HOUSTON, Feb. 10, 2016 /PRNewswire/ -- Service
Corporation International (NYSE: SCI), the largest provider of
deathcare products and services in North
America, today reported results for the fourth quarter 2015.
Our 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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
|
$
|
769.4
|
|
|
$
|
783.4
|
|
|
$
|
2,986.4
|
|
|
$
|
2,994.0
|
|
Operating
income
|
|
$
|
157.0
|
|
|
$
|
220.3
|
|
|
$
|
550.3
|
|
|
$
|
607.5
|
|
Net income
attributable to common stockholders
|
|
$
|
72.4
|
|
|
$
|
87.8
|
|
|
$
|
233.8
|
|
|
$
|
172.5
|
|
Diluted earnings per
share
|
|
$
|
0.36
|
|
|
$
|
0.42
|
|
|
$
|
1.14
|
|
|
$
|
0.81
|
|
Earnings from
continuing operations excluding special
items(1)
|
|
$
|
73.5
|
|
|
$
|
77.2
|
|
|
$
|
242.2
|
|
|
$
|
237.0
|
|
Diluted earnings per
share from continuing operations excluding special
items(1)
|
|
$
|
0.37
|
|
|
$
|
0.37
|
|
|
$
|
1.18
|
|
|
$
|
1.11
|
|
Diluted weighted
average shares outstanding
|
|
200.0
|
|
|
210.5
|
|
|
204.5
|
|
|
214.2
|
|
Net cash provided by
operating activities
|
|
$
|
75.6
|
|
|
$
|
61.2
|
|
|
$
|
472.2
|
|
|
$
|
317.4
|
|
Net cash provided by
operating activities excluding special
items(1)
|
|
$
|
89.3
|
|
|
$
|
123.3
|
|
|
$
|
513.9
|
|
|
$
|
508.6
|
|
|
|
(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 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 from continuing operations excluding
special items was $0.37 in both the
fourth quarter of 2015 and the fourth quarter of 2014. Higher
preneed cemetery sales production, lower corporate administrative
expenses, a lower share count, and a lower tax rate helped to
offset impacts of lower funeral services performed, the devaluation
of the Canadian dollar, and lower trust fund income. Diluted
earnings per share excluding special items grew $0.04, or 12.0%, compared to the prior year
quarter excluding $15.0 million of
recognized perpetual care trust fund income, related to the 2014
change in trust structure, that was not expected to recur in
2015.
- Net cash provided by operating activities excluding special
items decreased $34.0 million to
$89.3 million in the fourth quarter
of 2015 compared to $123.3 million in
the prior year quarter, primarily due to an expected increase in
cash taxes paid of $22.0 million and
an increase in payroll funding due to the timing of the
New Year's holiday.
- During the fourth quarter, we continued to return capital to
our shareholders through a combination of share repurchases and
dividends bringing our 2015 annual total to $432.8 million.
Tom Ryan, the Company's
Chairman and Chief Executive Officer, commented on the fourth
quarter of 2015:
"Given the headwinds of lower funeral
services performed, negative currency impacts, and the volatility
of the financial markets, we are pleased to report earnings and
cash flow results that were within our guidance range. Strong
cemetery sales production and the impact of our share buybacks
during the year were key to accomplishing our financial results.
For the year, we reported solid normalized earnings per share as
well as better than expected normalized operating cash flows, which
allowed us to return an impressive $433
million to shareholders through dividends and share
repurchases. Our results could not have been achieved without
the hard work and dedication of our entire team, and I thank all
24,000 of them for their efforts and continued focus on delivering
extraordinary service to our client families. We will continue to
enhance our operating platform as we drive customer value, grow
differentially through preneed sales, leverage our scale, and
deploy our capital wisely to deliver value to our
shareholders."
OUTLOOK FOR 2016
Our outlook for potential earnings
and cash flow in fiscal 2016 is detailed below.
(In millions,
except per share amounts)
|
|
2016
Outlook
|
Diluted earnings per
share from continuing operations excluding special
items(1)
|
|
$1.20 to
$1.36
|
Net cash provided by
operating activities excluding special
items(1)
|
|
$450 to
$500
|
Capital improvements
at existing facilities and cemetery development
expenditures
|
|
Approximately
$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 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 2016 excludes the following
because this information is not currently available for 2016: Gains
or losses associated with asset divestitures, gains or losses
associated with the early extinguishment of debt, potential tax
reserve adjustments and IRS settlement payments, 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 and potential tax reserve
adjustments, 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 FINANCIAL RESULTS FOR FOURTH QUARTER AND TWELVE
MONTHS OF 2015
Consolidated Segment
Results
See definitions of revenue line items in the
comparable sections that follow later in this earnings release.
