Service Corporation International (NYSE:SCI) reported higher adjusted earnings in the fourth quarter of 2025, with management highlighting steady revenue gains across both funeral and cemetery operations, continued momentum in pre-need sales production, and an outlook that assumes flat to slightly down funeral volumes in 2026.
Fourth-quarter and full-year earnings performance
Chairman and CEO Tom Ryan said SCI generated adjusted earnings per share (EPS) of $1.14 in the fourth quarter, up 8% from $1.06 in the prior-year period. He attributed the increase to moderate gains in revenue and gross profit in both business segments, slightly lower adjusted corporate general and administrative (G&A) expense, and a lower share count. Ryan said operating income improvements contributed about $0.04 of EPS growth, while the lower share count added another $0.04.
Funeral segment: higher average revenue per service, lower services performed
Ryan said total comparable funeral revenue increased by $3 million (just under 1%) in the quarter. Comparable core funeral revenue increased $6 million (just over 1%), driven primarily by a 3.2% increase in core average revenue per service. That improvement came despite a modest 30-basis-point increase in the core cremation rate. The company’s results were tempered by a 1.9% decline in core funeral services performed in the quarter. For full-year 2025, Ryan said comparable funeral volume declined less than 1% and that SCI believes the impact of the COVID “pull-forward effect” continues to diminish.
Non-funeral home revenue increased by $3 million in the quarter, which management attributed primarily to an increase of more than 11% in average revenue per service. Ryan said the company expects that trend to continue as older pre-need contracts mature with higher cumulative trust earnings and newer pre-need contracts mature with higher value due to SCI’s decision to no longer deliver pre-need merchandise at the time of sale.
Core general agency and other revenue declined by $8 million (almost 13%) primarily due to a lower general agency commission rate versus the prior-year quarter. Ryan said the commission rate was affected by product mix changes and higher cancellations stemming from the company’s insurance partner transition, but he said SCI believes the rate has now stabilized in the mid-30% range.
Funeral gross profit declined by almost $4 million, and the gross profit percentage declined by 70 basis points to about 21%. Ryan said a modest revenue increase was more than offset by a $5 million increase in recognized selling compensation costs. He noted that while the cash rate expended for selling costs was flat year over year, recognized selling costs increased due to compensation structure changes in the core business and the mix shift in SCI Direct toward insurance-funded products, which results in immediate recognition of general agency commissions and related selling costs.
Pre-need sales production rose sharply. Ryan said total pre-need sales production increased by $29 million (about 11%) over the prior-year quarter, including a $25 million (12%) increase in core pre-need funeral sales production and a more than $4 million (8%) increase in non-funeral home production. He said the company had “worked out the kinks” of the insurance partner transition in the core segment and, by the end of 2025, had rolled the insurance product into 100% of SCI Direct locations.
Cemetery segment: trust income lift and margin expansion
In the cemetery segment, Ryan said comparable cemetery revenue increased $5 million (about 1%) in the quarter, led by an $8 million increase in other revenue, partially offset by a $3 million decline in core revenue. The core decline was attributed primarily to a $3 million decline in at-need revenue.
Total recognized pre-need revenue was essentially flat, as a $6 million increase in pre-need merchandise and service revenue was offset by a $6 million decline in recognized pre-need property revenue. “Other revenue” increased primarily due to higher endowment care trust fund income, according to management.
Comparable pre-need cemetery sales production increased by $8 million (about 2%). Ryan said core sales accounted for a $13 million increase driven by “impressive velocity growth,” which was partially offset by a $5 million decline in large property sales against a strong prior-year comparison. For the full year 2025, pre-need cemetery sales production grew about 4%.
Cemetery gross profit rose $5 million (about 3%) in the quarter, and the gross profit percentage increased 70 basis points, producing an operating margin of more than 36%, Ryan said. He attributed the margin improvement to higher trust income and cost discipline, with fixed cost growth managed slightly above 1%.
