Park Lawn Corporation Announces Q2 2023 Results

Rhea-AI Summary

Park Lawn Corporation announced its financial operating results for Q2 2023. Revenue increased by 12.3% to $85.3M, while net earnings decreased by 35% to $3.8M. Adjusted EBITDA increased by 20.7% to $18.8M. The company completed several acquisitions, including Speaks, Cobb, and Ward funeral homes, and MWB funeral home in Ontario. PLC also renewed its normal course issuer bid.

Positive

• Revenue increased by 12.3% to $85.3M
• Gross profit increased by 25.2% to $21.0M
• Adjusted EBITDA increased by 20.7% to $18.8M
• The Speaks acquisition is expected to add $2.2M in Adjusted EBITDA annually
• The Cobb acquisition is expected to add $676,710 in Adjusted EBITDA annually
• The Ward acquisition is expected to add $1.8M in Adjusted EBITDA annually
• The MWB acquisition is expected to add approximately CAD$375,970 in Adjusted EBITDA annually
• PLC renewed its normal course issuer bid, allowing the purchase of up to 3,391,575 common shares

Negative

• Net earnings decreased by 35% to $3.8M
• Adjusted EBITDA margin decreased by 40 bps to 22.9%
• Adjusted net earnings per share-diluted decreased by 7.8% to $0.471

TORONTO, ON / ACCESSWIRE / August 10, 2023 / Today, Park Lawn Corporation (TSX:PLC)(TSX:PLC.U) (" PLC ", " Park Lawn ", or the " Company ") announced its financial operating results for the second quarter (" Q2 ") ended June 30, 2023.

Financial Results for the Three-Month Period Ended June 30, 2023 ¹ :

		For the three-month period ended												For six month period ended
		30-Jun-23				30-Jun-22				% Increase/(Decrease)				30-Jun-23				30-Jun-22				% Increase/(Decrease)
Revenue		$	85,275,555			$	75,921,525				12.3%			$	172,011,059			$	159,094,822				8.1%
Net Earnings		$	3,775,581			$	5,807,886				(35.0%)			$	8,351,727			$	14,509,904				(42.4%)
Adjusted Net Earnings 1		$	7,696,906			$	6,624,310				16.2%			$	16,312,237			$	17,801,172				(8.4%)
Adjusted EBITDA 1		$	18,829,730			$	15,605,747				20.7%			$	39,371,120			$	37,020,820				6.3%
Adjusted EBITDA Margin 1			22.1%				20.6%			150 bps					22.9%				23.3%			(40) bps
Adjusted Field EBITDA Margin 1			30.3%				27.8%			250 bps					31.3%				30.4%			90 bps
Net Earnings per share-diluted		$	0.109			$	0.167				(34.7%)			$	0.241			$	0.417				(42.2%)
Adjusted Net Earnings per share-diluted 1		$	0.222			$	0.190				16.8%			$	0.471			$	0.511				(7.8%)

J. Bradley Green, Chief Executive Officer of PLC, commented, "We are proud of our operating results this quarter as our overall performance demonstrates the ability of our team to incrementally improve their business operations in a challenging macroeconomic environment while simultaneously staying true to our mission to deliver the highest level of service to our families." Mr. Green continued, "Despite a slightly depressed death rate, we were nonetheless able to maintain strong market share in the communities in which we operate while at the same time increasing our Adjusted EBITDA and Adjusted EBITDA margins demonstrating success with both our targeted pricing strategy as well as more intentional expense management."

Key Results from the Three-Month Period Ended June 30, 2023:

