share count and a slightly lower adjusted effective tax rate.
  • Net cash provided by operating activities was $136.9 million in the third quarter of 2018 compared to $167.0 million in the third quarter of 2017. This decrease of $30.1 million was due to higher cash taxes paid of $21.1 million and decreases in working capital.
  • During the third quarter, we returned $77.6 million to shareholders through a combination of share repurchases and dividends and deployed $29.9 million of capital to accretive acquisitions and the construction of new funeral homes. For the nine months ended September 30, 2018, we returned $368.7 million to shareholders through a combination of share repurchases and dividends and deployed $209.0 million of capital to accretive acquisitions and the construction of new funeral homes.

Tom Ryan, the Company's Chairman and Chief Executive Officer, commented on the third quarter of 2018:

"We are pleased to report strong operating performance in the third quarter highlighted by producing mid-single digit percentage growth in revenue and double-digit percentage growth in operating profit. Revenue grew $47.5 million, or 6.5%, and operating profit grew $16.4 million, or 11%, quarter over quarter. This strong operating performance was partially offset by increases in adjusted general and administrative expenses for our long-term incentive compensation plan that is tied to increases in total shareholder return as we experienced a significant increase in our share price during the quarter compared to market indices.

We look forward to carrying our operating performance momentum into the fourth quarter and finishing the year strong. We are narrowing the range of our full year guidance for adjusted earnings per share to $1.77 to $1.85 per share and are confirming the midpoint of $595 million of our existing adjusted operating cash flow range. Our results could not have been achieved without the hard work and dedication of our entire team, and I thank all 23,000 associates for their efforts and continued focus on delivering extraordinary service to our client families. We believe our long-term growth strategy is on track as we continue to grow revenue, leverage our unparalleled scale, and deploy our capital wisely to enhance shareholder value."

REVISED OUTLOOK FOR 2018

Our revised outlook for potential earnings and cash flow in 2018 is as follows:

(In millions, except per share amounts)

Previous 2018
Outlook


Revised 2018
Outlook

Diluted earnings per share excluding special items(1)

$1.72 to $1.90


$1.77 to $1.85

Net cash provided by operating activities excluding special items(1)

$575 to $615


$575 to $615

Capital improvements at existing facilities and cemetery development expenditures

Approximately
$195


Approximately
$195



(1)

Diluted earnings per share excluding special items and Net cash provided by operating activities excluding special items are non-GAAP financial measures. We normally reconcile these non-GAAP financial measures from 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 outlook for 2018 excludes the following because this information is not currently available for 2018: Expenses net of insurance recoveries related to hurricanes, gains or losses associated with asset divestitures, gains or losses associated with the early extinguishment of debt, potential tax reserve adjustments and IRS payments and/or refunds, acquisition and integration costs, system implementation 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, especially gains or losses associated with asset divestitures, could materially impact our forward-looking diluted EPS and/or our 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".

REVIEW OF RESULTS FOR THIRD QUARTER 2018

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,


2018


2017


2018


2017

Funeral:








Atneed revenue

$

236.0



$

236.2



$

753.4



$

757.1


Matured preneed revenue

138.8



135.2



450.1



425.3


Core revenue

374.8



371.4



1,203.5



1,182.4


Non-funeral home revenue

11.5



10.8



37.2



34.8


Recognized preneed revenue

32.1



26.6



98.5



88.9


Other revenue

32.6



28.7



94.8



89.1


 Total revenue

$

451.0



$

437.5



$

1,434.0



$

1,395.2










Operating profit

$

68.1



$

70.1



$

279.0



$

274.8


Operating margin percentage

15.1

%


16.0

%


19.5

%


19.7

%









Funeral services performed

73,896



72,049



236,391



230,533


Average revenue per service

$

5,228



$

5,305



$

5,249



$

5,280



Cemetery:








Atneed property revenue

$

21.6



$

20.5



$

66.9



$

67.9


Atneed merchandise and service revenue

55.4



55.6



174.1



170.3


Total atneed revenue

77.0



76.1



241.0



238.2


Recognized preneed property revenue

151.3



129.7



403.4



378.5


Recognized preneed merchandise and service revenue

69.0



69.2



210.5



206.4


Total recognized preneed revenue

220.3



198.9



613.9



584.9


Core revenue

297.3



275.0



854.9



823.1


Other cemetery revenue

30.5



18.8



80.5



64.0


Total revenue

$

327.8



$

293.8



$

935.4



$

887.1










Operating profit

$

98.0



$

79.7



$

271.0



$

235.7


Operating margin percentage

29.9

%


27.1

%


29.0

%


26.6

%

Comparable Funeral Results

The table below details comparable funeral results of operations ("same store") for the three months ended September 30, 2018 and 2017. We consider comparable operations to be those owned for the entire period beginning January 1, 2017 and ending September 30, 2018.