(In millions,
except funeral services performed and average revenue per
service)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Funeral
|
|
|
|
|
|
|
|
Atneed
revenue
|
$
|
263.6
|
|
|
$
|
277.6
|
|
|
$
|
1,083.9
|
|
|
$
|
1,110.3
|
|
Funeral home matured
preneed revenue
|
128.1
|
|
|
135.1
|
|
|
532.3
|
|
|
566.6
|
|
Core revenue
|
391.7
|
|
|
412.7
|
|
|
1,616.2
|
|
|
1,676.9
|
|
Non-funeral home
matured preneed revenue
|
5.9
|
|
|
5.7
|
|
|
23.9
|
|
|
21.9
|
|
Recognized preneed
revenue
|
23.9
|
|
|
20.6
|
|
|
98.1
|
|
|
85.6
|
|
Other
revenue
|
38.9
|
|
|
34.0
|
|
|
150.6
|
|
|
136.1
|
|
Total
revenue
|
$
|
460.4
|
|
|
$
|
473.0
|
|
|
$
|
1,888.8
|
|
|
$
|
1,920.5
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
90.2
|
|
|
$
|
99.9
|
|
|
$
|
387.5
|
|
|
$
|
409.7
|
|
Gross margin
percentage
|
19.6
|
%
|
|
21.1
|
%
|
|
20.5
|
%
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
Funeral services
performed
|
77,760
|
|
|
80,425
|
|
|
316,913
|
|
|
325,641
|
|
Average revenue per
service
|
$
|
5,114
|
|
|
$
|
5,202
|
|
|
$
|
5,175
|
|
|
$
|
5,217
|
|
|
|
|
|
|
|
|
|
Cemetery
|
|
|
|
|
|
|
|
Atneed
revenue
|
$
|
75.1
|
|
|
$
|
79.3
|
|
|
$
|
300.7
|
|
|
$
|
307.8
|
|
Recognized preneed
revenue
|
199.3
|
|
|
179.1
|
|
|
660.9
|
|
|
611.4
|
|
Core revenue
|
274.4
|
|
|
258.4
|
|
|
961.6
|
|
|
919.2
|
|
Other cemetery
revenue
|
34.6
|
|
|
52.1
|
|
|
136.0
|
|
|
154.3
|
|
Total
revenue
|
$
|
309.0
|
|
|
$
|
310.5
|
|
|
$
|
1,097.6
|
|
|
$
|
1,073.5
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
97.3
|
|
|
$
|
105.5
|
|
|
$
|
284.4
|
|
|
$
|
266.0
|
|
Gross margin
percentage
|
31.5
|
%
|
|
34.0
|
%
|
|
25.9
|
%
|
|
24.8
|
%
|
Comparable Funeral Results
The table below
details comparable funeral results of operations ("same store") for
the three months ended December 31,
2015 and 2014. We consider comparable operations to be those
businesses owned for the entire period beginning January 1,
2014 and ending December 31,
2015.
