- Conference call on Thursday, May 7, 2009, at 8:30 a.m. Central Daylight Time.
HOUSTON, May 6 /PRNewswire-FirstCall/ -- Service Corporation International (NYSE: SCI), a leading provider of deathcare products and services, today reported results for the first quarter 2009. Our consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:
Three Months Ended
(In millions, except for per share amounts) March 31,
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2009 2008
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Revenues $510.6 $573.5
Operating income $85.6 $99.4
Net income attributable to common stockholders $34.5 $41.5
Diluted earnings per share $.14 $.16
Earnings from continuing operations excluding special
items(1) $31.0 $51.8
Diluted earnings per share from continuing
operations excluding special items(1) $.12 $.20
Diluted weighted average shares outstanding 250.3 265.3
Net cash provided by operating activities $141.4 $46.3
Net cash provided by operating activities excluding
special items(1) $141.4 $139.6
(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 to
net income attributable to common stockholders, diluted earnings per
share, and net cash provided by operating activities computed in
accordance with GAAP can be found later in this press release under
the heading 'Non-GAAP Financial Measures' or 'Cash Flow and Capital
Spending'.
Highlights:
- Diluted earnings per share from continuing operations excluding special items was $0.12 in the first quarter 2009 compared to $0.20 in the prior year first quarter. These results were in line with our expectations as cost reduction initiatives and a better than expected tax rate offset lower than expected funeral services performed.
- Funeral gross profit decreased $24.3 million as decreases in funeral services performed were partially offset by lower variable costs. Excluding an unfavorable Canadian currency impact and lower funeral trust fund income, the average revenue per funeral service grew approximately 4.0%.
- Cemetery gross profit decreased $13.2 million due to a decline in cemetery property sales and lower cemetery trust fund income, which were partially offset by lower variable costs. Cemetery gross profit exceeded our expectations as cost control initiatives helped to offset expected cemetery revenue declines.
- Net cash provided by operating activities excluding special items was $141.4 million during the quarter. This $1.8 million increase compared to the prior year primarily resulted from cost control and working capital initiatives, which were partially offset by declines in atneed customer cash receipts attributable to lower revenues as compared to 2008 levels.
Tom Ryan, the Company's President and Chief Executive Officer, commented on the first quarter of 2009:
'Considering the current economic environment, we are encouraged by our results in the first quarter. Even though we experienced a significant decrease in comparable funeral volume that was more than anticipated, we were able to prudently manage costs and capital spending so that earnings and cash flow results still met our internal projections. Subsequent to the first quarter, we have also focused on deleveraging initiatives, which has resulted in reducing our debt by an additional $53 million in April. Looking ahead to the remainder of 2009, we intend to maintain our focus on controlling and reducing costs and deleveraging, and we remain optimistic about the prospects for SCI in the future. '
REVIEW OF RESULTS FOR FIRST QUARTER 2009
Consolidated Segment Results
(In millions, except funeral services performed Three Months Ended
and average revenue per funeral service) March 31,
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2009 2008
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Funeral
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Funeral atneed revenue $240.2 $267.5
Funeral recognized preneed revenue 111.1 124.3
Other revenue(1) 13.6 13.8
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Total funeral revenues $364.9 $405.6
Gross profit $84.3 $108.6
Gross margin percentage 23.1% 26.8%
Funeral services performed 69,329 77,386
Average revenue per funeral service $5,067 $5,063
Cemetery
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Cemetery atneed revenue $59.9 $65.8
Cemetery recognized preneed revenue 69.6 79.3
Other revenue (2) 16.2 22.8
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Total cemetery revenues $145.7 $167.9
Gross profit $15.8 $29.0
Gross margin percentage 10.8% 17.3%
(1) Other funeral revenue consists primarily of General Agency (GA)
revenues, which are commissions we receive from third-party insurance
companies for life insurance policies or annuities sold to preneed
customers for the purpose of funding preneed funeral arrangements.
(2) Other cemetery revenue is primarily related to cemetery merchandise
and service trust fund income, perpetual care trust fund income, and
interest and finance charges earned from customer receivables on
preneed installments contracts.
Comparable Funeral Results
The table below details comparable funeral results of operations ('same store') for the three months ended March 31, 2009 and 2008. We consider comparable operations to be those owned for the entire period beginning January 1, 2008 and ending March 31, 2009.
(In millions, except funeral services
performed, average revenue per funeral
service, average revenue per contract
sold, and preneed funeral contracts
sold)
Three months ended
March 31,
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2009 2008 Change
------- ------- --------
Comparable funeral revenue:
Atneed revenue $235.6 $264.2 $(28.6)
Recognized preneed revenue 110.1 122.7 (12.6)
Other revenue(1) 13.5 13.9 (0.4)
------- ------ -------
Total comparable funeral revenues $359.2 $400.8 $(41.6)
Comparable gross profit $86.0 $108.7 $(22.7)
Comparable gross margin percentage 23.9% 27.1%
Comparable funeral services performed:
Preneed 23,475 25,633 (2,158)
Atneed 44,376 50,812 (6,436)
------- ------ -------
Total 67,851 76,445 (8,594)
Comparable average revenue per funeral
service $5,095 $5,061 $34
Comparable preneed funeral production:
Sales $108.4 $107.2 $1.2
Total preneed funeral contracts sold 19,412 19,057 355
Average revenue per contract sold $5,584 $5,625 $(41)
(1) Other revenue consists primarily of General Agency (GA) revenues,
which are commissions we receive from third-party insurance companies
for life insurance policies or annuities sold to preneed customers
for the purpose of funding preneed funeral arrangements.
- Comparable funeral services performed decreased 11.2%. We believe the decline in deaths in our markets is consistent with trends experienced by other funeral service providers and industry vendors and was due in part to a relatively mild influenza season compared to the first quarter of 2008, and an additional day due to leap year in the prior year quarter.
- The comparable average revenue per funeral service grew 0.7% over the prior year quarter. Excluding an unfavorable Canadian currency impact and lower funeral trust fund income, the average revenue per funeral service grew approximately 4.0%.
- The cremation rate increased 190 basis points to 42.9% in the first quarter of 2009 compared to 41.0% for the same period of 2008, which resulted in lower revenues of approximately $4.7 million, or $70 per funeral service.
- Comparable funeral gross profit decreased $22.7 million, or 20.9%, due to the impact of lower funeral services performed and a decrease in funeral trust fund income, which were partially offset by lower variable merchandise costs and a decline in personnel costs related to work force initiatives. The gross margin percentage decreased to 23.9% compared to 27.1% in 2008.
- Preneed funeral sales production increased $1.2 million, or 1.1%. Total funeral contracts sold increased 1.9% while the average revenue per contract sold decreased 0.7%. Excluding an unfavorable Canadian currency impact, the average revenue grew 1.9%. Preneed funeral sales are deferred and recognized in the future when the funeral service is performed.
Comparable Cemetery Results
The table below details comparable cemetery results of operations ('same store') for the three months ended March 31, 2009 and 2008. We consider comparable operations to be those owned for the entire period beginning January 1, 2008 and ending March 31, 2009.
