TSX:PLC - Post Discussion
Post by
retiredcf on Aug 15, 2022 7:47am
RBC 2
August 12, 2022
Healthy lawn: Tone and messaging of Q2 conference call consistent with our constructive outlook
TSX: PLC | CAD 31.92 | Outperform | Price Target CAD 49.00
Sentiment: Neutral
Bottom line: We would describe management's tone on the conference call as highly constructive and confident that the
operational setback that impacted Q2 results is largely in the rearview mirror.
Colour around trends and outlook largely consistent with changes we made to our model yesterday, with our revised forecasts a tick more conservative than the narrative:
• On track for $75-125 MM M&A spend in 2022. Based on the cadence of M&A YTD, we shifted a portion of M&A spend into next year, resulting in 2022E M&A $80-85 MM toward the low end of the guidance range.
• June/July sales trends recovered from April/May. The surprising -7.4% SSS decline in Q2 was driven primarily by shortfalls in April and May, largely attributable to decelerating at- and pre-need sales activity in certain cemetery properties. Corrective action was quickly implemented and management indicated June/July trends are in line with expectations and far better than April/ May. Based on management commentary, there could be upside bias to our revised Q3 SSS forecast -4% if August/September sales trends keep pace with the June/July recovery.
Management indicated that operating insights gleaned from the company’s proprietary information system (FaCTS) were very impactful to the timely identification of issues in the cemetery segment. FaCTS is currently active across the cemetery portfolio with funeral home rollout in the US anticipated by year-end.
NCIB strictly opportunistic. Management remains laser focused on M&A growth strategy, with NCIB a prudent backstop in the event of substantial share price declines/valuation compressions, particularly in light of Q2 results.
Be the first to comment on this post