(Dollars in
millions, except average revenue per service and average revenue
per contract sold)
|
|
Three Months Ended
December 31,
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Comparable
revenue:
|
|
|
|
|
|
|
|
|
Atneed
revenue(1)
|
|
$
|
260.9
|
|
|
$
|
274.0
|
|
|
$
|
(13.1)
|
|
|
(4.8)
|
%
|
Funeral home matured
preneed revenue(2)
|
|
127.6
|
|
|
133.5
|
|
|
(5.9)
|
|
|
(4.4)
|
%
|
Core
revenue(3)
|
|
388.5
|
|
|
407.5
|
|
|
(19.0)
|
|
|
(4.7)
|
%
|
Non-funeral home
matured preneed revenue(4)
|
|
5.9
|
|
|
5.7
|
|
|
0.2
|
|
|
3.5
|
%
|
Recognized preneed
revenue(5)
|
|
23.4
|
|
|
20.2
|
|
|
3.2
|
|
|
15.8
|
%
|
Other
revenue(6)
|
|
38.6
|
|
|
34.1
|
|
|
4.5
|
|
|
13.2
|
%
|
Total comparable
funeral revenue
|
|
$
|
456.4
|
|
|
$
|
467.5
|
|
|
$
|
(11.1)
|
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
Comparable gross
profit
|
|
$
|
91.3
|
|
|
$
|
100.1
|
|
|
$
|
(8.8)
|
|
|
(8.8)
|
%
|
Comparable gross
margin percentage
|
|
20.0
|
%
|
|
21.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
services performed:
|
|
|
|
|
|
|
|
|
Atneed services
performed
|
|
47,265
|
|
|
49,570
|
|
|
(2,305)
|
|
|
(4.6)
|
%
|
Funeral home matured
preneed services performed
|
|
22,776
|
|
|
23,520
|
|
|
(744)
|
|
|
(3.2)
|
%
|
Total core services
performed
|
|
70,041
|
|
|
73,090
|
|
|
(3,049)
|
|
|
(4.2)
|
%
|
Non-funeral home
matured preneed
|
|
6,819
|
|
|
6,369
|
|
|
450
|
|
|
7.1
|
%
|
Total comparable
services performed
|
|
76,860
|
|
|
79,459
|
|
|
(2,599)
|
|
|
(3.3)
|
%
|
|
|
|
|
|
|
|
|
|
Comparable sales
average revenue per service:
|
|
|
|
|
|
|
|
|
Atneed
|
|
$
|
5,520
|
|
|
$
|
5,527
|
|
|
$
|
(7)
|
|
|
(0.1)
|
%
|
Funeral home matured
preneed
|
|
5,601
|
|
|
5,678
|
|
|
(77)
|
|
|
(1.4)
|
%
|
Total core
|
|
5,547
|
|
|
5,575
|
|
|
(28)
|
|
|
(0.5)
|
%
|
Non-funeral home
matured preneed
|
|
862
|
|
|
900
|
|
|
(38)
|
|
|
(4.2)
|
%
|
Total comparable
average revenue per service
|
|
$
|
5,131
|
|
|
$
|
5,201
|
|
|
$
|
(70)
|
|
|
(1.3)
|
%
|
|
|
|
|
|
|
|
|
|
Total comparable
sales average revenue per service, excluding the impact of foreign
currency fluctuations
|
|
$
|
5,261
|
|
|
$
|
5,253
|
|
|
$
|
8
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
Comparable preneed
sales production:
|
|
|
|
|
|
|
|
|
Total preneed
sales
|
|
$
|
194.4
|
|
|
$
|
195.4
|
|
|
$
|
(1.0)
|
|
|
(0.5)
|
%
|
Total preneed
contracts sold
|
|
41,454
|
|
|
41,569
|
|
|
(115)
|
|
|
(0.3)
|
%
|
Average revenue per
contract sold
|
|
$
|
4,690
|
|
|
$
|
4,700
|
|
|
$
|
(10)
|
|
|
(0.2)
|
%
|
Average revenue per
contract sold, excluding the impact of foreign currency
fluctuations
|
|
$
|
4,773
|
|
|
$
|
4,751
|
|
|
$
|
22
|
|
|
0.5
|
%
|
|
|
(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 the sum of 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 (e.g.
SCI Direct) 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 $11.1 million in the fourth quarter of 2015
compared to 2014. A decline in core revenue of $19.0 million was partially offset by growth in
recognized preneed revenue and General Agency revenue. The core
revenue decrease consisted of a 4.2% decline in core funeral
services performed, primarily as a result of a mild flu
season.
- Core average revenue per service decreased 0.5% as a 1.2%
increase in organic growth was more than offset by $5.3 million of unfavorable Canadian currency
impact as well as lower trust fund income and an increase in
cremation mix. Our comparable cremation rate increased to 52.3% in
the fourth quarter of 2015 from 51.5% in the same period of
2014.
- Comparable funeral gross profit decreased $8.8 million, or 8.8%, compared to the prior year
quarter. The decline in revenue was somewhat offset by lower
expenses that were favorably impacted by the devaluation of the
Canadian currency.
- Comparable preneed funeral sales production decreased
$1.0 million, or 0.5%, in the fourth
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 December 31,
2015 and 2014. We consider comparable operations to be those
businesses owned for the entire period beginning January 1,
2014 and ending December 31,
2015.
