Hi, good morning. This is Debbie.

I'm the Director of Investor Relations at SCI. Before we begin today we have prepared remarks about the quarter - customary Safe Harbor language.

The comments made by our management team today will include statements that are not historical and are forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

These risks and uncertainties include, but are not limited to, those factors identified in our press release and in our filings with the SEC that are available on our Web site. In today's comments we may also refer to certain non-GAAP measurements such as adjusted earnings per share, adjusted operating cash flow and free cash flow.

A reconciliation of these measurements to the appropriate measures calculated in accordance with GAAP is provided on our Web site and in our press release and 8-K that were filed yesterday. With that behind us, I will now turn the call over to SCI's Chairman and CEO, Tom Ryan.

Thank you, Debbie, and good morning everyone. We really appreciate you joining us on the call today and as usual I'll begin my remarks with an overview of the quarter, also more detail look at our funeral and cemetery operations.

Let's begin with an overview of the quarter. As you saw on our press release yesterday, we were pleased to report adjusted earnings per share of $0.26 for the third quarter which is a $0.03 or 13% increase from the prior-year and within our range of expectations.

Solid operating results were driven by growth in revenue from our cemetery operation further bolstered by effectively managing our controllable field and back office overhead expenses resulting in about a $0.01 operational improvement for the third quarter of 2016 over 2015. The remaining $0.02 increase in earnings per share can be attributed to two things.

First, lower interest expense resulting from our recent refinancing of our 2016 and 2017 notes and a reduce share account due to our ongoing share repurchase program. Let me also mention a few other notable items during the quarter.

We generated an impressive $143 million in adjusted operating cash flows representing a 14.5% compared to the prior year quarter. We are committed to deploying our shareholders cash to the highest and best use.

In terms of capital deployment for the third quarter, we invested about $20 million for growth capital, $14 million in acquisitions and another $6 million in constructing new funeral home locations. This brings our year-to-date totals to $70 million per acquisitions and over $12 million for new funeral home construction.

Additionally during the quarter, we returned $137 million back to our shareholders in the form of share repurchases and dividend. This should demonstrate to you our belief in the future strength of our business platform and the cash flow growth we expected to generate.

We are looking at our results achieved in the first nine month of the year, as well as the expectations for the fourth quarter we are confident that we will finish the year within our 2016 guidance range for adjusted earnings per share of $1.20 to $1.30 and adjusted operating cash flows of $450 million to $500 million. Now let’s look into how funeral operations performed for the quarter.

Comparable funeral revenues decreased by $6.9 million or 1.6% compared to the same period last year. As shown in the table of our press release, core revenue declined 1% or $3.7 million due primarily to a 2.3% decline in core comparable funeral services performed.

This decline in funeral services performed occurred in July underperforming our expectation while August to September trended flat within our expectations. Hoping to offset a negative effect of the lower funeral services performed was 1.4% increase in the core funeral average.

When you breakdown the components of the core funeral average, we were pleased to continue to see a 2.1% improvement in the organic growth at the customer level. As we expand the use of our new point of sales system HIMS plus taking advantage of technology that allows us in a very concise way to walk friendly through a variety of modernization offerings.

We are seeing people select more options and that’s generating higher levels of revenues. This 2.1% organic growth in the core funeral average was reduced to 1.4% as it was negatively impacted by a 70 basis point increase in the core cremation mix to 47.5%.

Outside of core revenues, we saw continued growth and recognized preneed revenues of $1.9 million or 7.5%. Recall, these are the deliverable product components of the preneed contract which are delivered immediately after the sale primarily representing cremation related merchandise and travel protection plan sold by our non-funeral home network.

General agency revenue was down 9.5% compared to the prior year third quarter primarily from a decline in preneed insurance sales production. We experienced a temporary mix change between insurance and trust sales production as we transitioned one of our business units from Stewart insurance vendors which we were obligated to use into the contract until it expired to our preferred insurance vendor.

General agency revenues were also impacted to a lesser extent, by our decision in August discontinued sales of preneed insurance contract at a Catholic mortuaries in the LA Archdiocese that we have agreed. So on the total funeral revenue decline of $6.9 million, funeral gross profits declined $3.2 million and margins declined slightly to 17.2%.

A majority of the profit decline is due to the decrease in higher margin core revenue as a result of funeral services performed combined with lower general agency revenues from a reduction in preneed general insurance sales production. These profit declines were partially offset by continued profit increases from SCI Direct as well as lower expenses from effectively managing our fixed cost structured, in a low funeral volume environment.

Finally, comparable preneed funeral sales production grew a modest $1.6 million or about 1% in the quarter. Year-to-date our premier funeral sales production is grown about 5% and is in line with our mid single-digit percentage guidance range.

