UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6402-1 SERVICE CORPORATION INTERNATIONAL (Exact name of registrant as specified in its charter) Texas 74-1488375 (State or other jurisdiction ...

Service Corporation International (NYSE:SCI) Q1 2022 Results Conference Call May 4, 2022 9:00 AM ET Company Participants Debbie Young - Director, IR Tom Ryan - Chairman & CEO Eric Tanzberger - SVP & CFO Conference Call Participants A.J. Rice - Credit Suisse Joanna Gajuk - Bank of America Scott Schneeberger - Oppenheimer Operator Good day, and welcome to the Service Corporation International First Quarter 2022 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6402-1 SERVICE CORPORATION INTERNATIONAL (Exact name of registrant as specified in its charter) Texas 74-1488375 (State or other jurisdiction of i ...

Service Corporation International (NYSE:SCI) Q4 2021 Earnings Conference Call February 11, 2022 9:00 AM ET Company Participants Debbie Young - Director, IR Thomas Ryan - Chairman & CEO Eric Tanzberger - SVP & CFO Conference Call Participants Scott Schneeberger - Oppenheimer Joanna Gajuk - Bank of America Merrill Lynch A.J. Rice - Credit Suisse John Ransom - Raymond James Operator Good day, and welcome to the Service Corporation International Fourth Quarter 2021 Earnings Conference Call. All participants wi ...

service corporation international Non-GAAP Financial Measures February 14, 2022 Definitions: Non-GAAP Financial Measures This information should not be considered in isolation or as a substitute for related GAAP measures. Additionally, these measures as calculated by the Company may not be comparable to similarly titled measures used by other companies. ADJUSTED EPS OR DILUTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS We used diffect earnings per share excluding special items (adjusted IPS) as an underlyin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6402-1 SERVICE CORPORATION INTERNATIONAL (Exact name of registrant as specified in its charter) Texas 74-1488375 (State or other jurisdic ...

Service Corporation International (NYSE:SCI) Q3 2021 Earnings Conference Call October 28, 2021 9:00 AM ET Company Participants Debbie Young - Director, IR Tom Ryan - Chairman & CEO Eric Tanzberger - SVP & CFO Conference Call Participants John Ransom - Raymond James Scott Schneeberger - Oppenheimer Joanna Gajuk - Bank of America Operator Good day, ladies and gentlemen, and welcome to the SCI Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator instructions] Aft ...

service corporation international Non-GAAP Financial Measures October 27, 2021 Definitions: Non-GAAP Financial Measures This information should not be considered in isolation or as a substitute for related GAAP measures. Additionally, these measures as calculated by the Company may not be comparable to similarly titled measures used by other companies. ADJUSTED EPS OR DILUTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS We used diffect earnings per share excluding special items (adjusted IPS) as an underlying ...

[Glossary](index=3&type=section&id=Glossary) This section defines common terms specific to the deathcare industry, including 'Atneed', 'Preneed', and 'Cemetery Perpetual Care Trust' - The glossary defines common terms specific to the deathcare industry, such as **'Atneed'** (arrangements sold once death has occurred), **'Preneed'** (purchase prior to death), **'Cemetery Perpetual Care Trust'** (fund for maintaining cemetery grounds), and **'Maturity'** (when contracted merchandise is delivered or service performed)[7](index=7&type=chunk)[10](index=10&type=chunk)[19](index=19&type=chunk)[22](index=22&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and notes for June 30, 2021 and 2020 [Unaudited Condensed Consolidated Statement of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Operations%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20%26%202020) This statement provides a summary of the company's revenues, expenses, and net income for the three and six months ended June 30, 2021 and 2020 Three Months Ended June 30 (in thousands, except per share amounts) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Total Revenue | $987,535 | $820,035 | +20.4% | | Gross Profit | $268,713 | $218,767 | +22.8% | | Operating Income | $245,837 | $182,335 | +34.8% | | Net Income Attributable to Common Stockholders | $157,705 | $105,508 | +49.5% | | Basic EPS | $0.94 | $0.59 | +59.3% | | Diluted EPS | $0.92 | $0.59 | +55.9% | Six Months Ended June 30 (in thousands, except per share amounts) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | | Total Revenue | $2,065,516 | $1,623,000 | +27.3% | | Gross