(Dollars in
millions)
|
|
Three Months Ended
December 31,
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Comparable
revenue:
|
|
|
|
|
|
|
|
|
Atneed
revenue(1)
|
|
$
|
73.7
|
|
|
$
|
78.3
|
|
|
$
|
(4.6)
|
|
|
(5.9)
|
%
|
Recognized preneed
revenue(2)
|
|
198.1
|
|
|
178.3
|
|
|
19.8
|
|
|
11.1
|
%
|
Core
revenue(3)
|
|
271.8
|
|
|
256.6
|
|
|
15.2
|
|
|
5.9
|
%
|
Other
revenue(4)
|
|
34.2
|
|
|
51.4
|
|
|
(17.2)
|
|
|
(33.5)
|
%
|
Total comparable
revenue
|
|
$
|
306.0
|
|
|
$
|
308.0
|
|
|
$
|
(2.0)
|
|
|
(0.6)
|
%
|
|
|
|
|
|
|
|
|
|
Comparable gross
profit
|
|
$
|
96.5
|
|
|
$
|
105.1
|
|
|
$
|
(8.6)
|
|
|
(8.2)
|
%
|
Comparable gross
margin percentage
|
|
31.5
|
%
|
|
34.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable preneed
and atneed sales production:
|
|
|
|
|
|
|
|
|
Property
|
|
$
|
165.5
|
|
|
$
|
160.3
|
|
|
$
|
5.2
|
|
|
3.2
|
%
|
Merchandise and
services
|
|
133.9
|
|
|
123.8
|
|
|
10.1
|
|
|
8.2
|
%
|
Discounts
|
|
(35.8)
|
|
|
(30.3)
|
|
|
(5.5)
|
|
|
(18.2)
|
%
|
Preneed and atneed
sales production
|
|
$
|
263.6
|
|
|
$
|
253.8
|
|
|
$
|
9.8
|
|
|
3.9
|
%
|
Recognition
rate(5)
|
|
103.1
|
%
|
|
101.1
|
%
|
|
|
|
|
|
|
(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 that have been delivered or performed.
|
(3)
|
Core revenue
represents the sum of 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 core cemetery revenue grew $15.2 million, or 5.9%, in the fourth quarter of
2015 compared to 2014. Higher preneed sales production and revenue
associated with the completion of construction projects, helped to
offset the negative impact of Canadian currency. Excluding an
unfavorable Canadian currency impact revenue, grew $16.0 million or 6.2%.
- Other revenue declined $17.2
million primarily as a result of the $15.0 million perpetual care trust fund income
benefit received in the fourth quarter of 2014 due to the change in
our trust structure.
- Preneed cemetery sales production increased $12.1 million, or 6.8%, in the current quarter
compared to the same period last year. This increase was driven by
an increase in the number of preneed property contracts sold, which
was partially offset by an unfavorable Canadian currency
impact.
- Comparable cemetery gross profit decreased $8.6 million. Excluding the $15.0 million benefit from perpetual care trust
fund income in the fourth quarter of 2014, comparable cemetery
gross profit grew $6.4 million and
comparable cemetery margins increased from 30.8% to 31.5%. This
growth resulted from the increase in core revenue partially offset
by a corresponding increase in cost of sales and a slight
normalized decline in trust fund income.
Other Financial Results
General and
administrative expenses decreased $9.4
million to $33.5 million in
the fourth quarter of 2015 compared to the same period of 2014. The
prior year included $4.3 million of
costs related to the integration of Stewart and $1.3 million of system integration and other
costs. The current quarter included $2.7
million of system integration costs. Excluding these
one-time costs, general and administrative expenses decreased
$6.5 million over the prior year,
which is primarily due to decreases in liabilities associated with
our incentive compensation plans.
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 normalized 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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net cash provided by
operating activities, as reported
|
$
|
75.6
|
|
|
$
|
61.2
|
|
|
$
|
472.2
|
|
|
$
|
317.4
|
|
Premiums paid on
early extinguishment
|
—
|
|
|
—
|
|
|
6.5
|
|
|
24.8
|
|
Acquisition,
integration, and system transition costs
|
2.4
|
|
|
7.0
|
|
|
6.6
|
|
|
62.2
|
|
Legal defense fees
and other matters
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
Excess tax benefits
from share-based awards
|
0.8
|
|
|
9.4
|
|
|
18.1
|
|
|
30.1
|
|
Income tax payments
associated with divestitures
|
—
|
|
|
45.7
|
|
|
—
|
|
|
63.8
|
|
Payments related to
tax structure changes
|
10.5
|
|
|
—
|
|
|
10.5
|
|
|
—
|
|
Net cash provided by
operating activities excluding special items
|
$
|
89.3
|
|
|
$
|
123.3
|
|
|
$
|
513.9
|
|
|
$
|
508.6
|
|
- Net cash provided by operating activities excluding special
items decreased $34.0 million to
$89.3 million in the fourth quarter
due primarily to a $22.0 million
increase in cash taxes and an $12.0
million increase in payroll funding primarily due to the
timing of the New Year's Holiday.
