SCI: Strategy changed in early 2000’s to target 8-12% Earnings Growth

March 20, 2026/Business, Cemetery, Finance/

Service Corporation International (SCI) recently participated at the J.P. Morgan Industrials Conference and were represened there by Senior Vice-President and Treasurer Aaron Foley. Seeking Alpha provided a transcript of Foley’s comments and answers to questions that you can access here.

In those comments and questions one gets an idea of how SCI has developed as a company over the past two decades. Foley lets participants know that prior to about 2002 Service Corporation was a company dead-set on acquisitions and not too worried about anything else. Here’s some of Foley’s comments about that period:

“. . .We went through a hyper acquisitive period during the 1990s, where at one point, we were in over 20 different countries with 4,500 locations.

We did so with no focus on return on invested capital. It was just trying to get as many acquisitions under our belt as possible. And we’ve all seen how that unfolds in one way or another. We came up with about $1 billion worth of debt coming due in the next 12 months with negative free cash flow. And so we had to make some tough decisions. We ultimately had to liquidate all of our assets in those other 20 different countries to remain solvent, if you will. But really, since 2002 to 2005, then changed out the management team, really integrated 40 years of acquisitions that had never been integrated. And to get our footing under us. . . “

Foley went on to say this about how the focus changed from simply aquisitions to operations and the end-point of returning equity to the company investors that continues to this day, “And really in 2005, kind of started the strategy that we’re at now, following this 8% to 12% earnings growth framework. . . . “

In answer to a question about funeral home business and cemetery business, Foley made this comment:

“I would say that the business itself really you should split between a funeral and cemetery business. . . . The funeral industry is truly a caring and compassionate industry. People come in as a calling to help people in their toughest times of their lives, to manage through the death of a loved one. . . . .

Cemetery side rather, is really more of a sales-centric sales-focused type business. It’s kind of a real estate play going out and selling individual lots of lands to our consumers. What I think we have come in and how we have changed the business is really through the scale that we have. Being able to leverage that scale to go out, we’ve got a 3,800 person sales force, go out and radiate into our competitor’s backyard to build that backlog that we currently of $17 billion to drive the sales. . . “

In answer to a question on growth strategy and preneed, Foley made this comment:

“So as I mentioned earlier, we’ve got a $17 billion backlog of future revenue that’s coming through that’s a little over 4x future revenue. . . . .”

In answer to a question about traditional burials, cremations, and new memorialization offerings, Foley made this comment:

“And on top of that, I think you’ve also heard us talk more recently about how we’re putting our shoulder more behind a cremation opportunity on the cemetery side. So when you think about our business of about 2,000 locations, 1,500 funeral homes, 500 cemeteries, there’s an overlap of about 300 locations that we call combo locations where there is a funeral home that sits directly on a cemetery. And some of the metrics that we’ve looked at, say that about 1 out of every 4 cremation services that we do at those combo funeral locations gets incurred (interred ?) at our cemetery. Whether that’s through a cremation niche opportunity, which is basically a glass front box that people can put their urns as well as keepsakes in, the family can come back and remember their loved ones. We have columbariums, where the urn can be effectively interred. We’ve got scatter gardens and such. But we think that people don’t really know that, that opportunity necessarily exist out there for the cremated remains.

So we think that there may be an expectation or an impression that there remains just need to be taken home, that they may be left on the mantle for some time. But many times, they transition to a closet or something like that. And so if they knew that they had an opportunity to inter their loved one in a place that they could be remembered, we think that, that can be very much desired. And so we’ve started a strategy of really creating media and putting our shoulder behind it to see what this opportunity could grow to. Can that 25% that go into our current cemeteries currently? Could that grow to 30%, 35%, 40%? And again, we’re at the very early innings. I can’t say anything as it relates to what I expect the full impact of the company can be, but we’re seeing some very promising results there.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take: I found this read very enlightening and one of the main takes I took from it was from the history of SCI. It was “all about” acquisitions” at one point — but that led to soaring debt and a negative cash-flow. So, growing is great. . . .but managed, profitable growth is necessary. . . . .and as SCI has found out — “even better”!

I think that is a valuable lesson for all businesses that want to grow. Growth needs to be done in a profitable way with firm measurable parameters for that growth.

The 2nd take that I have from this article is something that I’ve said for a long time. That is, there is tremendous opportunities for cemeteries with the already heavily used cremation business. Niches, columbariums, scattering gardens, burial of ashes with monuments, and even premium priced selections seems to be something that SCI is finding buyers for.

When you couple the continued growing cremation numbers with the numbers of urns in homes today that will someday be needing a permanent memorial placement the opportunities seem endless. Getting those “in home” urns of today memorialized in a cemetery by using a “family placement” or “family sale” at the time of the next family death is one way to bring that urn to your cemetery.

It is my opinion that at the time of a current family cremation a well-versed funeral director will be doing the family a favor by asking them if they have other family urns that need placement at the same time. It is one way to move cremation remains from a home to a permanent memorial.

Tom Ryan
SCI CEO

The role of Tom Ryan at SCI: When you think about the evolution of Service Corporation International from “acquisition” company to “operating company” with managed growth-rate parameter goals one has to look at the role of current CEO Thomas Ryan. Looking back, Ryan became President of SCI in July 2002 and assumed the role of CEO in 2005 virtually the same dates Foley describes about SCI changes. So, one could say that the “evolution” has all happened under Tom Ryan’s leadership.

Looking back, the stock of SCI sold for $3.95 per share in July 2002 and as I write this article on Wednesday, March 18, 2026, the stock price sits at $78.90 per share. That makes a $10,000 investment in July 2002 worth right at $200,000 today. . . . which puts the CAGR (Compounded annual rate of return) at 13.29% annually.

Any way you look at that number it is indicative of incredible success and a testimony to the leadership of SCI over the past two decades under Ryan.

Disclaimer — The author of this article for Funeral Director Daily is a shareholder of Service Corporation International.

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