Service International (SCI 1.97%), the largest deathcare provider in North America, delivered results that surpassed expectations in its earnings report released on July 30, 2025. The company reported GAAP revenue of $1,065.4 million, beating analyst expectations of $1,051.6 million (GAAP), and posted a Non-GAAP earnings per share (EPS) of $0.88, topping the $0.85 consensus estimate (non-GAAP). Revenues grew by 3.0% compared to Q2 2024, and Non-GAAP EPS increased by 11%. Management maintained its full-year adjusted EPS outlook but raised its adjusted operating cash flow guidance for FY2025 by $50 million. The company continued to return capital to shareholders and maintained a strong financial footing, despite some pressure in cemetery margins and transitional effects in its preneed insurance business. Overall, it was a quarter characterized by steady growth, disciplined expense management, and a solid outlook.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.88 | $0.85 | $0.79 | 11% |
| Revenue | $1,065.4 million | $1,051.6 million | $1,034.0 million | 3.0% |
| Operating Income | $224.5 million | $220.8 million | 1.7% | |
| Net Income Attributable to Common Stockholders | $122.9 million | $118.2 million | 4.0% | |
| Net Cash Provided by Operating Activities | $166.5 million | $196.9 million | (15.5%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Strategic Drivers
Service International is a leading provider of funeral, cremation, and cemetery services, operating more than 1,480 funeral homes and nearly 500 cemeteries across 44 U.S. states, eight Canadian provinces, the District of Columbia, and Puerto Rico. Its network enables it to offer a wide range of funeral and memorialization services through both at-need (immediate) and preneed (pre-arranged) contracts.
The company’s recent focus areas include maintaining its broad geographic reach, investing in digital systems to improve customer service, and leveraging acquisitions to expand its presence. Key factors for its continued success are effective cost management, compliance with complex regulations, and capturing demographic growth, especially from the aging Baby Boomer population. Strategic growth through acquisitions, technology investment, and ongoing regulatory vigilance are central to its long-term plan.
Quarter Highlights: Operational and Financial Performance
During the quarter, Service International’s financial performance was driven by strength in its funeral segment and careful management of costs. Funeral revenue increased by 4.5% to $591.4 million compared to Q2 2024. This growth reflected a 3.1% rise in the average revenue per funeral service, and Total funeral services performed reached 87,014, up 1.1% compared to Q2 2024. The company attributed gains in comparable funeral gross profit, up 14.8%, to a combination of higher service revenues and control over fixed costs. The gross margin for the funeral segment (GAAP) rose by 1.9 percentage points to 19.6%.
Within the funeral segment, the company continued to see a rise in the cremation rate, with its core cremation mix reaching 57.1%, up 0.2 points, reflecting ongoing shifts in consumer preference. However, comparable preneed funeral sales production fell 8.8%, as ongoing transitions to a new insurance partner and changes in contract structure required retraining and licensing of sales personnel. Management described this impact as temporary, noting expectations for stabilization and renewed growth in 2026.
Total cemetery revenue increased by 1.3% to $474.1 million compared to Q2 2024, with at-need property revenue up 4.2% and preneed sales production rose 5.3%. A preneed contract is an agreement for future cemetery or funeral services, often completed before the individual passes away. This provides a recurring backlog, which can signal future revenue streams. Cemetery gross profit fell by $2.0 million compared to Q2 2024, with segment margin decreasing to 32.8% from 33.6%. The company cited higher selling compensation as the primary cause of these margin pressures.
Operating cash generation (GAAP) stood at $166.5 million, a decrease of 15.5% compared to Q2 2024. This was mainly due to a sharp increase in cash taxes paid, returning to more normal levels after prior policy benefits. Excluding special items and cash taxes, net cash from operations actually rose, underscoring the effect of tax timing on reported numbers. Capital returns remained a key priority, with $324 million spent on share buybacks and $91 million paid in dividends during the first half of 2025.
There were no significant regulatory disruptions during the quarter. The company continues to navigate evolving Federal Trade Commission rules and state laws, emphasizing ongoing compliance and readiness to adapt as needed. Management also highlighted the benefit of demographic trends, particularly with preneed sales and backlog driven by the Baby Boomer population. These trends support expectations for future growth in both the funeral and cemetery businesses.
Investments in digital technology advanced as part of a broader modernization plan, with $25 million allocated for 2025. Acquisitions remain a significant source of expansion. In 2024, $181.2 million was invested in acquisitions, and expectations for $75–$125 million in deals for the full year 2025. The company’s size and flexible capital structure allow it to act on these opportunities efficiently. $305 million of debt was repaid in the six months ended June 30, 2025, and liquidity at the close of Q1 2025 was reported at $1.6 billion.
Product and Service Context
In the funeral segment, service offerings include full-service funerals, direct cremations, and associated support, such as transportation and memorial planning. Cremation services have become a larger part of the mix. Preneed funeral contracts--arrangements for future services--continue to form an essential part of the backlog, despite temporary declines linked to insurance partner transition.
The cemetery segment provides property sales, internments, memorialization, and perpetual care services. At-need cemetery services, delivered when someone passes away, saw revenue growth. Preneed cemetery sales, involving the sale of cemetery property and services ahead of time, increased by 5.3%, boosting future revenue visibility. However, the revenue recognized from preneed property lagged slightly as a result of timing in delivering and developing sold property.
Outlook and Guidance
Management maintained its guidance for full-year 2025 Non-GAAP adjusted EPS in the range of $3.70–$4.00. The adjusted operating cash flow outlook for 2025 was raised to $880–$940 million, up by $50 million from earlier in the year, reflecting improved cash taxes and better working capital trends. Maintenance capital expenditures for FY2025, including spending on digital and property improvements, were planned at $315 million. No specific quarterly guidance was provided beyond these annual levels.
For future quarters, investors should keep an eye on the pace of normalization in preneed funeral sales, ongoing cost pressures (especially in selling and administrative expenses), and further expansion through acquisitions and technology. Demographic trends are expected to provide lasting support, but any shifts in regulatory requirements or market conditions could affect operational costs or segment margins. The quarterly dividend remained unchanged at $0.30 per share at the end of 2024.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
