Service Corp International SCI
Q2 2010 Earnings Call Transcript

Transcript Call Date 07/29/2010

Operator: Good day, ladies and gentlemen, and welcome to the Second Quarter 2010 Service Corporation International Earnings Conference Call. My name is Lisa, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to SCI Management. Please proceed.

Debbie Young - Director of IR: Good morning, everyone. This is Debbie Young, the Director of Investor Relations for SCI. We want to welcome you to our call this morning to discuss our second quarter results. Our call today will include some forward-looking statements that involve risks and uncertainties that could cause our results to differ materially from management's current expectation. We encourage you to review the Safe Harbor statement contained in our earnings release published yesterday as well as our most recent SEC filings for a more complete description.

Additionally, on the call today, Tom and Eric may use 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 of 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. As usual, we're going to have a quick overview of the quarter, go through funeral operations, cemetery operations. Eric, will have some comments on the financial side of the house and then some concluding comments.

So for the overview of the quarter, second quarter again we delivered consistent positive performance. If you look at earnings per share, our normalized earnings per share were $0.15 versus $0.12 prior year quarter, again normalized for both quarters.

So when you think about year-over-year improvement, it's really driven – three things contributing one being the largest. The first thing that's really driving our results is the acquisitions that occurred early in this year and late in last year.

So both Keystone and Palm Mortuaries were big contributors to our improvement, and they predominantly benefit the Funeral segment you'll notice as we go through those. Why they are so accretive as well is essentially we've funded these predominantly with cash. So when you think about the alternatives of earning money under cash, the alternatives with these very accretive acquisitions shows up in EPS pretty well.

Secondarily we continue to see solid cemetery sales production. We've been doing this for some time now and the comps are going to harder and harder, but again we delivered positive growth in that arena.

Lastly, we continue to manage our expenses very prudently in every level of the organization, at the G&A line, the overhead line that allocates in the field as well as in the field expenses. So I want to congratulate everybody in the Company for continuing to do that.

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