Service Corporation International — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated revenue increased 5% year-over-year to $1,107.3 million in Q3 2026, up from $1,058.1 million in Q3 2025.
• GAAP diluted earnings per share rose 24% to $1.03, compared to $0.83 in the prior-year quarter.
• Adjusted diluted earnings per share increased 11% to $0.97, up from $0.87 in Q3 2025.
• Net income attributable to common stockholders grew to $141.3 million from $117.5 million in the prior-year quarter.
• Operating income increased to $252.9 million from $226.4 million in Q3 2025.
• Net cash provided by operating activities increased 18% to $296.8 million, compared to $252.3 million in the prior-year quarter.
• Adjusted net cash provided by operating activities increased 11% to $296.9 million, up from $267.9 million in Q3 2025.
• Corporate general and administrative expenses decreased to $30.6 million from $38.3 million in the prior-year quarter.
• Interest expense decreased slightly to $65.0 million from $65.7 million in the prior-year quarter.
• Gains on divestitures and impairment charges, net, were $11.2 million in Q3 2026, compared to a $0.4 million net loss in Q3 2025.
• GAAP effective income tax rate was 25.1% in Q3 2026, down from 26.9% in the prior-year quarter.
• Adjusted effective tax rate was 25.3% in Q3 2026, up from 24.1% in the prior-year quarter.

Guidance and Future Outlook:

• Fourth quarter 2026 adjusted earnings per share guidance is set at $1.10 to $1.20.
• Full year 2026 adjusted earnings per share guidance is updated to $3.94 to $4.04.
• Full-year adjusted operating cash flow guidance is maintained with a midpoint of $1,085 million.
• Maintenance capital expenditure outlook is confirmed at $335 million, resulting in expected adjusted free cash flow of approximately $750 million.
• Outlook reflects lower funeral volumes than originally anticipated, continued higher healthcare costs, and increased selling compensation and advertising/marketing expenditures.
• Investments in preneed sales production are expected to drive future revenue and earnings growth as sales are recognized.
• Elevated costs are expected to continue into the fourth quarter.

Business Segments and Product Lines:

• Funeral Segment: Delivered solid results supported by growth in average revenue per service and stable funeral service volumes.
  • Comparable funeral preneed sales production increased 6%.
  • Comparable total funeral sales average grew 3%.
  • Core funeral revenue increased 2.3% to $475.5 million in comparable operations.
  • Non-funeral home revenue increased 10.6% to $28.2 million in comparable operations.
• Cemetery Segment: Generated 4% growth in comparable revenue, driven by higher recognized preneed property, merchandise, and service revenue.
  • Comparable cemetery preneed sales production increased 5%.
  • Recognized preneed cemetery property revenue grew 1%.
  • Preneed property sales production increased 4%.
  • Core cemetery revenue increased 2.7% to $457.9 million in comparable operations.
  • Other cemetery revenue increased 19.7% to $45.5 million, primarily due to increased endowment care trust fund income.
• Trust Fund Returns: Combined trust funds returned 6.2% for the nine months ended September 30, 2026, and -0.7% for the three months ended September 30, 2026.

Market and Competitive Landscape:

• The company operates as the largest provider of deathcare products and services in North America.
• At September 30, 2026, the company owned and operated 1,491 funeral service locations and 506 cemeteries (317 combination locations) across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico.
• The company serves approximately 700,000 combined preneed and atneed families annually.
• The funeral and cemetery industry is described as competitive.

Risks and Challenges:

• Margins were pressured by higher healthcare costs, higher selling compensation costs, and increased advertising and marketing expenditures.
• Changes to the sales compensation structure, including increased guaranteed hourly wages, resulted in higher selling compensation rates and more costs recognized in the current period.
• Increased preneed sales production creates near-term pressure on cemetery gross margins while expanding the backlog of higher-margin deferred property sales.
• Trust fund returns are subject to market conditions beyond the company's control.
• The company faces risks related to inflation, natural disasters, changes in death rates, and regulatory compliance.
• Potential risks include the financial condition of third-party insurance companies funding preneed contracts and the application of unclaimed property laws.

Management Commentary and Tone:

• Chairman and CEO Tom Ryan highlighted double-digit growth in adjusted earnings per share and adjusted operating cash flow.
• Management expressed confidence that investments in preneed sales production will drive future revenue and earnings growth despite near-term margin pressure.
• Ryan noted the company's disciplined approach to capital deployment across acquisitions, property development, real estate, and new funeral home construction.
• Management emphasized the dedication of over 25,000 associates and their commitment to providing exceptional care.

Other Key Points:

• Year-to-date, the company returned $464 million to shareholders through dividends and share repurchases.
• The company actively deploys capital across strategic growth opportunities including acquisitions, cemetery property development, real estate investments, and new funeral home construction.
• A favorable legal settlement contributed to the decrease in corporate general and administrative expenses.
• Lower long-term incentive compensation tied to total shareholder return contributed to reduced corporate general and administrative expenses.
• The company reported $11.2 million in net gains from non-strategic asset divestitures of excess land in Q3 2026.
• Total capital expenditures were $99.5 million in Q3 2026, a decrease of $2.1 million compared to the prior-year quarter.
• The company maintains a diversified portfolio of brands, with Dignity Memorial® being a primary name for families.