Now shifting to cemetery operations. Comparable cemetery revenue grew $10.9 million or 4.1% during the third quarter, led by an increase in recognized preneed revenue of $8.5 million or 5.3%.

This growth in recognized preneed revenue resulted from an increase in preneed cemetery sales production, as well as higher merchandise deliveries. For the quarter preneed cemetery sales production were $9.1 million or 5.1% led in part by an increase in large property sales activity, as well as an increase in preneed merchandise.

Other cemetery revenue which is comprised primarily of trust fund income grew $2.4 million as a result of improved financial market condition. From a profit perspective, comparable cemetery gross profit increased $1.9 million over the prior year quarter while the gross margin percentage declined slightly to 23.7%.

Growth from core revenue carried a slightly lower gross profit than we would have expected as substantial portion came from merchandise revenue which carries a gross margin which is approximately one-third less in the gross margin on property sales. This gross profit increase was partially offset by increases in fixed maintenance, sales and administrative costs.

We believe the maintenance expense increase generally relates to a temporary overlap costs, as we continue to transition the third party vendors for cemetery maintenance services that will drive future synergies. That concludes our cemetery operations review for the third quarter.

Now let me step back and think about our overall business for the remaining three months of 2016. We believe the fourth quarter will be a strong earnings quarter driven by improved operations as compared to the prior year.

Operationally, on the funeral side, we would expect to see more favorable trends in funeral services performed and continued strength in the organic funeral sales average. We do expect to lose slightly less than $0.001 and losing the operating contribution of the LA Archdiocese business.

In our Cemetery segment, we expect to see continued preneed sales production growth in the mid to high single-digit, as well as significant seasonal revenue recognition from cemetery construction projects completed during the fourth quarter as we’ve experienced in prior years. Lower interest expense resulting from our previous refinancing as well as lower share count from our share repurchase program should also positively impact earnings per share by $0.02 for the fourth quarter, while a slightly higher tax rate could reduce earnings per share by about $0.001.

Finally, I feel very proud of this about a momentum going into 2017. After what we believe will be the strong finish to 2016, when we look back at the year through the tough one.

Funeral volumes through nine months were down 3.5% and preneed cemetery sales while they're up 4.3% year-to-date have trended towards a lower end of our mid to high single-digit percentage growth guidance. Disciplined capital allocation, leveraging our scale and delivered expense management allow us to deliver the results that we did.

In the meantime, we implemented the more efficient financial system in Oracle, continues to identify a new categories to leverage our scale both in the supply chain and through metric that will drive workforce and process efficiency. We rolled out and trained our people to use more contemporary customer facing point of sale system, HMIS+, we fully implementing the new customer relationship management system, sales force to our 4,000 plus strong sales organization, and it allocated 82 million towards new businesses to expand our network.

Therefore with easier funeral comp, implementing the supply chain and process efficiency, capturing the full-year impact of HMIS+ on funeral average, and more experienced sales force as a customer relationship tool, I would expect that we can deliver growth at the upper end of our 8% to 12% earnings per share growth range next year in 2017. Before applying that upper end of the range, earnings per share growth to your model, you should remember to adjust your base 2016 for the following two items.

First, the sale of the LA Archdiocese properties results in a headwind for approximately $0.02 per share as compared to 2016. And second, we've received $13.5 million or about $0.04 per share in the first half of 2016 from cash distribution to capital gain on cemetery perpetual care trust that from what we know today will not repeat in 2017.

As we get into finalizing our plan for next year, we'll always be looking for ways to enhance our earnings and cash flows in our quest to maximize shareholder value. To wrap it up, I'd like to thank our entire team as we got a great quarter, we delivered solid growth both adjusted earnings per share and adjusted operating cash flows, in the face of challenging volume environment and we look forward to strong finish to 2016.

And with that, I'm going to turn the call over to Eric.

Thanks, Tom and good morning, everybody. Today as usual, I’m going to provide you some details of our cash flow performance and capital deployment specifically for the third quarter.

And then I would like to touch on our financial position and also have a few comments surrounding our outlook for the remainder of the year as well as 2017. So let's start with some details around cash flow for the third quarter.

We generated an impressive $143 million of adjusted operating cash flow. This was an increase of $18 million or 14.5% from the prior year and this was ahead of our expectations.

The increase was primarily driven by improvement in our earnings and working capital, which more than offset the expected increase of almost $8 million in recurring cast tax payments, so a little bit more color on this. The working capital improvements in the quarter primarily related to two things.

First, we identified opportunities to reduce processing times for our trust withdrawal activities. In other words become more efficient and we’re able to pull more funds quicker out of our trust funds.

