Service Corporation International (SCI Quick QuoteSCI - Free Report) delivered solid fourth-quarter 2025 results, with both top and bottom lines increasing year over year. The performance reflected steady growth across the funeral and cemetery segments, higher gross profit and continued capital discipline. The company also provided its outlook for 2026, with earnings growth expected within its long-term target range.

A Closer Look at SCI’s Quarterly Results

SCI reported adjusted earnings of $1.14 per share, which matched the Zacks Consensus Estimate. The metric increased 8% from adjusted earnings of $1.06 in the year-ago quarter.

Total revenues of $1,111.5 million increased 2% from $1,093.0 million in the year-ago quarter. Revenues slightly missed the Zacks Consensus Estimate of $1,119 million.

Gross profit rose 1.9% to $311.7 million from $305.9 million last year. The gross margin remained flat year over year at 28%.

Corporate general and administrative expenses were $33.7 million compared with $15.0 million in the prior-year period. The year-ago quarter included a $20.3 million reduction in the California legal reserve. Excluding this item, corporate G&A expenses declined year over year.

Operating income rose 5.1% to $275.6 million from $262.2 million in the year-ago quarter.

SCI Provides Insights by Segments

Funeral: Total funeral revenues reached $600.6 million, up from $587.7 million in the fourth quarter of 2024. Gross profit increased to $126.2 million from $125.1 million a year ago, while the gross margin was 21% compared with 21.3% in the prior-year quarter. SCI performed 89,117 funeral services, slightly higher than 88,934 services in the year-ago quarter. Average revenue per service increased 3.3% to $5,880 from $5,693.

Comparable funeral revenues jumped 0.5% year over year to $580.4 million. Comparable core revenues rose 1.2%, supported by a 3.2% increase in core average revenue per service, partially offset by a 1.9% decline in core services performed. Comparable preneed funeral sales production rose 11% to $294.1 million, reflecting strong core preneed growth and a full transition to a new insurance provider.

Comparable funeral gross profit decreased 2.8% to $123.0 million, and the gross margin contracted 70 basis points to 21.2%, primarily due to higher selling compensation tied to stronger preneed sales production.

Cemetery: Total cemetery revenues were $510.9 million, up from $505.3 million in the fourth quarter of 2024. Gross profit increased 2.6% to $185.5 million from $180.8 million, while the gross margin expanded 50 basis points to 36.3%.

Comparable cemetery revenues increased 0.9% to $508.3 million, driven by higher other revenues, including endowment care trust fund income. Comparable gross profit rose 2.9% to $185.2 million, and the gross margin expanded 70 basis points to 36.4%.

Comparable preneed cemetery sales production increased 2.2% to $368.5 million, supported by higher contract volume, partially offset by lower large property sales.

SCI’s Financial Health Snapshot

SCI ended 2025 with $243.6 million in cash and cash equivalents compared with $218.8 million at the end of 2024. Long-term debt totaled $5.1 billion. Total equity stood at around $1.6 billion.

Net cash provided by operating activities was $212.9 million in the fourth quarter compared with $264.1 million in the prior-year quarter. Excluding special items, operating cash flow was $213.2 million versus $267.6 million last year, primarily reflecting higher cash interest and cash taxes. For full-year 2025, adjusted operating cash flow was $965.5 million.

Total capital expenditures were $125.7 million in the quarter and $388.6 million for the full year, including investments in capital improvements, cemetery property development and new funeral home construction.

What to Expect From SCI in 2026?

For 2026, SCI expects diluted earnings per share, excluding special items, in the range of $4.05-$4.35, with the midpoint reflecting growth within its long-term target range of 8-12%.

Net cash provided by operating activities, excluding special items and cash taxes, is projected between $1,125 million and $1,185 million. After cash taxes (expected at $120 million at the midpoint), net cash provided by operating activities, excluding special items, is expected between $1,005 million and $1,065 million.

Maintenance capital expenditures for 2026 are expected to total $325 million, including $135 million for capital improvements at existing locations, $165 million for cemetery property development and $25 million for digital and corporate investments.

The Zacks Rank #3 (Hold) stock has gained 11.1% in the past year compared with the industry’s growth of 8.9%.

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