Service Corporation International Cuts 2026 EPS Outlook to $3.94-$4.04

Service Corporation International (SCI ) reported third-quarter 2026 results on October 28, 2026, with GAAP diluted earnings per share rising 24% to $1.03 from $0.83 in the prior-year quarter and adjusted earnings per share rising 11% to $0.97 from $0.87, according to the company’s third-quarter earnings release. Consolidated revenue grew $49.2 million, or 5%, over the third quarter of 2025 to $1,107.3 million.

The Houston-based funeral and cemetery operator also revised its full-year earnings outlook. The company said it now expects 2026 adjusted earnings per share of $3.94 to $4.04, alongside fourth-quarter adjusted earnings per share of $1.10 to $1.20. The new full-year range replaces the $4.10 to $4.30 range the company set on July 29, 2026, when it narrowed its guidance around a confirmed $4.20 midpoint in its second-quarter release. The company said the updated outlook reflects lower funeral volumes than it originally anticipated, the continued impact of higher healthcare costs, and higher selling compensation and advertising and marketing expenditures supporting preneed sales production; it said it continues to expect year-over-year revenue growth.

Operating income was $252.9 million versus $226.4 million a year earlier, and net income attributable to common stockholders was $141.3 million versus $117.5 million. Diluted weighted average shares outstanding were 137.2 million, down from 141.4 million. The quarter included $11.2 million of net gains on non-strategic asset divestitures and impairment charges, compared with $0.4 million of net losses in the prior-year quarter; the prior-year period also included a $0.4 million restructuring charge. The company said higher operating income and the lower share count drove the 11% adjusted earnings-per-share growth. Corporate general and administrative expenses were $30.6 million versus $38.3 million, a decrease the company attributed primarily to lower long-term incentive compensation expense tied to total shareholder return and a favorable legal settlement. Interest expense was $65.0 million versus $65.7 million, a $0.7 million decrease the company said resulted from lower rates on floating-rate debt more than offsetting higher balances.

“Today, we reported adjusted earnings per share of $0.97 and adjusted net cash provided by operating activities of $296.9 million, both delivering double-digit growth compared to the prior-year quarter,” Chairman and CEO Tom Ryan said. Ryan said margin pressure from higher healthcare costs, higher selling compensation costs and increased advertising and marketing expenditures was partially offset by higher trust fund income and lower corporate general and administrative expenses. He said the company returned $464 million to shareholders year to date through dividends and share repurchases; the nine-month cash flow statement shows $318.9 million of share repurchases and $145.4 million of dividend payments.

The GAAP effective income tax rate was 25.1%, down from 26.9% a year earlier, while the adjusted effective tax rate was 25.3%, up from 24.1%. Combined trust fund returns were negative 0.7% for the quarter and positive 6.2% for the first nine months of 2026. Adjusted earnings per share and adjusted operating cash flow are non-GAAP measures that the company reconciles to GAAP figures in the release appendix.

Funeral and Cemetery Results

Comparable funeral revenue rose $18.7 million, or 3.3%, to $588.2 million. Core funeral revenue increased $10.6 million, or 2.3%, primarily on a 2.8% increase in core average revenue per service, partially offset by a 0.5% decrease in core funeral services performed. The core cremation rate increased 60 basis points to 58.2%. Comparable funeral gross profit increased $3.6 million to $103.8 million, with the gross margin unchanged at 17.6%; the company said the revenue increase was partially offset by higher selling compensation and advertising and marketing expenditures supporting preneed sales production, along with increased health insurance expense. Comparable funeral preneed sales production rose $18.6 million, or 6.1%, to $323.5 million, with core contracts sold up 5.7%.

Comparable cemetery revenue increased $19.4 million, or 4.0%, to $503.4 million, on $11.9 million of higher core revenue and $7.5 million of higher other revenue. Total recognized preneed revenue rose 4.0%, and other revenue rose 19.7%, primarily on higher endowment care trust fund income. Comparable cemetery gross profit rose $1.1 million to $167.1 million, while the gross margin declined to 33.2% from 34.3%. The company attributed the margin decline to a sales compensation structure change that increased guaranteed hourly wages, as well as higher advertising and marketing expenditures and increased health insurance expense. Comparable cemetery preneed sales production increased $17.0 million, or 4.8%, to $369.2 million, supported in part by a $3.7 million increase in large sales. The recognition rate, the ratio of current-period core revenue to preneed and atneed sales production, was 96.6% versus 97.6% a year earlier.

Cash Flow and Full-Year Outlook

Net cash provided by operating activities increased $44.5 million, or 18%, to $296.8 million. Adjusted operating cash flow rose $29.0 million, or 11%, to $296.9 million; the company said the increase was supported by $26.5 million of higher operating income and a $29.9 million working capital benefit primarily related to the timing of an additional payroll cycle in the prior-year period, partially offset by $15.8 million of higher cash taxes. Third-quarter capital expenditures totaled $99.5 million, comprising $79.5 million of maintenance, cemetery development and other spending and $20.0 million of growth capital for construction of new funeral service locations, down $2.1 million from the prior-year quarter primarily due to timing. Long-term debt stood at $4,977.9 million at September 30, 2026, versus $5,083.0 million at December 31, 2025.

For full-year 2026, the company maintained its adjusted operating cash flow guidance at a midpoint of $1,085 million, within a $1,055 million to $1,115 million range that includes $120 million of expected cash taxes, and kept its maintenance capital expenditure outlook unchanged at $335 million, which together produce expected adjusted free cash flow of approximately $750 million. The outlook excludes items including hurricane-related expenses net of insurance recoveries, gains or losses on asset divestitures and early debt extinguishment, potential tax reserve adjustments and IRS payments or refunds, acquisition and integration costs, system implementation and transition costs, and potential litigation-related costs, because forward-looking GAAP figures are not currently accessible.

For the first nine months of 2026, revenue was $3,307.0 million versus $3,197.7 million a year earlier, operating income was $728.3 million versus $702.5 million, and net income attributable to common stockholders was $401.9 million versus $383.2 million. Diluted earnings per share were $2.90 versus $2.68, adjusted earnings per share were $2.84 versus $2.71, and net cash provided by operating activities was $869.3 million versus $729.9 million.

At September 30, 2026, the company owned and operated 1,491 funeral service locations and 506 cemeteries, of which 317 are combination locations, in 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. The company, which describes itself as the largest provider of deathcare products and services in North America, said it serves approximately 700,000 combined preneed and atneed families each year.

The company will host a conference call on October 29, 2026, at 8:00 a.m. Central Time, with a replay available through November 5, 2026.