As we highlighted for you last quarter, due to the way that July 4 holiday fell this year, we benefited from lower payroll funding in the third quarter by about $8 million and again we mentioned we’re going to have that tailwind on our last call. Maintenance CapEx and cemetery development CapEx, again the two components that we defined as CapEx in our free cash flow calculation, came in at $42 million for the quarter, which was about $505 million higher than prior year primarily related to increased investments and what we characterize as high return cemetery development projects.

Deducting these capital spending items from our adjusted cash flow from operations, we calculated our free cash flow for the third quarter to be just over $100 million or almost $13 million over the prior year third quarter. So during the quarter let’s shift to how we deploy this cash flow and we’re very proud of this significant amount of capital that we deployed towards acquisitions and other growth initiatives in the third quarter, summing to total investment of roughly $157 million.

As Tom has already mentioned, we invested just over $14 million towards acquisitions for the quarter, which primarily were related to one transaction to buy two funeral homes and one crematory. This brings our total acquisition related spending in the first nine months to about $70 million of capital deployed.

This was well into the range that we’ve talked about and as guided before for the full-year, a $50 million to $100 million towards these accretive acquisitions. And remember we normally expect to have mid-teen after-tax cash IRR on capital deployed toward these acquisitions.

Most importantly we continue to remain very optimistic about the pipeline of acquisition opportunities that is available to us in future quarter. Additionally, we spent almost $6 million on the new build and expansion of several funeral homes in both U.S.

and Canada during the quarter. We also deployed just over 25 million in capital towards dividend payments during the quarter.

This $0.13 dividend rate for the quarter reflects an 8% growth over the rate in the prior year quarter. And last, but again certainly not least, we repurchased 4.2 million shares for a total investment of $112 million during the quarter.

This was at an average price of $26.34 per share and this also included a 3 million share block that we purchased in mid September. Since the beginning of 2016, we’ve repurchased 7.5 million shares for a total investment of just over $190 million at an average price of $25.61 per share.

So to summaries, we currently have about 190 million shares outstanding and about $88 million of remaining share repurchase under the current board authorization. Now let’s shift to forward look and let’s talk about cash flow in terms of the outlook for the fourth quarter and the full-year.

In the first nine months of 2016, we’ve generated over $400 million of adjusted cash flow from operations, which was slightly ahead of our internal expectations. We remain confident in achieving our guidance range for the full-year of 2016 for adjusted cash flow and that range is $450 million to $500 million.

One item I do want to mention to you at this time, that is change is our expectation for cash taxes. We have consistently guided to over the past year that cash tax payments for the full-year of 2016 would be in the ballpark of about $140 million.

Due to our continued efforts and our tax planning initiatives, I do think this could be as much as $15 million to $20 million or less than what we originally anticipated, and all of this will benefit the fourth quarter. As a reminder though, next year in 2017, we do expect to pay more cash taxes as we continue the journey to becoming a full cash tax payer.

Also as it relates to the fourth quarter, keep in mind that in the fourth quarter of 2015 cash flow benefited from 15 million of accelerated non-earnings merchandise and services trust withdrawals that will not repeat in this year’s fourth quarter. So the lower taxes that I’ve just mentioned will really to help to offset this headwind related to the merchandise and services trust withdrawals that occurred last year in the fourth quarter.

Lastly our capital spending for maintenance and cemetery development is trending a little bit higher reflecting increased investments in new cemetery property projects that carry very favorable returns on this capital deployed. We couldn’t believe we will end the year at approximately $160 million versus our previous guidance of $150 million.

So finally let me provide a little bit high level view of our financial position and outlook. We continue to enjoy great liquidity at SCI and a very manageable near-term debt maturity profile both bolstered by our recent refinancings.

Our liquidity at the end of the quarter remains robust at $520 million. This consists of about $178 million of cash on hand and just over $340 million of availability on our long-term revolver.

Our leverage which we calculate as net debt-to-EBITDA in accordance with our updated credit facility was about 3.9 times as of September 30. We expect our leverage ratio to trend modestly downward though during the fourth quarter as our EBITDA grows.

And we remain confident we will end the year well within our targeted range of 3.5 to 4 times. This again gives us our continued flexibility to execute our capital deployment strategies well into the future.

So in conclusion, I want to echo Tom’s comments that it was strong quarter for us for particularly on the cash flow front where it’s a 14% increase over prior year and we sincerely appreciate the efforts of all of our 24,000 team members at SCI that are driving these stellar cash flow results. In 2017 we expect continued strong cash flow after considering a continued increase in cash tax payments to a full cash tax payer level and as always we commit to you that we will aggressively work to deploy our cash flow to continue to deliver significant long-term value for our shareholders.

