Core Insights - The article discusses the investment potential of a specific company, highlighting its strong market position and growth prospects [1][2] Company Analysis - The company has demonstrated robust financial performance, with significant revenue growth reported in the latest quarter [1] - Key metrics indicate an increase in market share, suggesting competitive advantages over peers [1] - The management team has outlined strategic initiatives aimed at further enhancing operational efficiency and profitability [1] Industry Context - The industry is experiencing a favorable environment, driven by increasing demand and technological advancements [1] - Competitive dynamics within the industry are shifting, with emerging players posing new challenges [1] - Regulatory changes are anticipated, which may impact operational frameworks and market strategies [1]

Core Insights - The article discusses the investment potential of a specific company, highlighting its strong market position and growth prospects [1][2]. Company Analysis - The company has demonstrated consistent revenue growth, with a reported increase of 15% year-over-year, reaching $1.5 billion in total revenue [1]. - Profit margins have improved, with the latest figures showing a margin of 25%, up from 20% in the previous year [1]. - The company is expanding its market share, particularly in emerging markets, which is expected to contribute significantly to future earnings [1]. Industry Trends - The industry is experiencing a shift towards digital transformation, with companies investing heavily in technology to enhance operational efficiency [1]. - Competitive pressures are increasing, with new entrants disrupting traditional business models, necessitating innovation and adaptation from established players [1]. - Regulatory changes are anticipated, which may impact operational costs and market dynamics within the industry [1].

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025, and 2024, including detailed notes on accounting policies and segment performance Consolidated Statement of Operations Highlights (in thousands, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,065,444 | $1,034,016 | $2,139,611 | $2,079,398 | | **Operating Income** | $224,459 | $220,841 | $476,146 | $453,045 | | **Net Income** | $122,924 | $118,220 | $265,851 | $249,494 | | **Diluted EPS** | $0.86 | $0.81 | $1.84 | $1.69 | Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $17,980,205 | $17,379,438 | | Preneed receivables and trust investments | $7,065,296 | $6,739,332 | | **Total Liabilities** | $16,419,852 | $15,700,769 | | Long-term debt | $4,976,111 | $4,751,448 | | **Total Equity** | $1,560,353 | $1,678,669 | Segment Gross Profit (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Funeral Gross Profit** | $115,977 | $100,426 | $269,955 | $232,300 | | **Cemetery Gross Profit** | $155,461 | $157,489 | $292,900 | $299,828 | | **Total Segment Gross Profit** | $271,438 | $257,915 | $562,855 | $532,128 | - The company repurchased **4,129,431 shares** of common stock for an aggregate cost of **$325.9 million** in the first six months of 2025, with **$491.8 million** remaining under the increased repurchase authorization[79](index=79&type=chunk) - Total debt increased to **$5.04 billion** as of June 30, 2025, from **$4.84 billion** at year-end 2024, with approximately **81%** at a fixed interest rate[69](index=69&type=chunk)[70](index=70&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a **$16.4 billion** backlog of future revenue from preneed sales as a key financial strength and detailing capital allocation priorities and operational results for both segments - The company's financial position is enhanced by a **$16.4 billion** backlog of future revenue from both trust and insurance-funded preneed sales as of June 30, 2025[96](index=96&type=chunk) - Capital allocation strategy prioritizes investing in acquisitions, returning excess cash to shareholders through dividends, and managing debt to maintain a target leverage ratio of **3.5x to 4.0x**[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - The company's leverage ratio was **3.68x** as of June 30, 2025, which is within the target range and below the maximum of **5.00x** allowed per the credit agreement[103](index=103&type=chunk) [Financial Condition, Liquidity, and Capital Resources](index=27&type=section&id=Financial%20Condition%2C%20Liquidity%2C%20and%20Capital%20Resources) The company maintains adequate liquidity with **$477.6 million** in operating cash flow for the first six months of 2025 and **$1.19 billion** in borrowing capacity, supported by a growing **$16.42 billion** backlog of deferred revenue Change in Operating Cash Flow (Six Months 2025 vs 2024) | Driver | Impact (in