Service Corporation International · NYSE:SCI
Service Corporation International — Debt Investor Presentation (April 2014)
27 slides from Service Corporation International's debt investor presentation, Apr 29, 2014
Slide 1: Forward-Looking Statements
Forward-Looking Statements The statements in this presentation that are not historical facts are forward-looking statements made in reliance on the "safe harbor" protections provided under the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions that the Compan
Slide 2: Today's Presenters
Today's Presenters Eric Tanzberger SVP, CFO and Treasurer Aaron Foley Managing Director, Assistant Treasurer 3
Slide 3: Today's Presenters
Today's Presenters = Eric Tanzberger o SVP, CFO and Treasurer = Aaron Foley o Managing Director, Assistant Treasurer
Slide 4: The Offering
The Offering Issuer Service Corporation International Amount $550 million Issue Senior Unsecured Notes Maturity 2024 (10 years) Security Unsecured Guarantors None Ranking The notes will rank equally in right of payment with all existing and future indebtedness and senior to all existing and future s
Slide 5: Sources and Uses and Capitalization
Sources and Uses and Capitalization PRO-FORMA CAPITALIZATION ($ in millions) ------------------------------------------------------------ Pro Forma 3/31/2014 Adjustments 3/31/2014 ------------------------------------------------------------ SOURCES AND USES ($ in millions) Sources Cash $ 18.4 Cash $
Slide 6: Business and Industry Overview
Business and Industry Overview 7
Slide 7: Key credit highlights
Key credit highlights Predominant player in stable funeral and cemetery industry with unparalleled network and scale Recent $1.5 billion acquisition of Stewart Enterprises positions us well for growth in 2014 and 2015 Pro forma revenues including Stewart of nearly $3 billion or ~16% share of industr
Slide 8: Our competitive strengths
Our competitive strengths Unparalled Network o 1,638 funeral homes and 515 cemeteries (55% combos*) o 43 states, 8 Canadian provinces, District of Columbia and Puerto Rico Size and Scale o Sharing of personnel, vehicles and other resources o Centralized or outsourced operating and accounting functio
Slide 9: Update on Stewart acquisition
Update on Stewart acquisition The transaction, valued at $1.5 billion, closed on December 23, 2013 and is expected to contribute meaningfully to financial results in 2014 and 2015 Synergies We originally estimated $60 million of cost savings (half in 2014 and half in 2015) Additional synergies of $1
Slide 10: Normalized EPS grew 15% in 2013; continued strong growth anticipated in 2014
Normalized EPS grew 15% in 2013 and exceeded our expectations; Anticipating continued strong growth in 2014 Recurring Normalized Earnings Per Share $1.10 $1.05 $1.00 $0.90 $0.80 $0.70 $.65 $.80 $.92 $0.06 1 $1.05 $0.60 $0.50 $0.65 $0.80 $0.86 Recurring EPS excluding impact of divestitures $0.40 2011
Slide 11: Keys to 2014 success and thoughts about 2015
Keys to 2014 success and thoughts about 2015 2014 2015 o Sales Success - We expect another strong year of growth in preneed funeral and cemetery sales (up mid to high single digit % range) o Stewart Synergies - We expect to realize roughly half of the total $75- $80 million of synergies in 2014 o SC
Slide 12: Keys to 2014 success and thoughts about 2015
Sales Success — We expect another strong year of growth in preneed funeral and cemetery sales (up mid to high single digit % range) Stewart Synergies - We expect to realize roughly half of the total $75- $80 million of synergies in 2014 SCI Direct - We expect continued growth in recognized preneed r
Slide 13: SCI historical financial overview
SCI historical financial overview Revenue ($mm) Free Cash Flow ($mm) $3,000 $2,500 $2,000 $2,054 $2,191 $2,316 $2,410 $2,556 $2,651 $350 $300 $250 $304 $265 $282 $272 $336 $344 $1,500 2009A 2010A 2011A 2012A 2013A Q1'14 LTM $200 2009A 2010A 2011A 2012A 2013A Q1'14 LTM Note: Free cash flow defined as
Slide 14: Robust and consistent cash flow continues despite growing headwind from cash taxes
Robust and consistent cash flow continues despite growing headwind from cash taxes Free Cash Flow $29(1) $272 $336 $315 $23 $26 $55 2012 2013 2014E FCF Incremental Cash Taxes Cash Taxes ($285 - $345) Trending toward upper end (1) - Reflects incremental cash taxes from 2013 to 2014 Free cash flow is
