Service Corporation International, the largest provider of deathcare products and services in North America, today reported results for the third quarter 2010. Our unaudited condensed consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:
1. Earnings from continuing operations excluding special items, diluted earnings per share from continuing operations excluding special items, and net cash provided from operating activities are non-GAAP financial measures. A reconciliation to net income, diluted earnings per share, and net cash provided from operating activities computed in accordance with GAAP can be found later in this press release under the headings “Cash Flow and Capital Spending” and “Non-GAAP Financial Measures”.
Highlights:
* Diluted earnings per share from continuing operations, excluding special items were $0.13 for both the third quarter 2010 and the prior year third quarter. Although the results were consistent, the prior year earnings included a $.02 benefit from a reduction in certain self-insurance reserves. This was replaced in the current period by increased cemetery merchandise deliveries and the completion of more cemetery construction projects, lower effective tax rates realized through favorable tax planning, as well as earnings accretion related to the Keystone and Palm acquisitions.
* Funeral gross profit increased $0.3 million, or 0.4%, and the funeral gross margin percentage declined to 19.2% from 20.9%. The prior year benefited from reductions in certain self-insurance reserves; however, increased funeral case volume and profits from the Keystone and Palm Mortuaries acquisitions delivered an overall increase in funeral gross profit.
* Cemetery gross profit increased $1.1 million, or 3.4%, while cemetery gross margin percentage was consistent with the prior year at 19.3%. The current quarter included strong revenues from new construction property, the comparative benefit of which was partially offset by the release of certain self-insurance reserves in the prior year quarter.
* Net cash provided by operating activities excluding special items for the quarter decreased $11.7 million to $82.5 million primarily as a result of higher cash taxes and higher cash interest payments.
Tom Ryan, the Company’s President and Chief Executive Officer, commented on the third quarter of 2010:
“SCI delivered a solid quarter with results in line with our expectations, led primarily by the positive contribution from recent acquisitions and favorable cemetery segment performance. For the nine month period, we have exceeded our internal expectations and expect to finish the year strong. With our new operating structure maturing, we expect to deliver solid growth in 2011. We will continue to pursue opportunities to increase shareholder value while continuing our emphasis on prudent risk and capital management, and believe we are well positioned for the future.”
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, endowment care trust fund income, and interest and finance charges earned from customer receivables on preneed installment contracts.
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