millions) | | :--- | :--- | | Increase in cash receipts from customers | $50.3 | | Increase in General Agency (GA) commission receipts | $43.4 | | Decrease in employee compensation payments | $37.7 | | Increase in cash tax payments | ($87.4) | | **Total Increase in Operating Cash Flow** | **$60.6** | Total Backlog of Preneed Contracts (Fair Value, in billions) | Backlog Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trust-funded deferred revenue | $7.99 | $7.64 | | Insurance-funded revenue | $8.43 | $8.37 | | **Total Backlog** | **$16.42** | **$16.01** | - Preneed insurance-funded sales production increased to **$402.3 million** in the first six months of 2025 from **$374.5 million** in the prior year period, driven by a significant increase in the number of contracts sold (**78,572** vs **59,923**)[120](index=120&type=chunk) - Preneed cemetery sales production grew to **$694.4 million** in the first six months of 2025, up from **$681.6 million** in the same period of 2024[123](index=123&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 & 2024](index=34&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20%26%202024) For Q2 2025, net income attributable to common stockholders was **$122.9 million** ($0.86 per diluted share), driven by a **15.5%** increase in funeral segment gross profit, while cemetery gross profit slightly decreased by **1.3%** Q2 2025 Funeral Segment Performance (Comparable) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $576.8M | $561.6M | +2.7% | | Gross Profit | $114.6M | $99.8M | +14.8% | | Gross Profit % | 19.9% | 17.8% | +210 bps | | Average Revenue per Service | $5,809 | $5,634 | +3.1% | Q2 2025 Cemetery Segment Performance (Comparable) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $470.0M | $468.2M | +0.4% | | Gross Profit | $153.3M | $157.6M | -2.7% | | Gross Profit % | 32.6% | 33.7% | -110 bps | - Funeral segment revenue growth was driven by a **3.1%** increase in comparable average revenue per service, offsetting a **0.9%** decrease in services performed, with the cremation rate rising by **40 basis points** to **64.3%**[149](index=149&type=chunk) - Cemetery preneed sales production increased by **5.3%** (**$18.5 million**), expected to benefit future periods as properties are constructed and revenue is recognized[155](index=155&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 & 2024](index=36&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20%26%202024) For H1 2025, net income was **$265.7 million** ($1.84 per diluted share), with funeral gross profit up **16.2%** due to revenue growth, while cemetery gross profit decreased by **$6.9 million** due to timing of revenue recognition H1 2025 Funeral Segment Performance (Comparable) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,202.5M | $1,163.8M | +3.3% | | Gross Profit | $267.0M | $231.5M | +15.3% | | Gross Profit % | 22.2% | 19.9% | +230 bps | | Average Revenue per Service | $5,774 | $5,623 | +2.7% | H1 2025 Cemetery Segment Performance (Comparable) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $902.9M | $908.9M | -0.7% | | Gross Profit | $290.1M | $300.2M | -3.4% | | Gross Profit % | 32.1% | 33.0% | -90 bps | - The increase in funeral gross profit margin was attributed to revenue growth and continued focus on managing the fixed cost structure[170](index=170&type=chunk) - The decrease in comparable cemetery revenue was primarily due to a **$14.1 million** decline in recognized preneed property revenue related to the timing of new construction, partially offset by a **$4.6 million** increase in atneed revenue[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to market risks, primarily related to changes in interest rates and the prices of marketable equity and debt securities held within the preneed trust funds - The company's primary market risk exposure stems from the equity and debt securities held in its affiliated trust funds, which are used to fund preneed operations and are sensitive to market price fluctuations[187](index=187&type=chunk)[188](index=188&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[189](index=189&type=chunk) - No changes were made during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[190](index=190&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the financial statements for information on legal proceedings, including ongoing unclaimed property audits by various states regarding preneed trust funds - The company is subject to unclaimed property audits from approximately **forty states** regarding the escheatment of unused preneed trust funds, with audits resolved in **eighteen states**[89](index=89&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes in Risk Factors from those set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[193](index=193&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&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 second quarter of 2025, where a total of **2,493,090 shares** were repurchased, primarily under the publicly announced program Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 916,075 | $77.82 | | May 2025 | 976,955 | $76.79 | | June 2025 | 600,060 | $78.77 | | **Total Q2** | **2,493,090** | **-** |

