Financial Analysis

"Commitments and Contingencies Insurance Loss Reserves We purchase various insurance products with high deductibles including: comprehensive general liability, morticians and cemetery professional liability, automobile liability, and workers compensation. The high-deductible insurance program means we are primarily self-insured for claims and associated costs and losses covered by these policies. As of June 30, 2026 and December 31, 2025, we had self-insurance reserves of $114.5 million and $108.4 million, respectively. Litigation and Regulatory Matters We are a party to various litigation and regulatory matters, investigations, and proceedings. Some of the more frequent routine litigations incidental to our business are based on operational claims and employment-related matters, including discrimination, harassment, and wage and hour laws and regulations. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. We intend to vigorously defend ourselves in the matters described herein; however, if we determine that an unfavorable outcome is probable and can be reasonably estimated, or if we determine an amount for which we would be willing to settle the matter to avoid further costs and risk, we establish the necessary accruals. We hold certain insurance policies that may reduce cash outflows with respect to an adverse outcome of these matter …

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Debt The components of Debt are: June 30, 2026 December 31, 2025 (In thousands) 7.500% Senior Notes due April 2027 $ 136,924 $ 136,924 4.625% Senior Notes due December 2027 550,000 550,000 5.125% Senior Notes due June 2029 750,000 750,000 3.375% Senior Notes due August 2030 850,000 850,000 4.000% Senior Notes due May 2031 800,000 800,000 5.750% Senior Notes due October 2032 800,000 800,000 Term Loan due November 2030 740,625 750,000 Bank Credit Facility due November 2030 365,000 255,000 Corporate Headquarters Debt Facility due February 2037 106,620 54,766 Obligations under finance leases 160,112 151,061 Mortgage notes and other debt, maturities through 2050 78,200 80,142 Unamortized debt issuance costs (34,316) (38,076) Total debt 5,303,165 5,139,817 Less: Current maturities of long-term debt (195,149) (56,847) Total long-term debt $ 5,108,016 $ 5,082,970 Current maturities of debt at June 30, 2026 include amounts due under our 7.500% Senior Notes due April 2027, term loan, mortgage notes and other debt, and finance leases within the next year as well as the portion of unamortized debt issuance costs expected to be recognized in the next twelve months. The Company believes it has sufficient existing liquidity to satisfy these obligations as well as continued access to the debt capital markets. Approximately 77% and 79% of our total debt had a fixed interest rate at June 30, 2026 and December 31, 2025, respectively. The components of our weighted average interest rate are as f …

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Income Taxes Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur. Discrete items include, among others, events such as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitation, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was 25.1% and 25.2% for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rate was 25.1% and 25.7% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate was lower for the six months ended June 30, 2026 primarily due to a discrete tax benefit from an investment in a renewable energy project recognized in the first quarter of 2026. The effective tax rate for the three and six months ended June 30, 2026 was higher than the federal statutory tax rate of 21.0% primarily due to state and foreign tax expenses. We participate in tax equity investments in renewable energy projects that qualify for federal investment tax credits. These investments are accounted for under the proportional amortization method. Tax credits and other related tax benefits are recognized as a reduction of income tax expense as they are realized, with corresponding amortization of the investment in proportion to the tax benefits received. During the six months ended June 30, 2026, we recogniz …

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Internal-Use Software In September 2025, the FASB issued guidance to modernize the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software. The new guidance is effective for us for the 2028 annual period, with early adoption permitted, and it can be adopted either on a prospective, modified or retrospective basis. We are currently assessing the impact of this guidance and upon adoption, will apply the amendment to our financial statements and related notes.

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Segment Reporting Our operations are both product-based and geographically-based, and the reportable operating segments presented below include our funeral and cemetery operations. Our geographic areas include the United States and Canada, where we conduct both funeral and cemetery operations. Our Chief Operating Decision Maker (CODM) is our Chief Executive Officer, who is responsible for making key operating, finance, and capital allocation decisions and specifically uses segment gross profit to aid in the decision making and to assess the performance of the operating segments. Our reportable segment information, including disaggregated revenue, was as follows and includes a reconciliation of gross profit to our consolidated income before income taxes. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (In thousands) Revenue from customers: Funeral revenue: Atneed revenue $ 298,669 $ 296,114 $ 618,874 $ 625,185 Matured preneed revenue 196,495 183,503 401,880 389,345 Core funeral revenue 495,164 479,617 1,020,754 1,014,530 Non-funeral home revenue 27,582 25,749 56,436 53,357 Non-funeral home preneed sales revenue 21,334 26,421 43,473 48,621 Core general agency and other revenue 60,758 59,578 114,725 114,351 Total funeral revenue 604,838 591,365 1,235,388 1,230,859 Direct cost (85,179) (85,005) (175,469) (177,783) Selling compensation (52,447) (47,759) (102,760) (92,921) Salaries & fringe expense (172,400) (167,465) (342,985) (335,315) Facility expen …

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Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of SCI and all subsidiaries in which we hold a controlling financial interest. Intercompany balances and transactions have been eliminated in consolidation. Our unaudited condensed consolidated financial statements also include the accounts of the merchandise, service, and cemetery perpetual care trusts in which we have a variable interest and are the primary beneficiary. We have retained the specialized industry accounting principles when consolidating the trusts. Our trusts are variable interest entities, for which we have determined that we are the primary beneficiary as we absorb a majority of the losses and returns associated with these trusts. Although we consolidate the trusts, it does not change the legal relationships among the trusts, us, or our customers. The customers are the legal beneficiaries of these trusts; therefore, their interests in these trusts represent a liability to us. Our interim condensed consolidated financial statements are unaudited but include all adjustments, consisting of normal recurring accruals and any other adjustments, which management considers necessary for a fair statement of our results for these periods. Our unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting policies described in our Annual Repor …

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Equity (All shares reported in whole numbers) Share Repurchase Program Subject to market conditions, normal trading restrictions, and limitations in our debt covenants, we may make purchases of our common stock in the open market or through privately negotiated transactions under our share repurchase program. On June 11, 2026, we announced that our Board of Directors increased the authorized level of repurchases of our common stock by approximately $472.0 million. During the six months ended June 30, 2026, we repurchased 3,350,873 shares of common stock at an aggregate cost of $264.9 million, which is an average cost per share of $79.04. A fter these repurchases and the increase in our share repurchase authorization, the remaining dollar value of shares authorized to be purchased under the share repurchase program was $567.5 million at June 30, 2026. Subsequent to June 30, 2026, we repurchased 327,690 shares for $25.6 million at an average cost per share of $78.22.

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