Profit | $646,220 | $397,811 | +62.4% | | Operating Income | $587,877 | $334,111 | +76.0% | | Net Income Attributable to Common Stockholders | $386,584 | $187,449 | +106.2% | | Basic EPS | $2.29 | $1.04 | +120.2% | | Diluted EPS | $2.25 | $1.03 | +118.4% | [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20%26%202020) This statement details the company's net income and other comprehensive income components for the three and six months ended June 30, 2021 and 2020 Three Months Ended June 30 (in thousands) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Net Income | $157,789 | $105,553 | +49.5% | | Foreign currency translation adjustments | $6,934 | $13,738 | -49.5% | | Total Comprehensive Income | $164,723 | $119,291 | +38.1% | | Total Comprehensive Income Attributable to Common Stockholders | $164,639 | $119,244 | +38.1% | Six Months Ended June 30 (in thousands) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Net Income | $386,744 | $187,554 | +106.2% | | Foreign currency translation adjustments | $11,939 | $(17,464) | N/A | | Total Comprehensive Income | $398,683 | $170,090 | +134.4% | | Total Comprehensive Income Attributable to Common Stockholders | $398,523 | $169,985 | +134.4% | [Unaudited Condensed Consolidated Balance Sheet](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheet%20-%20June%2030%2C%202021%20%26%20December%2031%2C%202020) This statement presents the company's assets, liabilities, and equity at June 30, 2021, and December 31, 2020 As of June 30, 2021 vs. December 31, 2020 (in thousands) | Metric | June 30, 2021 | December 31, 2020 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Total Current Assets | $586,574 | $376,152 | +55.9% | | Total Assets | $15,344,449 | $14,515,425 | +5.7% | | Total Current Liabilities | $691,492 | $815,934 | -15.3% | | Long-term Debt | $3,772,448 | $3,514,182 | +7.4% | | Total Liabilities and Equity | $15,344,449 | $14,515,425 | +5.7% | | Total Equity | $1,918,111 | $1,752,621 | +9.4% | [Unaudited Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows%20-%20Six%20Months%20Ended%20June%2030%2C%202021%20%26%202020) This statement outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 Six Months Ended June 30 (in thousands) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Net Cash Provided by Operating Activities | $489,764 | $364,302 | +34.4% | | Net Cash Used in Investing Activities | $(108,552) | $(152,058) | -28.6% | | Net Cash Used in Financing Activities | $(176,495) | $(199,694) | -11.6% | | Net Increase in Cash, Cash Equivalents, and Restricted Cash | $208,028 | $7,975 | +2508.5% | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $446,638 | $250,595 | +78.2% | [Unaudited Condensed Consolidated Statement of Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Equity%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20%26%202020) This statement details changes in the company's equity for the three and six months ended June 30, 2021 and 2020 Equity Changes for Six Months Ended June 30, 2021 (in thousands) | Metric | Balance at Dec 31, 2020 | Comprehensive Income | Dividends Declared | Stock Repurchases | Other | Balance at Jun 30, 2021 | | :-------------------------------- | :---------------------- | :------------------- | :----------------- | :------------------ | :------ | :---------------------- | | Total Equity | $1,752,621 | $398,683 | $(70,920) | $(187,183) | $74,909 | $1,918,111 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial instruments, and other significant financial disclosures - **Note 1. Nature of Operations:** Service Corporation International (SCI) is North America's largest provider of deathcare products and services, operating a network of funeral service locations and cemeteries in the United States and Canada, offering both atneed and preneed arrangements[38](index=38&type=chunk) - **Note 2. Summary of Significant Accounting Policies:** The consolidated financial statements include SCI and its subsidiaries, as well as merchandise and service trusts and cemetery perpetual care trusts where SCI is the primary beneficiary. Restricted cash primarily consists of proceeds from divestitures in escrow and collateralized insurance obligations[41](index=41&type=chunk)[42](index=42&type=chunk)[46](index=46&type=chunk) - **Note 3. Preneed Activities:** Preneed receivables, net and trust investments increased to **$5.79 billion** at June 30, 2021, from **$5.35 billion** at December 31, 2020. Recognized trust fund income (realized and unrealized) for preneed trust investments was **$88.8 million** for the six months ended June 30, 2021, up from **$59.2 million** in the prior year, driven by