• Revenue increased by approximately 12.3% to $85.3M primarily as a result of Acquired Operations as compared to the three-month period ended June 30, 2022.
• Gross profit increased by 25.2% to $21,043,308 compared to $16,813,765 for the three-month period ended June 30, 2022.
• Fully Diluted Earnings per share was $0.109 compared to $0.167 for the three-month period ended June 30, 2022.
• Fully Diluted Adjusted Net Earnings per share increased by $0.032 or 16.8% to $0.222 compared to $0.190 for the three-month period ended June 30, 2022.
• Net Earnings was $3,775,581 compared to $5,807,886 for the three-month period ended June 30, 2022.
• Adjusted EBITDA increased by 20.7% to $18,829,730 as compared to $15,605,747 for the three-month period ended June 30, 2022.
• PLC achieved an Adjusted EBITDA margin of 22.1%, an increase of 150 bps over the three-month period ended June 30, 2022.
• On April 10, 2023, the Company completed the acquisition of substantially all the assets of Carson-Speaks Chapel in Independence, Missouri; Speaks Buckner Chapel in Buckner, Missouri; Speaks Suburban Chapel in Independence, Missouri; and Oak Ridge Memory Gardens in Independence, Missouri (collectively " Speaks "). The Speaks acquisition expands Park Lawn's Kansas City metropolitan market by adding three stand-alone funeral homes and one stand-alone cemetery and is expected to add $2,247,759 in Adjusted EBITDA annually.
• On June 26, 2023, the Company completed the acquisition of substantially all the assets of Cobb Funeral Chapel and Cobb Suncrest Memorial Gardens, a business consisting of one on-site funeral home and cemetery located in Moultrie, Georgia (collectively " Cobb "). The Cobb acquisition is expected to add $676,710 in Adjusted EBITDA annually.
• Following the close of the quarter, on July 17, 2023, the Company acquired substantially all the assets of Ward Funeral Home Limited with three standalone funeral homes located in Brampton, Woodbridge and Toronto, Ontario (collectively " Ward "). The Ward acquisition expands PLC's funeral home presence in Ontario and is expected to add $1,800,000 in Adjusted EBITDA annually.

Further Expansion of Ontario Footprint

Subsequent to the quarter, on August 8, 2023, the Company completed the acquisition of substantially all the assets of M.W. Becker Funeral Home Ltd. (" MWB "), a standalone funeral home business in Keswick, Ontario.

"We take great pride in serving Keswick and the surrounding communities and look forward to continuing to provide outstanding personalized service to our families through our partnership with Park Lawn," said Yves Larocque, former owner of MWB.

"The addition of the M.W. Becker Funeral Home allows us to enter a growing market north of Toronto, and expands Park Lawn's footprint in Ontario, in furtherance of our stated growth objectives. We are excited to welcome the M.W. Becker team into the Park Lawn family," stated J. Bradley Green, Chief Executive Officer of PLC.

Highlights of the transaction include:

• PLC deepening its presence in Ontario by adding one standalone funeral home in Keswick, Ontario;
• MWB performs approximately 162 calls per year and was financed with cash on hand and funds from PLC's credit facility;
• The MWB acquisition is expected to add approximately CAD$375,970 in Adjusted EBITDA annually. ¹
• For the 12 months ended December 31, 2022, PLC had Adjusted EBITDA of US$74,948,868 and net earnings of US$25,124,765.
• The agreed upon purchase price multiple is within PLC's publicly-stated targeted EBITDA multiple range for transactions of this nature.

Renewal Normal Course Issuer Bid

PLC also announced today that the Toronto Stock Exchange (the " TSX ") has approved the renewal of the Company's normal course issuer bid (" NCIB "). Under the terms of the NCIB, PLC may, during the twelve-month period commencing August 17, 2023 and ending August 16, 2024 purchase up to 3,391,575 common shares (" Common Shares ") representing 10% of its public float of issued and outstanding Common Shares. As at August 4, 2023, there were 34,272,395 Common Shares issued and outstanding and 33,915,751 Common Shares estimated in the "public float", calculated in accordance with TSX rules. All Common Shares purchased by PLC under the renewed NCIB will be cancelled or transferred to and held by a trust established by PLC for the settlement of equity settled incentive plans.

PLC's board of directors has authorized the NCIB because the board believes that, from time to time, the market price of Common Shares may be such that their purchase may be an attractive and appropriate use of corporate funds. The NCIB will provide PLC with additional flexibility to manage capital. Decisions regarding the timing of future purchases of Common Shares will be based on market conditions, share price, capital needs and other factors.

Purchases made by PLC will be made on the open market through the facilities of the TSX and/or alternative Canadian trading systems, in accordance with applicable TSX and other applicable trading system rules. The actual number of Common Shares purchased under the NCIB and the timing of any such purchases will be at PLC's discretion. Based on the average daily trading volume of 62,835 during the last six months, daily purchases will be limited to 15,708 Common Shares, other than block purchase exceptions.

