SERVICE CORP INTERNATIONAL

Results of Operations — Three and Six months ended June 30, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

Management Summary

In the second quarter of 2024, we reported consolidated net income attributable to common stockholders of $118.2 million ($0.81 per diluted share) compared to net income attributable to common stockholders in the second quarter of 2023 of $132.2 million ($0.86 per diluted share). These results were impacted by certain items including:

In addition to the above items, the decrease from the prior year is primarily due to lower funeral gross profit on lower services performed as well as higher interest expense and a higher tax rate. This was partially offset by higher cemetery gross profit, lower corporate general and administrative expenses, and a lower share count.

FORM 10-Q 33

PART I

Funeral Results

(1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2023 and ending June 30, 2024.

(2) We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding general agency revenue, recognized preneed revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of funeral services performed during the period. Recognized preneed revenue is excluded from our calculation of comparable average revenue per service because the associated service has not yet been performed.

Funeral Revenue

Consolidated revenue from funeral operations was $565.8 million for the three months ended June 30, 2024 compared to $565.4 million for the same period in 2023. This $0.4 million increase is primarily attributable to the $5.6 million increase in revenue from acquired and newly constructed properties, partially offset by the $5.1 million decrease in comparable revenue.

Comparable revenue from funeral operations was $558.1 million for the three months ended June 30, 2024 compared to $563.2 million for the same period in 2023. This $5.1 million, or 0.9%, decrease is primarily due to a $6.6 million decrease in core funeral revenue and $7.0 million decrease in non-funeral home preneed sales revenue, partially offset by a $6.8 million increase in core general agency revenue and other revenue.

The core funeral revenue decreased by $6.6 million, or 1.4%, primarily due to a 2.7% decrease in core funeral services performed partially offset by a favorable 1.3% increase in core average revenue. The core cremation rate increased 60 basis points to 56.9%. Non-funeral home preneed sales revenue decreased by $7.0 million, or 19.5%, primarily due to operational changes in certain markets with respect to timing of merchandise deliveries. This decrease is partially offset by an increase in general agency revenue as we continue to shift from trust-funded to insurance-funded contracts. Core general agency and other revenue grew $6.8 million, primarily due to increased core general agency revenue from higher comparable core preneed funeral insurance production.

Funeral Gross Profit

Consolidated funeral gross profit decreased $15.1 million, or 13.1%, for the three months ended June 30, 2024 compared to the same period in 2023. This decrease is primarily attributable to the decrease in comparable funeral gross profit of $16.4 million, or 14.2%. Comparable funeral gross profit decreased $16.4 million to $99.4 million and the comparable gross profit percentage decreased from 20.6% to 17.8%. This decrease is primarily due to the decline in revenue described above and the timing of incentive compensation costs compared to the prior year quarter.

34 Service Corporation International

PART I

Cemetery Results

(1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2023 and ending June 30, 2024.

Cemetery Revenue

Consolidated revenue from our cemetery operations increased $20.2 million, or 4.5%, for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to a $11.9 million increase in comparable cemetery revenue and a $8.7 million increase in revenue contributed by newly constructed and acquired properties.

The $11.9 million, or 2.7%, increase in comparable cemetery revenue was primarily due to a $6.9 million increase in core revenue and a $5.0 million increase in other revenue. The increase in core revenue was driven by a $7.5 million increase in total recognized preneed revenue, primarily due to the growth in recognized merchandise and service preneed revenue. Other revenue was higher by $5.0 million, or 16.4%, compared to the prior year quarter primarily from an increase in endowment care trust fund income related to the expansion of our total return investment strategy in certain states.

Cemetery Gross Profit

Consolidated cemetery gross profit increased $11.6 million, or 8.0%, in the three months ended June 30, 2024 compared to the same period in 2023, which is primarily attributable to a $6.6 million increase in gross profit contributed by newly constructed and acquired properties and a $5.1 million increase in comparable cemetery gross profit. Comparable cemetery gross profit increased $5.1 million to $151.1 million, and the gross profit percentage increased to 32.9% from 32.6%. The growth is related to the higher revenue mentioned above somewhat offset by higher maintenance costs and the timing of incentive compensation costs versus the prior year quarter.

Other Financial Statement Items

Corporate General and Administrative Expenses

Corporate general and administrative expenses increased $4.1 million to $39.0 million for the second quarter of 2024 compared to the second quarter of 2023 primarily related to the timing of incentive compensation costs versus the prior year quarter.

Gains on Divestitures and Impairment Charges, Net

We recognized a $1.9 million net pre-tax gain on asset divestitures and impairments in the second quarter of 2024 compared to a $7.0 million net pre-tax gain in the second quarter of 2023 on asset divestitures associated with non-strategic funeral and cemetery locations in the United States and Canada.

Interest Expense

Interest expense increased $4.9 million to $64.4 million for the three months ended June 30, 2024 primarily due to higher balances combined with a slightly higher interest rate on our Bank Credit Facility.

Provision for Income Taxes

Our effective tax rate was 25.3% and 24.5% for the three months ended June 30, 2024 and 2023, respectively. The higher effective tax rate for the three months ended June 30, 2024 was primarily due to lower excess tax benefits recognized on the settlement of employee share-based awards. The effective tax rate for the three months ended June 30, 2024 was higher than the federal statutory tax rate of 21.0% primarily due to state tax expense.

