SERVICE CORP INTERNATIONAL

For the period ended Jun 30, 2024. Filed Aug 1, 2024.

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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Jun 30, 2024 · Filed Aug 1, 2024

SCI$73.74-2.3%Stored close · as of Nov 6, 2026

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Contents

3. Preneed Activities

Preneed Activities

Preneed Receivables, Net and Trust Investments

The components of Preneed receivables, net and trust investments in our unaudited Condensed Consolidated Balance Sheet were as follows:

	June 30, 2024	December 31, 2023
(In thousands)
Preneed receivables, net	$1,526,962	$1,513,933
Trust investments, at market	6,745,118	6,394,796
Insurance-backed fixed income securities and other	237,807	222,424
Trust investments	6,982,925	6,617,220
Less: Cemetery perpetual care trust investments	(2,039,659)	(1,939,241)
Preneed trust investments	4,943,266	4,677,979
Preneed receivables, net and trust investments	$6,470,228	$6,191,912

14 Service Corporation International

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Preneed receivables, net comprised the following:

	June 30, 2024
	Funeral	Cemetery	Total
(In thousands)
Preneed receivables	$190,283	$1,390,965	$1,581,248
Unearned finance charges	(10,445)	(7,927)	(18,372)
Preneed receivables, at amortized cost	179,838	1,383,038	1,562,876
Reserve for credit losses	(18,781)	(17,133)	(35,914)
Preneed receivables, net	$161,057	$1,365,905	$1,526,962
	December 31, 2023
	Funeral	Cemetery	Total
(In thousands)
Preneed receivables	$190,514	$1,371,804	$1,562,318
Unearned finance charges	(10,100)	(5,810)	(15,910)
Preneed receivables, at amortized cost	180,414	1,365,994	1,546,408
Reserve for credit losses	(17,026)	(15,449)	(32,475)
Preneed receivables, net	$163,388	$1,350,545	$1,513,933

At June 30, 2024, the amortized cost basis of our preneed receivables by year of origination was as follows:

	2024	2023	2022	2021	2020	Prior	Total
(In thousands)
Preneed receivables, at amortized cost:
Funeral	$38,850	$60,243	$37,051	$17,827	$8,613	$17,254	$179,838
Cemetery	285,460	467,467	321,327	180,408	86,230	42,146	1,383,038
Total preneed receivables, at amortized cost	$324,310	$527,710	$358,378	$198,235	$94,843	$59,400	$1,562,876

At June 30, 2024, the payment status of our preneed receivables was as follows:

	Past Due
	<30 Days	30-90 Days	90-180 Days	>180 Days	Total	Current	Total
(In thousands)
Preneed receivables, at amortized cost:
Funeral	$6,002	$3,972	$2,334	$28,618	$40,926	$138,912	$179,838
Cemetery	41,888	37,518	9,637	6,918	95,961	1,287,077	1,383,038
Total preneed receivables, at amortized cost	$47,890	$41,490	$11,971	$35,536	$136,887	$1,425,989	$1,562,876

FORM 10-Q 15

PART I

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the six months ended June 30, 2024:

	December 31, 2023	Provision for Expected Credit Losses	WriteOffs	Effect of Foreign Currency and Other	June 30, 2024
(In thousands)
Funeral	$(17,026)	$(3,061)	$1,264	$42	$(18,781)
Cemetery	(15,449)	(2,027)	333	10	(17,133)
Total reserve for credit losses on preneed receivables	$(32,475)	$(5,088)	$1,597	$52	$(35,914)

The table below sets forth certain investment-related activities associated with our trusts:

	Three months ended June 30,		Six months ended June 30,
	2024	2023	2024	2023
(In thousands)
Deposits	$159,741	$153,817	$315,860	$291,062
Withdrawals	$139,587	$144,550	$270,194	$268,795
Purchases of securities	$740,525	$536,674	$1,082,592	$1,144,462
Sales of securities	$724,333	$537,531	$1,059,059	$1,167,889
Realized gains from sales of securities(1)	$173,045	$71,551	$278,490	$153,881
Realized losses from sales of securities(1)	$(25,736)	$(52,336)	$(57,551)	$(102,246)

(1)All realized gains and losses are recognized in Other income, netfor our trust investments and are offset by a corresponding reclassification in Other income, net to Deferred receipts held in trust and Care trusts’ corpus.

16 Service Corporation International

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The cost and market values associated with trust investments recorded at market value are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.

