Park Lawn Corp T.PLC

Consumer Cyclical Personal Services

Park Lawn Corporation is engaged in providing goods and services associated with the disposition and memorialization of human remains. The Company and its subsidiaries own and operate businesses, including cemeteries, crematoria, funeral homes, chapels, planning offices and a transfer service. Its primary products and services are cemetery lots, crypts, niches, monuments, caskets, urns and other merchandise, funeral services, after-life celebration services and cremation services. Its products and services are sold on a pre-planned basis or at the time of death. It has one stand-alone funeral home located in Durham, North Carolina; one stand-alone funeral home and one on-site funeral home and cemetery located in Abingdon, Virginia; eight stand-alone funeral homes, two stand-alone cemeteries and one on-site funeral home and cemetery located in and around the Savannah, Tennessee area; three stand-alone funeral homes located in Brampton, Woodbridge and Toronto, Ontario and more.

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Park Lawn Corp

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Post by retiredcfon Aug 14, 2020 8:01am

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Post# 31407254

TD

This is a flash report so there's potential for them to soon raise their current $28.00 target. GLTA

Park Lawn Corp.

(PLC-T) C$26.96

Q2/20 First Look Event

PLC reported Q2/20 results that were above expectations. Revenue was $84.7mm (up 45% y/y), versus our estimate of $71.6mm (consensus: $70.5mm). Adjusted EBITDA (net of NCI) was $19.5mm (up 50% y/y), versus our estimate of $13.0mm (consensus: $15.1mm).
9:30 a.m. ET conference call (647-427-7450 or 888-231-8191; code: 5697518)

Impact: POSITIVE

The Q2/20 results came in well ahead of our forecast, primarily owing to the stronger-than-anticipated revenue. While PLC previously stated that its revenue early in the quarter was down >15% organically y/y and we were forecasting a 12% organic decline, PLC reported organic revenue growth in Q2/20 of 7%. Given a largely fixed cost structure, this incremental revenue was the primary driver of the EBITDA beat (revenue 18% above forecast, versus operating expenses only 7% above forecast).
Organic growth was seen in both the funeral and cemetery segments. Geographically, the growth came from the U.S., with Canada revenue down 2% organically y/y.
In the funeral business, volumes increased y/y on higher at-need business (including in COVID-19 hotspots such as New Jersey, Michigan, and Colorado), partly offset by lower average revenue per call (due to social distancing restrictions). We will look to the conference call for additional colour on the extent to which volumes may have been pulled forward from future quarters as well as the extent to which average revenue per call has recovered.
The cemetery business similarly benefited from higher at-need business, while pre-need cemetery revenue declined organically as shelter-in-place orders limited the company's ability to close sales. However, PLC noted that pre-need sales improved materially as shelter-in-place orders were lifted and, recognizing COVID-19 as a triggering event for potential sales, began actively pursuing contacts. We will look to the conference call for additional detail on the cadence of recovery of pre-need sales.
As management gained increased comfort around the impact of COVID-19 on the business, PLC resumed its growth capex plans and began re- engaging on M&A. PLC exited the quarter with leverage of 2.8x (1.5x for covenant purposes) and $177mm of available liquidity to pursue its growth objectives.