SCI — Service Corporation International

Summary of SCI Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Adjusted EPS: $1.14, an 8% increase from $1.06 in Q4 2024.
• Full-Year Adjusted EPS: $3.85, up 9% from $3.53 in 2024.
• Revenue Growth: Moderate increases in both funeral and cemetery segments; comparable funeral revenues rose by $3 million (less than 1%).
• Gross Profit: Funeral gross profit declined by nearly $4 million; cemetery gross profit increased by $5 million (3%).
• Adjusted Operating Cash Flow: $213 million in Q4; $966 million for the full year, an 11% increase from 2024.
• Capital Investments: $174 million in Q4; total of $508 million for the year, including $328 million in maintenance CapEx.

2. Strategic Updates and Business Highlights

• Funeral Segment: Core funeral revenue increased by $6 million (over 1%), driven by a 3.2% growth in average revenue per service, despite a 1.9% decline in services performed.
• Cemetery Segment: Comparable cemetery revenue rose by $5 million (1%), with preneed merchandise and service sales production up $15 million.
• Insurance Transition: SCI Direct has fully transitioned to insurance-funded products, which is expected to stabilize commission rates moving forward.
• Acquisitions: $36 million spent on acquisitions in Q4, totaling $101 million for the year, aligning with guidance.

3. Forward Guidance and Outlook

• 2026 Adjusted EPS Guidance: Expected range of $4.05 to $4.35, indicating 5% to 13% growth.
• Funeral Volume Outlook: Anticipated to be flat to slightly down, with average revenue per case growing at inflationary rates.
• Cemetery Revenue Growth: Expected to grow by 2% to 5%, with preneed cemetery sales production projected to increase in the low to mid-single-digit percentage range.
• Cash Flow Guidance: Adjusted operating cash flow expected between $1.0 billion and $1.06 billion for 2026.

4. Bad News, Challenges, or Points of Concern

• Funeral Volume Decline: Comparable funeral volume declined less than 1% for the year, attributed to the diminishing COVID pull-forward effect.
• General Agency Revenue: Experienced a decline due to lower commission rates and higher cancellation rates from the transition to a new insurance partner.
• Cost Management: While fixed costs were managed below inflation, there are concerns about the sustainability of this trend in the face of potential volume increases.
• Market Conditions: Uncertainty regarding future funeral volumes and the impact of demographic trends on business performance.

5. Notable Q&A Insights

• Cemetery Sales: Management expressed confidence in preneed cemetery sales growth, with a focus on improving sales processes and targeting cremation customers.
• G&A Expenses: Corporate G&A expenses were lower than expected, attributed to volatility in long-term incentive plan accruals.
• Sales Strategy: Emphasis on improving sales conversion rates and retaining key employees through fixed compensation structures.
• Market Trends: Management noted positive trends in sales activity, particularly in cemetery production, despite a slow start in January 2026.

Overall, SCI reported solid financial performance for Q4 2025 and provided a cautiously optimistic outlook for 2026, while acknowledging challenges in funeral volumes and the impact of recent transitions in their insurance offerings.