	Fair Value Hierarchy Level	Cost	UnrealizedGains	UnrealizedLosses	Value
(In thousands)
Fixed income securities:
U.S. Treasury	2	$41,008	$92	$(1,174)	$39,926
Canadian government	2	28,139	—	—	28,139
Corporate	2	10,496	77	(16)	10,557
Residential mortgage-backed	2	5,306	23	(93)	5,236
Asset-backed	2	287	—	(56)	231
Equity securities:
Preferred stock	2	411	—	(47)	364
Common stock:
United States	1	1,866,686	540,987	(78,600)	2,329,073
Canada	1	41,053	13,951	(1,497)	53,507
Other international	1	95,201	36,524	(9,399)	122,326
Mutual funds:
Equity	1	905,990	138,661	(4,619)	1,040,032
Fixed income	1	1,072,323	3,529	(122,570)	953,282
Trust investments, at fair value		4,066,900	733,844	(218,071)	4,582,673
Commingled funds
Fixed income		826,695	1,375	(67,867)	760,203
Equity		337,136	88,786	(228)	425,694
Money market funds		385,415	—	—	385,415
Alternative investments		432,745	167,342	(8,954)	591,133
Trust investments, at net asset value		1,981,991	257,503	(77,049)	2,162,445
Trust investments, at market		$6,048,891	$991,347	$(295,120)	$6,745,118

FORM 10-Q 17

PART I

	Fair Value Hierarchy Level	Cost	UnrealizedGains	UnrealizedLosses	Value
(In thousands)
Fixed income securities:
U.S. Treasury	2	$45,645	$145	$(1,376)	$44,414
Canadian government	2	31,896	—	—	31,896
Corporate	2	10,642	138	(17)	10,763
Residential mortgage-backed	2	5,452	29	(104)	5,377
Asset-backed	2	291	—	(51)	240
Equity securities:
Preferred stock	2	417	—	(97)	320
Common stock:
United States	1	1,744,919	478,226	(78,630)	2,144,515
Canada	1	42,721	20,251	(676)	62,296
Other international	1	108,106	19,580	(11,088)	116,598
Mutual funds:
Equity	1	876,620	118,476	(9,540)	985,556
Fixed income	1	998,767	5,727	(109,231)	895,263
Trust investments, at fair value		3,865,476	642,572	(210,810)	4,297,238
Commingled funds
Fixed income		827,600	2,432	(63,021)	767,011
Equity		337,500	71,819	(642)	408,677
Money market funds		346,672	—	—	346,672
Alternative investments		412,482	169,825	(7,109)	575,198
Trust investments, at net asset value		1,924,254	244,076	(70,772)	2,097,558
Trust investments, at market		$5,789,730	$886,648	$(281,582)	$6,394,796

Our alternative investments include funds invested in limited partnerships with interests in private equity, private market real estate, energy and natural resources, infrastructure, transportation, and private debt including both distressed debt and mezzanine financing. These investments can never be redeemed by the funds. Instead, due to the nature of the investments in this category, distributions are received through the liquidation of the underlying assets of the funds. The funds' managers have not communicated the timing of any liquidations.

Maturity dates of our fixed income securities range from 2024 to 2040. Maturities of fixed income securities (excluding mutual and commingled funds) at June 30, 2024 are estimated as follows:

	Fair Value
(In thousands)
Due in one year or less	$49,573
Due in one to five years	28,421
Due in five to ten years	6,009
Thereafter	86
Total estimated maturities of fixed income securities	$84,089

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $45.9 million and $41.3 million for the three months ended June 30, 2024 and 2023, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $25.5 million and $21.4 million for the three months ended June 30, 2024 and 2023, respectively.

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $88.6 million and $77.3 million for the six months ended June 30, 2024 and 2023, respectively. Recognized trust fund income (realized and

18 Service Corporation International

PART I

unrealized) related to our cemetery perpetual care trust investments was $48.8 million and $43.4 million for the six months ended June 30, 2024 and 2023, respectively.

Deferred Revenue, Net

Deferred revenue, net represents future revenue, including distributed trust investment earnings associated with unperformed trust-funded preneed contracts that are not held in trust accounts. Future revenue and net trust investment earnings that are held in trust accounts are included in Deferred receipts held in trust.

The components of Deferred revenue, net in our unaudited Condensed Consolidated Balance Sheet were as follows:

	June 30, 2024	December 31, 2023
(In thousands)
Deferred revenue	$2,713,648	$2,649,397
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts	(1,001,667)	(945,888)
Deferred revenue, net	$1,711,981	$1,703,509

The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust:

	Six months ended June 30,
	2024	2023
(In thousands)
Beginning balance — Deferred revenue, net and Deferred receipts held in trust	$6,374,393	$5,787,548
Net preneed contract sales	723,286	734,179
Acquisitions (dispositions) of businesses, net	14,955	(1,551)
Net investment gains(1)	213,412	333,249
Recognized revenue from backlog(2)	(317,427)	(321,824)
Recognized revenue from current period sales	(294,186)	(305,441)
Change in amounts due on unfulfilled performance obligations	(53,861)	(61,154)
Change in cancellation reserve	(223)	(177)
Effect of foreign currency and other	(8,690)	(5,352)
Ending balance — Deferred revenue, net and Deferred receipts held in trust	$6,651,659	$6,159,477

(1)Includes both realized and unrealized investment gains (losses)

(2)Includes current year trust fund income through the date of performance

FORM 10-Q 19

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