(Dollars in millions, except average revenue per service and average revenue per contract sold)


Three Months Ended September 30,


2018


2017


Var


%

Comparable revenue:








Atneed revenue(1)

$

227.0



$

230.6



$

(3.6)



(1.6)

%

Matured preneed revenue(2)

136.3



133.4



2.9



2.2

%

Core revenue(3)

363.3



364.0



(0.7)



(0.2)

%

Non-funeral home revenue(4)

11.5



11.0



0.5



4.5

%

Recognized preneed revenue(5)

31.5



26.6



4.9



18.4

%

Other revenue(6)

32.1



28.6



3.5



12.2

%

Total comparable revenue

$

438.4



$

430.2



$

8.2



1.9

%









Comparable operating profit

$

67.5



$

70.6



$

(3.1)



(4.4)

%

Comparable operating margin percentage

15.4

%


16.4

%


(1.0)

%












Comparable services performed:








Atneed

39,079



39,578



(499)



(1.3)

%

Matured preneed

22,147



22,090



57



0.3

%

Total core

61,226



61,668



(442)



(0.7)

%

Non-funeral home

9,234



9,137



97



1.1

%

Total comparable funeral services performed

70,460



70,805



(345)



(0.5)

%

Core cremation rate

48.3

%


46.6

%


1.7

%



Total comparable cremation rate

55.0

%


53.4

%


1.6

%











Comparable sales average revenue per service:








Atneed

$

5,809



$

5,826



$

(17)



(0.3)

%

Matured preneed

6,154



6,039



115



1.9

%

Total core

5,934



5,903



31



0.5

%

Non-funeral home

1,245



1,204



41



3.4

%

Total comparable average revenue per service

$

5,319



$

5,296



$

23



0.4

%









Comparable preneed sales production:








Total preneed sales

$

227.5



$

200.2



$

27.3



13.6

%

Core contracts sold

30,507



27,208



3,299



12.1

%

Non-funeral home contracts sold

17,204



16,292



912



5.6

%

Core average revenue per contract sold

$

5,964



$

5,929



$

35



0.6

%

Non-funeral home average revenue per contract sold

$

2,651



$

2,385



$

266



11.2

%



(1)

Atneed revenue represents merchandise and services sold and delivered or performed once death has occurred.



(2)

Matured preneed revenue represents merchandise and services sold on a preneed contract through our core funeral homes which have been delivered or performed as well as the related merchandise and service trust fund income.



(3)

Core revenue represents the sum of merchandise and services sold on an atneed contract or preneed contract, which were delivered or performed once death has occurred through our core funeral homes.



(4)

Non-funeral home revenue represents services sold on a preneed or atneed contract through one of our non-funeral home sales channels (e.g. SCI Direct) and performed once death has occurred.



(5)

Recognized preneed revenue represents travel protection, net and merchandise 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.

 

  • Total comparable funeral revenue increased by $8.2 million, or 1.9%, in the third quarter of 2018 compared to the same period of 2017 primarily from a $4.9 million increase in recognized preneed revenue and a $3.5 million increase in other revenue (primarily general agency revenue).
  • Core revenue was relatively flat as a 0.7% decrease in core funeral services performed was offset by a 0.5% increase in the core average revenue per service. Organic sales average growth, including favorable trust income, more than offset a 170 basis point increase in the core cremation rate.
  • The $4.9 million increase in recognized preneed revenue is primarily driven by an increase the number of contracts sold through our non-funeral home sales channel.
  • The $3.5 million increase in other revenue is primarily due to higher general agency revenue resulting from a 13.6% increase in preneed funeral sales production.
  • Comparable funeral operating profit decreased $3.1 million to $67.5 million and the operating margin percentage decreased 100 basis points to 15.4%. Our fixed costs in the funeral segment were higher by $9.4 million, or 3.6%, as expected wage increases for critical customer-facing employees and higher self-insured medical claims added to the increase. Additionally, we experienced higher selling costs associated with marketing and sales lead procurement that we believe are benefiting funeral preneed sales production.
  • Comparable preneed funeral sales production increased $27.3 million, or 13.6%, in the third quarter of 2018 compared to 2017. We experienced double-digit percentage growth in both our core and non-funeral home sales channel resulting primarily from recently implemented customer-facing technology and investments in our website redesign, digital marketing campaigns, and search engine optimization.

