Service Corporation International (NYSE:SCI) Q3 2023 Earnings Conference Call November 2, 2023 9:00 AM ET

Company Participants

Debbie Young - Director, IR

Thomas Ryan - Chairman, President & CEO

Eric Tanzberger - SVP & CFO

Conference Call Participants

Joanna Gajuk - Bank of America Merrill Lynch

Daniel Hultberg - Oppenheimer

John Ransom - Raymond James & Associates

Operator

Good morning, and welcome to the SCI Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note that the event is being recorded. I would now like to turn the conference over to SCI management. Please go ahead.

Debbie Young

Thank you, and good morning. This is Debbie Young, and we welcome you today to our third quarter earnings call. We'll have prepared remarks from Tom and Eric in just a moment. But before that, let me quickly go over the safe harbor language.

Any comments made by our management team that state our beliefs, plans, expectations or projections for the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements.

These risks and uncertainties include, but are not limited to, those factors identified in our earnings release and also in our filings with the SEC that are available on our website. Today, we will also discuss certain non-GAAP financial measures, and a reconciliation of these measures can be found in the tables at the end of our earnings release as well as our website.

I'd now like to turn the call over to Tom Ryan, Chairman and CEO.

Thomas Ryan

Thank you, Debbie. Hello, everyone, and thank you for joining us on the call today. This morning, I'm going to begin my remarks with some high-level color on our business performance for the quarter and provide some greater detail around our solid funeral and cemetery results. I will then close with some thoughts on the rest of 2023 and some preliminary thoughts on 2024.

For the third quarter, we generated adjusted earnings per share of $0.78 which compared to $0.68 in the prior year. This impressive 15% growth in earnings per share over the prior year is primarily related to improved cemetery profitability driven by higher cemetery revenue from completed construction projects, along with lower fixed costs in both the cemetery and funeral segments, resulting in higher gross profit and margin expansion.

Below the line, the 425 basis point rise in interest rates on our variable rate debt increased our interest expense, reducing earnings per share by $0.09. This increased interest rate expense was predominantly offset by lower general and administrative expenses and the favorable impact of a lower share count. We have accelerated the pace of our share buyback, given our recent stock price, repurchasing $65 million of stock during September and $99 million during the month of October.