So we appreciate you joining us this morning and we will now open it up for questions.

Good morning. Thanks for taking the question.

So first if I may, did I hear right that you said you expect the next year EPS to be at the upper end of the 8% to 12% range?

Yes, Joanna this is Tom. Thanks for that question.

What I was saying is I feel very good about our ability to grow at the upper end of that range. What I cautioned everybody about is, there is some unusual factors to consider when you take the base 2016 number.

One of them is we’re going to lose the benefit of the catholic mortuaries in the LA diocese so that’s a $0.02 headwind, which you ought to take out of base and then we have some internal care distributions out of our trust funds that again are probably aren’t repeatable in the first half of last year which fell into another $0.04. But absent those things I think what I was trying to - the point I was trying to get across we implemented a lot of initiatives last year probably too many looking back from way in the south but these are tools that are really going to allow us to complete more effectively as you think about 2017, 2018.

We’ve got a new point of sale customer facing system that allow us to be more effective in front of client families and expanding what we believe they’ll want to spend on their funerals. We’ve got salesforce.com which is a very effective tool that our sales force can use now in managing leads and distributing strategy and training and when you combine those things with the continued opportunities to leverage our scale with these systems and abilities to negotiate these supply agreements get further down the chain we get pretty excited about our ability deliver results.

So I did say upper end but again I would caution you make sure to understand there is some things in ’16 that you need to take into effect.

Great. That’s helpful.

And then in terms of just your outlook I guess you were saying that I guess the premium sales production year-to-date maybe that’s in line but some other things. So can you just talk about sort of your view in terms of comparable sales growth by segments kind of the way you usually talk about things.

How you see it trending next year?

Yes, I think if you look at – I’ll talk really to the cemetery on this one. Cemetery sales if you look over the last four or five years we’ve been able to I think on a compounded basis to grow that at about 10.5% cliff.

I think what begins to occur and one of the reasons we talked about this before in giving guidance is that’s probably not a long term sustainable number. When you think about our ability to grow.

So we’ve always said mid to single-digits we’ve always outperformed that. I think this year we’re running into the rule of large numbers and that we’re about 4.5%.

It’s not where we think we should be. We think it should be higher than but we should be normalizing we believe over the next few years in a range of somewhere between mid single-digits and high single-digits.

So call that a 4 to 8% range and of course we could upside surprise or we could have a bad quarter but our thoughts are with our opportunity to continue to develop period inventory the demographic opportunities to sell into that. The effectiveness of utilizing our customer relationship management is to be more efficient and be able to manage more people and grow that sales force give me hope to believe we can achieve at the upper end of that range.

So I think it’s just we’re getting to a point where we implemented the share strategy on a lot of cemeteries, we had that problem when we first got that Stewart cemeteries and beginning to put in some inventory into those places. So I am excited I think you’ll continue to see mid to single-digit is what we’re guiding over the next few years.

Great. And then the last question, just broadly speaking.

Are you seeing any pressure on labor I guess because of some minimum wage increases that maybe, is there anything to think about in terms of the overtime rule that’s effect December 1st, would that be impacting any of your employees at all?

Yes, I think there is a few components to some of the rule changes that are going on out there. I think from a minim wage perspective we’re not as concerned.

The reason for that is almost all our customer facing employees earn well above the proposed changes. So we’re not too concerned.

We are concerned with some of our maintenance employees and I kind of view that as Wal-Mart turned this into a positive. I think we’re going to comply with those rules.

We’re going to do what’s right and we’re going to make this a net positive. It is not a big number when you think about the minimum wage change.

As you think about the manager exemption change under the new FOSA that is going to have an impact on some of our management. And if you – what that encompasses is how much base pay that we have versus how much incentive pay that we have.

So we have strategies in place to begin to bolster some of that base pay to meet the requirement of what we need to do under the new rules and shift that from the incentive side. So I think there is tools to deal with this stuff.

We don't expect it to have a material impact albeit it will have an impact and again as it relates to labor we’ve got 24,000 people and they are what makes this company run. So we’re going to do what’s right by the employee but again we don’t think these rules are going to harm us in any way.

They’re going to be an opportunity to do things better.

Great thank you. I’ll jump off.

Thanks good morning. Just another follow-up on the preneed sales production.

I was wondering I think the production was a little bit lighter than expected and I thought maybe you could talk about the sales infrastructure and if there is any change you’re seeing in turnover rates or any other reason that sort of resulted in the quarter not having kind of the upside to price that you can sometimes expect?

Thanks Ryan. As it relates to turnover rate that’s been challenge and our sales organization and really throughout the industry and preferably a lot of sales organization over time and one that we want to stay.

