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Service Corporation International SCI posted impressive third-quarter 2025 results, with both top and bottom lines increasing year over year and beating the Zacks Consensus Estimate. The company reaffirmed its 2025 earnings outlook and raised its cash flow guidance, reflecting improved operating performance, stronger cash generation and continued financial discipline.
SCI posted adjusted earnings of 87 cents per share, which surpassed the Zacks Consensus Estimate of 83 cents. The metric increased from the year-ago quarter’s adjusted earnings of 79 cents. Increased gross profit, lower administrative costs and a reduced share count offset the effect of a higher tax rate, driving a 10.1% year-over-year rise in adjusted earnings per share.
Total revenues of $1,058.1 million increased 4.4% from $1,014 million in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1,041 million.
Service Corporation International price-consensus-eps-surprise-chart | Service Corporation International Quote
Gross profit increased 5.1% to $265.5 million from $252.6 million last year. The gross margin expanded by 30 basis points (bps) year over year to 25.1%.
Corporate general and administrative expenses decreased 12.4% year over year to $38.3 million from $43.7 million in the prior-year period. As a percentage of revenues, this metric declined 70 bps year over year to 3.6%.
Operating income rose 6.6% to $226.4 million from $212.4 million in the year-ago quarter. The operating margin improved 40 bps year over year to 21.4% in the quarter under review.
Funeral Operations: Total funeral revenues reached $574.1 million, beating the Zacks Consensus Estimate of $573.8 million. This compares with $566 million in the third quarter of 2024. Gross profit declined 7.7% year over year to $99.6 million from $107.9 million, with the gross margin contracting 180 bps to 17.3%. The segment performed 84,636 funeral services compared with 85,743 in the prior-year quarter, with average revenue per service rising 3.1% to $5,843 from $5,669.
Comparable funeral results showed that core revenues decreased 0.7% to $454.2 million, led by a 3.6% decline in atneed revenues to $274.7 million and a 4% increase in matured preneed revenues to $179.5 million. Non-funeral home revenues increased 12.6% to $26 million, whereas core general agency and other revenues grew 5.9% to $56 million. Non-funeral home preneed sales revenues decreased 17.1% to $22.3 million.
Total comparable funeral services performed decreased 3.1% year over year to 82,057, with atneed services down 6.1% to 42,455 and matured preneed services rising 1.0% to 25,467. Non-funeral home services declined 0.7% to 14,135. The comparable core cremation rate increased to 57.3% from 56.8%, while the total comparable cremation rate rose to 64.4% from 63.9%.
Comparable funeral preneed sales production increased 1.9% to $300.2 million, with core contracts sold rising 4.3% to 36,224 and non-funeral home contracts sold decreasing 21.2% to 18,400. Core average revenue per contract sold increased 4.3% to $6,712, while non-funeral home average revenue per contract sold rose 2.2% to $3,101.
Cemetery Operations: Total cemetery revenues were $484 million, surpassing the consensus estimate of $467.7 million. This compares with $448 million in the third quarter of 2024. Gross profit increased 14.6% to $165.9 million from $144.8 million, while the gross margin improved 200 bps year over year to 34.3%.
Comparable cemetery total comparable revenues increased 6.9% year over year to $478.6 million, supported by a 6.7% rise in core revenues to $441 million and a 10.3% increase in other revenues to $37.6 million. Recognized preneed property revenues grew 10.5% to $224.6 million, and recognized preneed merchandise and service revenues advanced 5.8% to $109.5 million, leading to an 8.9% increase in total recognized preneed revenues to $334.1 million.
Comparable cemetery gross profit rose 12.4% year over year to $162.8 million, and the gross profit margin expanded 160 bps to 34%.
Comparable cemetery preneed and atneed sales production increased 7% to $449.8 million, driven by a 7.5% increase in property sales to $250.8 million, and an 8.5% increase in merchandise and services sales to $203.3 million. Preneed sales production grew 9.6% to $345.6 million.
SCI Stock Past 3 Months' Performance
The Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $241.3 million, long-term debt of $4.96 billion, and total equity of $1.57 billion.
Net cash provided by operating activities was $252.3 million in the three months ended Sept. 30, 2025. Excluding special items and higher cash taxes paid of $11.1 million, net cash provided by operating activities improved $10 million to $283 million.
Total capital expenditure was $101.6 million, including $34.9 million for capital improvements at existing field locations, $45 million for the development of cemetery property, $6.1 million for digital investments and corporate initiatives, and $15.6 million for growth capital expenditure related to new funeral service locations.
Service Corp confirmed the mid-point of its 2025 earnings guidance and raised its cash flow outlook based on improved expectations for cash taxes and working capital timing. The mid-point of earnings per share (EPS) guidance remains at $3.85, while the range has been narrowed to $3.80-$3.90 from the previously stated $3.70-$4.00. At the mid-point, the company expects adjusted earnings growth within its long-term target of 8-12%.
The company’s cash flow guidance has been increased, reflecting better visibility into operating performance and tax efficiency. Net cash provided by operating activities, excluding special items and cash taxes, is projected between $1.05 billion and $1.09 billion, up slightly from the prior stated $1.03-$1.09 billion.
After accounting for cash taxes, net cash provided by operating activities, excluding special items, is expected between $910 million and $950 million, compared with the prior mentioned $880-$940 million.
The total capital expenditure view for 2025 is unchanged at $315 million. This includes $130 million for capital improvements at existing field locations, $160 million for the development of cemetery property, and $25 million for digital investments and corporate initiatives.
The stock has gained 5% in the past three months, in line with the industry.
We have highlighted three other top-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. UNFI, PepsiCo, Inc. PEP and Ollie's Bargain Outlet Holdings OLLI.
United Natural is the leading distributor of natural, organic and specialty food and non-food products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
UNFI delivered an earnings surprise of 416.2% in the trailing four quarters, on average. The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.5% and 167.6%, respectively, from the year-ago reported figures.
PepsiCo is one of the leading global food and beverage companies. It presently carries a Zacks Rank #2.
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales indicates year-over-year growth of 1.8%, whereas that for EPS suggests a decline of 0.6%. PEP has a trailing four-quarter negative earnings surprise of 1.1%, on average.
Ollie's Bargain is a value retailer of brand-name merchandise at drastically reduced prices and currently carries a Zacks Rank #2. OLLI delivered a trailing four-quarter earnings surprise of 4.2%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current fiscal-year sales and earnings indicates 16.4% and 16.5% rallies, respectively, from the year-earlier reported levels.
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This article originally published on Zacks Investment Research (zacks.com).
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