Service Corp Revenue Growth Accelerates, Cash Flow Guidance Raised
Service Corp International posted 4% revenue growth in the second quarter, up from 2% in the prior quarter, and raised its 2026 cash flow guidance midpoint by $50 million.
Service Corp International (SCI) said second-quarter revenue rose 4% to $1,103.3 million from $1,065.4 million a year earlier, an acceleration from the 2% growth reported in the first quarter, when revenue rose to $1,096.5 million from $1,074.2 million. The death-care services and cemetery operator posted GAAP diluted earnings of $0.90 a share, up from $0.86 in the prior-year quarter, reversing a first-quarter decline in which EPS fell to $0.97 from $0.98.
The funeral segment showed signs of stabilizing after a difficult start to the year. Comparable funeral services performed fell 1.7% year over year in the second quarter, a moderation from the 6% decline in the first quarter, when an unusually strong prior-year flu season acted as a headwind to comparisons. Preneed sales trends moved in opposite directions across the two businesses: comparable funeral preneed sales production growth accelerated to 7% from 6%, while comparable cemetery preneed sales production growth decelerated to 8% from 10%.
Margins compressed in both core segments, though for different reasons. Comparable funeral gross margin fell 130 basis points to 18.5% from 19.8%, due to higher selling compensation tied to strong insurance-funded preneed sales. Comparable cemetery gross margin slipped to 32.6% from 32.8%, reversing the 120-basis-point improvement management had highlighted for that segment in the first quarter.
Operating cash flow accelerated sharply, growing 43% year over year to $238.7 million, compared with 7% growth to $333.8 million in the first quarter. Cash taxes included in operating cash flow fell to $30.0 million from $94.3 million in the prior-year quarter, primarily due to credits tied to a renewable energy investment. Corporate general and administrative expenses declined to $41.8 million from $49.5 million, partly reflecting a $6.4 million legal settlement charge in the prior-year period that did not recur. A restructuring charge of $1.575 million and an associated $1.6 million charge booked in the second quarter of 2025 also did not recur, removing another cost drag from the year-over-year comparison.
Total capital expenditures rose $12.7 million to $95.7 million from $83.0 million a year earlier, reflecting the timing of cemetery property development spending.
Service Corp raised its 2026 cash flow guidance midpoint by $50 million, to $1,085 million from $1,035 million, due to stronger cemetery preneed cash receipts. The company reiterated its EPS guidance midpoint of $4.20 while narrowing the range to $4.10-$4.30 from $4.05-$4.35. It also raised its 2026 total maintenance capital expenditures guidance by $10 million, to $335 million from $325 million.
The company returned $363 million to shareholders through dividends and buybacks year-to-date through the second quarter, a figure it did not quantify in its first-quarter release.