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A History of Caring Service and Success

Service Corporation International (SCI) is North America’s largest provider of funeral and cemetery services, with shares traded on the New York Stock Exchange under the symbol SCI. It was founded in 1962 by Robert L. Waltrip, a licensed funeral director who grew up in his family’s funeral business and who still serves as chairman of the Company’s board of directors.

The Birth of a Network

The Company’s original business plan was based on efficiencies of scale specifically, reducing overhead costs by sharing resources such as embalming, accounting, transportation and personnel among three or four funeral homes in a business “cluster.”  After proving the plan’s effectiveness in Houston in the early 1960s, the founder and a small group of associates set out to apply this operating strategy through ownership of death care businesses in other markets. It was the beginning of a three-decade period of expansion that would create a North American network of nearly 1,400 funeral homes and cemeteries by the end of 1992. In 1993, the Company reached beyond North American shores and acquired major death care companies in Australia, the United Kingdom and France, plus smaller holdings in other European countries and South America. At the end of 1999, the Company’s global network numbered more than 4,500 funeral service locations, cemeteries and crematories in 20 countries.

Change and Adaptation
As SCI grew its offshore presence, it continued to acquire businesses in North America—a  marketplace that, by the late 1990s, had become extremely competitive among companies seeking to buy death care businesses.  Purchase prices became inflated, corporate debt levels grew, access to financial markets disappeared and it became apparent to all players that the dynamics of the business expansion model had changed. Facing these facts, SCI realigned its priorities and, over the next few years, implemented numerous initiatives to reduce overhead, pay down debt and increase cash flow. In the process, the Company reassessed the value of its global expansion.  While foreign operations had once shown promise, it was clear that nearly 70 percent of SCI’s revenues were generated by operations in the United States and Canada. Beginning in 2000, SCI went through a period of change during which it divested most of its offshore businesses and many North American funeral homes and cemeteries that were either underperforming or did not fit SCI’s long-term strategy.

Branding and Customer Satisfaction
In 1999, the Company capitalized on the strength of its network by introducing to North America the first transcontinental brand of death care services and products—Dignity Memorial® (see www.dignitymemorial.com ). National branding was commonplace among overseas death care operations, and it was a natural fit for SCI operations in the United States and Canada. The Company’s North American network was comprised of businesses known by their “heritage” identities, most commonly the names of founding families from whom the firms were acquired. By unifying this network under one brand name, SCI created a recognizable entity that represents value, quality, integrity and uncompromising standards of service, one that can be marketed from coast to coast.  Most of the Company’s businesses today feature the Dignity Memorial logotype on their signage, along with the local heritage names under which some have operated for more than 100 years. To ensure lasting customer satisfaction, a survey is sent to client families who have been assisted by SCI firms.  Of the nearly 30 percent of families who respond, more than 95 percent express willingness to recommend the services of SCI funeral homes to friends and family.

Strengthening and Modernization
As it refined its network and introduced name brand funeral services in the early years of the new century, the Company also made significant improvements to its financial condition and infrastructure. Between 2002 and 2006, SCI reduced its net debt (total debt minus cash) by more than $1 billion, increased operating cash flow and simplified its field management organization to enhance efficiency, performance and accountability. It also improved business and sales processes, tightened internal controls, strengthened corporate governance standards and established the finest training and development system in its industry. For its shareholders, SCI returned value through more than $335 million in share repurchases, and it resumed payment of a regular quarterly dividend in early 2005, the first since 1999. By the beginning of 2006, SCI was a noticeably different organization than that of five years earlier. The Company was operating at a profit, with robust cash flows and resources and the most efficient infrastructure in its history. It was from this new position of strength that SCI took a giant step toward future success by acquiring its biggest competitor, Alderwoods Group, in November 2006. The addition of more than 600 funeral homes and cemeteries in the Alderwoods network provided an expanded geographic footprint that enables SCI to serve families in 43 states, the District of Columbia and eight Canadian provinces. In early 2010, SCI acquired another large competitor, Keystone North America. As SCI looks to the future, the acquisition of 70 percent of the oustanding shares of The Neptune Society, Inc. in 2011 brought with it the resources of the nation's largest direct cremation organization. In late 2013, SCI completed the acquisition of Stewart Enterprises, Inc., growing the company’s footprint to more than 2,000 funeral homes and cemeteries in 43 states, eight Canadian provinces, the District of Columbia and Puerto Rico.

A Company for its Time
With solid financials, exclusive products and customer benefits, favorable demographics, and “best in class” policies, training and professional standards, SCI is in an excellent position to provide North America’s finest death care services for generations to come.