Service Corporation International

Second-quarter adjusted EPS was $0.90, up from $0.88 a year ago. Adjusted operating cash flow was about $239 million, an increase of $71 million or 42% year over year, and adjusted free cash flow is now guided to $750 million for full-year 2026 after maintenance CapEx of $335 million. Funeral comparable revenue increased by $5 million, or about 1%; comparable core funeral revenue rose $7 million, or about 1.5%; and comparable core funeral volume declined 1.7%. Cemetery comparable revenue increased by $23 million, or about 5%; cemetery gross profit grew $7 million, or 4%; and comparable preneed cemetery sales production increased $29.7 million, or 8%. For full year 2026, SCI narrowed adjusted EPS guidance to $4.10-$4.30 and confirmed the $4.20 midpoint. It raised adjusted operating cash flow guidance midpoint to $1.085 billion from $1.035 billion, with cash taxes still expected at about $120 million and acquisition investment targeted at $75 million to $125 million.

Tom Ryan said the quarter showed muted EPS growth but strong underlying momentum in preneed sales, cash flow, and the company’s ability to invest and return capital. He highlighted the four-part sales strategy, including headcount, lead-to-sale conversion, seminars, and large sales, and said AI tools are being used to train sales counselors and improve effectiveness. He sounded constructive on the second half, saying SCI is positioned for solid revenue growth, margin expansion in both segments, and double-digit EPS growth versus the back half of 2025.

Eric Tanzberger emphasized strong cash generation, with adjusted operating cash flow of about $239 million, up $71 million year over year, helped by lower cash taxes, stronger cemetery collections, and relatively flat working capital outside timing items. He said the company invested $120 million in the quarter, including $80 million of maintenance capital, $25 million of growth capital, and $15 million for acquisitions, and returned $172 million to shareholders through $123 million of buybacks and just under $50 million of dividends. He raised full-year adjusted operating cash flow guidance midpoint to $1.085 billion, increased maintenance CapEx to $335 million, and said adjusted free cash flow should be $750 million for 2026; he also noted liquidity of about $1.6 billion and leverage of 3.77x net debt to EBITDA.

Analysts focused on the sales strategy shift toward fixed compensation and insurance-funded preneed, and management said the change is mainly a retention and training tool that has helped attract and keep better salespeople. They also said SCI Direct is now in the low 90s insurance mix and core funeral is around 70%, with trust products still needed in some states and for some customers. Questions on funeral volume trends drew a cautiously positive response: July was said to be roughly flat year over year so far, and management expects declines to continue moderating as demographic tailwinds build. On margins and cemetery recognition rates, management said funeral margin pressure from compensation and product-transition items should ease later in the year, while cemetery recognition should move back toward the mid-90% range as backlog deliveries flow through.