Financial Data and Key Metrics Changes - For Q2 2025, the company reported adjusted earnings per share of $0.88, an increase of over 11% compared to $0.79 in the prior year period [6] - Total comparable funeral revenue increased by over $15 million, or about 3%, compared to the prior year quarter [6] - Funeral gross profit increased by about $15 million, with the gross profit percentage rising by 20 basis points [8] Business Line Data and Key Metrics Changes - Comparable core funeral revenues increased by $8 million, or about 2%, driven by a 3.3% growth in core average revenue per service [7] - Comparable cemetery revenue increased by $2 million, or almost 1%, with core revenue up by about $1 million [10] - Preneed funeral sales production decreased by $29 million, or about 9%, primarily due to a transition to a new preneed insurance provider [9] Market Data and Key Metrics Changes - The company anticipates comparable core preneed sales production growth in 2025, despite a decrease in the first half of the year [9] - Cemetery gross profit decreased by $4 million, with the gross profit percentage declining by 110 basis points [12] - The company expects preneed cemetery sales production to grow at low to mid single-digit percentages over the prior year's six-month period [13] Company Strategy and Development Direction - The company confirmed its normalized earnings per share guidance range of $3.7 to $4 for 2025 and raised its cash flow outlook due to stronger working capital trends [12] - The company plans to invest $100 million in capital expenditures for existing locations, cemetery development, and new builds [19] - The acquisition pipeline remains optimistic, with an anticipated investment target of $75 million to $125 million for 2025 [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue and margin growth for both funeral and cemetery segments for the remainder of 2025 [12] - The company noted that cash taxes will revert to a more normalized level in 2025 compared to 2024, following a tax accounting method change [24] - Management highlighted the importance of their team in navigating challenges and providing exceptional service to customers [16][25] Other Important Information - The company returned $239 million of capital to shareholders in Q2 2025 through dividends and share repurchases [21] - Adjusted operating cash flow for the quarter was $168 million, with a significant increase in cash taxes impacting the overall cash flow [17][19] - The company ended the quarter with liquidity of about $1.4 billion, consisting of cash on hand and available credit [25] Q&A Session Summary Question: What drove the dip in the recognition rate in the current quarter? - Management attributed the dip to normal volatility in cemetery production and expects the recognition rate to improve in the second half of the year [28][30] Question: What are the expectations for the cremation rate moving forward? - Management indicated that the pace of increase in the cremation rate may moderate, with expectations adjusted to 50 to 80 basis points [32][34] Question: How will cash flow and tax benefits from the federal bill affect long-term cash taxes? - Management expects a $30 million benefit from cash taxes this year, with ongoing benefits from capital improvements [36][41] Question: What are the expectations for funeral volumes in the back half of the year? - Management noted that the third quarter will be a tougher comparison for funeral volumes, while cemetery revenues are expected to be strong [44] Question: What is the financial benefit of the shift in life insurance partner? - Management expects incremental benefits from the type of insurance products sold, with potential for a couple of points increase in production [54][56] Question: What is the outlook for preneed sales production growth? - Management expects low to mid single-digit growth in preneed sales production for both funeral and cemetery segments in the second half of the year [62][64]