Accelerated non-earnings merchandise and service trust withdrawals
of approximately $15.0 million in the
fourth quarter of 2015 helped to offset the $15.0 million perpetual care capital gain
withdrawals received in the fourth quarter of 2014 that were
related to the change in trust structure.
- A summary of our capital expenditures is set forth below:
Capital Expenditures
(In millions)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Capital improvements at
existing locations
|
$
|
20.8
|
|
|
$
|
24.2
|
|
|
$
|
83.4
|
|
|
$
|
74.8
|
|
Development of cemetery
property
|
21.9
|
|
|
23.4
|
|
|
58.3
|
|
|
57.7
|
|
Construction of new
funeral home facilities and other
|
3.6
|
|
|
1.7
|
|
|
9.3
|
|
|
12.0
|
|
Total capital
expenditures
|
$
|
46.3
|
|
|
$
|
49.3
|
|
|
$
|
151.0
|
|
|
$
|
144.5
|
|
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 twelve
months ended December 31, 2015 is set
forth below:
|
|
Three
Months
|
|
Twelve
Months
|
Preneed
funeral
|
|
2.6%
|
|
(1.5)%
|
Preneed
cemetery
|
|
3.0%
|
|
(1.0)%
|
Cemetery perpetual
care
|
|
1.0%
|
|
(0.3)%
|
Combined trust
funds
|
|
2.2%
|
|
(0.9)%
|
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
December 31,
|
|
2015
|
|
2014
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Net income
attributable to common stockholders, as reported
|
$
|
72.4
|
|
|
$
|
0.36
|
|
|
$
|
87.8
|
|
|
$
|
0.42
|
|
After-tax reconciling
items:
|
|
|
|
|
|
|
|
Impact of gains from
divestitures and impairment charges, net
|
(1.9)
|
|
|
(0.01)
|
|
|
(16.9)
|
|
|
(0.08)
|
|
Acquisition,
integration, and system transition costs
|
1.7
|
|
|
0.01
|
|
|
3.4
|
|
|
0.02
|
|
Tax reserve adjustments
and other
|
1.3
|
|
|
0.01
|
|
|
2.9
|
|
|
0.01
|
|
Earnings from
continuing operations and diluted earnings per share excluding
special items
|
$
|
73.5
|
|
|
$
|
0.37
|
|
|
$
|
77.2
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding (in thousands)
|
|
|
199,977
|
|
|
|
|
210,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions,
except diluted EPS)
|
Twelve Months
Ended December 31,
|
|
2015
|
|
2014
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
Net income
attributable to common stockholders, as reported
|
$
|
233.8
|
|
|
$
|
1.14
|
|
|
$
|
172.5
|
|
|
$
|
0.81
|
|
After-tax reconciling
items:
|
|
|
|
|
|
|
|
Impact of (gains)
losses on divestitures and impairment charges, net
|
(3.1)
|
|
|
(0.01)
|
|
|
3.2
|
|
|
0.01
|
|
Acquisition,
integration, and system transition costs
|
4.2
|
|
|
0.02
|
|
|
32.9
|
|
|
0.17
|
|
Losses on early
extinguishment of debt, net
|
4.3
|
|
|
0.02
|
|
|
18.0
|
|
|
0.08
|
|
Legal defense fees and
other matters
|
—
|
|
|
—
|
|
|
7.3
|
|
|
0.03
|
|
Tax reserve adjustments
and other
|
3.0
|
|
|
0.01
|
|
|
3.1
|
|
|
0.01
|
|
Earnings from
continuing operations and diluted earnings per share excluding
special items
|
$
|
242.2
|
|
|
$
|
1.18
|
|
|
$
|
237.0
|
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding (in thousands)
|
|
|
204,450
|
|
|
|
|
214,200
|
|
Conference Call and Webcast
We will host a conference
call on Thursday, February 11, 2016,
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)
619-6396 with the passcode of 41644033. 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 February 24,
2016 and can be accessed at (630) 652-3042 with the passcode
of 41644033#. Additionally, a replay of the conference call
will be available on our website for approximately two weeks.
