SCI Shares Fall 12% After Funeral Volumes Force Lower Outlook
The funeral and cemetery operator cut its full-year adjusted earnings view while preneed selling costs hit today's margins.
Service Corporation International, which runs funeral homes and cemeteries across North America, lowered its full-year adjusted earnings outlook to $3.94 to $4.04 a share, citing funeral volumes lower than it originally anticipated. Shares fell 11.88% to $72.55 in Thursday trading, a day after the company's third-quarter results.
A lower outlook for the fourth quarter
The company now expects fourth-quarter adjusted earnings of $1.10 to $1.20 a share. It said it still expects revenue to grow year over year, but pointed to lower funeral volumes, higher healthcare costs, and higher selling compensation and advertising spending to support preneed sales, meaning contracts sold in advance of a death.
It kept its full-year adjusted operating cash flow guidance, with a midpoint of $1,085 million, and its $335 million maintenance capital spending outlook.
Third-quarter adjusted earnings rose 11% to $0.97 a share from $0.87, and revenue grew 5% to $1,107.3 million, the release said.
Cemetery margins absorb the selling costs
Comparable cemetery gross profit rose just $1.1 million to $167.1 million on $19.4 million more revenue, the 10-Q shows. The margin slid to 33.2% from 34.3%.
A revised sales pay structure raised selling costs now, which the company said should lower such expense later. Higher health insurance expense also weighed.
Funerals were soft over nine months. Comparable funeral gross profit fell 7.0% to $346.5 million, which the company attributed to lower funeral volumes and a heavier fixed-cost structure. Comparable services performed fell 2.7% over that stretch.
The explanation has shifted since the prior quarterly filing, which cited incentive accrual timing and insurance-funded preneed sales.
A $17.7 billion backlog and buybacks
SCI, which operated 1,491 funeral homes and 506 cemeteries at September 30 under brands including Dignity Memorial, says its backlog of future preneed revenue stands at $17.7 billion. Management argues the selling costs now being expensed build that backlog and will benefit later periods.
After quarter-end, the company repurchased 232,968 shares for $18.2 million, an average of $78.21 a share. Chairman and CEO Tom Ryan said in the release that the company has returned $464 million to shareholders through dividends and buybacks this year.
Fourth-quarter results will show whether adjusted earnings land inside the $1.10 to $1.20 range.
Sources
- 10-Q Filing — Service Corp. International (SCI) — SEC EDGAR
- 10-Q Filing — Service Corp. International (SCI), Q2 FY2026 filed 2026-07-30 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, exhibit991q326earningsrele.htm) — Service Corp. International, filed 2026-10-28 — SEC EDGAR
- Service Corporation Q3 Earnings Miss Estimates, Revenues Rise 5% Y/Y — Yahoo Finance
- Service Corporation International (SCI) Stock Price, Quote, News & Analysis | Seeking Alpha — seekingalpha.com
- SERVICE CORPORATION INTERNATIONAL ANNOUNCES THIRD QUARTER 2026 FINANCIAL RESULTS AND UPDATES FOURTH QUARTER OUTLOOK – Company Announcement - FT.com — Financial Times
- Service Corp.: Q3 Earnings Snapshot – WTOP News — wtop.com
- Service Corporation Queues for Q3 Earnings: Key Things to Note — Yahoo Finance
