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 Nov 13, 2020 8:19am

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Post# 31893795

TD

Have PLC rated as a Buy with a $33.00 target. GLTA

Park Lawn Corp.

(PLC-T) C$29.25

Q3/20 First Look Event

Park Lawn reported Q3/20 results that were broadly in line with Street expectations. Revenue was $83.8mm (up 26% y/y), versus our estimate/consensus of $83.7mm/ $83.3mm. Adjusted EBITDA (net of NCI) was $19.1mm (up 26% y/y), versus our estimate/consensus of $20.0mm/$19.4mm.

9:30 a.m. ET conference call (647-427-7450 or 888-231-8191; code: 7388398).

Impact: NEUTRAL

Our overall view on Park Lawn remains unchanged following the Q3/20 results. Revenue was in line with our forecast and we believe the overall revenue outlook remains highly favorable near-term, particularly against the backdrop of rising COVID-19 case counts. While EBITDA came in ~5% below our forecast, this was largely owing to increased sales commissions due to strength in cemetery sales and we would note that EBITDA margins were relatively consistent y/y and q/q. We believe Park Lawn remains on track for ~26% EBITDA margins exiting F2022.
Overall organic growth in Q3/20 was 11%, modestly above our forecast of ~9%. Organic growth was seen in both the cemetery and funeral businesses. At- need sales were higher y/y, which we believe is largely due to the direct and in- direct impacts of COVID-19. Pre-need cemetery sales increased in Q3/20 as stay- at-home-orders were relaxed in many regions and with COVID-19 serving as a triggering event for clients. We believe lower average revenue per call was likely a marginal offset.
Park Lawn remains engaged on M&A and continues to move forward on its capex investments. We believe M&A will continue to be the most significant growth driver for Park Lawn moving forward and expect that it will remain active on M&A near-term. We estimate pro-forma available liquidity for Park Lawn (following its two recently announced acquisitions) is ~$136mm and pro-forma leverage (incl. convertible debentures and leases) is ~2.7x. Leverage for compliance purposes at the end of Q3/20 was only ~1.5x, well below covenants.
We believe organic growth could remain strong into H1/21. We anticipate that strength in at-need volumes should continue in the coming months, driven by continued death rates above normal levels, which we believe is also supportive of pre-need cemetery sales.