Service Corporation International's Q2 2025: Navigating Contradictions in Cremation Rates and Preneed Sales Growth

Cremation rate and market impact, preneed sales production expectations are the key contradictions discussed in Service Corporation International's latest 2025Q2 earnings call.



Earnings and Revenue Growth:
- Service Corporation International (SCI) reported adjusted earnings per share of $0.88 for Q2 2025, a 11% increase from the prior year.
- Funeral revenue increased by over $15 million or 3%, with comparable funeral revenue up by 2%.
- This growth was due to solid core revenue and commission growth from a new preneed insurance marketing agreement.

Cremation Rate and Revenue Impact:
- The core cremation rate increased by 20 basis points, contributing to a 3.3% growth in core average revenue per service.
- The moderate increase in the cremation rate is expected to affect revenue by about 50 basis points instead of the historical 1%.
- This is attributed to higher cremation rates in rural areas and the demographic makeup serving more consumers with lower cremation rates.

Cemeterry Revenue and Recognition Rate:
- Comparable cemetery revenue increased by $2 million or almost 1%, with a $3 million increase in at-need revenue.
- The recognition rate for preneed cemetery revenue was lower due to delays in construction but is expected to increase in the second half.
- The decline in recognition is due to lower recognition rates on new construction, which will be recognized upon project completion.

Cash Flow and Share Repurchase:
- Adjusted operating cash flow for the quarter was $168 million, with a revised full-year guidance increased to $880 million to $940 million.
- The company returned $239 million to shareholders through $45 million in dividends and $194 million in share repurchases.
- The increase in cash flow was due to working capital improvements and a reduction in cash taxes, enabled by legislative changes.