Slide 15: Strong financial position and liquidity post new debt issuance
Strong financial position and liquidity post new debt issuance Cash of approximately $149 million at March 31, 2014 Pro-forma credit availability of $253 million o At March 31, the facility had $140 million of borrowings, which increases pro-forma for this transaction to $215 million Total debt at 3
Slide 16: Substantial and consistent liquidity in addition to stable cash flow
We have maintained substantial and consistent liquidity in addition to stable cash flow We target having a minimum liquidity of $300 - $350 million Liquidity (in millions) Cash on Hand plus Credit Facility Availability $525 $529 $531 $473 $564 $383 $383 $397 $203 $402 $419 $380 $358 $253 2008 2009 2
Slide 17: Key credit metrics
Key credit metrics Debt / EBITDA 5.00X 4.00X 3.53x 3.25x 3.15x 3.10x 4.05x 3.95x 2009 2010 2011 2012 2013 Q1'14 LTM Interest coverage 3.92x 4.21x 4.35x 3.00X 4.69x 6.21x 5.69x 2009 2010 2011 2012 2013 Q1'14 LTM Note: Debt / EBITDA and Interest coverage are calculated in accordance with SCI's Credit
Slide 18: Strong financial position and favorable debt maturity profile
Actions we have taken have resulted in a strong financial position and favorable debt maturity profile Debt Maturity Profile at March 31, 2014 Will service this debt from STEI divestiture proceeds 6.750% Senior Notes 6.750% Senior Notes 7.625% Senior Notes 7.000% Senior Notes 6.500% Senior Notes $20
Slide 19: Appendix: Non-GAAP Financial Measures
Appendix: Non-GAAP Financial Measures 20
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures This information should not be considered in isolation or as a substitute for related GAAP measures. Additionally, these measures as calculated by the Company may not be comparable to similarly titled measures used by other companies. Normalized EPS or Earnings from conti
Slide 21: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA This information should not be considered in isolation or as a substitute for related GAAP measures. Additionally, these measures as calculated by the Company may not be comparable to similarly titled measures used by other companies. o We use EBITDA as an underlying opera
Slide 22: Normalized EPS
Normalized EPS (In millions, except diluted EPS) Twelve Months Ended December 31, Net income attributable to common stockholders, as reported After-tax reconciling items: Impact of divestitures and impairment charges, net System and process transition costs Stewart acquisition and transition costs G
Slide 23: Normalized EPS (continued)
Normalized EPS (continued) (In millions, except diluted EPS) Three Months Ended March 31, Net income attributable to common stockholders, as reported After-tax reconciling items: Impact of divestitures and impairment charges, net System and process transition costs Stewart acquisition and transition
Slide 24: Free Cash Flow
Free Cash Flow Twelve Months Ended December 31, (In millions) 2013 2012 2011 2010 Net cash provided by operating activities, as reported $ 384.7 $ 369.2 388.1 354.4 System and process transition costs 3.3 4.7 2.6 5.1 Stewart acquisition and transition costs 45.4 -- -- -- Legal defense fees and other
Slide 25: Free cash flow (continued)
Free cash flow (continued) Net cash provided by operating activities, as reported System and process transition costs Stewart acquisition and transition costs Legal defense fees and other matters Excess tax benefit from share based awards Net cash provided by operating activities, excluding special
Slide 26: Outlook for 2014
Outlook for 2014 Low Midpoint High Net cash provided by operating activities excluding special items (adjusted cash flow from operations) (A) $430 $455 $480 Diluted earnings per share from continuing operations excluding special items (Normalized EPS) (B) $1.00 $1.05 $1.10 Diluted weighted average s
Slide 27: Outlook for 2014
Outlook for 2014 Low __Midpoint__High $430 $455 $480 Net cash provided by operating activities excluding special items (adjusted cash flow from operations) (A) Diluted earnings per share from continuing operations excluding special items (Normalized EPS) (B) Diluted weighted average shares (000s) 21
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