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Service Corp. International Reports Operating Results (10-Q)

April 30, 2010 | About:

Service Corp. International (NYSE:SCI) filed Quarterly Report for the period ended 2010-03-31.

Service Corp. International has a market cap of $2.39 billion; its shares were traded at around $9.39 with a P/E ratio of 18.5 and P/S ratio of 1.2. The dividend yield of Service Corp. International stocks is 1.7%. Service Corp. International had an annual average earning growth of 4.1% over the past 10 years.SCI is in the portfolios of Mason Hawkins of Southeastern Asset Management, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Our financial stability is enhanced by our $6.6 billion backlog of future revenues from both trust and insurance-funded sales at March 31, 2010, which is the result of preneed funeral and cemetery sales. We believe we have the financial strength and flexibility to reward shareholders through dividends while maintaining a prudent capital structure and pursuing new opportunities for profitable growth. We currently have approximately $123.4 million authorized to repurchase our common stock.

On March 26, 2010, pursuant to a tender offer, we acquired approximately 91% of the outstanding common stock of Keystone for C$8.07 per share in cash, resulting in a purchase price of $288.9 million, which includes the refinancing of $80.7 million of Keystones debt and our purchase of the remaining shares of Keystone for $17.5 million, subsequent to March 31, 2010.

As of March 31, 2010, we have cumulative net unrealized losses of $26.5 million in our preneed funeral and cemetery merchandise and service trusts, and cumulative net unrealized losses of $17.3 million in our cemetery perpetual care trusts, as discussed in Notes 4, 5, and 6 , Financial Statements and Supplementary Data. At March 31, 2010, these net unrealized losses represented 1.7% of our original cost basis of $2.6 billion. As explained in Critical Accounting Policies, Fair Value Measurements, changes in unrealized gains and/or losses related to these securities are reflected in Other comprehensive income (loss) and offset by the Deferred preneed funeral and cemetery receipts held in trust and Care trusts corpus interest in those unrealized gains and/or losses. Therefore, the majority of these net unrealized losses are not reflected in our consolidated statement of operations for the quarter ended March 31, 2010. We do, however, rely on our trust investments to provide funding for the various contractual obligations that arise upon maturity of the underlying preneed contracts. Because of the long-term relationship between the establishment of trust investments and the required performance of the underlying contractual obligations, the impact of current market conditions that may exist at any given time is not necessarily indicative of our ability to generate profit on our future performance obligations.

We rely on cash flow from operations as a significant source of liquidity. Our cash flow from operating activities provided $108.9 million in the first quarter of 2010. Our current cash and cash equivalents balance is approximately $149.3 million as of April 26, 2010. In addition, we have $207.6 million in excess borrowing capacity under our bank credit facility. We currently have no significant maturities of long-term debt until November 2013.

Investing Activities Net cash used in investing activities increased $210.9 million in the first three months of 2010 compared to the first three months of 2009, primarily due to an increased outflow of $258.9 million in acquisitions, partially offset by increased inflows of $26.3 million in withdrawals of restricted funds and $16.6 million in proceeds from divestitures.

Financing Activities Net cash used in financing activities decreased by $152.0 million in the first three months of 2010 compared to the first three months of 2009, primarily due to a $168.8 million increase in proceeds from issuance of long-term debt (net of debt issuance costs) which was partially offset by a $20.5 million increase in debt payments.

Read the The complete Report

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