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 10, 2022 9:50am

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Post# 35088067

TD

Have a $34.00 target. GLTA

Park Lawn Corp.

(PLC-T) C$22.52

First Look: 6% EBITDA Beat; Margin Improvements Initiated Event

Q3/22 adj. EBITDA of $18.2mm is down 2.7% y/y, but 5.7% above TD's $17.2mm (Cons: $17.0mm), reflecting slightly stronger-than-expected revenues and adjusted EBITDA margins of 22.4% (TD/Cons: 21.6%/22.5%).
CC: 9:30 a.m. ET (877-545-0320; code: 624678).

Impact: POSITIVE

Q3/22 results were better-than-feared as the normalization of COVID-19-related deaths had less of an impact on PLC's operations than we anticipated, and with PLC driving a return to growth of pre-need property sales. PLC's comparable call volumes declined 8.0% y/y alongside the normalization of mortality rates post COVID-19. However, PLC believes it outperformed the national average and its peers reflecting market share gains. Looking forward, management highlighted a robust acquisition pipeline and expectations for additional near-term margin recovery, reflecting further expense controls and price increases.

Consolidated Q3/22 net revenue increased 10.7% y/y to $80.9mm, reflecting strong acquisition contribution, partially offset by a decline in organic sales. SSSG of -0.8%, was above TD's estimated decline of 5.3% (lapping +8.1% in Q3/21), reflecting stronger-than-expected pre-need sales driven by large group sales in certain cemeteries. Additionally, average revenue per call decreased 1.9% y/y (down from +2.1% in Q2/22 and +7% in Q1/22) in part reflecting a higher cremation mix. Revenue from recent acquisitions was lower-than-forecast and offset the stronger-than-expected SSSG; we attribute this to the broad-based market weakness.
Adjusted EBITDA margin of 22.4% was 82bps above TD's 21.6% estimate (up 189bps q/q), reflecting the benefits of heightened expense controls. Margins continue to be impacted by inflationary pressures with maintenance expenses up 11.2% y/y. However, management anticipates further near-term margin growth from price increases and additional expense controls. Recall management's previous goal is to achieve sustainable margins of ~26% by year-end 2022.
Balance sheet: We estimate PLC's pro-forma leverage including recent acquisitions at ~2.3x (including debentures and leases). Pro-forma available liquidity of ~$120mm.
Outlook: Management reaffirmed that it expects to achieve its target of C$100mm of pro-forma adj. EBITDA in FY2022. PLC's acquisition pipeline remains robust with management confident that it will deploy its targeted $75mm-$100mm on deals in FY2022 and FY2023 ($49.4mm spent across Q1-Q3/22).
NCIB: PLC repurchased ~201k shares at C$24.86/share (total consideration: $3.7mm).