Service Corporation International Earnings Call Transcripts
Fiscal Year 2026
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Funeral volumes declined 6% in Q1 but are expected to partially recover, with full-year guidance at -1% to -3%. Strong preneed cemetery sales, technology investments, and cost controls support stable EPS guidance and margin expansion. Long-term growth is anticipated from demographic shifts and a $17 billion backlog.
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The company leverages its leading market position and scale in funeral and cemetery services, focusing on pre-need contracts and operational efficiency to drive growth. Despite recent volume declines, revenue per service and margins remain strong, with long-term growth expected as demographic trends shift.
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Q1 2026 saw adjusted EPS rise to $0.97, with strong cemetery growth offsetting funeral volume declines. Pre-need sales and average revenue per service increased, while cost controls supported margins. 2026 guidance is reaffirmed, with improvement expected in the second half.
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The event detailed a disciplined transformation to a customer-centric, scalable platform, leveraging digital tools and operational excellence for sustained growth. Key drivers include a $17B pre-need backlog, evolving cremation trends, and targeted M&A, with renewed earnings growth expected from 2026.
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The company leverages a unique urban network and a large pre-need backlog for long-term growth, with recent gains from technology adoption and operational efficiencies. M&A remains focused on large independents, while insurance transitions and AI initiatives are set to drive future performance.
Fiscal Year 2025
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Q4 and full-year 2025 saw solid EPS and cash flow growth, with margin expansion in cemetery and strong pre-need sales. 2026 guidance anticipates continued EPS and cash flow growth, stable leverage, and disciplined capital allocation, though funeral volume remains a key uncertainty.
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Funeral and cemetery segments have normalized post-pandemic, with steady contract growth and a focus on expanding large sales. Market share remains strong, AI and analytics are being piloted, and margin expansion is supported by new marketing agreements and customized offerings. Online pricing has shown minimal impact on business metrics.
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The company expects normalized growth in 2025 and beyond, with demographic tailwinds from aging baby boomers starting around 2029. Cremation trends are stabilizing, and regulatory-driven shifts in pre-need sales are nearly complete, positioning for resumed growth. M&A remains disciplined, targeting 25%-30% market share over time.
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Volumes in funeral and cemetery segments have stabilized, with moderated cremation mix shifts and strong pre-need sales. EPS growth of 8%-12% is targeted for 2026, supported by acquisitions, capital deployment, and a robust acquisition pipeline.
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Q3 2025 saw adjusted EPS rise over 10% year-over-year, driven by strong cemetery growth and disciplined expense management, while funeral revenues were slightly down. 2025 guidance was reaffirmed, with robust cash flow and capital returns, and long-term EPS growth of 8%-12% targeted.
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Q2 2025 saw adjusted EPS rise 11% year-over-year, driven by funeral segment growth and cost control, while cemetery gross profit declined. Cash flow guidance was raised, with strong liquidity and capital returns, and pre-need sales are expected to rebound in the second half.
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The company leverages its leading North American funeral and cemetery portfolio, focusing on pre-need sales and demographic trends among Baby Boomers. Funeral volumes have stabilized post-pandemic, with steady revenue per service growth and strong margin expansion in the cemetery segment. Capital allocation prioritizes M&A, construction, dividends, and share repurchases.
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COVID-related demand pull-forward has led to flat funeral volumes in 2024, but demographic trends, especially the aging baby boomer population, are expected to drive growth and margin expansion in coming years. Improved insurance contracts and disciplined acquisitions support long-term profitability.
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The business maintains a leading market share in a fragmented industry, with stable growth driven by inflationary pricing, strategic pre-need sales, and property tiering. Funeral and cemetery volumes are stabilizing post-COVID, with margin and cash flow strength expected to continue.
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Q1 2025 saw adjusted EPS rise to $0.96, driven by strong funeral segment growth and margin expansion, while cemetery revenue declined. The transition to insurance-funded pre-need contracts temporarily reduced sales production, but guidance for 2025 EPS and cash flow was reaffirmed.
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Earnings growth is expected to return to historical levels as COVID impacts fade and demographic trends drive demand. M&A activity is robust, focusing on larger independents, while technology investments have boosted sales efficiency and reduced turnover. The recent agency switch is set to enhance revenue and margins.
Fiscal Year 2024
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Q4 2024 saw strong EPS and cash flow growth, with both funeral and cemetery segments contributing to higher revenues and margins. 2025 guidance anticipates continued margin expansion, stable or slightly lower funeral volumes, and robust capital allocation, despite higher tax rates and ongoing labor cost pressures.
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Funeral volumes are expected to stabilize in 2025 after a 2% decline in 2024, with strong average revenue growth and improved operational efficiency. M&A and targeted development remain key growth drivers, while technology adoption and product diversification help offset industry headwinds.
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Q3 2024 saw stable earnings and strong cash flow, with robust acquisition activity and increased investment in growth and maintenance. Guidance for Q4 and 2025 is optimistic, with EPS and cash flow expected to rise, supported by a strong acquisition pipeline and demographic tailwinds.
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Q2 adjusted EPS declined year-over-year due to lower funeral volumes, but cemetery profits and acquisitions partially offset the impact. Management expects full-year results at the lower end of guidance, with most EPS growth in Q4 and a return to higher growth in 2025 as headwinds subside.