Service Corp Profit Growth Slows as Volumes Decline
The death-care provider’s adjusted earnings per share rose just 1% in the latest quarter, down from 8% growth in the prior period.
Service Corp International (SCI) reported a sharp deceleration in profit growth as funeral volumes fell and margin pressures mounted. The death-care provider posted adjusted earnings of $0.97 a share in the first quarter of 2026, up 1% from a year earlier. That marked a slowdown from 8% growth in the fourth quarter of 2025 and 9% for the full year.
The results underscored a shift in the company’s operating environment. Revenue grew 2% to $1.10 billion, down from 3% growth in 2025. The slowdown was driven by a 6% decline in comparable funeral service volumes, worse than the 1.9% drop in the prior quarter, which the company attributed to a strong prior-year flu season and broader demographic trends. While the average sale price for comparable funeral services rose 3%, matching the prior quarter’s growth, the volume decline offset those gains.
Operating income fell 3% to $243.8 million, reversing a 5% increase in the fourth quarter of 2025. Gross profit margins for comparable funeral services compressed 300 basis points to 21.4%, extending a trend that saw a 70-basis-point decline in the prior quarter. The company partly offset those pressures with a 10% increase in comparable cemetery preneed sales production, accelerating from 2% growth in the fourth quarter. Cemetery gross profit margins expanded 120 basis points to 32.8%.
Cash flow provided a brighter spot. Net cash from operating activities rose 7% to $333.8 million, accelerating from flat growth in 2025. Adjusted operating cash flow increased 6% to $334.5 million. The company reiterated its 2026 guidance for adjusted earnings per share at $4.05 to $4.35, implying 5% to 8% growth at the midpoint—below its long-term target range of 8% to 12%. Adjusted operating cash flow guidance was also maintained at $1.13 billion to $1.19 billion, up 11% to 17% from 2025.
Corporate expenses declined 2% to $43.9 million after surging 19% in the fourth quarter due to a $20.3 million reduction in legal reserves in the prior-year period. Interest expense rose 4% to $64 million, driven by higher floating-rate debt. The company’s effective tax rate fell 110 basis points to 25%, aided by renewable energy tax benefits.
Capital expenditures edged up 2% to $79.9 million, with growth-focused capex rising 19% to $13.4 million. Trust fund returns turned negative in the quarter, with preneed funeral and cemetery funds declining 0.8% and 0.7%, respectively, after posting gains of 1.8% to 1.9% in the prior quarter. The core cremation rate ticked up 40 basis points to 57.8%.
Service Corp continued returning capital to shareholders, spending $645 million on share repurchases and dividends in 2025, up from $580 million in 2024. The company also allocated $101 million to acquisitions, adding 22 funeral homes and 2 cemeteries last year.