Park Lawn Corp V.PLC

Primary Symbol: 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 Oct 29, 2020 10:50am

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Post# 31803045

TD

Park Lawn Corp.

(PLC-T) C$27.66

Death Care Comparables Report Very Strong Q3/20 Results Event

Service Corporation International (SCI-N; not covered) reported Q3/20 results yesterday after market close. Revenue was 15% above consensus and Adj. EPS was 88% above consensus. The stock is up 6% this morning, as of 10 am ET.
Carriage Services (CSV-N; not covered) reported Q3/20 results on October 27 after market close. Revenue was 13% above consensus and Adj. EPS was 46% above consensus. The stock was up 5% yesterday.

Impact: POSITIVE read-through for Park Lawn

Funeral - SCI and CSV reported organic growth in the funeral business of 12% and 9%, respectively. This was led by materially higher volumes y/y (+19% for SCI; +16% for CSV), largely attributable to COVID-19 and broadly in line with CDC data on excess deaths. Average revenue per service remained lower y/y in Q3/20 (-4% for SCI; -6% for CSV), primarily owing to ongoing gathering restrictions and social distancing, but modestly better than the 7-8% declines in Q2/20.
Cemetery - SCI and CSV reported organic growth in the cemetery business of 29% and 13%, respectively, due to a combination of higher at-need volumes and higher pre-need sales. SCI's at-need cemetery revenue increased 29% y/y on more burial services performed, while its pre-need sales production increased 47% y/y. CSV did not disclose pre-need sales, but noted that they are now above normal trend levels. Pre-need sales are benefiting from increased leads from the higher at-need business and with COVID-19 serving as a triggering event for individuals to evaluate post-death alternatives.
Margins - Both companies also reported strong y/y improvement in margins, owing to the higher volumes and recent cost containment measures. SCI's operating margins improved by 760bps y/y, while CSV's EBITDA margins increased by 670bps y/y.
SCI currently expects results to remain strong through Q1/21 (albeit not as strong as Q3/20), with a leveling off in Q2/21 and declines in H2/21 against more challenging comparables, although this outlook remains highly uncertain.
We believe PLC is similarly positioned for a strong Q3/20 and believe risks are weighted to the upside relative to our current Q3/20 outlook and consensus. PLC will release its Q3/20 results on November 12.