Post by
retiredcf on Mar 04, 2022 9:11am
CIBC
Currently have a $48.00 target. GLTA
EQUITY RESEARCH
March 4, 2022 Flash Research
PARK LAWN CORPORATION LIMITED
Q4/21 First Look: A More Normal-looking Quarter
Our Conclusion
PLC produced Q4/21 results that were in line with consensus and a little
below our estimates – all in, a good end to the year following on a solid
Q3/21. We expect these results, which provide a glimpse into a more normal operating environment, to help reverse the recent weakening share price trend. PLC grew revenues by 10% Y/Y, of which almost all came from acquisitions, as the quarter lapped a heavy pandemic comp: higher Y/Y average revenues per call were offset by lower volumes. Pre-need sales continued to benefit from heightened consumer awareness of the need for end-of-life planning. This quarter, another in which a stronger CAD was a Y/Y headwind, marks the end of CAD reporting: as of Q1/22, PLC will not only report in USD, but it will also add a USD ticker (paying USD dividends).
Key Points
Details Of The Beat: Revenues came in at $99.5MM, in line with our
$100MM estimate and similar consensus; FX-adjusted organic growth was a modest 0.7% (-2.5% FX-unadjusted). Adjusted EBITDA of $25.2 MM was a bit light of our $26.2MM estimate and basically in line with $25.5MM
consensus. Adjusted EBITDA margins came in at 25.3%, below both our
26.1% estimate and 25.5% consensus due to sales mix, labour pressures,
general cost inflation and supply chain issues all decreasing gross margins (82.5% vs. our 83.5% estimate). Adjusted EPS of $0.37 (up 5.7% Y/Y) was just short of our $0.39 estimate and in line with $0.37 consensus. Free cash flow before acquisitions came in at $18.3MM ($0.53/share) compared to our estimate of $15.9MM ($0.47/share); on a post-acquisition basis, free cash flow consumption of $46.1MM ($1.35/share) came in below our consumption estimate of $56.3MM ($1.66/share). The balance sheet is in good shape to support further acquisitions with ~$215MM of liquidity and ~1.9x total leverage.
Transaction Activity Remains Robust: During the quarter, PLC closed five
acquisitions, which we estimate made up ~$60MM of the year’s ~$160MM
total deal value. We see this healthy transaction activity as further evidence of the company’s ability to execute on its robust deal pipeline. Management has stated publicly that it believes PLC can easily do $100 million-$150 million of annual deals; the major constraints are time and internal resources, rather than capital or number of opportunities.
Updated Outlook: PLC released a new five-year aspirational growth targets of US$150MM of pro forma Adjusted EBITDA (~15% CAGR) and US$2.00+ of Adjusted EPS (~11% CAGR).
Conference Call: 9:30 a.m. ET Friday (888-506-0062, 490276#)