PLC has entered into an automatic securities purchase plan (" ASPP ") with its designated broker in connection with its NCIB to facilitate the purchase of Common Shares during times when PLC would ordinarily not be permitted to purchase Common Shares due to regulatory restrictions or self-imposed black-out periods. Before entering a black-out period, PLC may, but is not required to, instruct the broker to make purchases under the NCIB based on parameters set by PLC in accordance with the ASPP, TSX rules and applicable securities laws. The ASPP has been pre-cleared by the TSX. Outside of pre-determined blackout periods, Common Shares may be purchased under the NCIB based on management's discretion, in compliance with TSX rules and applicable securities laws. All purchases made under the ASPP will be included in computing the number of Common Shares purchased under the NCIB.

Under its prior NCIB that commenced on August 17, 2022 and expires on August 16, 2023, the Company had sought and received approval from the TSX to purchase up to 3,385,439 Common Shares. As of August 9, 2023, the Company had purchased 207,885 Common Shares under its prior NCIB through open market purchases on the TSX and/or alternative Canadian trading systems, at a weighted average price of approximately C$24.81 per Common Share for total cash consideration, including commission, of $3,835,438 (C$5,152,539).

Important Reminder

The Company will host a conference call to discuss its second quarter 2023 financial results on Friday, August 11, 2023. Details are as follows:

Date : Friday, August 11, 2023

Time : 9:30 a.m. EST

Dial-in Number : Toll Free (877) 545-0523 | Conference ID: 711858

To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call. The Company's complete financial results can be found at www.sedar.com or on the Company's website at www.parklawncorp.com .

A replay of the conference call will be available until Friday, August 25, 2023 and can be accessed as follows: Dial-in Number: Toll Free (877) 481-4010| Conference ID: 48853. Alternatively, the conference will also be available on the Company's website at www.parklawncorp.com .

About Park Lawn Corporation

PLC provides goods and services associated with the disposition and memorialization of human remains. Products and services are sold on a pre-planned basis (pre-need) or at the time of a death (at-need). PLC and its subsidiaries own and operate businesses including cemeteries, crematoria, funeral homes, chapels, planning offices and a transfer service. PLC operates in three Canadian provinces and nineteen U.S. states.

Non‐IFRS Measures

Adjusted Net Earnings, Adjusted EBITDA and their related per share amounts, Adjusted EBITDA margins, Adjusted Field EBITDA margins, Acquired Operations and Comparable Operations are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Such measures are presented in this news release because management of PLC believes that such measures are relevant in evaluating PLC's operating performance. Such measures, as computed by PLC, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar measures reported by such other organizations.

The Company defines Acquired Operations as business units or operating locations acquired by the Company during the period from January 1, 2022 and ending June 30, 2023. The Company defines Comparable Operations as business units or operating locations owned by the Company for the entire period from January 1, 2022 and ending June 30, 2023.

The following tables indicate how the Company reconciles Adjusted Net Earnings, Adjusted EBITDA and their related per share amount, Adjusted EBITDA margins and Adjusted Field EBITDA margins to the nearest IFRS measure.

Adjusted Net Earnings

		Three Months Ended June 30,
		2023				2022
Net Earnings		$	3,775,581			$	5,807,886
Adjusted for the impact of:
Amortization of intangible assets			356,939				319,030
Fair value adjustment on interest rate swaps			(2,064,453	)			-
Share based compensation			2,068,750				1,220,065
Acquisition and integration costs			1,748,272				1,642,477
Other (income) expenses			2,980,894				(1,823,991	)
Tax effect on the above items			(1,169,077	)			(541,157	)
Adjusted Net Earnings		$	7,696,906			$	6,624,310
Adjusted Net Earnings - per share
Basic		$	0.224			$	0.194
Diluted		$	0.222			$	0.190
Weighted Average Shares
Basic			34,390,430				34,216,943
Diluted			34,700,648				34,863,288

EBITDA and Adjusted EBITDA

		Three Months Ended June 30,
		2023				2022
Earnings before income taxes		$	4,525,743			$	7,981,152
Adjusted for the impact of:
Finance costs			4,202,416				1,721,942
Depreciation and amortization			3,971,186				3,203,516
Amortization of cemetery property			1,396,922				1,660,586
EBITDA			14,096,267				14,567,196
Fair value adjustment on interest rate swaps			(2,064,453	)			-
Share based compensation			2,068,750				1,220,065
Acquisition and integration costs			1,748,272				1,642,477
Other (income) expenses			2,980,894				(1,823,991	)
Adjusted EBITDA		$	18,829,730			$	15,605,747
EBITDA - per share
Basic		$	0.410			$	0.426
Diluted		$	0.406			$	0.418
Adjusted EBITDA - per share
Basic		$	0.548			$	0.456
Diluted		$	0.543			$	0.448
Weighted Average Shares Outstanding
Basic			34,390,430				34,216,943
Diluted			34,700,648				34,863,288