Financial Data and Key Metrics Changes - The company generated adjusted earnings per share of $0.88, an increase of over 11% compared to $0.79 in the prior year period [5] - Total comparable funeral revenue increased by over $15 million, or about 3%, compared to the prior year quarter [5] - Funeral gross profit increased by about $15 million, with the gross profit percentage rising by 20 basis points [6][10] Business Line Data and Key Metrics Changes - Comparable core funeral revenues increased by $8 million, or about 2%, driven by a 3.3% growth in core average revenue per service [6] - Comparable cemetery revenue increased by $2 million, or almost 1%, with a core revenue increase of about $1 million [8][9] - Preneed funeral sales production decreased by $29 million, or about 9%, primarily due to the transition to a new preneed insurance provider [7] Market Data and Key Metrics Changes - The company anticipates comparable core preneed sales production growth in 2025, despite a decrease in the current quarter [7] - The transition to the new preneed insurance provider has impacted sales production, but the company expects growth in the future [7][8] Company Strategy and Development Direction - The company confirmed its normalized earnings per share guidance range of $3.7 to $4 for 2025, raising its cash flow outlook due to stronger working capital trends [10] - The company plans to invest $100 million in capital expenditures, focusing on existing locations, cemetery development, and new builds [17][18] - The acquisition pipeline remains optimistic, with an anticipated investment target of $75 million to $125 million for 2025 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue and margin growth for both funeral and cemetery segments in the remainder of 2025 [10] - The company expects preneed cemetery and funeral sales production to grow at low to mid-single-digit percentages over the prior year's six-month period [11] - Management acknowledged the challenges posed by higher effective tax rates but remains optimistic about cash flow and operational performance [21] Other Important Information - The company returned $239 million of capital to shareholders in the second quarter through dividends and share repurchases [19] - The company ended the quarter with liquidity of about $1.4 billion, consisting of approximately $250 million in cash and $1.2 billion available on its long-term bank credit facility [23] Q&A Session Summary Question: What caused the dip in the recognition rate in the current quarter? - Management attributed the dip to normal volatility in cemetery production and expects the recognition rate to return to normal in the second half of the year [26][27] Question: What are the expectations for the cremation rate moving forward? - Management indicated that the pace of increase in the cremation rate may moderate, adjusting expectations to a range of 50 to 80 basis points [30][32] Question: How will the changes in cash taxes affect long-term cash flow? - Management expects a $30 million benefit from lower cash taxes this year, with ongoing benefits from capital improvements [34][39] Question: What are the expectations for funeral volumes in the back half of the year? - Management noted that the third quarter may present tougher comparisons for funeral volumes, while cemetery revenues are expected to be strong [42] Question: How is the company performing in preneed sales production? - Management expects low to mid-single-digit growth in preneed sales production for both funeral and cemetery segments in the second half of the year [58][60] Question: What is the outlook for capital deployment given the increase in cash flows? - Management indicated that capital will be deployed to the highest return opportunities, including M&A and new construction projects [66][70]

Adjusted EPS - For the three months ended June 30, 2025, net income attributable to common stockholders was $122.9 million, or $0.86 diluted EPS, compared to $118.2 million, or $0.81 diluted EPS in 2024[7] - Adjusted EPS for the three months ended June 30, 2025, was $0.88, compared to $0.79 in 2024[7] - For the six months ended June 30, 2025, net income attributable to common stockholders was $265.7 million, or $1.84 diluted EPS, compared to $249.5 million, or $1.69 diluted EPS in 2024[7] - Adjusted EPS for the six months ended June 30, 2025, was $1.84, compared to $1.68 in 2024[7] Adjusted Cash Flow from Operations & Free Cash Flow - Net cash provided by operating activities for the three months ended June 30, 2025, was $166.5 million, compared to $196.9 million in 2024[8] - Adjusted cash flow from operations for the three months ended June 30, 2025, was $168.3 million, compared to $219.9 million in 2024[8] - Free cash flow for the three months ended June 30, 2025, was $99.4 million, compared to $137.5 million in 2024[8] - Net cash provided by operating activities for the six months ended June 30, 2025, was $477.6 million, compared to $417.0 million in 2024[8] - Adjusted cash flow from operations for the six months ended June 30, 2025, was $484.2 million, compared to $440.0 million in 2024[8] - Free cash flow for the six months ended June 30, 2025, was $348.5 million, compared to $287.6 million in 2024[8]

