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Service Corp International Inc SCI
Q1 2010 Earnings Call Transcript

Transcript Call Date 04/29/2010

Operator: Good day, ladies and gentlemen, and welcome to the First Quarter 2010 Service Corporation International Earnings Conference Call. My name is Jasmine, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

At this time, I would now like to turn the conference over to your host for today, SCI Management. Please proceed.

Debbie Young - Director of IR: Good morning. This is Debbie Young, the Director of Investor Relations for SCI. We want to welcome you to our call this morning to discuss our first quarter results. As normal, before we begin with our prepared remarks, I need to walk you through our Safe Harbor language.

In our comments today we will make statements that are not historical facts and are forward looking. These statements are based on assumptions that we believe are reasonable. However, there are many important factors that could cause our actual results in the future to differ materially from these forward-looking statements.

For more information related to these statements and other risk factors, please review our periodic filings with the SEC that are available on our website at sci-corp.com.

Additionally, on the call today, Tom and Eric may use the terms like normalized EPS or normalized operating cash flows. These are non-GAAP financial terms. Please see our press release and 8-K that was filed yesterday, where we have provided a detailed reconciliation for these measures to the appropriate GAAP terms.

Now, I'll turn the call over to President and CEO, Tom Ryan.

Thomas L. Ryan - President and CEO: Thank you, Debbie, and thanks everybody for being on the call today. I am going to start with an overview of the quarter and then get into general and cemetery operations like I normally do, then have a little concluding segment for you as well.

So on an overview of the quarter, normalized earnings per share were $0.13 versus $0.12 in the prior year quarter, and so on a year-over-year improvement, it was primarily driven by two things. One was strong cemetery sales production, and secondly, we had increased trust fund income, particularly over Q1 2009.

Shifting to kind of an expectations analysis, I would define the quarter overall as it was in line with external expectations, slightly below our internal expectations. As from our perspective we had even better than anticipated cemetery projection in the first quarter. But this was more than offset by the softer funeral volumes that again I'll talk about when we review funeral operations.

And so here we start funeral operations. First of all, the comparable funeral revenues for the quarter were essentially flat. When you think about volume on a same-store basis, it's down some 3.5% for the quarter. While our annual guidance assumes down to low single digits for the year, even at the midpoint of our guidance, we were expecting a more favorable first quarter comparable.

As you'll recall, last year in 2009, our comparable volumes were down some 11.2%. So we thought we get a little better bounce into against those numbers and we didn't get quite what we expected. There was really no reason though to react to this. Three months is not a lot of data as the year goes. In addition to that, we anticipated just particularly in the low end of our guidance ranges that we gave the annual guidance back in February. So again, not because we thought still down a bit, but down in the mid single digits since where we thought it would be for the year.

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