Service Corporation International (SCI) investor relations material

Business performance and outlook

• Funeral and cemetery segments have normalized post-pandemic, with strong averages and steady growth in contract velocity and value.

• Large cemetery sales are lumpy, comprising 10%-15% of pre-need sales, with no clear external drivers but active internal sales efforts.

• Maintenance capital of $160 million is allocated to cemetery property development, including both community and private family mausoleums.

• COVID-19's impact on death rates has normalized, with volumes expected to be flat to slightly down in 2025 and similar trends projected for 2026.

• Earnings growth framework targets 8%-12%, with 5%-7% from base business, assuming flattish funeral volumes and mid-single-digit cemetery pre-need growth.

Market dynamics and strategy

• Market share is 17%-18% by revenue, with 12%-13% on the funeral side and 27%-28% on the cemetery side.

• Pre-need growth is driven by a 3,700-3,800 counselor sales force, CRM analytics, targeted marketing, and ongoing training.

• AI is being piloted for obituary writing and lead routing, with further applications in analytics and forecasting under exploration.

• Cremation mix has slowed to a 50-100 basis point annual shift, now at 57%-58%, with less pressure expected as urban areas approach 70%-80%.

• Each 1% shift in cremation mix impacts EBITDA by about $13 million, with current trends expected to moderate.

Margins, pricing, and regulatory environment

• Cemetery margins have grown from 17%-18% to 33% over 15-20 years, driven by pre-need sales and operational effectiveness.

• Funeral margins have risen to 21% due to a new marketing agreement, with further growth expected as Baby Boomer demographics increase volumes later this decade.

• New marketing agreement with Global Atlantic increased general agency commission from 26%-27% to 35%-36%, effective July 2024.

• Demographics for large cemetery purchases skew toward middle and upper-income families, with custom inventory and scarcity driving pricing.

• 70%-80% of locations have online pricing; regulatory changes may require full compliance, but current online pricing has had negligible impact on volume or average.