Financial Performance - For the quarter ended June 2025, Service Corp. reported revenue of $1.07 billion, reflecting a 3% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $0.88, up from $0.79 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.05 billion by 1.48%, while the EPS surpassed the consensus estimate of $0.84 by 4.76% [1] Key Metrics - Total comparable funeral average revenue per service was $5,807, slightly above the two-analyst average estimate of $5,762.86 [4] - The number of funeral services performed was 87,014, exceeding the two-analyst average estimate of 86,839 [4] - Cemetery revenue reached $474.1 million, surpassing the estimated $471.26 million by three analysts, representing a 1.3% increase compared to the year-ago quarter [4] - Funeral revenue was $591.4 million, exceeding the estimated $578.6 million by three analysts, marking a 4.5% increase year-over-year [4] - Gross profit from cemetery services was $155.5 million, above the estimated $154.19 million, while gross profit from funeral services was $116 million, exceeding the estimate of $106.85 million [4] Stock Performance - Shares of Service Corp. have returned -7.4% over the past month, contrasting with the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Service Corp. (SCI) reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and showing an increase from $0.79 per share a year ago, representing an earnings surprise of +4.76% [1][2] Financial Performance - The company posted revenues of $1.07 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.48%, compared to $1.03 billion in the same quarter last year [2] - Over the last four quarters, Service Corp. has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Service Corp. shares have declined approximately 4.7% since the beginning of the year, while the S&P 500 has gained 8.3% [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.83 on revenues of $1.04 billion, and for the current fiscal year, it is $3.77 on revenues of $4.28 billion [7] Industry Context - The Funeral Services industry, to which Service Corp. belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Service Corp.'s stock performance [5][6]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) The company reported strong Q2 2025 financial results, driven by increased revenue and adjusted EPS, with management highlighting segment-specific growth drivers [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) Service Corporation International reported strong Q2 2025 results with adjusted earnings per share of $0.88, an 11% increase year-over-year. Revenue grew by $31.4 million to $1.065 billion, and gross profit increased by 5%. Key operational achievements included a 3.1% growth in the comparable total funeral sales average and a 5.3% increase in cemetery preneed sales production Q2 2025 Key Financial Results (in millions, except per share data) | | 2025 Q2 | 2024 Q2 | 2025 YTD | 2024 YTD | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,065.4 | $1,034.0 | $2,139.6 | $2,079.4 | | **Operating income** | $224.5 | $220.8 | $476.1 | $453.0 | | **Net income** | $122.9 | $118.2 | $265.7 | $249.5 | | **Diluted EPS** | $0.86 | $0.81 | $1.84 | $1.69 | | **Adjusted Diluted EPS** | $0.88 | $0.79 | $1.84 | $1.68 | | **Net cash from operations** | $166.5 | $196.9 | $477.6 | $417.0 | - Key performance metrics for Q2 2025 showed positive growth - Revenue grew by **$31.4 million** compared to Q2 2024[7](index=7&type=chunk) - Gross profit increased by **$13.5 million**, or **5%**[7](index=7&type=chunk) - GAAP earnings per share grew **6%** to **$0.86**, while adjusted EPS grew **11%** to **$0.88**[7](index=7&type=chunk) - Cemetery preneed sales production increased by **5.3%**[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO attributed the impressive 11% growth in adjusted EPS to higher funeral revenue and effective fixed cost management, which led to a 14.8% increase in comparable funeral gross profit. In the cemetery segment, a focus on sales production resulted in a 5.3% increase in preneed sales, with the majority of this benefit expected in future periods as properties are developed - Funeral segment performance was driven by a higher average revenue per funeral and increased core general agency revenue, benefiting from a change in the preferred preneed insurance provider[3](index=3&type=chunk) - The cemetery segment's **5.3%** increase in preneed sales production will primarily benefit future periods as the undeveloped property sold is constructed and the revenue is recognized[4](index=4&type=chunk) - The company reaffirmed its long-term growth strategy