higher investment returns and capital gains[52](index=52&type=chunk)[62](index=62&type=chunk)[155](index=155&type=chunk) - **Note 4. Income Taxes:** The effective tax rate for the three months ended June 30, 2021, was **22.6%** (**25.5%** in 2020), primarily due to higher excess tax benefits from employee share-based awards. For the six months, the rate was **24.2%** (**24.3%** in 2020)[64](index=64&type=chunk) - **Note 5. Debt:** Total debt was **$3.84 billion** at June 30, 2021, with a weighted average interest rate of **3.79%**. During the six months ended June 30, 2021, the company issued **$820.0 million** of new debt and made aggregate debt payments of **$717.9 million**, resulting in a **$5.2 million** loss on early extinguishment of debt[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - **Note 7. Equity:** The company repurchased **3,683,396 shares** of common stock for **$187.3 million** during the six months ended June 30, 2021. The Board of Directors increased the share repurchase authorization to **$500 million** in May 2021, leaving **$460.2 million** authorized at June 30, 2021[78](index=78&type=chunk) - **Note 8. Segment Reporting:** Total revenue from customers for the six months ended June 30, 2021, was **$2.07 billion**, with funeral revenue at **$1.15 billion** and cemetery revenue at **$914.4 million**. The company operates in the United States and Canada[81](index=81&type=chunk) - **Note 9. Commitments and Contingencies:** Self-insurance reserves were **$93.7 million** at June 30, 2021. The company is involved in various litigations, including wage and hour claims, a class action related to the Stewart Enterprises acquisition, and operational claims regarding cremation service contracts. An unclaimed property audit is also ongoing in several states[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - **Note 10. Earnings Per Share:** Diluted EPS was **$0.92** for the three months and **$2.25** for the six months ended June 30, 2021. The diluted weighted average number of shares outstanding decreased to **170.9 million** (three months) and **171.6 million** (six months) primarily due to share repurchases[97](index=97&type=chunk)[173](index=173&type=chunk)[187](index=187&type=chunk) - **Note 11. Acquisitions and Divestiture-Related Activities:** The company spent **$3.6 million** on business acquisitions and **$10.5 million** on real estate acquisitions during the six months ended June 30, 2021. Net pre-tax gains on divestitures and impairment charges were **$7.4 million** for the six months ended June 30, 2021[100](index=100&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, liquidity, capital resources, and results of operations for the three and six months ended June 30, 2021, compared to the prior year [The Company](index=26&type=section&id=The%20Company) This section provides an overview of SCI's operations as North America's largest deathcare provider and its adaptation to market changes - SCI is North America's largest deathcare provider, operating **1,458 funeral service locations** and **485 cemeteries** across 44 states, 8 Canadian provinces, DC, and Puerto Rico as of June 30, 2021[103](index=103&type=chunk) - The company holds a **$13.2 billion** backlog of future revenue from trust and insurance-funded preneed sales as of June 30, 2021, contributing to revenue stability and predictability[104](index=104&type=chunk) - COVID-19 continues to impact operations, but SCI leveraged technology (livestreaming, virtual meetings, CRM) to adapt to social distancing, leading to increased digital sales leads and improved customer experience[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - As community restrictions eased and vaccine distribution became widespread, the company experienced unprecedented growth in preneed cemetery sales and a significant increase in demand for memorial services[111](index=111&type=chunk) [Financial Condition, Liquidity, and Capital Resources](index=27&type=section&id=Financial%20Condition%2C%20Liquidity%2C%20and%20Capital%20Resources) This section provides management's perspective on the company's financial condition, liquidity, and capital resources [Capital Allocation Considerations](index=27&type=section&id=Capital%20Allocation%20Considerations) This section outlines the company's approach to capital deployment, including acquisitions, dividends, share repurchases, and debt management - The company generated **$489.8 million** in cash flow from operating activities in the first six months of 2021 and had **$966.0 million** in remaining borrowing capacity under its Bank Credit Facility as of June 30, 2021[113](index=113&type=chunk) - SCI