Adjusted Field EBITDA

		Three Months Ended June 30, 2023
		Cemetery				Funeral Home				Corporate				Total
Earnings before income taxes		$	4,997,044			$	12,580,136			$	(13,051,437	)		$	4,525,743
Adjusted for the impact of:
Finance Costs			18,058				175,638				4,008,720				4,202,416
Depreciation and amortization			891,943				2,903,400				175,843				3,971,186
Amortization of cemetery property			1,384,097				12,825				-				1,396,922
EBITDA			7,291,142				15,671,999				(8,866,874	)			14,096,267
Fair value adjustment on interest rate swaps			-				-				(2,064,453	)			(2,064,453	)
Share based compensation			-				-				2,068,750				2,068,750
Acquisition and integration costs			19,033				305,060				1,424,179				1,748,272
Other (income) expenses			2,579,490				(8,051	)			409,455				2,980,894
Adjusted EBITDA		$	9,889,665			$	15,969,008			$	(7,028,943	)		$	18,829,730

		Three Months Ended June 30, 2022
		Cemetery				Funeral Home				Corporate				Total
Earnings before income taxes		$	8,564,617			$	9,243,628			$	(9,827,093	)		$	7,981,152
Adjusted for the impact of:
Finance Costs			35,361				165,259				1,521,322				1,721,942
Depreciation and amortization			833,400				2,269,091				101,025				3,203,516
Amortization of cemetery property			1,638,650				21,936								1,660,586
EBITDA			11,072,028				11,699,914				(8,204,746	)			14,567,196
Share based compensation			-				-				1,220,065				1,220,065
Acquisition and integration costs			-				197,346				1,445,131				1,642,477
Other (income) expenses			(1,861,230	)			4,180				33,059				(1,823,991	)
Adjusted EBITDA		$	9,210,798			$	11,901,440			$	(5,506,491	)		$	15,605,747

		Six Months Ended June 30,
		2023				2022
Net Earnings		$	8,351,727			$	14,509,904
Adjusted for the impact of:
Amortization of intangible assets			681,260				701,573
Fair value adjustment on interest rate swaps			(463,663	)			-
Share based compensation			3,169,838				2,685,243
Acquisition and integration costs			3,541,554				2,756,316
Other (income) expenses			3,000,351				(1,527,501	)
Tax effect on the above items			(1,968,830	)			(1,324,363	)
Adjusted Net Earnings		$	16,312,237			$	17,801,172
Adjusted Net Earnings - per share
Basic		$	0.475			$	0.521
Diluted		$	0.471			$	0.511
Weighted Average Shares
Basic			34,319,997				34,183,665
Diluted			34,660,457				34,806,950

		Six Months Ended June 30,
		2023				2022
Earnings before income taxes		$	11,583,432			$	19,971,202
Adjusted for the impact of:
Finance costs			7,811,228				3,281,380
Depreciation and amortization			7,745,300				6,428,627
Amortization of cemetery property			2,983,080				3,425,553
EBITDA			30,123,040				33,106,762
Fair value adjustment on interest rate swaps			(463,663	)			-
Share based compensation			3,169,838				2,685,243
Acquisition and integration costs			3,541,554				2,756,316
Other (income) expenses			3,000,351				(1,527,501	)
Adjusted EBITDA		$	39,371,120			$	37,020,820
EBITDA - per share
Basic		$	0.878			$	0.968
Diluted		$	0.869			$	0.951
Adjusted EBITDA - per share
Basic		$	1.147			$	1.083
Diluted		$	1.136			$	1.064
Weighted Average Shares Outstanding
Basic			34,319,997				34,183,665
Diluted			34,660,457				34,806,950

		Six Months Ended June 30, 2023
		Cemetery				Funeral Home				Corporate				Total
Earnings before income taxes		$	14,654,972			$	25,299,501			$	(28,371,041	)		$	11,583,432
Adjusted for the impact of:
Finance Costs			42,118				376,719				7,392,391				7,811,228
Depreciation and amortization			1,749,729				5,643,040				352,531				7,745,300
Amortization of cemetery property			2,958,061				25,019				-				2,983,080
EBITDA			19,404,880				31,344,279				(20,626,119	)			30,123,040
Fair value adjustment on interest rate swaps			-				-				(463,663	)			(463,663	)
Share based compensation			-				-				3,169,838				3,169,838
Acquisition and integration costs			19,033				481,910				3,040,611				3,541,554
Other (income) expenses			2,538,755				(4,392	)			465,988				3,000,351
Adjusted EBITDA		$	21,962,668			$	31,821,797			$	(14,413,345	)		$	39,371,120