of growing revenue, leveraging scale, and making wise capital investments to enhance shareholder value[5](index=5&type=chunk) [2025 Financial Outlook](index=2&type=section&id=CONFIRMED%202025%20EARNINGS%20PER%20SHARE%20GUIDANCE%20AND%20RAISED%202025%20CASH%20FLOW%20GUIDANCE) The company reaffirmed its 2025 adjusted EPS guidance while raising its cash flow outlook due to anticipated lower cash taxes and working capital benefits [Confirmed EPS and Raised Cash Flow Guidance](index=2&type=section&id=Confirmed%20EPS%20and%20Raised%20Cash%20Flow%20Guidance) The company confirmed its full-year 2025 adjusted EPS guidance range of $3.70 to $4.00. The guidance for net cash provided by operating activities (excluding special items) was raised to a new range of $880 million to $940 million, up from the previous $830 million to $890 million. This increase is attributed to lower anticipated cash taxes and stronger working capital benefits Revised 2025 Outlook (in millions, except per share amounts) | Metric | Original 2025 Outlook | Revised 2025 Outlook | | :--- | :--- | :--- | | **Adjusted Diluted EPS** | $3.70 - $4.00 | $3.70 - $4.00 | | **Adjusted Operating Cash Flow** | $830 - $890 | $880 - $940 | | **Expected Cash Taxes** | $175 | $145 | | **Total Maintenance Capital Expenditures** | $315 | $315 | - The cash flow outlook was increased due to lower expected cash taxes (midpoint reduced by **$30 million**) and stronger working capital benefits[9](index=9&type=chunk) [Segment Performance](index=8&type=section&id=Consolidated%20Segment%20Results) Both funeral and cemetery segments demonstrated varied performance, with the funeral segment showing strong profit growth and the cemetery segment increasing preneed sales production [Funeral Segment](index=8&type=section&id=Funeral%20Segment) The funeral segment demonstrated strong performance with a 2.7% increase in comparable revenue, driven by a 3.3% rise in core average revenue per service and a 14.0% growth in core general agency revenue. This resulted in a significant 14.8% increase in comparable gross profit and a 210 basis point margin expansion to 19.9% [Consolidated Funeral Results](index=8&type=section&id=Consolidated%20funeral) For the second quarter of 2025, consolidated funeral revenue increased to $591.4 million from $565.8 million in the prior year. Gross profit rose to $116.0 million, with the gross profit margin expanding to 19.6% from 17.7% Consolidated Funeral Results (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $591.4 | $565.8 | $1,230.9 | $1,170.5 | | **Gross Profit** | $116.0 | $100.4 | $270.0 | $232.3 | | **Gross Profit %** | 19.6% | 17.7% | 21.9% | 19.8% | [Comparable Funeral Results](index=9&type=section&id=Comparable%20Funeral%20Results) Comparable funeral revenue grew 2.7% to $576.8 million, driven by a 3.3% increase in average revenue per service and higher general agency revenue. Despite a 1.5% decrease in core funeral services performed, gross profit surged 14.8% to $114.6 million due to revenue growth and effective cost management. Preneed sales production declined 8.8%, impacted by the transition to a new insurance provider Q2 Comparable Funeral Performance vs. Prior Year | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $576.8M | $561.6M | +2.7% | | **Gross Profit** | $114.6M | $99.8M | +14.8% | | **Gross Profit %** | 19.9% | 17.8% | +210 bps | | **Total Services Performed** | 84,622 | 85,353 | -0.9% | | **Total Avg. Revenue / Service** | $5,809 | $5,634 | +3.1% | | **Total Preneed Sales** | $299.3M | $328.1M | -8.8% | - Core general agency revenue grew by **$7.2 million** (**14.0%**), primarily due to higher commission rates resulting from the change in the company's preferred preneed insurance provider[31](index=31&type=chunk) - Comparable preneed funeral sales production decreased by **$28.8 million** (**8.8%**), which is attributed to the transition to a new preneed insurance provider that began in July 2024[31](index=31&type=chunk) [Cemetery Segment](index=8&type=section&id=Cemetery%20Segment) The cemetery segment experienced modest comparable revenue growth of 0.4% to $470.0 million. While preneed sales production was strong, increasing 5.3%, the timing of revenue recognition on new property construction led to a slight decrease in recognized preneed revenue. Comparable gross profit decreased by 2.7% to $153.3 million, with margins contracting to 32.6% due to higher selling compensation on increased sales production [Consolidated Cemetery Results](index=8&type=section&id=Consolidated%20cemetery) For Q2 2025, consolidated cemetery revenue was $474.1 million, a slight increase from $468.2 million in Q2 2024. Gross profit decreased slightly to $155.5 million from $157.5 million, with the gross profit margin declining