By Thomas A. Parmalee
Service Corporation International’s first-quarter results, reported April 29, offer a clear takeaway for cemetery operators: underlying cemetery demand remains a durable growth engine — even as broader death-care volumes fluctuate.
While the company acknowledged a 6% year-over-year decline in comparable funeral service volumes, SCI’s cemetery segment continued to outperform, underscoring the increasing strategic importance of cemetery operations within a mixed funeral-cemetery portfolio.
Adjusted earnings per share came in at 97 cents, essentially flat compared to 96 cents in the prior-year period. Revenue rose 2% to approximately $1.10 billion, while operating cash flow increased 7% to $333.8 million.
Wall Street, however, had expected stronger performance at $1.00 per share on $1.11 billion in revenue.
Cemetery Operations Lead Growth Narrative
For cemetery operators, the most notable signal in SCI’s report is the continued acceleration in preneed cemetery performance and its downstream financial impact.
Comparable cemetery preneed sales production increased 10% in the quarter, helping drive a 7% increase in cemetery revenue and a 120-basis-point improvement in cemetery gross profit.
Core cemetery revenue growth was reinforced by:
- A $28 million increase in preneed revenue recognition (up 10%).
- Strong property revenue gains (+$20 million).
- Increased merchandise and service revenue (+$8 million).
- Higher endowment care trust fund income (+$6 million).
These gains more than offset a modest $3 million decline in at-need cemetery revenue, reinforcing a structural shift toward preneed as the primary growth lever in cemetery operations.
Preneed Strategy Increasingly Decoupled from Funeral Volumes
SCI leadership emphasized that cemetery preneed strength is increasingly independent of funeral volume trends.
Chairman and CEO Tom Ryan noted that comparable funeral service volumes declined 6% year over year, attributing the drop to both a strong prior-year flu season and broader demographic patterns.
However, cemetery preneed production continued to climb, with Ryan highlighting that sales growth was driven by both large-scale transactions (+$20 million) and core sales (+$12 million).
From a cemetery operator’s perspective, this divergence is significant: Preneed cemetery sales are increasingly being driven by off-site marketing channels, including seminars typically held in restaurants and hotels rather than cemetery locations. That structural shift reduces reliance on walk-in traffic and strengthens the predictability of sales pipelines.
Cremation-Cemetery Opportunity Remains Underpenetrated
A key strategic insight from SCI’s call centers on cremation families — a growing segment that cemetery operators may be under-serving.
SCI reported successful pilot programs in 10 markets designed specifically to educate cremation families on cemetery offerings. These initiatives included targeted advertising, in-lobby presentations, and expanded educational materials.
Ryan described early results as “very successful,” noting meaningful performance improvements versus control markets. The company now plans to expand the initiative to approximately 80 additional markets.
For cemetery operators, this underscores a critical opportunity: Cremation growth does not necessarily reduce cemetery relevance, but it does require reframing cemetery value propositions around education, memorialization, and family engagement.
Capital Investment Continues to Favor Cemetery Infrastructure
SCI’s capital allocation further reinforces the strategic importance of cemetery assets within its portfolio.
In the quarter, the company invested:
- $41 million in cemetery development projects.
- $20 million in cemetery and funeral home upgrades.
- $17 million in growth capital, including new builds and real estate expansion.
- $5 million in digital and corporate initiatives.
Additionally, SCI deployed $24 million toward acquisitions across multiple states and remains on pace to meet its 2026 acquisition investment target of $75 million to $125 million.
The sustained investment in development and expansion is a strong indicator that long-term land-based and memorialization assets continue to be viewed as structurally valuable — even in a shifting service mix.
Outlook for the Rest of the Year
SCI reaffirmed its full-year guidance of $4.05 to $4.35 diluted earnings per share, excluding special items. However, leadership acknowledged that current funeral volume trends place greater probability on results landing in the lower half of that range.
The company continues to expect a 1% to 3% decline in funeral volumes for the year, while also pointing to historical patterns where weaker first-quarter volumes have tended to recover in the second half of the year.
From a cemetery operator’s lens, the key takeaway is not short-term volatility in funeral services, but rather the resilience of cemetery preneed growth, trust earnings expansion, and capital reinvestment strategies that continue to support long-term asset value.
Bottom Line for Cemetery Operators
SCI’s results reinforce several structural themes shaping cemetery operations today:
- Preneed cemetery sales remain a consistent growth driver.
- Cremation-focused education is becoming a critical demand unlock.
- Cemetery performance is increasingly decoupled from funeral volume cycles.
- Capital investment continues to favor cemetery development and upgrades.
- Trust earnings and backlog conversion are becoming more material to long-term earnings stability.
In short, while funeral volumes fluctuate, cemetery operations are increasingly positioned as the stabilizing and in many cases expanding core of its business model.
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