NYSE:SCI
SERVICE CORP INTERNATIONAL
A leading provider of secure identity document processing and fraud prevention solutions for U.S. federal agencies and global governments.
Key Metrics
Investment Thesis
Bull Case
SCI offers a stable defensive profile with recurring revenue streams from long-term government contracts that provide predictable cash flows regardless of broader economic cycles. The company's continuous investment in automation and fraud detection technologies creates a widening moat against competitors, supporting margin expansion potential. Consistent share repurchases signal management confidence in the balance sheet and commitment to increasing earnings per share over time.
Bear Case
The high leverage profile with $5.08B in long-term debt poses vulnerability during periods of rising interest rates, as interest expense already consumes a large portion of operating profit. Revenue growth has been modest and linear rather than exponential, limiting upside potential for growth-oriented investors seeking higher multiples. Dependence on a single primary customer base within the federal government creates concentration risk if policy shifts occur or funding is cut.
About SERVICE CORP INTERNATIONAL
Service Corporation International (SCI) provides comprehensive identification services including passport issuance and fraud detection to federal agencies and international governments. Operating primarily within the United States, the company leverages advanced security technologies and automated processing systems to streamline government identity verification workflows.
Analysis
Management Discussion
Despite a slight decline in net income from 2024 to 2025, SCI successfully grew revenue to $4.31B through strategic acquisitions totaling over $100M and operational efficiencies. The strong operating cash flow of $942.8M demonstrates robust liquidity generation, allowing the company to return significant capital to shareholders via repurchases exceeding $460M while managing a substantial debt load.
Industry Overview
The global identity services market is expanding as governments worldwide modernize their citizen verification systems to combat fraud and improve security. This sector is characterized by high capital expenditure requirements for secure printing facilities and IT infrastructure, alongside strict regulatory compliance standards that favor established incumbents.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $4.11B | $4.10B | $4.19B | $4.31B |
| Cost of Revenue | $2.95B | $3.01B | $3.10B | $3.17B |
| Gross Profit | $1.15B | $1.09B | $1.09B | $1.14B |
| Operating Expenses | $227.3M | $147.6M | $163.0M | $162.0M |
| Operating Income | $927.3M | $944.3M | $927.7M | $978.1M |
| G&A | $237.2M | $157.4M | $139.0M | $166.2M |
| Stock-Based Comp | $14.7M | $15.4M | $17.2M | $17.6M |
| D&A | $175.3M | — | — | — |
| Depreciation | $175.3M | $191.3M | $208.2M | $219.7M |
| Amortization | $18.4M | $18.7M | $17.2M | $16.4M |
| Other OpEx | $-10.0M | $-9.8M | $24.0M | $-4.2M |
| Non-Operating Income | $-171.7M | $-235.6M | $-252.3M | $-248.3M |
| Interest Expense | $172.1M | $239.4M | $257.8M | $255.4M |
| Pre-Tax Income | $755.6M | $708.6M | $675.4M | $729.8M |
| Income Tax | $189.6M | $170.9M | $156.7M | $186.9M |
| Continuing Ops | $566.0M | $537.7M | $518.8M | $542.8M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $566.0M | $537.7M | $518.8M | $542.8M |
| Minority Interest | $696.0K | $344.0K | $105.0K | $231.0K |
| Net to Common | $565.3M | $537.3M | $518.6M | $542.6M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $359.8M | $498.3M | $377.3M | $411.8M |
| Cash & Equivalents | $191.9M | $221.6M | $218.8M | $243.6M |
| Inventory | $31.7M | $33.6M | $33.3M | $35.2M |
| Other Current Assets | $136.2M | $243.1M | $125.2M | $133.0M |
| Long-Term Assets | $14.71B | $15.86B | $17.00B | $18.24B |
| PP&E (Net) | $2.35B | $2.48B | $2.58B | $2.75B |
| Intangibles | $481.0M | $485.1M | $512.4M | $473.6M |
| Goodwill | $1.95B | $1.98B | $2.08B | $2.17B |
| Operating Leases | $49.7M | $51.0M | $50.1M | $47.5M |
| Other LT Assets | $9.88B | $10.86B | $11.78B | $12.80B |
| Total Assets | $15.07B | $16.36B | $17.38B | $18.65B |
| Current Liabilities | $799.3M | $749.1M | $723.8M | $745.7M |
| Current Debt | $90.7M | $63.3M | $83.8M | $56.8M |
| Current Leases | $7.1M | $7.8M | $7.9M | $8.2M |
| Taxes Payable | $1.1M | $60.0K | $715.0K | $3.7M |
| Other Current Liab | $700.4M | $677.9M | $631.4M | $677.0M |
| Long-Term Liabilities | $12.59B | $14.06B | $14.98B | $16.27B |
| Long-Term Debt | $4.25B | $4.65B | $4.75B | $5.08B |
| LT Operating Leases | $45.3M | $46.0M | $45.3M | $42.6M |
| Other LT Liab | $8.30B | $9.37B | $10.18B | $11.14B |
| Total Liabilities | $13.39B | $14.81B | $15.70B | $17.02B |
| Shareholders' Equity | $1.67B | $1.54B | $1.68B | $1.64B |
| Retained Earnings | $544.4M | $432.5M | $553.7M | $499.0M |
| AOCI | $16.5M | $24.9M | $-7.2M | $12.4M |
| Total L&E | $15.07B | $16.36B | $17.38B | $18.65B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $566.0M | $537.7M | $518.8M | $542.8M |
| Non-Cash Adjustments | $218.6M | $205.7M | $467.0M | $346.1M |
| Working Capital Changes | $41.1M | $125.7M | $-40.8M | $53.9M |
| Cash from Operations | $825.7M | $869.0M | $944.9M | $942.8M |
| Cash from Investing | $-447.9M | $-469.4M | $-620.9M | $-548.3M |
| Debt Repayments | $36.3M | $22.2M | $24.4M | $21.2M |
| Share Buybacks | $660.9M | $544.8M | $253.7M | $461.0M |
| Dividends Paid | $160.0M | $168.0M | $174.3M | $183.6M |
| Cash from Financing | $-448.0M | $-381.1M | $-319.6M | $-374.7M |
| FX Effect | $-3.9M | $1.7M | $-7.7M | $5.3M |
| Net Change in Cash | $-74.0M | $20.2M | $-3.4M | $25.1M |
| Beginning Cash | $278.6M | $204.5M | $224.8M | $218.8M |
| Ending Cash | $204.5M | $224.8M | $221.4M | $243.6M |
Frequently Asked Questions
How does SERVICE CORP INTERNATIONAL make money?
The company's revenue is driven by core passport and ID card production services, specialized fraud detection and analytics platforms, and related government outsourcing contracts that include data management and secure printing capabilities.
What are the main risks for SCI?
Significant exposure to federal budget constraints and potential reductions in discretionary spending for identity services could impact contract renewals. The company faces intense scrutiny over data privacy regulations and cybersecurity threats inherent to handling sensitive biometric and personal information. High interest rates increase the cost of debt servicing, as evidenced by substantial interest expense relative to operating profits. Regulatory changes regarding immigration policies or passport issuance targets can lead to volatility in workload volume.
What is SCI's competitive advantage?
SCI possesses a dominant market position in U.S. passport processing with high barriers to entry due to stringent security requirements and long-term federal contracts. The firm benefits from proprietary automation technologies that significantly reduce processing times and costs while maintaining rigorous fraud prevention standards. A diversified revenue model across multiple identification categories mitigates reliance on any single government program.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.