Comparable Cemetery Results

The table below details comparable cemetery results of operations ("same store") for the three months ended September 30, 2018 and 2017. We consider comparable operations to be those owned for the entire period beginning January 1, 2017 and ending September 30, 2018.

(Dollars in millions)

Three Months Ended September 30,


2018


2017


Var


%

Comparable revenue:








Atneed property revenue

$

21.3



$

20.3



$

1.0



4.9

%

Atneed merchandise and service revenue

54.7



55.1



(0.4)



(0.7)

%

Total atneed revenue (1)

76.0



75.4



0.6



0.8

%

Recognized preneed property revenue

149.1



129.3



19.8



15.3

%

Recognized preneed merchandise and service revenue

66.4



68.7



(2.3)



(3.3)

%

Total recognized preneed revenue (2)

215.5



198.0



17.5



8.8

%

Core revenue(3)

291.5



273.4



18.1



6.6

%

Other revenue(4)

29.6



18.7



10.9



58.3

%

Total comparable revenue

$

321.1



$

292.1



$

29.0



9.9

%









Comparable operating profit

$

96.1



$

79.3



$

16.8



21.2

%

Comparable operating margin percentage

29.9

%


27.1

%


2.8

%











Comparable preneed and atneed sales production:








Property

$

149.0



$

143.9



$

5.1



3.5

%

Merchandise and services

131.3



124.4



6.9



5.5

%

Discounts and other

(1.0)



(0.4)



(0.6)



(150.0)

%

Preneed and atneed sales production

$

279.3



$

267.9



$

11.4



4.3

%









 Recognition rate(5)

104.4

%


102.1

%







(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, which were delivered or performed as well as the related merchandise and service trust fund income.



(3)

Core revenue represents the sum of property, merchandise, and services that have been delivered or performed as well as the related merchandise and service trust fund income.



(4)

Other revenue is primarily related to 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 stated as a percentage of current period preneed and atneed sales production.

 

  • Total comparable cemetery revenue grew $29.0 million, or 9.9%, in the third quarter of 2018 when compared against the third quarter of 2017. The revenue growth over the prior year quarter is due to an increase in sales production, the completion of cemetery property construction projects that were previously sold, and higher other revenue (primarily endowment care trust fund income).
  • Comparable preneed cemetery sales production increased $10.5 million, or 5.4%. The main drivers of this growth were a 3.2% increase in preneed property production and a 9.3% increase in preneed merchandise and services production.
  • Comparable cemetery operating profit increased $16.8 million to $96.1 million and the operating margin percentage increased 280 basis points to 29.9%. The revenue increases mentioned above were partially offset by investments in digital marketing mentioned above, as well as higher labor costs due to permanent wage increases for certain of our critical customer-facing employees and higher self-insured medical claims.

Other Financial Results

  • General and administrative expenses increased $2.1 million to $41.1 million in the third quarter of 2018. The prior year quarter included a legal settlement of $11.5 million. Excluding this legal settlement, adjusted general and administrative expenses increased by $13.6 million primarily related to higher expenses for our long-term incentive compensation plan because the plan is tied to increases in total shareholder return.
  • Interest expense increased $3.7 million to $46.4 million in the third quarter of 2018 due to higher interest rates on our floating rate debt as well as an increase in the overall balance of our total debt.
  • The GAAP effective income tax rate for the third quarter of 2018 was 19.8%, up from the prior year third quarter tax rate of 15.7% for 2017. The rate in 2017 was lower due to a decrease in GAAP book income as a result of an $11.5 million legal settlement. The third quarter of 2018 GAAP book income was positively impacted by an $8.0 million gain on divestitures. Excluding these items, our adjusted effective income tax rate was 17.6% in the third quarter of 2018 compared to 19.5% in the prior year third quarter, which is primarily due to tax reform and lower tax benefits recognized on the settlement of employee share-based awards.