to 32.8% Consolidated Cemetery Results (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $474.1 | $468.2 | $908.8 | $908.9 | | **Gross Profit** | $155.5 | $157.5 | $292.9 | $299.8 | | **Gross Profit %** | 32.8% | 33.6% | 32.2% | 33.0% | [Comparable Cemetery Results](index=10&type=section&id=Comparable%20Cemetery%20Results) Comparable cemetery revenue saw a marginal increase of 0.4% to $470.0 million. A 5.3% increase in preneed sales production, driven by large and core sales, is expected to benefit future periods. However, gross profit declined by 2.7% to $153.3 million, and the margin contracted by 110 basis points, primarily due to higher selling compensation associated with the increased sales production Q2 Comparable Cemetery Performance vs. Prior Year | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $470.0M | $468.2M | +0.4% | | **Gross Profit** | $153.3M | $157.6M | -2.7% | | **Gross Profit %** | 32.6% | 33.7% | -110 bps | | **Preneed Sales Production** | $366.5M | $348.0M | +5.3% | - Preneed sales production increased by **$18.5 million** (**5.3%**), which will benefit future periods as the current undeveloped property sold is constructed and recognized[34](index=34&type=chunk) - The decrease in comparable cemetery gross profit was a result of modest revenue growth being offset by higher selling compensation on higher sales production[34](index=34&type=chunk) [Other Financial Results](index=11&type=section&id=Other%20Financial%20Results) This section details corporate expenses, cash flow dynamics, capital expenditure trends, and the strong performance of the company's trust funds [Corporate Expenses and Income Taxes](index=11&type=section&id=Corporate%20Expenses%20and%20Income%20Taxes) Corporate general and administrative expenses increased by $10.5 million to $49.5 million, largely due to a $6.4 million legal settlement. Interest expense remained stable at $64.1 million. The adjusted effective tax rate decreased to 25.4% from 25.8% in the prior year quarter, primarily due to non-taxable gains on certain life insurance policies - Corporate G&A expenses rose by **$10.5 million** in Q2 2025, with **$6.4 million** attributed to legal settlements and the remainder to higher auto/general liability claims and timing of incentive compensation accruals[34](index=34&type=chunk) - The adjusted effective tax rate for Q2 2025 was **25.4%**, down from **25.8%** in Q2 2024, mainly due to non-taxable gains on the cash surrender value of certain life insurance policies[34](index=34&type=chunk) [Cash Flow and Capital Spending](index=11&type=section&id=Cash%20Flow%20and%20Capital%20Spending) Net cash from operating activities was $166.5 million, a decrease from the prior year, primarily due to an $84.3 million increase in cash taxes paid. Excluding special items and cash taxes, operating cash flow increased by $32.7 million. Total capital expenditures decreased by $8.6 million to $83.0 million, mainly due to lower spending on digital investments and corporate projects - Net cash provided by operating activities was **$166.5 million** in Q2 2025, down from **$196.9 million** in Q2 2024. This was significantly affected by an expected **$84.3 million** increase in cash taxes paid[7](index=7&type=chunk)[33](index=33&type=chunk) - Excluding special items and the increase in cash taxes, net cash provided by operating activities increased by **$32.7 million**, or over **14%**[7](index=7&type=chunk)[33](index=33&type=chunk) Capital Expenditures (in millions) | Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Maintenance & Cemetery Development** | $68.9 | $82.4 | $135.7 | $152.4 | | **Growth Capital Expenditures** | $14.1 | $9.2 | $25.5 | $18.6 | | **Total Capital Expenditures** | $83.0 | $91.6 | $161.2 | $171.0 | [Trust Fund Performance](index=12&type=section&id=Trust%20Fund%20Returns) The company's trust funds generated strong returns in the second quarter of 2025. The combined trust funds saw a return of 8.4% for the three months and 7.8% for the six months ended June 30, 2025 Consolidated Trust Fund Returns (Gross) | Fund Type | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Preneed funeral** | 8.4% | 7.6% | | **Preneed cemetery** | 8.6% | 8.1% | | **Cemetery perpetual care** | 8.0% | 7.6% | | **Combined trust funds** | 8.4% | 7.8% | [Financial Statements and Non-GAAP Reconciliation](index=5&type=section&id=APPENDIX%3A%20RESULTS%20FOR%20THE%20SECOND%20QUARTER%20OF%202025) This appendix provides detailed consolidated financial statements including operations, balance sheet, cash flows, and non-GAAP reconciliations for Q2 2025 [Consolidated Statement of Operations](index=5&type=section&id=Consolidated%20Statement%20of%20Operations%20%28Unaudited%29) The company reported Q2 2025 revenue of $1.065 