Service Corporation International (NYSE: SCI) stock rose 2.71% on Feb 18th, 2020 (as of 10:57 am GMT-5; Source: Google finance) after the company in the fourth quarter of FY 19 has reported 11.1% increase in the adjusted earnings per share to $0.60 on the back of growth in funeral segment profits.
During the fourth quarter of FY19, revenue grew 5% & the comparable funeral gross profit rose 10%. There is an increase of comparable funeral and cemetery preneed sales production by 12.1% and 5.2%, respectively, compared to the prior year quarter. The company’s Net cash provided by operating activities had fallen to $156.6 million in the fourth quarter of 2019 compared to $163.5 million in the fourth quarter of 2018 as rise in operating results were offset by anticipated higher cash taxes and the timing of cash interest payments.
Moreover, during the fourth quarter, the company’s total comparable funeral revenue rose by $23.3 million compared to the same period of 2018. This increase was mainly due to higher core revenue of $12.8 million and higher recognized preneed revenue of $7.8 million. There was 3.3%, increase in core revenue, due to a 1.3% increase in core funeral services performed and a 2.0% increase in core average revenue per service. The segment’s organic sales average grew an impressive 2.7% but was somewhat offset by a 130 basis point increase in the core cremation rate.
Additionally, during the fourth quarter, the company had returned $110.2 million to shareholders through share repurchases and dividends and spent $48.2 million of capital to accretive acquisitions and the construction of new funeral service locations. For the full year 2019, the company had returned $261 million to shareholders through share repurchases and dividends and spent $142.6 million on accretive acquisitions, land for new cemeteries, and the construction of new funeral service locations.
For fiscal 2020, the company expects adjusted earnings per share long-term growth in the range of 8%-12%. The company expects an expected increase in the adjusted effective tax rate from 22.3% in 2019 to approximately 24% in 2020. The net cash provided by operating activities excluding special items is expected to be $55 million net increase in cash taxes paid compared to 2019.