Cash Flow and Capital Spending

(In millions)

Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017

Net cash provided by operating activities

$

136.9



$

167.0



$

452.3



$

389.5


Pension settlement payment







6.3


IRS tax settlement





(5.6)



34.2


Net cash provided by operating activities excluding special items

$

136.9



$

167.0



$

446.7



$

430.0


Cash taxes included in net cash provided by operating activities excluding special items

$

25.1



$

4.0



$

56.0



$

87.3


Net cash provided by operating activities excluding special items decreased $30.1 million to $136.9 million in the third quarter of 2018 from $167.0 million in the prior year quarter. The decrease is primarily driven by $21.1 million higher cash taxes paid. Additionally, higher earnings in the quarter were more than offset by decreases in preneed working capital.

A summary of our capital expenditures is set forth below:

 (In millions)

Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017

Capital improvements at existing field locations and corporate

$

31.3



$

30.8



$

87.9



$

73.2


Development of cemetery property

21.9



21.7



56.7



54.6


Capital improvements at existing facilities and cemetery development expenditures

53.2



52.5



144.6



127.8


Growth capital expenditures/construction of new funeral home facilities

9.9



3.8



21.3



13.8


Total capital expenditures

$

63.1



$

56.3



$

165.9



$

141.6


Total capital expenditures increased in the current quarter by $6.8 million primarily due to expected increases in growth capital for the construction of new funeral home facilities, along with slight increases in capital improvements at existing facilities and new cemetery property development.

TRUST FUND RETURNS

Total trust fund returns include realized and unrealized gains and losses and dividends and are shown without netting of certain fees. A summary of our consolidated trust fund returns for the three and nine months ended September 30, 2018 is set forth below:



Three Months


Nine Months

Preneed funeral


3.2%


4.7%

Preneed cemetery


3.3%


4.8%

Cemetery perpetual care


2.7%


3.6%

Combined trust funds


3.1%


4.4%

NON-GAAP FINANCIAL MEASURES

Earnings excluding special items and diluted earnings per share excluding special items 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 excluding special items and our GAAP diluted earnings per share to diluted earnings per share 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,


2018


2017


Net
Income


Diluted
EPS


Net
Income


Diluted
EPS

Net income attributable to common stockholders, as reported

$

68.9



$

0.37



$

56.2



$

0.29


Pre-tax reconciling items:








(Gains) losses on divestitures and impairment charges, net

(8.0)



(0.04)



0.1




Legal settlements





11.5



0.06


Tax reconciling items:








Tax effect from special items

0.8





(4.0)



(0.02)


Change in certain tax reserves and other (1)

2.6



0.02



(0.8)




Earnings excluding special items and diluted earnings per share excluding special items

$

64.3



$

0.35



$

63.0



$

0.33










Diluted weighted average shares outstanding (in thousands)



185,460





192,243



(In millions, except diluted EPS)

Nine Months Ended September 30,


2018


2017


Net
Income


Diluted
EPS


Net
Income


Diluted
EPS

Net income attributable to common stockholders, as reported

$

254.2



$

1.36



$

299.3



$

1.56


Pre-tax reconciling items:








Gains on divestitures and impairment charges, net

(15.3)



(0.08)



(5.5)



(0.03)


Losses on early extinguishment of debt

10.1



0.05






Pension termination settlements





12.8



0.07


Legal settlements





11.5



0.06


Tax reconciling items:








Tax effect from special items

1.4



0.01



(6.6)



(0.03)


Change in certain tax reserves and other (1)

(14.8)



(0.08)



(108.0)



(0.57)


Earnings excluding special items and diluted earnings per share excluding special items

$

235.6



$

1.26



$

203.5



$

1.06










Diluted weighted average shares outstanding (in thousands)



187,517





192,417




(1)

2018 is impacted by the remeasurement of deferred taxes resulting from a change in estimate related to the finalization of the 2017 tax return. 2017 is impacted by the settlement of IRS tax audits related to tax years 1999-2005. Please see our third quarter 2018 Form 10-Q filing for further details, which will be filed later.

Conference Call and Webcast

We will host a conference call on Tuesday, October 30, 2018, 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 (888) 771-4371 or (847) 585-4405 with the passcode of 47683779. 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 6, 2018 and can be accessed at (888) 843-7419 or (630) 652-3042 with the passcode of 47683779#. Additionally, a replay of the conference call will be available on our website for approximately one week.