was in compliance with all debt covenants at June 30, 2021, reporting a leverage ratio of **2.49** (maximum 4.75) and an interest coverage ratio of **9.60** (minimum 3.00)[114](index=114&type=chunk) - Capital deployment prioritizes strategic acquisitions and new funeral service locations, paying quarterly dividends (targeting **30-40% payout ratio** of after-tax earnings), repurchasing shares, and managing debt[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - During the six months ended June 30, 2021, the company repurchased **3,683,396 shares** for **$187.3 million**. The share repurchase authorization was increased to **$500 million** in May 2021, with **$460.2 million** remaining at June 30, 2021[119](index=119&type=chunk) [Cash Flow](index=28&type=section&id=Cash%20Flow) This section analyzes the company's cash flow from operating, investing, and financing activities for the six months ended June 30, 2021 - **Operating Activities:** Net cash provided increased by **$125.5 million** to **$489.8 million** for the six months ended June 30, 2021, driven by higher cash receipts from customers and lower cash interest payments, partially offset by increased employee compensation, tax payments, and net trust deposits[125](index=125&type=chunk) - **Investing Activities:** Net cash used decreased by **$43.5 million** to **$108.6 million** for the six months ended June 30, 2021, primarily due to reduced spending on business and real estate acquisitions[125](index=125&type=chunk) - **Financing Activities:** Net cash used decreased by **$23.2 million** to **$176.5 million** for the six months ended June 30, 2021, mainly due to a decrease in common stock repurchases and an increase in net debt proceeds[126](index=126&type=chunk) [Financial Assurances](index=29&type=section&id=Financial%20Assurances) This section discusses the company's use of surety bonds to support preneed sales activities - Total surety bonds outstanding were **$286.2 million** at June 30, 2021, a decrease from **$294.2 million** at December 31, 2020. These bonds primarily support preneed sales activities in lieu of trusting funds[128](index=128&type=chunk) [Preneed Activities and Backlog of Contracts](index=29&type=section&id=Preneed%20Activities%20and%20Backlog%20of%20Contracts) This section details the company's preneed sales production, maturities, and the total backlog of deferred revenue Preneed Insurance-Funded Production & Maturities (Six Months Ended June 30, in millions) | Metric | 2021 | 2020 | Change (YoY) | | :---------------- | :----- | :----- | :----------- | | Sales Production | $313.6 | $229.9 | +36.4% | | General Agency Revenue | $77.2 | $59.7 | +29.3% | | Maturities | $198.8 | $188.7 | +5.4% | Preneed Trust-Funded Production & Maturities (Six Months Ended June 30, in millions) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | | Funeral Sales Production | $229.3 | $169.0 | +35.7% | | Funeral Maturities | $172.9 | $150.0 | +15.3% | | Cemetery Preneed Sales Production | $683.9 | $459.3 | +48.9% | Total Backlog of Deferred Revenue (in billions) | Metric | June 30, 2021 | December 31, 2020 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Backlog of trust-funded deferred revenue | $6.49 | $6.11 | +6.2% | | Backlog of insurance-funded revenue | $6.72 | $6.58 | +2.1% | | **Total Backlog of Deferred Revenue** | **$13.21** | **$12.69** | **+4.1%** | [Trust Investments](index=31&type=section&id=Trust%20Investments) This section describes the management and investment objectives of the company's trust funds, including asset allocation and income recognition - Trust funds are managed by independent trustees and investment managers, with investment policies guiding asset allocation and manager selection in compliance with state and provincial laws[142](index=142&type=chunk) - Primary investment objectives for funeral and cemetery merchandise and service trusts are capital preservation and growth, while cemetery perpetual care trusts are growth-oriented to provide fixed distributions or emphasize steady current investment income[143](index=143&type=chunk)[144](index=144&type=chunk) - As of June 30, 2021, SCI trusts had a diversified allocation of approximately **61% equities**, **27% fixed income securities**, **7% alternative and other investments**, with the remaining **5% in cash**[154](index=154&type=chunk) - Recognized trust fund income (realized and unrealized) for preneed trusts was **$88.8 million** for the six months ended June 30, 2021, significantly higher than **$59.2 million** in 2020 due to higher investment returns and capital gains[155](index=155&type=chunk) [Results of Operations — Three