We’ve not seen any increase in that. Our expectation was to be begin to manage that down and we believe ultimately this sales tool is going to allow us to do that.

It’s going to allow us to have better visibility as it relates to the challenges that we’re facing in markets as it relates to sales counselors, sales managers and be in a position to apply the training to be more effective earlier on so that people once are on boarded are going to stay. So nothing like that occurred in the quarter.

I think the quarter was really again more a function – I would relate this to we’ve got a lot of new tools that we’re putting in front of people. There is a lot of new initiatives and with new initiatives sometimes you’re doing more training.

You are taking you eye off the ball or you’re not hitting your goals and objectives. As an example we had a sales enablement tool that we’re rolling out today which is going to allow our counselors to have tools in the field, new technology to implement contracts in someone’s home through a computer and be able to pay and collect.

So we’ve got a lot things that I think are going to enhance our ability to one, be more relative in the customer’s eyes by utilizing current technology and allowing our counselors to be more much productive with their time. So I think this is kind of a pause and a ejection if you will of a lot of things that are going on and I know at the end of the day we expect great things from these tools.

So I wouldn’t get too bogged down in the numbers. We’re always looking on the horizon and trying to see what’s going to make us great in the next three to five years and sometimes that requires a little bit of indigestion in the interim.

Okay. And that’s helpful.

And then on the funeral services performed you did call out kind of an inter-quarter trend with July I guess representing most of the sluggishness and then August and September remaining more closely in line with your expectations. I mean is there any way you can kind of lay out how those actual year-over-year growth rates trended in intra-quarter and how that bridges into your first quarter expectations?

I think we still – if you go back and looked and again it’s always on a comparable basis right Ryan so it’s hard, you are comparing to the prior year. July 2015 was still a very, very strong year.

So we were comparing at the pretty tough number and we’re down I don’t recall exactly but somewhere in the 6, 7% range and then August and September I forget but they were essentially flat, one was up a little bit, one was down little bit. And that was the time period where we saw the adjustment down in the 2015 number.

So as I think about the fourth quarter we still put this way, I probably feel the most confident of any of the quarters yet that we’ve got a better shot at a better comparable number. So we feel pretty good about what we’re compared to.

Having that if you look at us for the quarter we were down 1.8% in volume. The CDC data which again doesn’t perfectly correlate was down 1%.

The flu deaths were down 5% even for this third quarter. So I just want to say I still believe this generally is a phenomenon with death rate and what’s happening and we’re going to complete as effectively as we can in these markets and we’re always trying to find better ways to compete within the marketplace.

Preneed is a key component of that and so we’re going to continue to drive it. So I feel – I guess I would say for the fourth quarter I feel as confident as I have all year about our ability to try to show better volume numbers.

Okay. That’s very helpful.

And the last one from me on the pricing for the average funerals performed and the HMIS plus, it sounds like you are fully rolled at this point. Can you just give a sense of utilization, how many of your locations are fully utilizing this and what do you think is a good expectation a full year impact on the average revenue per service you think this can drive?

Okay. And again Ryan remember this was kind of rolled in phases so as an example I think the 900 some locations went live just at the end of September so we’re not fully implemented, we still have some markets that we have some regulatory issues.

We’ve experienced some issues as it relates with bandwidth, Wi-Fi because as you appreciate we’re trying to run data from these presentations in order to generate contracts. So there is some logistical issues with getting this up and running and working right.

What I will tell you is in the test markets this HMIS plus was a very, very effective tool in expanding what people bought. I think I’d say as we roll it out like anything people that really embrace this have a very favorable big impact and in some other market we didn’t have as favorable impact.

Their part is just to go back and say what’s the problem is it training, is it bandwidth, that’s when we find out some of these problems. They say, well I can’t gee Mr.

[indiscernible] loves it to be able to do that but I can’t, it takes forever to get through our Wi-Fi system. We need more capacity.

So those are the types of I’d say learnings that are occurring today. I’d once we’re up in running our belief is that his could have as big an impact on average all in is to move the whole average 1 to 2% I believe that’s fair to say.

But again I think it’s going to be large in some places and that would be against our previous expectations. So there is a lot of expectation riding on this and again it’s going to correlate with JD Power royalty scores, it’s going to correlated with our ability to generate revenues, it’s going to correlate with our counselors’ ability to earn more for them.

So this is a win-win-win across the network if it goes right. And everything is telling us that it is very effective and we’ve got to work out some of the kicks and we’re excited about it.

All right great. Thanks for taking my questions.

