Service Corporation International (NYSE: SCI) posts decent performance

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Service Corporation International (NYSE: SCI) in the fourth quarter of FY 18 has reported the diluted earnings per share excluding special items of $0.54 compared to $0.50 in the fourth quarter of 2017. The profit growth in the cemetery segment along with increased profits from recent acquisitions and a favorable tax rate had more than exceeded the negative trends from lower funeral operating profit and higher general and administration expenses. For the full year of 2018, SCI has reported a 15% rise in adjusted earnings per share. The company has expanded comparable cemetery segment profit margin by 170 basis points however the comparable funeral segment profit margin contracted by 50 basis points.

Moreover, in the fourth quarter of 2018, net cash provided by operating activities is of $163.5 million in compared to $113.9 million in the fourth quarter of 2017. The fourth quarter of 2017 was negatively impacted due to an $11.5 million legal settlement. Net cash provided by operating activities excluding special items has increased to $163.5 million in the fourth quarter of 2018 compared to $125.4 million in the prior year quarter. The increase was primarily driven by payment of lower cash taxes.

During the fourth quarter, SCI has returned $32.7 million to shareholders through share repurchases and dividends and deployed $17.9 million of capital to accretive acquisitions and the construction of new funeral homes. For the full year 2018, SCI has spent $226.9 million on accretive acquisitions and the construction of new funeral homes compared to $94.0 million in 2017. Even with this large increase in growth capital invested, the company was able to return $401.5 million to shareholders through share repurchases and dividends, which is a 30% increase over 2017.

For FY 19, SCI expects diluted earnings per share from continuing operations excluding special items to be in line with the expected long-term growth framework of 8%-12%. The company anticipate operating growth to be at the upper end of the range but will be somewhat offset by a higher effective tax rate in 2019.

Meanwhile, Michael R. Webb, SCI’s President and Chief Operating Officer, informed the company of his intent to retire, effective March 31, 2019. Thomas L. Ryan, Chairman of the Board and Chief Executive Officer will take the role of President of SCI and Sumner J. Waring, III, Senior Vice President of Operations, will assume the role of Chief Operating Officer of SCI, effective April 1, 2019.

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