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 contracts funded
through life insurance 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 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.
- We use a combination of insurance, self-insurance and large
deductibles in managing our exposure to certain inherent risks, as
such, 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.
- 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 may 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 2015 Annual Report on Form 10-K, which will be filed
in the next several days. 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 December 31,
2015, we owned and operated 1,535 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)
525-5235
|
SERVICE
CORPORATION INTERNATIONAL
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
(In thousands,
except per share amounts)
|
|
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
$
|
769,383
|
|
|
$
|
783,444
|
|
|
$
|
2,986,380
|
|
|
$
|
2,994,011
|
|
Costs and
expenses
|
(581,942)
|
|
|
(578,142)
|
|
|
(2,314,435)
|
|
|
(2,318,326)
|
|
Gross
profit
|
187,441
|
|
|
205,302
|
|
|
671,945
|
|
|
675,685
|
|
General and
administrative expenses
|
(33,525)
|
|
|
(42,882)
|
|
|
(128,188)
|
|
|
(184,749)
|
|
Gains on divestitures
and impairment charges, net
|
3,119
|
|
|
57,861
|
|
|
6,522
|
|
|
116,613
|
|
Operating
income
|
157,035
|
|
|
220,281
|
|
|
550,279
|
|
|
607,549
|
|
Interest
expense
|
(43,055)
|
|
|
(42,892)
|
|
|
(172,897)
|
|
|
(177,571)
|
|
Losses on early
extinguishment of debt, net
|
—
|
|
|
—
|
|
|
(6,918)
|
|
|
(29,158)
|
|
Other (expense)
income
|
(281)
|
|
|
202
|
|
|
(113)
|
|
|
1,780
|
|
Income from
continuing operations before income taxes
|
113,699
|
|
|
177,591
|
|
|
370,351
|
|
|
402,600
|
|
Provision for income
taxes
|
(41,249)
|
|
|
(90,982)
|
|
|
(135,027)
|
|
|
(225,980)
|
|
Income from continuing
operations
|
72,450
|
|
|
86,609
|
|
|
235,324
|
|
|
176,620
|
|
Net income (loss) from
discontinued operations
|
—
|
|
|
1,340
|
|
|
(390)
|
|
|
2,186
|
|
Net income
|
$
|
72,450
|
|
|
$
|
87,949
|
|
|
$
|
234,934
|
|
|
$
|
178,806
|
|
Net income
attributable to noncontrolling interests
|
(96)
|
|
|
(155)
|
|
|
(1,162)
|
|
|
(6,337)
|
|
Net income
attributable to common stockholders
|
$
|
72,354
|
|
|
$
|
87,794
|
|
|
$
|
233,772
|
|
|
$
|
172,469
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
$
|
1.17
|
|
|
$
|
0.82
|
|
Diluted earnings per
share
|
$
|
0.36
|
|
|
$
|
0.42
|
|
|
$
|
1.14
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
Basic weighted
average number of shares
|
196,248
|
|
|
206,977
|
|
|
200,356
|
|
|
210,741
|
|
Diluted weighted
average number of shares
|
199,977
|
|
|
210,467
|
|
|
204,450
|
|
|
214,200
|
|
SERVICE
CORPORATION INTERNATIONAL
|
CONSOLIDATED
BALANCE SHEET
|
|
|
December
31,
|
|
2015
|
|
2014
|
|
(In thousands,
except share amounts)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
134,599
|
|
|
$
|
177,335
|
|
Receivables,
net
|
90,462
|
|
|
109,050
|
|
Inventories
|
27,835
|
|
|
29,697
|
|
Other
|
55,513
|
|
|
80,774
|
|
Total current
assets
|
308,409
|
|
|
396,856
|
|
Preneed funeral
receivables, net and trust investments
|
1,760,297
|
|
|
1,843,023
|
|
Preneed cemetery
receivables, net and trust investments
|
2,318,167
|
|
|
2,306,669
|
|
Cemetery
property
|
1,753,015
|
|
|
1,739,216
|
|
Property and
equipment, net
|
1,846,722