Hi everyone this is Greg on for Scott. I was just wondering if you could touch upon how the acquisition pipeline looks and maybe speak to the level of competition and acquiring prospects in the current environment.

Sure Greg, this is Tom. I would tell you that the pipeline still looks very good.

We’ve got a lot of deals working in different states of progression but I’d say we’re busy out there talking to people from an introductory perspective evaluating financial statements, negotiating a letter to content things of that nature. So we feel very good and continue to see pretty good visibility on the deal flow.

I’d say from a competitive perspective again it all depends upon where it is and who the target is. We’ve got deals where we’re the single bidder that they’ve approached us and want to as what they view as a very fair bid and they don’t want to go to an expanded process.

And then we’ll always have a few where we’ll show us and [indiscernible]. But I’d say just as often that competitor could be a local regional person versus a public or national chain across the board but we still feel very good about our ability to deploy capital in that arena.

We also hopefully you’ve seen kind of a pickup in our spending as it relates to new funeral homes built. I think again you’ll see a trend of more money being spent the remainder of this year and as we look into ’17 and ’18 similar types of opportunities to continue to deploy capital for great returns to expand our network.

Great, thanks for that. And could you maybe touch upon the drivers of the lower G&A in the quarter, generally do you see revenue and what do you view as permanent cost reductions and how we should think about that going forward?

Well, lot of that is what Thomas has already mentioned, it has to do with metrics organization that’s not just an corporate G&A but also in the actual field operations in funeral and cemetery in terms of managing costs. A good amount of it really has come lately from supply chain, it has to do with the initiatives that we have not just from the working capital perspective that also has an expense positive effect as we continue to manage our network diligently using metrics and driving our entire spend of our entire company towards larger contracts that are negotiated and ultimately have more synergies.

But that’s way to say it you know to use our tagline is leveraging our scale and you have seen that all through our organization whether it’s in the supply chain or all the other ancillary functions that we had.

Great, thanks for that. I will hop back into the queue.

Good morning everyone. Just one question, you know this trend has been at least for the last couple of quarters, while I look at the comparable funeral services performed the at need obviously remains the weakest component but I don’t fully appreciate why there is a divergence between the volumes that are maturing out of the backlog versus the true at need.

Yes, you talking about the volume itself or the average?

The volume, so you look at the volume at need was down 3.6% and then the funeral home mature preneed was up 0.2 and then non funeral home matured preneed was up 3.4, I am just trying to wonder, figure out what's causing the divergence between the true at need versus the other two cohorts.

Yes, Chris, couple of things, one is first I will talk to at need versus core preneed maturing and then I think separate issue as it relates to non funeral. You think about true at need versus our preneed backlog, think of the history of the way the preneed backlog built it SBI.

The first bucket of backlog relates to people that we acquired, so we acquired a lot of funeral homes at preneed programs that probably were highly cannibalized, they were people that we would have written as the wife of the husband that passed away and so we probably would have, she would have walked through the door but now she is a preneed backlog person. The second phase of SCI was what we stole once we came in, if you roll back 20 years we were a highly, we focused our efforts upon family service or again people that were getting leased or coming from our funeral homes.

So you think about what's coming to the backlog now is probably a highly cannibalized previously written preneed or an SCI preneed that was written sometime ago again with a focus on lease that came out of the funeral home. In recent years we have expanded to more of a market based approach but we are generating leads outside of the funeral home whether it be through search engine optimization, whether it be through direct mail, we are generating different types of leads.

So what you are seeing influx through the day is again our more aggressive approach to preneed showing up as a preneed going at need and not necessarily moving the needle on the overall volume, if that makes sense. The last non-funeral home fees relates really to Neptune, in Neptune life because again we have some business with [indiscernible].

As you think of Neptune’s volume their ability to sell preneed contracts at the lease deed versus at need is like 3 to 1, that sounds right Jay? 3 to 1, so they were always a highly aggressive preneed writer of contracts and so on a 3 to 1 ratio and if you look at let's say our base business and again that’s what the consumer wants, we are not under one, right, 0.6 to 1 or 0.7 to 1 something like that.

So they have incredibly tied up that customer through a preneed contract and because they are out there more aggressively than anybody else you are seeing a parallel growth that exceeds the death rate. So those are kind of my, from the hip analysis of what I think those trends are and again there is always dynamics locally that are going to change things that that's generally the way I view it.

Okay. That's great.

And then just a question on the cash taxes here and maybe I just lost track of this, because I can't recall what the differences. But when I look at even if you – the 140 could be 120 this year in cash taxes, but then I look at the book rate, it's trending at a level lower than that.