		Six Months Ended June 30, 2022
		Cemetery				Funeral Home				Corporate				Total
Earnings before income taxes		$	16,940,042			$	22,950,514			$	(19,919,354	)		$	19,971,202
Adjusted for the impact of:
Finance Costs			86,388				319,474				2,875,518				3,281,380
Depreciation and amortization			1,681,182				4,566,391				181,054				6,428,627
Amortization of cemetery property			3,365,441				60,112								3,425,553
EBITDA			22,073,053				27,896,491				(16,862,782	)			33,106,762
Share based compensation			-				-				2,685,243				2,685,243
Acquisition and integration costs			-				197,819				2,558,497				2,756,316
Other (income) expenses			(1,861,230	)			23,212				310,517				(1,527,501	)
Adjusted EBITDA		$	20,211,823			$	28,117,522			$	(11,308,525	)		$	37,020,820

¹ Adjusted Net Earnings, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Field EBITDA Margin and Adjusted Net Earnings per share diluted are non IFRS financial measures. Refer to the non-IFRS Financial Measures section of this document for more information on each non-IFRS financial measure.

Cautionary Statement Regarding Forward‐Looking Information

This news release contains forward-looking statements within the meaning of applicable securities laws relating to the business of PLC and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may", "estimate", "pro-forma" and other similar expressions. These statements are based on PLC's expectations, estimates, forecasts and projections and include, without limitation, statements regarding: PLC's focus on implementing incremental improvements in its operations and making selective and strategic growth decisions that drive shareholder value; PLC's expectations regarding its strong pipeline and opportunities for continued strategic growth in 2023; PLC's expectation that the MWB acquisition will add approximately CAD$375,970 in Adjusted EBITDA; and regarding the impact of the Speaks, Cobb and Ward acquisitions on PLC's annual Adjusted EBITDA. The forward-looking statements in this news release are based on certain assumptions, including the normalization of the death rate, that the CAD to USD exchange rate remains consistent, the Speaks, Cobb, Ward and MWB acquisitions will perform as expected, PLC will be able to implement business improvements and costs savings, PLC will be able to retain key personnel, there will be no unexpected expenses occurring as a result of contemplated acquisitions, multiples remain at or below levels paid by PLC for previously announced acquisitions, the acquisition and financing markets remain accessible, capital can be obtained at reasonable costs and PLC's current business lines operate and obtain synergies as expected, as well as those regarding present and future business strategies, the environment in which PLC will operate in the future, expected revenues, expansion plans and PLC's ability to achieve its aspirational goals and acquisitions targets.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, risks associated with pandemic, epidemic and other public health risks, risks associated with the impact of inflation on PLC's business, risks associated with political conflict, including from economic sanctions imposed or to be imposed as a result thereof, and supply chain disruptions resulting therefrom, and the other factors discussed under the heading "Risk Factors" in PLC's most recent Annual Information Form and most recent Management's Discussion and Analysis available at www.sedarplus.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, PLC assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Unless otherwise stated, all amounts discussed herein are denominated in U.S. dollars.

Contact Information

Daniel Millett
Chief Financial Officer
(416) 231-1462, ext. 221

SOURCE: Park Lawn Corporation

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FAQ

What were the financial results for Q2 2023?

Revenue increased by 12.3% to $85.3M, while net earnings decreased by 35% to $3.8M. Adjusted EBITDA increased by 20.7% to $18.8M.

What acquisitions did PLC complete?

PLC completed the acquisitions of Speaks, Cobb, and Ward funeral homes, and MWB funeral home in Ontario.

What is the expected impact of the acquisitions on Adjusted EBITDA?

The Speaks acquisition is expected to add $2.2M, the Cobb acquisition is expected to add $676,710, the Ward acquisition is expected to add $1.8M, and the MWB acquisition is expected to add approximately CAD$375,970 in Adjusted EBITDA annually.

What is PLC's normal course issuer bid?

PLC renewed its normal course issuer bid, allowing the purchase of up to 3,391,575 common shares.