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 securities, which are affected by market conditions that are beyond our control.
  • We may be required to replenish our affiliated funeral and cemetery trust funds 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 and cemetery industry is competitive.
  • Increasing death benefits related to preneed contracts funded through life insurance or annuity contracts may not cover future increases in the cost of providing a price-guaranteed service.
  • The financial condition of third-party insurance companies that fund our preneed 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 decline, our cash flows and revenue may decrease.
  • If we are not able to respond effectively to changing consumer preferences, our market share, revenue, cash flows and/or profitability could decrease.
  • The continuing upward trend in the number of cremations performed in North America could result in lower revenue, operating profit, and cash flows.
  • 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 claims could have a material adverse impact on our financial results.
  • We use a combination of insurance, self-insurance, and large deductibles in managing our exposure to certain inherent risks, therefore, we could be exposed to unexpected costs that could negatively affect our financial performance.
  • A number of years may elapse before particular tax matters, for which we have established accruals, are audited and finally resolved.
  • Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows.
  • 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, financial condition, or cash flow.
  • 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 may prevent us from fulfilling our obligations under our indebtedness.
  • A failure of key information technology systems or processes could disrupt and adversely affect our business.
  • Failure to maintain effective internal control over financial reporting could adversely affect our results of operations, investor confidence, and our stock price.
  • The application of unclaimed property laws by certain states to our preneed funeral and cemetery backlog could have a material adverse impact on our liquidity, cash flows, and our financial results.

For further information on these and other risks and uncertainties, see our Securities and Exchange Commission filings, including our 2017 Annual Report on Form 10-K and as updated in our Form 10-Q filings. 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, 2018, we owned and operated 1,478 funeral homes and 481 cemeteries (of which 286 are combination locations) in 44 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:


Jay Andrew - Director / Corporate Communications


(713) 525-5235

 

SERVICE CORPORATION INTERNATIONAL

CONSOLIDATED STATEMENT OF OPERATIONS



Three Months Ended


Nine Months Ended


September 30,


September 30,


2018


2017


2018


2017


(In thousands, except per share amounts)

Revenue:








Property and merchandise revenue

$

392,410



$

363,934



$

1,158,224



$

1,116,551


Service revenue

323,246



319,810



1,035,794



1,012,631


Other revenue

63,130



47,602



175,342



153,116


Total revenue

778,786



731,346



2,369,360



2,282,298


Costs and expenses:








Cost of property and merchandise

(203,349)



(189,818)



(600,997)



(588,370)


Cost of service

(188,893)



(179,924)



(568,034)



(546,978)


Overhead and other expenses

(220,374)



(211,828)



(650,270)



(636,417)


Total costs and expenses

(612,616)



(581,570)



(1,819,301)



(1,771,765)


Operating profit

166,170



149,776



550,059



510,533


General and administrative expenses

(41,070)



(38,992)



(106,990)



(121,644)


Gains (losses) on divestitures and impairment charges, net

7,970



(143)



15,317



5,545


Hurricane expenses, net

(767)



(1,290)



(437)



(1,290)


Operating income

132,303



109,351



457,949



393,144


Interest expense

(46,419)



(42,754)



(134,514)



(125,473)


Loss on early extinguishment of debt, net





(10,131)




Other income (expense), net

152



(19)



2,416



(1,049)


Income before income taxes

86,036



66,578



315,720



266,622


(Provision for) benefit from income taxes

(17,043)



(10,437)



(61,398)



32,830


Net income

68,993



56,141



254,322



299,452


Net (income) loss attributable to noncontrolling interests

(58)



23



(160)



(105)


Net income attributable to common stockholders

$

68,935



$

56,164



$

254,162



$

299,347


Basic earnings per share:








Net income attributable to common stockholders

$

0.38



$

0.30



$

1.39



$

1.59


Basic weighted average number of shares

180,858



187,435



182,859



187,761


Diluted earnings per share:








Net income attributable to common stockholders

$

0.37



$

0.29



$

1.36



$

1.56


Diluted weighted average number of shares

185,460



192,243



187,517



192,417


Dividends declared per share

$

0.17



$

0.15



$

0.51



$

0.43


 

SERVICE CORPORATION INTERNATIONAL

CONSOLIDATED BALANCE SHEET



September 30, 2018


December 31, 2017


(In thousands, except share amounts)

ASSETS




Current assets:




Cash and cash equivalents

$

158,301



$

330,039


Receivables, net

84,018



90,304


Inventories

26,061



25,378


Other

32,107



35,575


Total current assets

300,487



481,296


Preneed receivables, net and trust investments

4,568,470



4,778,842


Cemetery property

1,835,761



1,791,989


Property and equipment, net

1,960,329



1,873,044


Goodwill

1,854,167



1,805,981


Deferred charges and other assets

954,478



601,184


Cemetery perpetual care trust investments

1,596,542



1,532,167


Total assets

$

13,070,234



$

12,864,503






LIABILITIES & EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

482,357



$

489,172


Current maturities of long-term debt

68,806



337,337


Income taxes payable

3,726



2,470


Total current liabilities

554,889



828,979


Long-term debt

3,542,314



3,135,316


Deferred revenue, net

1,431,181



1,789,776


Deferred tax liability

372,929



283,765


Other liabilities

402,593



410,982


Deferred receipts held in trust

3,687,394



3,475,430


Care trusts' corpus

1,589,948



1,530,818


Commitments and contingencies




Equity:




Common stock, $1 per share par value, 500,000,000 shares authorized, 193,556,602 and 191,935,647 shares issued, respectively, and 180,933,966 and 186,614,747 shares outstanding, respectively

180,934



186,615


Capital in excess of par value

962,041



970,468


Retained earnings

313,720



210,364


Accumulated other comprehensive income

32,167



41,943


Total common stockholders' equity

1,488,862



1,409,390


Noncontrolling interests

124



47


Total equity

1,488,986



1,409,437


Total liabilities and equity

$

13,070,234



$

12,864,503


 

SERVICE CORPORATION INTERNATIONAL

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, except share amounts)



Nine Months Ended September 30,


2018


2017

Cash flows from operating activities:




Net income

$

254,322



$

299,452


Adjustments to reconcile net income to net cash provided by operating activities:




Loss on early extinguishment of debt

10,131




Depreciation and amortization

117,496



113,641


Amortization of intangibles

20,170



20,923


Amortization of cemetery property

47,509



46,533


Amortization of loan costs

4,531



4,344


Provision for doubtful accounts

6,522



6,846


Provision for (benefit from) deferred income taxes

25,491



(148,465)


Gains on divestitures and impairment charges, net

(15,317)



(5,545)


Gain on sale of investments

(2,636)




Share-based compensation

11,740



10,719


Change in assets and liabilities, net of effects from acquisitions and divestitures:




(Increase) decrease in receivables

(964)



12,568


Increase in other assets

(19,251)



(15,814)


(Decrease) increase in payables and other liabilities

(2,879)



66,455


Effect of preneed sales production and maturities:




Increase in preneed receivables, net and trust investments

(37,387)



(58,631)


Increase in deferred revenue, net

43,329



37,438


Decrease in deferred receipts held in trust

(10,541)



(981)


Net cash provided by operating activities

452,266



389,483


Cash flows from investing activities:




Capital expenditures

(165,943)



(141,652)


Acquisitions, net of cash acquired

(187,616)



(75,818)


Proceeds from divestitures and sales of property and equipment

29,890



32,588


Proceeds from sale of investments

2,900




Payments for Company-owned life insurance policies

(14,283)



(6,189)


Proceeds from Company-owned life insurance policies

2,810



2,591


Purchase of land and other

(14,525)



175


Net cash used in investing activities

(346,767)



(188,305)


Cash flows from financing activities:




Proceeds from issuance of long-term debt

395,000



120,000


Scheduled payments of debt

(25,601)



(26,376)


Early payments of debt

(259,590)




Principal payments on capital leases

(29,771)



(40,509)


Proceeds from exercise of stock options

18,481



30,672


Purchase of Company common stock

(275,726)



(148,818)


Payments of dividends

(93,002)



(80,711)


Purchase of noncontrolling interest



(4,580)


Bank overdrafts and other

(8,842)



2,790


Net cash used in financing activities

(279,051)



(147,532)


Effect of foreign currency on cash, cash equivalents, and restricted cash

(1,111)



9,463


Net (decrease) increase in cash, cash equivalents, and restricted cash

(174,663)



63,109


Cash, cash equivalents, and restricted cash at beginning of period

340,601



211,506


Cash, cash equivalents, and restricted cash at end of period

$

165,938



$

274,615


 

Cision View original content:http://www.prnewswire.com/news-releases/service-corporation-international-announces-third-quarter-2018-financial-results-and-confirms-guidance-for-2018-300739739.html

SOURCE Service Corporation International