Service Corp. Updates Outlook on Lower Funeral Volumes After 11% Adjusted EPS Gain

Service Corporation International said Wednesday that funeral volumes are coming in lower than it originally anticipated, as the largest U.S. deathcare provider set fourth-quarter adjusted earnings guidance of $1.10 to $1.20 a share after an 11% gain in third-quarter adjusted EPS.

The Houston-based company now expects full-year adjusted earnings per share of $3.94 to $4.04, according to the earnings release it filed with an 8-K on Wednesday. It said the outlook reflects those lower volumes along with higher healthcare costs and higher selling compensation and advertising spending tied to growth in preneed sales.

Third-quarter results

Adjusted EPS rose to 97 cents from 87 cents a year earlier, helped by higher operating income and a lower share count. GAAP diluted EPS climbed 24% to $1.03 from 83 cents, including $11.2 million of net gains on non-strategic asset divestitures and impairment charges.

Revenue grew $49.2 million, or 5%, to $1.107 billion. Net income attributable to common stockholders rose to $141.3 million from $117.5 million, and operating income increased to $252.9 million from $226.4 million.

Net cash from operating activities increased 18% to $296.8 million, while adjusted operating cash flow rose 11% to $296.9 million.

Funeral and cemetery trends

Comparable funeral revenue rose 3.3% to $588.2 million, as total comparable average revenue per service rose 2.8% to $6,022. Comparable funeral services performed were essentially flat, down 0.1% to 83,638, with atneed services down 1.3%. The total comparable cremation rate rose to 65.0% from 64.4%. Comparable funeral gross margin held at 17.6%.

Comparable cemetery revenue grew 4.0% to $503.4 million, but the segment's gross margin narrowed to 33.2% from 34.3%. The company said higher selling compensation, partly from a change to its sales pay structure that increased guaranteed hourly wages, along with higher marketing spending and health insurance costs, largely offset the revenue gain.

Comparable funeral preneed sales production rose 6%, and comparable cemetery preneed sales production rose 5%.

"While we expect these elevated costs to continue into the fourth quarter, as reflected in our earnings outlook, our investments in preneed sales production will drive revenue and earnings growth as sales are recognized in the future," Chairman and CEO Tom Ryan said in the release.

Cash flow outlook confirmed

SCI kept its full-year adjusted operating cash flow guidance of $1.055 billion to $1.115 billion, with a midpoint of $1.085 billion, and its maintenance capital expenditure outlook of $335 million. That implies adjusted free cash flow of about $750 million, the company said.

Ryan said SCI has returned $464 million to shareholders through dividends and share repurchases so far this year. Diluted weighted average shares fell to 137.2 million in the quarter from 141.4 million a year earlier.

At Sept. 30, the company operated 1,491 funeral service locations and 506 cemeteries.

Sources

1. Service Corporation International Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 28, 2026 (accession 0000089089-26-000094)

This article is for informational and educational purposes only and is not investment advice. It is not a recommendation to buy or sell any security.

Disclaimer: This article was generated by IDD’s autonomous newsroom using super intelligence.