Service Corporation International (SCI) Q2 2026: Strong Cash Flow, Raised Guidance, and Strategic Updates
Houston, TX – July 29, 2026: Service Corporation International (NYSE: SCI), North America’s largest provider of deathcare products and services, has announced its financial results for the second quarter ended June 30, 2026. The company reported robust growth in revenue, cash flow, and key operating metrics, raising its full-year cash flow guidance and reaffirming its earnings outlook. Below is a comprehensive breakdown of this quarter’s results and outlook, with critical elements for shareholders and potential investors.
Key Financial Highlights
- Q2 2026 Revenue: \$1.10 billion, up 4% (\$37.8 million) from Q2 2025.
- GAAP Earnings Per Share (EPS): \$0.90, compared to \$0.86 in Q2 2025.
- Adjusted EPS: \$0.90, up from \$0.88 in Q2 2025.
- Net Cash Provided by Operating Activities: \$238.7 million, a 43% increase from \$166.5 million last year.
- Adjusted Operating Cash Flow: \$238.8 million, up 42% year-over-year.
- Operating Income: \$231.6 million, compared to \$224.5 million in Q2 2025.
- Net Income to Common Stockholders: \$124.8 million, up from \$122.9 million.
- Diluted Shares Outstanding: 138.3 million (down from 143.0 million in Q2 2025 – signaling active share buybacks).
Segment Performance Details
Funeral Segment
- Comparable Funeral Sales Average: Grew 3% year-over-year; average revenue per service rose to \$5,985 (from \$5,807).
- Comparable Funeral Preneed Sales Production: Increased 7%.
- Funeral Services Performed: Slight 1% decline, but offset by strong average revenue per service.
- Gross Profit: \$110.3 million (down from \$116.0 million), with gross margin declining from 19.6% to 18.2%. The margin compression was primarily due to higher selling compensation tied to strong insurance-funded preneed sales.
- Cremation Rate: 58.0% (core), up 60 basis points; total comparable cremation rate 64.8%.
- Strong Backlog: Preneed funeral sales production up 6.6% (\$323.3 million), core contracts sold up 6.7%.
Cemetery Segment
- Comparable Cemetery Revenue: Up 5%. Total revenue reached \$498.5 million (from \$474.1 million).
- Recognized Preneed Merchandise and Service Revenue: Up 9.8% year-over-year.
- Recognized Preneed Property Revenue: Up 2.2%.
- Preneed and Atneed Sales Production: Up 6.3% to \$508.4 million; preneed sales production alone up 8.0% to \$399.5 million.
- Gross Profit: Increased to \$163.2 million (from \$155.5 million); gross margin slightly lower at 32.7% (down from 32.8%) due to higher sales compensation, but with the benefit of higher-margin deferred property sales in backlog.
- Other Revenue: Jumped 22.8% due to increased endowment care trust income.
Cash Flow and Capital Allocation
- Operating Cash Flow: Surged due to reduced cash taxes (mainly from renewable energy investment credits) and strong preneed sales collections.
- Maintenance Capital Expenditures: Increased \$11 million to \$335 million annualized (higher investments in field locations and cemetery property).
- Growth Capital Expenditures: \$29 million for the first half, focused on new funeral home construction and strategic expansions.
- Shareholder Returns: \$363 million returned so far in 2026 through dividends and share repurchases, highlighting disciplined capital allocation and potentially supporting share price.
2026 Guidance Update – Price Sensitive
- Adjusted EPS Guidance: Narrowed upward to \$4.10–\$4.30 (from prior range of \$4.05–\$4.35). Midpoint (\$4.20) implies 8–12% growth, inline with long-term expectations.
- Raised Cash Flow Guidance: Operating cash flow (excluding special items and cash taxes) increased by \$50 million to a new midpoint of \$1.085 billion (from \$1.035 billion).
- Maintenance Capital Expenditures: Raised by \$10 million to \$335 million for the year.
- Key Drivers: Upward revisions are driven by stronger than expected preneed cemetery sales and cash collections.
- Forward Risks: Guidance excludes unknowns such as hurricane impacts, litigation costs, asset sales, and other one-off items. Investors should be aware that these could still affect GAAP results.
Strategic and Operational Highlights
- Disciplined Capital Allocation: Continued focus on strategic acquisitions, cemetery portfolio expansion, and real estate investments.
- Backlog Growth: Strong preneed sales in both funeral and cemetery segments boost future revenue visibility. Deferred sales are higher-margin and provide long-term earnings power.
- Expense Management: Corporate and admin expenses fell \$7.7 million year-over-year, with prior year including legal settlement charges and higher insurance claims.
- Interest Expense: Flat, as higher floating-rate debt balances were offset by lower rates (from 6.8% to 5.8%).
- Tax Rate: Effective tax rate edged down to 25.1% (from 25.2%).
Balance Sheet and Trust Fund Performance
- Total Assets: \$19.2 billion as of June 30, 2026.
- Long-term Debt: \$5.1 billion; remains manageable.
- Trust Fund Returns:
- Preneed funeral: 8.0% (quarter), 7.1% (half-year)
- Preneed cemetery: 7.8% (quarter), 7.1% (half-year)
- Cemetery perpetual care: 7.4% (quarter), 6.8% (half-year)
- Combined trust funds: 7.7% (quarter)
Risks and Forward-Looking Statements
- Key Risks: Market volatility in trust funds, inflation, weather/catastrophic events, regulatory changes, litigation, loss of qualified staff, adverse publicity, economic downturns, supply chain disruptions, and fluctuations in death rates or consumer preferences.
- Balance of Fixed Costs: SCI’s business model is highly fixed cost, which magnifies risks and opportunities from changes in service volumes.
- Potential for future impairments if economic/industry conditions deteriorate.
Shareholder Information
- SCI operates 1,495 funeral service locations and 505 cemeteries across North America.
- The company serves approximately 700,000 families annually, with the Dignity Memorial® brand at the forefront.
- Upcoming conference call: July 30, 2026, with webcast and replay details available on the SCI website.
What This Means for Investors
SCI’s Q2 2026 report is highly price sensitive for several reasons:
- Raised cash flow guidance and reaffirmed earnings guidance—SCI is generating more cash than expected, and its preneed sales growth is fueling future deferred, higher-margin revenue.
- The company is returning substantial capital to shareholders and remains focused on strategic growth and margin expansion.
- Investors should monitor the sustainability of preneed sales, the effects of rising cremation rates, and the company’s management of inflation and regulatory risks.
Overall, the Q2 2026 results and outlook are likely to be well received by the market given the positive cash flow surprise, increased capital returns, and reaffirmed growth strategy.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the company’s full SEC filings and consult with their financial advisors before making any investment decisions. Past performance is not indicative of future results. All forward-looking statements are subject to risks and uncertainties as detailed in the company’s official disclosures.