|
|
|
1,861,403
|
|
Goodwill
|
1,796,340
|
|
|
1,810,853
|
|
Deferred charges and
other assets
|
616,511
|
|
|
624,248
|
|
Cemetery perpetual
care trust investments
|
1,319,427
|
|
|
1,341,376
|
|
Total
assets
|
$
|
11,718,888
|
|
|
$
|
11,923,644
|
|
LIABILITIES & EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
422,842
|
|
|
$
|
453,042
|
|
Current maturities of
long-term debt
|
95,181
|
|
|
90,931
|
|
Income taxes
payable
|
1,373
|
|
|
8,035
|
|
Total current
liabilities
|
519,396
|
|
|
552,008
|
|
Long-term
debt
|
3,071,738
|
|
|
2,963,794
|
|
Deferred preneed
funeral revenue
|
557,897
|
|
|
540,164
|
|
Deferred preneed
cemetery revenue
|
1,120,001
|
|
|
1,062,381
|
|
Deferred tax
liability
|
470,584
|
|
|
448,824
|
|
Other
liabilities
|
496,921
|
|
|
502,553
|
|
Deferred preneed
receipts held in trust
|
2,973,386
|
|
|
3,148,884
|
|
Care trusts'
corpus
|
1,319,564
|
|
|
1,327,658
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Common stock, $1 per
share par value, 500,000,000 shares authorized, 200,859,676 and
205,458,331 shares issued, respectively, and 195,772,876 and
204,866,770 shares outstanding, respectively
|
195,773
|
|
|
204,867
|
|
Capital in excess of
par value
|
1,092,106
|
|
|
1,186,304
|
|
Accumulated
deficit
|
(109,351)
|
|
|
(81,859)
|
|
Accumulated other
comprehensive income
|
6,164
|
|
|
59,414
|
|
Total common
stockholders' equity
|
1,184,692
|
|
|
1,368,726
|
|
Noncontrolling
interests
|
4,709
|
|
|
8,652
|
|
Total
equity
|
1,189,401
|
|
|
1,377,378
|
|
Total liabilities and
equity
|
$
|
11,718,888
|
|
|
$
|
11,923,644
|
|
SERVICE
CORPORATION INTERNATIONAL
|
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
Years Ended
December 31,
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(In
thousands)
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
234,934
|
|
|
$
|
178,806
|
|
|
$
|
152,588
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of tax
|
390
|
|
|
(2,186)
|
|
|
(406)
|
|
Losses (gains) on
early extinguishment of debt, net
|
6,918
|
|
|
29,158
|
|
|
(468)
|
|
Premiums paid on
early extinguishment of debt
|
(6,549)
|
|
|
(24,804)
|
|
|
—
|
|
Depreciation and
amortization
|
141,456
|
|
|
140,002
|
|
|
122,235
|
|
Amortization of
intangible assets
|
31,459
|
|
|
36,640
|
|
|
21,859
|
|
Amortization of
cemetery property
|
62,407
|
|
|
60,439
|
|
|
48,344
|
|
Amortization of loan
costs
|
9,434
|
|
|
8,825
|
|
|
15,943
|
|
Provision for
doubtful accounts
|
6,083
|
|
|
7,376
|
|
|
7,874
|
|
Provision for
deferred income taxes
|
18,048
|
|
|
129,671
|
|
|
71,708
|
|
(Gains) losses on
divestitures and impairment charges, net
|
(6,522)
|
|
|
(116,613)
|
|
|
6,263
|
|
Share-based
compensation
|
13,843
|
|
|
13,127
|
|
|
11,925
|
|
Excess tax benefits
from share-based awards
|
(18,123)
|
|
|
(30,123)
|
|
|
—
|
|
Change in assets and
liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
|
|
Decrease (increase)
in receivables
|
464
|
|
|
(18,644)
|
|
|
11,017
|
|
Decrease (increase)
in other assets
|
2,457
|
|
|
(11,013)
|
|
|
(14,815)
|
|
Increase (decrease)
in payables and other liabilities
|
20,567
|
|
|
(12,038)
|
|
|
(1,995)
|
|
Effect of preneed
funeral production and maturities:
|
|
|
|
|
|
Decrease in preneed
funeral receivables, net and trust investments
|
24,918
|
|
|
30,357
|
|
|
47,648
|
|
Increase (decrease)
in deferred preneed funeral revenue
|
6,199
|
|
|
(23,069)
|
|
|
(9,260)