Months Ended June 30, 2021 and 2020](index=33&type=section&id=Results%20of%20Operations%20%E2%80%94%20Three%20Months%20Ended%20June%2030%2C%202021%20and%202020) This section analyzes the company's financial performance for the three months ended June 30, 2021, highlighting key drivers of net income and segment results [Management Summary](index=33&type=section&id=Management%20Summary) This summary highlights the increase in consolidated net income and diluted EPS for Q2 2021, driven by improved gross profit and lower expenses - Consolidated net income attributable to common stockholders increased to **$157.7 million** (**$0.92 diluted EPS**) in Q2 2021 from **$105.5 million** (**$0.59 diluted EPS**) in Q2 2020, driven by higher gross profit from cemetery recognized preneed revenue, fewer shares outstanding, lower interest expense, and a lower effective tax rate[157](index=157&type=chunk) [Funeral Results](index=34&type=section&id=Funeral%20Results) This section details the funeral segment's revenue, services performed, and gross profit for Q2 2021, noting impacts from prior year pandemic-related deaths Three Months Ended June 30 (in millions, except average revenue per service) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | | Consolidated Funeral Revenue | $531.7 | $480.9 | +10.6% | | Comparable Funeral Revenue | $524.4 | $476.2 | +10.1% | | Comparable Services Performed | 84,449 | 89,675 | -5.8% | | Comparable Average Revenue per Service | $5,350 | $4,727 | +13.2% | | Consolidated Funeral Gross Profit | $108.4 | $116.0 | -6.6% | | Comparable Funeral Gross Profit | $107.3 | $115.0 | -6.7% | | Comparable Gross Profit Percentage | 20.5% | 24.1% | -360 bps | - The decrease in comparable services performed was primarily due to COVID-19 pandemic related deaths in the prior year quarter[160](index=160&type=chunk) - Funeral gross profit was reduced as staffing and service levels normalized compared to the prior year, driven by customer demand for more robust remembrances, and increased fixed costs due to higher incentive compensation and repairs/maintenance[162](index=162&type=chunk) [Cemetery Results](index=35&type=section&id=Cemetery%20Results) This section details the cemetery segment's revenue and gross profit for Q2 2021, driven by strong preneed property sales and atneed revenue growth Three Months Ended June 30 (in millions) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | | Consolidated Cemetery Revenue | $455.8 | $339.1 | +34.4% | | Comparable Cemetery Revenue | $455.6 | $339.0 | +34.4% | | Comparable Recognized Preneed Revenue Growth | +$88.5 | N/A | N/A | | Comparable Atneed Revenue Growth | +$17.8 | N/A | +19.5% | | Consolidated Cemetery Gross Profit | $160.3 | $102.8 | +55.9% | | Comparable Cemetery Gross Profit | $160.2 | $102.8 | +55.8% | | Comparable Gross Profit Percentage | 35.2% | 30.3% | +490 bps | - The significant increase in cemetery revenue and gross profit was driven by strong comparable preneed cemetery property sales production and a **19.5%** increase in atneed revenue[165](index=165&type=chunk)[166](index=166&type=chunk) [Other Financial Statement Items](index=35&type=section&id=Other%20Financial%20Statement%20Items) This section covers changes in corporate expenses, divestiture gains, interest expense, effective tax rate, and diluted shares outstanding for Q2 2021 - Corporate general and administrative expenses decreased by **$8.1 million** to **$29.0 million** in Q2 2021, primarily due to fewer workers' compensation, general liability, and auto liability insurance claims, and lower charitable contributions[167](index=167&type=chunk) - Net pre-tax gain on divestitures and impairment charges was **$6.2 million** in Q2 2021, up from **$0.7 million** in Q2 2020[168](index=168&type=chunk) - Interest expense decreased by **$4.3 million** to **$37.4 million** in Q2 2021 due to lower interest rates on floating rate debt and debt refinancing activities[169](index=169&type=chunk) - The effective tax rate was **22.6%** in Q2 2021, down from **25.5%** in Q2 2020, primarily due to higher excess tax benefits recognized on the settlement of employee share-based awards[170](index=170&type=chunk) - Diluted weighted average shares outstanding decreased to **170.9 million** in Q2 2021 from **179.7 million** in Q2 2020, reflecting the impact of share repurchases[173](index=173&type=chunk) [Results of Operations — Six Months Ended June 30, 2021 and 2020](index=36&type=section&id=Results%20of%20Operations%20%E2%80%94%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) This section analyzes the company's financial performance for the six months ended June 30, 2021, highlighting