Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today reported results for the third quarter 2009. Our unaudited condensed consolidated financial statements can be found at the end of this press release.
Tom Ryan, the Company?s President and Chief Executive Officer, commented on the third quarter of 2009:
“Our financial performance for the quarter was very encouraging, and continued the trend of strong financial results for the year, and I want to thank all of our associates for their efforts and hard work in achieving these results. We believe our proactive response to the challenging economic climate, which included realigning our cost structure to promote sustainable operating efficiency and investing in our sales production channel, has been validated by the results achieved, as operating income surpassed prior year results for the quarter. Moreover, our fundamentally sound business model and efficient cost structure will provide the basis for high margin growth as we expand the organization both organically and through acquisition.”
“We recently announced the acquisition of Keystone North America Inc., the fifth largest provider of deathcare products and services in North America. The transaction is anticipated to close in the first quarter of 2010 and is expected to be immediately accretive to earnings and cash flow. Looking forward, we intend to continue to capitalize on our leading market position, utilizing our strength as the industry leader to make our business stronger and to enhance shareholder value.”
Quarter Highlights:
Diluted earnings per share from continuing operations excluding special items was $0.13 in the third quarter 2009 compared to $0.09 in the prior year third quarter. These results exceeded our internal expectations as cost reduction initiatives, better than expected trust fund performance, and better than expected preneed cemetery production more than offset lower funeral services performed in the quarter.
Funeral gross profit increased $9.5 million, or 16.0%, and funeral gross margin percentage improved to 20.9% from 16.9% as significant efficiencies obtained from cost control initiatives more than offset declines in funeral services performed.
Cemetery gross profit increased $9.4 million, or 40.7%, and cemetery gross margin percentage improved to 19.3% from 13.9% due to an increase in preneed cemetery property sales, higher cemetery trust fund income and reductions in costs compared to prior year levels, which were partially offset by lower atneed revenues in the third quarter.
Net cash provided by operating activities excluding special items for the quarter was $94.2 million, a decrease of $22.7 million compared to the prior year, reflecting the impact of partially funding an October payroll in the current quarter, disbursements for mid-year incentive compensation and lower receipts on preneed receivables, which were partially offset by higher earnings.
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