FORM 10-Q 35

PART I

Weighted Average Shares

The diluted weighted average number of shares outstanding was 146.8 million for the three months ended June 30, 2024 compared to 153.1 million for the same period in 2023. The decrease primarily reflects the impact of shares repurchased under our share repurchase program.

Six Months Ended June 30, 2024 and 2023

Management Summary

In the first six months of 2024, we reported consolidated net income attributable to common stockholders of $249.5 million ($1.69 per diluted share) compared to net income attributable to common stockholders for the same period in 2023 of $277.0 million ($1.80 per diluted share). These results were impacted by certain items including:

In addition to the above items, the decrease from the prior year is primarily due to lower funeral gross profit on lower services performed which was offset by a slightly higher cemetery gross profit. Also, fewer shares outstanding and a lower tax rate helped to partially offset the impact of higher interest expense.

Funeral Results

(1) We define comparable (or same store) operations as those funeral locations owned by us for the entire period beginning January 1, 2023 and ending June 30, 2024.

(2) We calculate comparable average revenue per service by dividing comparable funeral revenue, excluding general agency revenue, non-funeral home preneed sales revenue, and other revenue to avoid distorting our average of normal funeral services revenue, by the comparable number of funeral services performed during the period.

FORM 10-Q 36

PART I

Funeral Revenue

Consolidated revenue from funeral operations was $1,170.5 million for the six months ended June 30, 2024, compared to $1,175.1 million for the same period in 2023. This $4.6 million decrease is primarily attributable to a $13.6 million decrease in comparable revenue as described below and offset by $10.0 million of growth in revenue contributed by acquired and newly constructed properties.

Comparable revenue from funeral operations was $1,157.5 million for the six months ended June 30, 2024 compared to $1,171.1 million for the same period in 2023. The $13.6 million decrease was due to a $19.3 million decrease in non-funeral home preneed sales revenue, partially offset by an increase of $5.0 million in core general agency and other revenue.

Non-funeral home preneed sales revenue decreased by $19.3 million primarily due to operational changes in certain markets with respect to timing of merchandise deliveries. This decrease is partially offset by an increase in general agency revenue as we continue to shift from trust-funded to insurance-funded contracts. Core general agency and other revenue grew $5.0 million, primarily due to increased core general agency revenue from higher comparable core preneed funeral insurance production.

Funeral Gross Profit

Consolidated funeral gross profit decreased $32.7 million, or 12.3%, in the first six months of 2024 compared to the same period in 2023. This decrease is primarily attributable to the $34.6 million, or 13.0%, decrease in comparable funeral gross profit. Comparable funeral gross profit decreased $34.6 million to $230.7 million and the comparable gross profit percentage decreased from 22.7% to 19.9%. This decrease is primarily due to the decline in revenue described above and the timing of incentive compensation costs compared to the prior year.

Cemetery Results

(1) We define comparable (or same store) operations as those cemetery locations owned by us for the entire period beginning January 1, 2023 and ending June 30, 2024.

Cemetery Revenue

Consolidated revenue from our cemetery operations increased $41.9 million, or 4.8%, for the six months ended June 30, 2024 compared to the same period in 2023 primarily due to a $33.0 million, or 3.8%, increase in comparable cemetery revenue and a $9.7 million increase in revenue contributed by newly constructed and acquired properties.

The $33.0 million, or 3.8%, increase in comparable cemetery revenue was primarily attributable to a $26.0 million increase in comparable cemetery core revenue. This increase was primarily a result of a $27.1 million increase in total recognized preneed revenue, which benefited from growth in comparable preneed sales production of $16.3 million, or 1.9%, and trust fund income.

Cemetery Gross Profit

Consolidated cemetery gross profit increased $14.2 million for the six months ended June 30, 2024 compared to the same period in 2023, which is primarily attributable to a $7.7 million increase in comparable cemetery gross profit and a $6.7 million increase in gross profit contributed by newly constructed and acquired properties. Comparable cemetery gross profit increased from $285.9 million to $293.6 million, while the gross profit percentage decreased from 33.0% to 32.6%. Although we experienced revenue growth, we continue to see increases in our fixed costs, primarily due to maintenance and salaries and wages compared to the prior year.

FORM 10-Q 37

PART I

Other Financial Statement Items

Corporate General and Administrative Expenses

Corporate general and administrative expenses increased $1.2 million to $80.3 million for the six months ended June 30, 2024 primarily due to an increase in salaries and wages, partially offset by a decrease in incentive compensation costs versus the prior year.

Gains on Divestitures and Impairment Charges, Net

We recognized a $1.2 million net pre-tax gain on asset divestitures and impairments in the six months ended June 30, 2024 compared to a $7.6 million net pre-tax gain in 2023 on asset divestitures associated with non-strategic funeral and cemetery locations in the United States and Canada.

Interest Expense

Interest expense increased $15.3 million to $128.7 million for the six months ended June 30, 2024 primarily due to higher interest rates and higher balances on our Bank Credit Facility.

Provision for Income Taxes

Our effective tax rate was 24.0% and 24.5% for the six months ended June 30, 2024 and 2023, respectively. The lower effective tax rate for the six months ended June 30, 2024 was primarily due to lower state and international tax expense. The effective tax rate for the six months ended June 30, 2024 was higher than the federal statutory tax rate of 21.0% primarily due to state tax expense.

Weighted Average Shares

The diluted weighted average number of shares outstanding was 147.3 million for the six months ended June 30, 2024 compared to 154.2 million for the same period in 2023. The decrease primarily reflects the impact of shares repurchased under our share repurchase program.