key drivers of net income and segment results [Management Summary](index=36&type=section&id=Management%20Summary) This summary highlights the significant increase in consolidated net income and diluted EPS for H1 2021, driven by strong segment gross profit - Consolidated net income attributable to common stockholders increased to **$386.6 million** (**$2.25 diluted EPS**) in H1 2021 from **$187.4 million** (**$1.03 diluted EPS**) in H1 2020, driven by higher funeral and cemetery gross profit and lower interest expense, partially offset by higher income taxes[174](index=174&type=chunk) [Funeral Results](index=36&type=section&id=Funeral%20Results) This section details the funeral segment's revenue, services performed, and gross profit for H1 2021, noting impacts from pandemic-related deaths Six Months Ended June 30 (in millions, except average revenue per service) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Consolidated Funeral Revenue | $1,151.1 | $985.8 | +16.8% | | Comparable Funeral Revenue | $1,136.1 | $978.6 | +16.1% | | Comparable Services Performed | 189,600 | 175,676 | +7.9% | | Comparable Average Revenue per Service | $5,234 | $4,920 | +6.4% | | Consolidated Funeral Gross Profit | $299.2 | $219.5 | +36.3% | | Comparable Funeral Gross Profit | $296.9 | $219.3 | +35.4% | | Comparable Gross Profit Percentage | 26.1% | 22.4% | +370 bps | - The **7.9%** increase in comparable services performed was primarily due to COVID-19 pandemic related deaths during the first quarter of 2021[177](index=177&type=chunk) - Comparable funeral gross profit percentage increased by **370 basis points** to **26.1%** as revenue growth more than offset higher fixed costs due to normalized staffing and service levels[179](index=179&type=chunk) [Cemetery Results](index=37&type=section&id=Cemetery%20Results) This section details the cemetery segment's revenue and gross profit for H1 2021, driven by substantial increases in preneed and atneed revenue Six Months Ended June 30 (in millions) | Metric | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Consolidated Cemetery Revenue | $914.4 | $637.2 | +43.5% | | Comparable Cemetery Revenue | $914.1 | $637.0 | +43.5% | | Comparable Recognized Preneed Revenue Growth | +$207.9 | N/A | N/A | | Comparable Atneed Revenue Growth | +$57.5 | N/A | +32.6% | | Consolidated Cemetery Gross Profit | $347.0 | $178.3 | +94.6% | | Comparable Cemetery Gross Profit | $346.9 | $178.2 | +94.7% | | Comparable Gross Profit Percentage | 37.9% | 28.0% | +990 bps | - The substantial increase in cemetery revenue and gross profit was driven by a **$207.9 million** increase in comparable recognized preneed revenue and a **$57.5 million** (**32.6%**) increase in comparable atneed revenue[181](index=181&type=chunk)[182](index=182&type=chunk) [Other Financial Statement Items](index=38&type=section&id=Other%20Financial%20Statement%20Items) This section covers changes in corporate expenses, divestiture gains, interest expense, effective tax rate, and diluted shares outstanding for H1 2021 - Corporate general and administrative expenses decreased by **$3.2 million** to **$65.8 million** in H1 2021, primarily due to fewer insurance claims and lower charitable contributions[183](index=183&type=chunk) - Net pre-tax gain on divestitures and impairment charges was **$7.4 million** in H1 2021, compared to **$5.3 million** in H1 2020, which included **$3.1 million** in impairment charges related to certain tradenames[184](index=184&type=chunk) - Interest expense decreased by **$12.9 million** to **$73.2 million** in H1 2021 due to lower interest rates on floating rate debt and debt refinancing activities[185](index=185&type=chunk) - The effective tax rate was **24.2%** in H1 2021, similar to **24.3%** in H1 2020, higher than the federal statutory rate primarily due to state tax expenses partially offset by excess tax benefits[186](index=186&type=chunk) - Diluted weighted average shares outstanding decreased to **171.6 million** in H1 2021 from **181.6 million** in H1 2020, reflecting the impact of share repurchases[187](index=187&type=chunk) [Critical Accounting Policies, Recent Accounting Pronouncements, and Accounting Changes](index=38&type=section&id=Critical%20Accounting%20Policies%2C%20Recent%20Accounting%20Pronouncements%2C%20and%20Accounting%20Changes) This section confirms no significant changes to critical accounting policies and discusses the evaluation of new accounting guidance - Critical accounting policies have not significantly changed since December 31, 2020, and involve management estimates and assumptions affecting reported financial amounts[188](index=188&type=chunk) - The company