Service International(US:SCI)2022-02-15 22:23Financial Condition - The company has a significant amount of indebtedness, which could adversely affect its ability to raise additional capital and fulfill obligations under its debt [128]. - As of December 31, 2021, the company would need to fund approximately $135.7 million into state-mandated trust accounts if surety bonds are not renewed [118]. - The company's cemetery segment has a goodwill balance of $330.9 million, which is sensitive to market conditions and could be impaired if economic conditions worsen [124]. - Approximately 79% of the total debt consisted of fixed rate debt at a weighted average rate of 3.70% as of December 31, 2021 [260]. - A hypothetical increase in interest rates by 10% would increase interest expense by $1.1 million [260]. - The company must maintain certain leverage and interest coverage ratios under its Bank Credit Facility, which may require actions contrary to its strategic plan [117]. - The company is subject to various claims and lawsuits that may result in significant financial impacts [145]. - Changes in taxation could adversely affect the company's financial condition and cash flows [148]. - The company has $2.7 billion in federal, state, and foreign loss carryforwards with expiration dates through 2040 [378]. - As of December 31, 2021, the company had total debt of $3.97 billion, an increase from $3.74 billion in 2020 [382]. Revenue and Income - Total revenue for 2021 reached $4,143,143, an increase of 18% from $3,511,509 in 2020 [278]. - Net income attributable to common stockholders for 2021 was $802,939, up 55.5% from $515,907 in 2020 [278]. - Basic earnings per share increased to $4.79 in 2021, compared to $2.92 in 2020, reflecting a growth of 64% [278]. - The company reported a total comprehensive income of $804,098 for 2021, up from $525,644 in 2020, a growth of 52.9% [279]. - Income before income taxes for the United States was $994.6 million in 2021, compared to $633.6 million in 2020 [369]. - Total income taxes for 2021 amounted to $242.2 million, an increase from $145.9 million in 2020 and $94.7 million in 2019 [370]. - The effective tax rate for 2021 was 23.2%, compared to 22.0% in 2020 and 20.4% in 2019 [371]. Cash Flow and Assets - Cash flows from operating activities amounted to $920,608 in 2021, an increase from $804,351 in 2020 [282]. - Total assets grew to $15,691,178 in 2021, up from $14,515,425 in 2020, indicating a 8.1% increase [281]. - The company’s cash, cash equivalents, and restricted cash at the end of 2021 were $278,555, up from $238,610 at the end of 2020 [282]. - The net receivables as of December 31, 2021, were $106,051,000, compared to $92,939,000 in 2020, indicating an increase of about 14.1% [293]. - The total reserve for credit losses on trade receivables decreased from $5,905,000 in 2020 to $5,828,000 in 2021, reflecting a reduction of approximately 1.3% [297]. Investments and Receivables - Preneed receivables, net increased to $1,243,781 thousand in 2021 from $1,069,965 thousand in 2020, representing a growth of approximately 16.2% [350]. - Trust investments at fair value rose to $6,536,851 thousand in 2021, up from $5,851,188 thousand in 2020, marking an increase of about 11.7% [350]. - Total preneed receivables, net and trust investments reached $6,015,323 thousand in 2021, compared to $5,345,720 thousand in 2020, reflecting a growth of approximately 12.5% [354]. - The reserve for credit losses on preneed receivables totaled $20,727 thousand at the end of 2021, up from $19,204 thousand in 2020, showing an increase of approximately 7.9% [352]. - Deposits to trust increased to $519,023 thousand in 2021 from $429,307 thousand in 2020, representing a growth of about 20.9% [354]. Stock and Shareholder Information - The company canceled 9.8 million, 11.9 million, and 2.2 million shares of common stock held in treasury in 2021, 2020, and 2019, respectively [325]. - The company has authorized the issuance of 1,000,000 shares of preferred stock, with no preferred shares issued as of December 31, 2021 [417]. - As of December 31, 2021, the remaining dollar value of shares authorized for repurchase under the share repurchase program was $495.0 million [419]. - The company recognized $14.2 million in employee share-based compensation expense in 2021, with an income tax benefit of $3.5 million related to this compensation [422]. - Nonvested restricted share units at December 31, 2021, totaled 128,171 units with a weighted-average grant-date fair value of $47.87 [428]. Operational Risks - The company faces risks related to supply chain disruptions, which could lead to merchandise delivery delays and increased costs, adversely affecting results of operations [139]. - The company’s operations in Canada expose it to operational, economic, and currency risks, affecting a significant portion of its revenue [127]. - The company’s ability to compete in the funeral and cemetery industry is challenged by a large number of independent operators and price competition [134]. - The company’s high fixed costs in its funeral and cemetery businesses may lead to margin declines during periods of lower sales volumes [138]. - Compliance with laws and regulations concerning burial procedures is critical to the company's operations and could affect financial results [144].