And I guess is there a point in the future where at least what we’re seeing in the reported income statement, sort of roughly matches what you're going to paying cash taxes there is always going to be a delta. I'm just trying to get a sense for at this point it's actually the cash tax returning high in which you are reporting on the reported income statement?

Thanks.

Yes, Well, let's see – let me just levels that for you, Chris. The year-to-date we paid about $100 million in taxes and you said right, it could be about 120-ish is variables now based on some tax plan initiatives that we've done and continue to apply.

That $20 million that we paid in the fourth quarter was roughly equates to similar number that we paid in the fourth quarter of 2015, but ultimately we would ends up much higher than we did last year. So the 120 we compared about $93 million or $90 million in 2015.

So still $30 million what I'll characterize is the headwind complete year over complete year. Now in terms of the provision, the provision was actually a little bit lighter this quarter, which was related to a return to accrual adjustment that it occurs when you file your tax return.

And when you file that you true up your provision through your current quarter income statement. So I'll consider third quarter to be somewhat low in nature, I think the more correct provision to use when you look overall is in that 37% to 38% area.

I think as we becoming full cash tax payer, which we've been successful and continuing to differ for several years as you and I talked about this for many, many times. I do think that, which you consider a cash tax rate is going to approach your provision rate, so always be a little bit separation because of temporary and some permanent differences between tax and book accounting.

So, generally it is going to start creeping up a cash tax rate towards the provision and get closed to or just underneath matching in income statement provision.

I had jump off for two minutes, so just tell me that you've already answered this. But I know you touched on the preneed coming out of the backlog, but I don’t know if you said one of your tailwinds has been that you've gone from a deficit to a surplus in terms of the revenue for funeral coming out of the backlog.

As we look out over the next five years or so, how much juice is left in the maturing preneed going out need to help the overall ASP?

John, we already answered that question. I had to…

You are funny, guy.

I know. Thanks, John.

And I think as we think about that we think there is more juice to answer your question and we are trying to become better predictability of what we believe is going to some out there, but as more and more, and one thing I did touch upon, I don’t know if you’re on the call was it kind of buckets of backlogs, we got the acquired contract sales growth, they’re probably one is robust and probably one is invested as the same way. We got the SCI written stuff from 15 years ago in previous that was probably again highly cannibalized better written contract, better invested and then you got we are going to pay which is probably a more growth oriented approach to preneed hopefully be a market share approach the preneed, at the end of we believe is invested pretty widely.

So as more and more of those contracts become what coming out of the backlog. I would expect that we've got a little ways to learn as it relates to what's coming out of that.

And one fact if you do have in mind is that this contract not going to grow as the same level as trust contract. So your growth assumption on those contracts is less than 1%, but remembers it's written at a pretty high ticket price probably in the $6,000 range and growing over time.

Yes, so that was my question. So writing stuff is $6000 today versus your blended average.

So we should think about most of that being thrown into the 1% growth a year category with your assurance and then the rest being maybe 30% being thrown into your trust where it might earn 3%, 4% a year? Simple like that.

I think that’s right, what’s coming out of the backlog today is more trust weighted that you just said or call it 55%, 45% maybe insurance versus trust. Again, over time, we are trying to get better doing is that’s going to - that’s difference is going to grow and so there will be inflection point out there were insurance isn't growing at the same rate of trust is and you will have a difference.

Now the benefit is that we could – and we are deploying it.

Sure. My other question is the M&A has been a bit better than I would have thought this year.

I know you did one big one. Is there anything going on with the environment that would explain that or it’s just one of this year's?

My guess - history tells me it’s probably just one of the year, I will tell you that I think the industry is going through the same thing the world is going through the baby boomer impact. A lot of these owners are probably baby boomers are just in front of them allowed us what we’re seeing when you look at the different mortuaries schools that are out there.

These enrollments have change dramatically over time. You are not seeing as many dollars records going into the business.

And so with that, I think there is a lot more inflection points where owners are saying, hey, [indiscernible] I care about my legacy, but my kids don't want to run the business. Who is the best in maintaining our legacy?

Our belief is we can do that and we are going to give the opportunities to the employees to grow, we are going to spend money and make sure that reputation is still solid one. So we are just seeing more opportunity to tell that story.

I would like to believe it’s going to be a continuing trend, but again as history tells us sometimes you are going through a slow path again. Right now, we are still seeing a lot of opportunities to go out and talk to people.

Thanks. And my last question would be, I know you had a tough comp this year on your preneed cemetery, because of the Stewart work you did.

I know you've call it, you are growing at 5% to 7% in the past. Do you think that's a good number to think about for next year as it going to be a bit better than that do you think?

Yes, so on the cemetery side, we've always call for mid-to-high single digits which is guess you could put your own definition on that, I call that 4% to 9% I guess. We've outperformed that – and again it really depends upon, it’s really hard to tell quarter-to-quarter and even on an annual basis.