billion and net income of $122.9 million, resulting in diluted EPS of $0.86. This compares to revenue of $1.034 billion, net income of $118.2 million, and diluted EPS of $0.81 in Q2 2024 Q2 2025 Consolidated Statement of Operations (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue** | $1,065,444 | $1,034,016 | | **Gross profit** | $271,438 | $257,915 | | **Operating income** | $224,459 | $220,841 | | **Net income attributable to common stockholders** | $122,865 | $118,166 | | **Diluted earnings per share** | $0.86 | $0.81 | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet%20%28Unaudited%29) As of June 30, 2025, the company had total assets of $18.0 billion, up from $17.4 billion at year-end 2024. Total liabilities increased to $16.4 billion, while total equity decreased to $1.56 billion Consolidated Balance Sheet Highlights (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $434,141 | $377,330 | | **Total assets** | $17,980,205 | $17,379,438 | | **Total current liabilities** | $713,193 | $723,839 | | **Long-term debt** | $4,976,111 | $4,751,448 | | **Total liabilities** | $16,419,852 | $15,700,769 | | **Total equity** | $1,560,353 | $1,678,669 | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20%28Unaudited%29) For the six months ended June 30, 2025, net cash provided by operating activities was $477.6 million. Net cash used in investing activities was $191.2 million, and net cash used in financing activities was $243.0 million, resulting in a net increase in cash of $49.1 million Six Months Ended June 30 Cash Flow Summary (in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $477,580 | $417,000 | | **Net cash used in investing activities** | ($191,235) | ($235,825) | | **Net cash used in financing activities** | ($243,025) | ($215,163) | | **Net increase (decrease) in cash** | $49,120 | ($36,653) | [Non-GAAP Reconciliation](index=12&type=section&id=Non-GAAP%20Financial%20Measures) The company reconciled its GAAP net income to non-GAAP "Earnings excluding special items." For Q2 2025, GAAP net income of $122.9 million was adjusted for items like gains on divestitures ($4.1M), legal settlements ($6.4M), and restructuring charges ($1.6M) to arrive at non-GAAP earnings of $125.5 million. This translated to an adjusted diluted EPS of $0.88 compared to the GAAP EPS of $0.86 Q2 Reconciliation of GAAP to Non-GAAP Earnings (in millions, except EPS) | | Net Income | Diluted EPS | | :--- | :--- | :--- | | **As reported (GAAP)** | $122.9 | $0.86 | | Gains on divestitures, net | ($4.1) | ($0.03) | | Legal settlement | $6.4 | $0.04 | | Restructuring charge | $1.6 | $0.01 | | Tax effects & other | ($1.3) | ($0.00) | | **Excluding special items (Non-GAAP)** | $125.5 | $0.88 |

Core Insights - Service Corporation International (SCI) reported a strong second quarter performance with adjusted earnings per share of $0.88, reflecting an 11% increase year-over-year [2][8] - The company experienced a 14.8% growth in comparable funeral gross profit, driven by higher funeral revenue and effective cost management [2][26] - Cemetery segment sales production increased by 5.3%, contributing to modest revenue growth, with future benefits expected from undeveloped property sales [3][26] Financial Performance - Total revenue for the second quarter of 2025 was $1,065.4 million, up from $1,034.0 million in the same quarter of 2024, marking a $31.4 million increase [5][8] - Operating income rose to $224.5 million compared to $220.8 million in the prior year [5] - Net income attributable to common stockholders was $122.9 million, an increase from $118.2 million in the second quarter of 2024 [5][8] Earnings and Cash Flow - Diluted earnings per share increased to $0.86 from $0.81 year-over-year, while adjusted diluted earnings per share rose to $0.88 from $0.79 [5][9] - Net cash provided by operating activities was $166.5 million, down from $196.9 million in the prior year, primarily due to an increase in cash taxes paid [8][9] - Excluding special items, net cash provided by operating activities increased by over 14% [8][9] Guidance and Outlook - The company confirmed its 2025 earnings per share guidance range of $3.70 to $4.00 and raised its cash flow outlook to $880 million to $940 million [6][7] - The anticipated long-term growth framework for diluted earnings per share from continuing operations is expected to be within 8%-12% [6][7] Segment Performance - Comparable funeral revenue increased by $15.2 million, or 2.7%, driven by a $7.9 million increase in core funeral revenue [21][26] - Comparable cemetery revenue showed a slight increase, with total recognized preneed revenue at $323.0 million, down from $325.1 million [25][26] - The core cremation rate improved to 57.1%, reflecting a 20 basis point increase [26]