Service Corporation International Q1 FY2026 earnings call

Tom Ryan started with an overview of quarterly performance. Cemetery revenue and gross profit increased supported by double-digit growth in pre-need cemetery sales production, while funeral revenue and gross profit were lower due to mid-single-digit decline in case volume. Discussed funeral results in detail, including revenue decline, context of volume decline, offset by average revenue per service growth. Talked about pre-need funeral and cemetery sales growth. Eric discussed cash flow results, capital investments, corporate G&A, trust fund returns, and cash flow guidance for 2026.

Funeral: Comparable funeral revenues decreased by $17 million, or just less than 3%, mainly due to a 6.6% decrease in core funeral services performed. Core average revenue per service grew 3.5%. Funeral gross profit declined by approximately $23 million, with gross profit percentage down 300 basis points to just over 21%. Cemetery: Comparable cemetery revenue increased by $31 million or about 7%, primarily due to higher core revenue. Comparable pre-need cemetery sales production grew an impressive $32 million, or 10% in the quarter. Cemetery gross profit in the quarter grew by $15 million, or 11%, with margin expansion of 120 basis points to approximately 33%

Reaffirmed 2026 normalized earnings per share guidance range of $4.05 to $4.35. Expect year-over-year rate of funeral volume decline to moderate, resulting in 1% to 3% decline for the year. Confident in delivering within stated earnings range due to strong momentum in pre-need cemetery sales, average revenue per funeral, and disciplined expense management.

Forward-looking statements are subject to risks and uncertainties identified in earnings release and SEC filings, including factors that could cause actual results to differ materially from contemplated statements.

Q: On the funeral volumes, it'd be great just to hear how volumes, volume growth, you know, progressed throughout the quarter in kind of, you know, January, February, March. And then what are you seeing in early April, early days in the second quarter?

A: Sure, Parker. This is Tom. Thanks for the question. You know, what we saw was out of the gate, you know, really all three months were down. I think January and February were a little steeper and March was slightly better, but still down. And what we're seeing, Parker, and it's not unlike when we study the five years before, what typically happens is the first quarter is the worst. The second quarter is still not great. And you tend to start trending the back half of the year and seeing that volume come back. That's what we've experienced in the previous five times. And I'd tell you right now in April, we're seeing the same thing. April's still down. It's not as bad as the first quarter, but we're still kind of facing a little bit of a headwind. And again, I think we anticipate that that would get better throughout the quarter and really see, you know, maybe get to see some positive comps in the back half of the year.

Q: And then in terms of the guidance, I may have missed this. I know you said that you now expect comparable funeral volumes down one to three. But on the pre-need cemetery side, I think that's going to be kind of helping offset that. It was up 9.7% in the first quarter. But just how are you guys thinking about that throughout the course of the year? The comps do get a little bit tougher, but just how are you thinking about pre-need cemetery production within the four-year guidance now?

A: Yeah, I think, Parker, this time it's always hard to tell through three months. We were very pleased with the first quarter. But we still, when we talked about guidance before, remember, I think I told you to steer you towards the low to mid-single digits. I think with the first quarter in the bank, we feel pretty good about mid-single digit growth for the year. 10% is high step in it. But we do still feel very good about our momentum. Jay's got the team really focused on KPIs. In the four of those, one of the channels is large sales. One of them is headcount. And so what we're seeing today, and I touched upon it a little bit on the call, is that we're growing the headcount. Part of that is we're trying to retain more of our employees, and that's being successful, and then hire new ones. And we believe we've got better leads. Our next KPI is our lead-to-sale ratio. And so that's really focused on the quality of leads and our ability to follow those up. And then the third bucket before large sales is seminars. We've found that seminars are a way that we can educate the consumer, get in front of them. And so Jay really pushed the initiative to say, let's expand the number of seminars we're doing. And we're seeing great success with that. And those are the types of things where you're out in the community, you're not getting your leads through the funeral home. And that's why I think we can say, we grew velocity in a quarter, even though funeral volumes were down. And by the way, funeral volumes are a great lead source, but we're finding other ways to get out to the consumer and seeing real success there. So we feel great about the momentum. You're right, the comps get a little tougher as we go along the year, but still very confident that we can get to that mid-single digit growth for the year. ...