is evaluating the optional guidance provided by the FASB's 'Reference Rate Reform' to ease accounting burdens related to LIBOR discontinuation[51](index=51&type=chunk) [Cautionary Statement on Forward-Looking Statements](index=39&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Statements) This statement advises on the inherent risks and uncertainties associated with forward-looking information, including pandemic effects and market conditions - The report contains forward-looking statements subject to various risks and uncertainties, including continued effects from the COVID-19 pandemic, market conditions affecting affiliated trust funds, potential requirements to replenish trust funds, debt covenant restrictions, and unfavorable litigation outcomes[190](index=190&type=chunk)[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily from interest rate fluctuations and marketable securities in trust funds - The company's primary market risks are related to interest rates and the price fluctuations of marketable equity and debt securities held in connection with its preneed operations and sales[194](index=194&type=chunk)[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[196](index=196&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[197](index=197&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information on legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the financial statements for detailed information on the company's legal proceedings and regulatory matters - Information regarding legal proceedings is set forth in Part I, Item 1. Financial Statements, Note 9 of this Form 10-Q, which is incorporated by reference[200](index=200&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the company's Risk Factors as set forth in Item 1A of its Annual Report on Form 10-K for the fiscal year ended December 31, 2020[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities during the three months ended June 30, 2021, including the number of shares purchased, average price paid, and the remaining authorization under the program Share Repurchases (Three Months Ended June 30, 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program | | :-------------------------------- | :----------------------------- | :--------------------------- | :---------------------------------------------------------------------------- | | April 1, 2021 — April 30, 2021 | 695,722 | $52.03 | $90,562,099 | | May 1, 2021 — May 31, 2021 | 188,084 | $53.20 | $494,995,519 | | June 1, 2021 — June 30, 2021 | 657,792 | $52.97 | $460,156,506 | | **Total** | **1,541,598** | | | - The approximate dollar value of shares authorized to be purchased under the share repurchase program was **$460.2 million** at June 30, 2021[202](index=202&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the quarterly reporting period - There were no defaults upon senior securities during the quarterly period ended June 30, 2021[203](index=203&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section clarifies that mine safety disclosures are not applicable to the company's business operations - Mine Safety Disclosures are not applicable to the registrant[204](index=204&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) This section indicates that no additional information is provided beyond what is already disclosed in the report - No other information is provided in this section[205](index=205&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, indentures, and certifications - The report includes various exhibits such as Restated Articles of Incorporation, Bylaws, Senior Indenture, and certifications from the Principal Executive and Financial Officers[206](index=206&type=chunk) - Interactive data files formatted in Inline XBRL are also included as exhibits[208](index=208&type=chunk) [SIGNATURE](index=43&type=section&id=SIGNATURE) This section provides the official signature and date of filing for the Form 10-Q report - The report was signed on July 29, 2021, by Tammy Moore, Vice President and Corporate Controller (Principal Accounting Officer) of Service Corporation International[209](index=209&type=chunk)

Service Corporation International (NYSE:SCI) Q2 2021 Earnings Conference Call July 29, 2021 9:00 AM ET Company Participants Debbie Young - Director of Investor Relations Tom Ryan - Chairman & Chief Executive Officer Eric Tanzberger - Senior Vice President & Chief Financial Officer Conference Call Participants Joanna Gajuk - Bank of America Daniel Hultberg - Oppenheimer A.J. Rice - Credit Suisse John Ransom - Raymond James Operator Good morning, and welcome to the SCI Second Quarter 2021 Earnings Conference ...