Service Corporation International (SCI) investor relations material

Industry trends and post-COVID impacts

• Funeral volumes surged during COVID due to a pull-forward effect, with 130,000 excess services over 2.5 years, now largely normalized.

• Excess deaths from non-COVID causes like drug overdoses and suicides have started reverting to historical averages.

• Funeral volumes in Q1 were down 6% industry-wide, with expectations to recover about 400 basis points over the next three quarters.

• Historical cycles show similar volume declines recover partially within the year, with full-year guidance for funeral volumes at -1% to -3%.

• Baby boomer demographic shift is expected to drive at-need business growth over the next 3–10 years.

Financial performance and guidance

• Q1 saw a 6% decline in funeral volumes, but cost controls and strong preneed cemetery sales kept results flat to slightly up year-over-year.

• EPS guidance remains $4.05–$4.35, with each 1% volume decline equating to about $0.10 per share impact.

• If volumes end down 3%, EPS is expected at the low end of guidance; if better, results could reach the upper end.

• Free cash flow is projected at $700 million after $300 million CapEx, with a 6% yield and strong conversion rates.

Sales initiatives and operational strategies

• Preneed cemetery sales grew 10% year-over-year in Q1, with full-year guidance raised to mid-single-digit growth.

• Technology investments in CRM and increased salesforce headcount are driving lead generation and conversion.

• Seminar-based sales and decoupling preneed from at-need sales are regaining momentum post-COVID.

• Large sales (>$100,000) remain strong, influenced by real estate and stock market trends, but core sales drive most volume.

• Margin expansion is expected to continue, with cemetery margins now at 33%-35%, up from the teens 20 years ago.