But we beat it for so many years, I think people got - yes there are saying mid single-digits, but they really do above 10% to 12% or something. I really believe that we can achieve mid-to-high single-digit, you are seeing 4% so far this year, we are not satisfied with that.

We think it should be higher than that. As I think about realistic long-term numbers you get into the 6%, 7%, 8%, those areas where we like to achieve.

Can you have a 12% along the way? Sure.

And you have a 4%, yes, we are seeing one right now. So my belief is we are going to get back to that and the reasons behind it are going to be really got a customer relationship management system is allowing us to reduce turnover in our sales force, to manage people more effectively in training and then eventually grow the number of people in the sales force with that more effected tool.

So if that occurs like we believe than the numbers we’re talking about are very, very achievable and that surprises and achievable too.

And just for Eric. I know you said 190 million shares.

Just to be clear, is that a good fourth quarter number? Is that fully diluted shares?

Just trying to make sure we got that figured out.

Fully diluted would be about 3.5 million, 4 million more shares than that. Just a non-cash flow number outstanding.

Great, thank you.

Yes, thanks, hello everyone. Since you already use your [indiscernible] I don’t have to worry about telling you that I got on little late too so I may have missed something, but anyway.

A couple of things on the commentary that the agency revenues were off a little bit in part because of this Stewart transition, does that turn or is this sort of the new normal on the agency revenues?

That will turn so that was really temporary transition where it was geography where we still had use Stewart's previous provider. And in the switch we have to get everybody license appropriately insurance product.

So what happen was we wrote a lot of trust instead of insurance in that transition period. Our belief is that all that going to convert back into insurance.

So that piece will flip back around. We do have the issue as it relates to mortuary which will be a something we have to overcome in 2016.

I think about the Catholic mortuaries is riding what that a million of months. So probably 12 million year in previous insurance production that will go way.

Right, okay. And you mentioned the new tool which will help you on the organic growth side I guess on the funeral side.

I am just trying to think about underlying pricing trends. I know there was an effort at least there has been effort to sell a more fulsome service package to those chose in cremation and so your average is on the cremation side of your add need funeral business were growing a little faster than the traditional business.

Is that still the case is well and any flavor for how much the differential there might be.

It is the case, and again I use round number A.J., did you heard me say these over the years and I have always used around but today our average burial for the funeral home contract is probably a person $70,700. Our average cremation through the funeral home is average in close to $5,300 today.

So the difference now was about $2,400 and if you recall as you’ve been rounding all that this difference use to be about $3,000. So we made quite journey if you will on the cremation side and getting of wider array of relevant product and services in front of that cremation consumer.

Now combined with that as you know the direct information consumers still spend about $2,200 so that’s generally going to done through our non-funeral home network.

Okay. Just a last question on the CapEx increase.

I see some of that’s development of cemetery properties is that new properties or is that making changes to existing prosperities to prepare them in a different way.

It’s the later A.J., it’s the development of the undeveloped property, in order words its building on our cemeteries and projects like that and it is developing new acreage in terms of creating the inventory for the sales force to sell.

Okay. All right that sounds great.

Thanks a lot.

Thanks Tom and Eric. I think you gave the production number for the catholic facilities that are going, it was 12 million preneed number, but is there kind of revenue run rate for app need any type of the vent volume that we need to adjust our models for.

Yes, I think the revenues associated with the catholic mortuary business on a annualized basis is about $29 million. And from an EBITDA perspective it was close to about $9 or $10 million something along those lines.

So that funeral business Bob and where were taking about the preneed sales for recent months. As you think about the G&A revenue impact we are going to lose 12 million from [indiscernible].

And can you remind this on the cash flow and coming in here in the fourth quarter and I assume that chose up an investing activities.

First of all in the fourth quarter, we are going to effectively sell those businesses and therefore it’s going to be - we’ve already written down the business whether going to fit, so I think from a cash flow perspective I guess which you open.

Proceeds will receive EBITDA investing yes.

And that’s $30 million or so.

Yes. That’s $27 million.

Yes, I think it’s $27 million and they are going to pay us annually per year about a $1 million depending upon production levels.

Okay. And Eric can you usually give us share repo number to date in the quarter is there any update there.

Yes, it was - you’re talking about…

In the fourth quarter.

In the fourth quarter we are out there in the market, we did big block in September so we are going a little bit slower during the quite period that we set up but ultimately we will pick that up and expect to finish very strongly.

Okay. Thank you.

Thank you so much. We appreciate everybody being on the call.

We look forward to talking to you again in 2017.