|
|
Decrease in deferred
preneed receipts held in trust
|
(52,946)
|
|
|
(52,869)
|
|
|
(50,990)
|
|
Effect of preneed
cemetery production and maturities:
|
|
|
|
|
|
Increase in preneed
cemetery receivables, net and trust investments
|
(73,038)
|
|
|
(43,964)
|
|
|
(73,626)
|
|
Increase in deferred
preneed cemetery revenue
|
60,960
|
|
|
54,049
|
|
|
30,785
|
|
Decrease in deferred
preneed cemetery receipts held in trust
|
(11,173)
|
|
|
(34,664)
|
|
|
(12,761)
|
|
Other
|
—
|
|
|
(108)
|
|
|
(27)
|
|
Net cash provided by
operating activities from continuing operations
|
472,186
|
|
|
318,355
|
|
|
383,841
|
|
Net cash (used in)
provided by operating activities from discontinued
operations
|
—
|
|
|
(1,000)
|
|
|
868
|
|
Net cash provided by
operating activities
|
472,186
|
|
|
317,355
|
|
|
384,709
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Capital
expenditures
|
(150,986)
|
|
|
(144,499)
|
|
|
(112,939)
|
|
Acquisitions, net of
cash acquired
|
(41,258)
|
|
|
(15,336)
|
|
|
(1,057,122)
|
|
Proceeds from
divestitures and sales of property and equipment
|
16,772
|
|
|
424,383
|
|
|
13,219
|
|
Net withdrawals
(deposits) of restricted funds and other
|
8,066
|
|
|
(12,225)
|
|
|
341
|
|
Net cash (used in)
provided by investing activities from continuing
operations
|
(167,406)
|
|
|
252,323
|
|
|
(1,156,501)
|
|
Net cash provided by
(used in) investing activities from discontinued
operations
|
987
|
|
|
4,963
|
|
|
(292)
|
|
Net cash (used in)
provided by investing activities
|
(166,419)
|
|
|
257,286
|
|
|
(1,156,793)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
446,250
|
|
|
755,000
|
|
|
1,055,000
|
|
Debt issuance
costs
|
(6,025)
|
|
|
(10,500)
|
|
|
(36,064)
|
|
Payments of
debt
|
(160,220)
|
|
|
(230,561)
|
|
|
(90,466)
|
|
Early extinguishment
of debt
|
(197,377)
|
|
|
(762,764)
|
|
|
(80)
|
|
Principal payments on
capital leases
|
(28,601)
|
|
|
(29,380)
|
|
|
(26,280)
|
|
Proceeds from
exercise of stock options
|
31,809
|
|
|
32,376
|
|
|
6,309
|
|
Excess tax benefits
from share-based awards
|
18,123
|
|
|
30,123
|
|
|
—
|
|
Purchase of Company
common stock
|
(345,261)
|
|
|
(242,874)
|
|
|
(1,708)
|
|
Payments of
dividends
|
(87,570)
|
|
|
(71,517)
|
|
|
(57,229)
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(In
thousands)
|
|
|
Purchase of
noncontrolling interest
|
(2,075)
|
|
|
(15,000)
|
|
|
(23,333)
|
|
Bank overdrafts and
other
|
(7,531)
|
|
|
7,130
|
|
|
336
|
|
Net cash (used in)
provided by financing activities from continued
operations
|
(338,478)
|
|
|
(537,967)
|
|
|
826,485
|
|
Net cash used in
financing activities from discontinued operations
|
—
|
|
|
—
|
|
|
(1,370)
|
|
Net cash (used in)
provided by financing activities
|
(338,478)
|
|
|
(537,967)
|
|
|
825,115
|
|
Net change in cash of
discontinued operations
|
—
|
|
|
1,361
|
|
|
785
|
|
Effect of foreign
currency
|
(10,025)
|
|
|
(2,284)
|
|
|
(1,001)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(42,736)
|
|
|
35,751
|
|
|
52,815
|
|
Cash and cash
equivalents at beginning of period
|
177,335
|
|
|
141,584
|
|
|
88,769
|
|
Cash and cash
equivalents at end of period
|
$
|
134,599
|
|
|
$
|
177,335
|
|
|
$
|
141,584
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/service-corporation-international-announces-fourth-quarter-2015-financial-results-and-finalizes-outlook-for-2016-300218414.html
SOURCE Service Corporation International