Sales increase for funeral provider SCI

The head of Service Corporation International, the Houston-based provider of funeral services and cemetery plots, on Wednesday attributed a sales increase last year to a combination of factors that included acquisitions, an increase in people planning ahead and, during the fourth quarter, a tough flu season and a relatively ineffective vaccine.

"We will continue to focus on growing our pre-need backlog, which we believe is the most advantageous approach to expanding market share over the long-term," CEO Thomas Ryan told investors in a conference call to discuss financial results released late Tuesday.

Net income up

For the fourth quarter, SCI reported net income of $87.8 million, compared with $29.3 million a year earlier, with earnings per share of 42 cents, up from 14 cents.

SCI realized $57.9 million in the quarter from divestments required by federal regulators in its acquisition of Stewart Enterprises, which closed in December 2013. SCI is now the largest company in its industry in North America, with about 2,000 funeral homes in the U.S. and Canada.

Newly integrated Stewart funeral homes and cemeteries contributed significantly to income growth in the fourth quarter. Facilities that have been under SCI for at least a year also did more business in the quarter and for the year.

During the call, the company also said it had adopted Stewart's practices of paying sales commissions and that a higher commission rate fueled sales.

Baby boomers' wishes

SCI is also trying to bring in more money by adapting to changing consumer demands. SCI is trying to better meet baby boomers' desire for more personalized funerals and services such as catering. The company is experimenting with themed funeral homes in the Southeast, from tailgating parties for football fans in Alabama to wine-tasting goodbyes in Florida.

By adding services that clients used to get elsewhere for funeral receptions, SCI can boost revenue per funeral. During the call, the company said it is working on expanding services in the new Stewart funeral homes.

SCI funeral homes performed more than 80,000 funerals in the fourth quarter. The company reported increases in funerals planned at the time of death and in those sold ahead of time to customers who make their own arrangements. Ryan also cited the lower effectiveness of this season's flu shot.

For 2015 the company expects more growth, with about half coming from integrating Stewart facilities, and half from growth in the original business.

"We will continue to focus on growing our pre-need backlog, which we believe is the most advantageous approach to expanding market share over the long-term," Ryan said in the call with investors.

CFO Eric Tanzberger said SCI would continue to look for acquisitions in 2015 and is "excited about the pipeline for potential acquisition opportunities."

SCI stock rose 5.91 percent Wednesday, to $24.39 per share.