Cash flow, capital allocation, and balance sheet update
Chief Financial Officer Eric said SCI generated $213 million of adjusted operating cash flow in the fourth quarter, above the high end of the company’s most recent guidance range. He said that compared with the prior year (after neutralizing an expected $21 million increase in cash taxes), adjusted operating cash flow decreased $34 million, impacted by higher cash interest (up $24 million) and working capital timing, including payroll timing.
For full-year 2025, SCI generated $966 million in adjusted operating cash flow. Eric said that excluding cash taxes and special items in both years, cash provided by operating activities increased $108 million, or 11%, versus 2024.
SCI’s fourth-quarter capital investment totaled $174 million, contributing to $508 million for the full year across maintenance, growth, acquisitions, and real estate. The company invested $107 million of maintenance capital in the quarter and $328 million for the full year. Growth capital spending was $31 million in the quarter and $79 million for the year. SCI also spent $36 million on acquisitions in the quarter and $101 million for the year, with purchases in North Carolina, Arizona, Florida, and Canada.
In capital returns, SCI returned $107 million to shareholders in the quarter through $59 million of share repurchases and $48 million of dividends. For the year, the company returned $645 million through $461 million of repurchases and $184 million of dividends. Eric said the company ended the year with just under 140 million shares outstanding and repurchased an additional 500,000 shares after year-end for about $40 million.
Eric also discussed a new $2.5 billion bank credit facility entered into in November, consisting of a funded $750 million term loan and a $1.7 billion revolving credit facility, both maturing in November 2030. He said the transaction increased liquidity by more than $350 million, and current liquidity is about $1.7 billion. Leverage ended 2025 just above 3.65x, at the lower end of the company’s long-term net debt-to-EBITDA target range of 3.5x to 4.0x.
2026 outlook: EPS growth tied to volumes, sales production, and cost control
Ryan said SCI is guiding to a normalized 2026 EPS range of $4.05 to $4.35, with a midpoint of $4.20 (5% to 13% growth, 9% at the midpoint). In the funeral segment, the company expects flat to slightly down volume versus 2025, average revenue per case growing at inflationary rates (partially offset by modest cremation mix increases), higher general agency revenue driven by increased pre-need sales production, and slightly higher recognized selling costs as compensation shifts toward more fixed pay. The company expects to manage fixed costs slightly below inflation and targets a funeral gross margin percentage increase of 20 to 60 basis points.
For cemetery, SCI expects low- to mid-single-digit growth in pre-need sales production and cemetery revenue growth of about 2% to 5%, with gross margin expansion of 30 to 60 basis points compared to 2025.
Eric guided to 2026 adjusted operating cash flow of about $1.0 billion to $1.06 billion. At the midpoint, he expects cash taxes to decline about $20 million to approximately $120 million, citing an anticipated tax benefit from investments in renewable energy projects, while noting SCI expects to return to a normalized cash tax rate of about 24% to 25% beyond 2026 absent additional planning strategies or regulatory changes. He said the effective tax rate on the income statement is expected to trend in line with 2025 at about 25% to 26%.
On the Q&A, management said the primary factor that could pressure results toward the lower end of EPS guidance would be continued softness in funeral volumes, while stronger volumes and sustained sales momentum could support the higher end.
About Service Corporation International (NYSE:SCI)
Service Corporation International (NYSE: SCI) is a leading provider of funeral, cremation and cemetery services in North America. Through its network of funeral homes, cemeteries, memorial parks and crematoria, the company offers a broad array of end-of-life services, including traditional funeral ceremonies, memorialization, burial and cremation. In addition to core services, SCI provides grief counseling, pre-need planning and merchandise such as caskets, vaults, urns and memorialization products.
Headquartered in Houston, Texas, Service Corporation International operates more than 1,900 funeral homes, over 450 cemeteries and 40 combination facilities across the United States and Canada.
