Service Corporation International Announces Second Quarter 2018 Financial Results And Updates Guidance For 2018
HOUSTON, July 30, 2018 /PRNewswire/ -- Service Corporation International (NYSE: SCI), the largest provider of deathcare products and services in North America, today announced results for the second quarter of 2018. Our unaudited consolidated financial statements can be found at the end of this press release. The table below summarizes our key financial results:
Diluted earnings per share were $0.55 in the second quarter of 2018 compared to $0.36 in the second quarter of 2017. The second quarter of 2018 was positively impacted by a $6.9 million gain on divestitures coupled with favorable remeasurement of deferred taxes which resulted in a lower effective tax rate. Diluted earnings per share excluding special items were $0.44 in the second quarter of 2018 compared to $0.35 in the second quarter of 2017. The nine cent increase in diluted earnings per share excluding special items was primarily driven by three cents of higher operating income after taking into account hurricane expenses, four cents primarily from a lower effective tax rate, and two cents from the impact of the revenue recognition accounting standard implemented January 1, 2018.
Net cash provided by operating activities was $103.9 million in the second quarter of 2018 compared to $34.4 million in the second quarter of 2017. The second quarter of 2017 was negatively impacted by an IRS tax settlement payment and a pension settlement payment. Net cash provided by operating activities excluding special items was $103.9 million in the second quarter of 2018 compared to $74.9 million in the second quarter of 2017. This increase of $29.0 million was primarily due to a reduction in cash taxes compared to the prior year.
During the second quarter, we returned $141.0 million to shareholders through a combination of share repurchases and dividends and deployed $140.5 million of capital to accretive acquisitions and the construction of new funeral homes. For the six months ended June 30, 2018, we returned $291.1 million to shareholders through a combination of share repurchases and dividends and deployed $179.1 million of capital to accretive acquisitions and the construction of new funeral homes.
Tom Ryan, the Company's Chairman and Chief Executive Officer, commented on the second quarter of 2018:
"We are pleased to report over 25% growth in both adjusted earnings per share and adjusted operating cash flow during the quarter. Increased cemetery and funeral revenue resulting from strong preneed sales production, effects of tax reform, and the impact of our share buybacks during the year were key to delivering these solid financial results. The resulting cash flows allowed us to deploy an impressive $281.5 million of capital towards acquisitions, new funeral home construction, dividends, and share repurchases. Based on our mid-year performance, we are confirming our adjusted earnings per share guidance, while raising our adjusted cash flow guidance range to $575 million to $615 million. I would like to thank our hardworking and dedicated team of over 23,000 professionals for their continued focus on delivering extraordinary service to our client families. As we move into the back half of the year we believe we are on track to grow our revenues by remaining relevant with the consumer, drive future market share by growing our preneed sales, continue to leverage our scale, and deploy capital to enhance shareholder value."
UPDATED OUTLOOK FOR 2018
Our outlook for diluted earnings per share from continuing operations excluding special items is anticipated to be in line with our expected long-term growth framework of 8%-12% after consideration of special items, expected positive impact from revenue recognition accounting changes, and tax reform. Our updated outlook for higher net cash provided by operating activities excluding special items reflects a $25 million decrease in anticipated cash taxes compared to our original expectations as a result of effective tax planning, bringing the expected total cash tax payments for the year to approximately $90 million. We are also increasing our 2018 capital improvements at existing facilities and cemetery development expenditures guidance by $10 million to $195 million primarily to reflect increased investments in our websites, sales production technology, and funeral homes as part of our strategy of remaining relevant with our consumers.