SERVICE CORP INTERNATIONAL

PART I

4. 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 26.9% and 21.1% for the three months ended September 30, 2025 and 2024, respectively. Our effective tax rate was 26.1% and 23.1% for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate was higher for the three and nine months ended September 30, 2025 primarily due to a change in estimate recorded in the current year related to the finalization of the 2024 tax return, as well as less excess tax benefit recognized upon the settlement of employee share-based awards. The effective tax rate for the three and nine months ended September 30, 2025 was higher than the federal statutory tax rate of 21.0% primarily due to state and foreign tax expense.

We actively participate in tax credit equity investments for projects eligible to receive renewable energy tax credits. These investments, accounted for under the equity method, are recorded in Deferred charges and other assets, net of reserves on our Consolidated Balance Sheet. Upon realization, tax credits associated with these investments are recognized as a reduction of tax expense. This reduction is offset by amortization of the investment in proportion to the tax benefits received during the period under the proportional amortization method. During 2025, we recognized investment tax credits and other tax benefits totaling $5.3 million and amortized the equity investment by $5.2 million to reflect the realization of these benefits. This amortization is reflected within the Provision for income taxes in the Consolidated Statement of Operations.

The federal statutes of limitations have expired for all tax years prior to 2021. Our 2022 federal income tax return is currently under audit by the IRS. Various state and foreign jurisdictions are auditing years 2020 through 2023. The outcome of each of these audits cannot be predicted at this time.

Following the enactment of the new U.S. tax legislation, Public Law No. 119-21, on July 4, 2025, we adopted the relevant provisions during the third quarter of 2025, including those pertaining to bonus depreciation and interest expense. Consistent with our expectations, the adoption of these provisions did not have a material effect on our consolidated financial statements.

FORM 10-Q 19

PART I

5. Debt

The components of Debt are:

Current maturities of debt at September 30, 2025 include amounts due under our term loan, mortgage notes and other debt, and finance lease payments due within the next year as well as the portion of unamortized debt issuance costs expected to be recognized in the next twelve months.

Approximately 81% and 84% of our total debt had a fixed interest rate at September 30, 2025 and December 31, 2024, respectively.

The components of our ending interest rate are as follows:

During the nine months ended September 30, 2025 and 2024, we paid $159.5 million and $172.5 million in cash interest, respectively.

Bank Credit Agreement

The Bank Credit Facility due January 2028 provides us with flexibility for working capital, if needed, and is guaranteed by a majority of our domestic subsidiaries. The subsidiary guaranty is a guaranty of payment of the outstanding amount of the total lending commitment, including letters of credit. The Bank Credit Facility contains a maximum leverage ratio financial covenant and certain dividend and share repurchase restrictions. As of September 30, 2025, we were in compliance with all of our debt covenants. We have $1.0 million of letters of credit outstanding and pay a quarterly fee of 0.20% on the unused commitment at September 30, 2025. As of September 30, 2025, we had $1,214.0 million in borrowing capacity under the Bank Credit Facility. The Bank Credit Facility had an interest rate of 6.26% and 6.46% at September 30, 2025 and December 31, 2024, respectively.

As of December 31, 2024, we had $39.0 million of letters of credit outstanding. During the second quarter of 2025, we replaced our letters of credit with a $46.0 million surety bond and a related indemnity obligation with a large insurance company.

Debt Issuances and Additions

During the nine months ended September 30, 2025, we issued or added $688.5 million of debt including:

20 Service Corporation International

PART I

•$655.0 million on our Bank Credit Facility due January 2028; and

•$33.5 million on our Corporate Headquarters Debt Facility due February 2037.

Net proceeds were used for general corporate purposes and to fund the construction of the new corporate headquarters building.

During the nine months ended September 30, 2024, we issued or added $1,336.1 million of debt including:

•$800.0 million unsecured 5.75% Senior Notes due October 2032;

•$530.0 million on our Bank Credit Facility due January 2028; and

•$6.1 million in other debt.

Net proceeds from newly issued debt during the nine months ended September 30, 2024 were used to pay down our Bank Credit Facility due January 2028 and for general corporate purposes. These transactions resulted in additional debt issuance costs of $14.1 million.

Debt Extinguishments and Reductions

During the nine months ended September 30, 2025, we made aggregate debt payments of $509.2 million for scheduled and early debt extinguishment payments including:

•$490.0 million in aggregate principal of our Bank Credit Facility due January 2028;

•$12.7 million in aggregate principal of our Term Loan due January 2028; and

•$6.5 million in other debt.

During the nine months ended September 30, 2024, we made aggregate debt payments of $1,228.5 million for scheduled and early debt extinguishment payments including:

•$1,210.0 million in aggregate principal of our Bank Credit Facility due January 2028;

•$12.7 million in aggregate principal of our Term Loan due January 2028;

•$0.5 million in aggregate principal of our 7.5% Senior Notes due April 2027 repurchased in the open market; and

•$5.3 million in other debt.

FORM 10-Q 21