CIBCHave a $30.00 target. GLTA
EQUITY RESEARCH
May 11, 2023 Flash Research
PARK LAWN CORP.
Q1/F23 First Look: Sound Result In Tough Environment;
Enhanced Disclosure Introduced
Park Lawn reported Q1 results that were in line with consensus expectations
on sales, and slightly above on EBITDA and EPS. We anticipate PLC to be
up modestly tomorrow, particularly given the stock’s slide of late. Importantly,
Park Lawn revealed new disclosure this quarter, providing sales and EBITDA
by operating segment. We consider this development to be a meaningful
positive change for investors.
Revenue was $87MM (consensus $87MM) and EBITDA was $21MM (cons.
$20MM), while EBITDA margin was slightly better at 23.7% vs. consensus of
23.0%. Adjusted EPS was $0.25 (cons. $0.24). Q1 last year reflected an
elevated mortality rate from COVID, making for a difficult Y/Y comparison;
EPS declined 22% Y/Y and we estimate organic EBITDA growth of -16%.
Comparable operations revenue was -5.6%, well above our -12.7% forecast.
Within the Funeral Home segment (~60% of sales), organic call volumes
declined 11.3%, while average revenue per call increased by 1.5%. Within
Cemetery, comparable sales were -2.4%, the product of lower property sales
partly offset by higher merchandise and services revenue and group sales.
PLC completed one deal in late Q1, acquiring Meyer Brothers Funeral
Homes, which is expected to add $1.8MM of adjusted EBITDA. Net leverage
post Q1 stands at ~2.6x NTM EBITDA. Management will host a conference
call tomorrow morning at 9:30 a.m. ET. Dial-in is 888-506-0062 (passcode:
462890).