CEO Andrew Clark on Park Lawn Corporation Results

Editor’s Note:  I am out of the office this week.  Because of that FDD will not be publishing an article on Tuesday or Thursday.  I hope you enjoy the articles for Monday, Wednesday, and Friday I have scheduled.

#                                #                                 #                                    #

On March 27 Toronto based Park Lawn Corporation held an earnings call with various brokers to discuss the past results and look into what is next for the company.  CEO Andrew Clark and CFO James Joseph Leeder also answered questions.  You can read the entire transcript of the earnings call from Yahoo Finance here.

We will give you some highlights that we saw and heard and then give you a couple of verbatim answers from the executives of Park Lawn so you can maybe see what they may be up to next.

Clark and Leeder mentioned:

  • During 2018 the company completed several acquisitions in Canada and in the United States.  Most significant were the acquisitions of the Signature Group and the CMS Mid-Atlantic Group.
  • In the last two calendar years (2017 and 2018) the company has added 66 cemetery properties and 52 funeral homes as well as some crematoria to their portfolio.
  • The company also explained that they have gained experienced management teams and established a U.S. Operations Center in Houston, Texas.
  • Revenue increased in 2018 to $161 million as compared to $87.3 million company wide in 2017.
  • Company debt has increased to $96 million at the end of 2018 as compared to $4.4 million at the end of 2017.
  • Comparable business units had a year over year growth rate of 6.4% for the year and 10.8% in the 4th quarter.

Here is a couple of broker based questions and how they were answered:

Q.  Can you give us your organic growth by geography and 10.8% is great, but it sounds above normal?

A. Yes. So Scott, we can comment on that. That was in Canada. It was relatively smaller in Canada at about 2% organic growth. In the U.S., it was about 8.9% organic growth in the quarter. A lot of that organic growth was attributable to the opening of and initial sales at the Lafayette property in New Jersey.

Q.  You have talked about internal organic growth projects.  Can you give us a little more detail on the $25 million you talked about in capital expenditures (CapEx).

A.  So we can comment specifically on the projects. Many of them are estimated budgets at this point in time. We’re very leery about commenting on CapEx numbers related to specific construction projects because I’m sure, as you’d know, those projects don’t always kind of land where you expect. Sometimes they’re better, sometimes they’re worse. But they’re almost certainly different from what the initial budget is. So our — the principal investments, I think, starting in — from smallest ones into larger, would be — we’ve acquired some land and are now under construction of a funeral home in Taos, New Mexico, which will add to our footprint in New Mexico. We’re in the process of our permitting phase for the on-site funeral home at Forest Lawn Cemetery in Houston, Texas. We are, again, in the permitting — not permitting, the planning phases with the city of Toronto of the — of an on-site funeral home at Westminster Cemetery in Toronto. That would be the largest of the projects in terms of overall capital expenditure, and it would be the largest by a fair margin. I would also say that we are — we expect to be, in the fourth quarter of this year, opening the third floor at the Westminster Mausoleum here in Toronto. So those combined will get us awfully close to that $25 million number, with a meaningful portion of that being tied up in the funeral home at Westminster. The — we also included in that $25 million number — was the $1 million dollars or so that we spent to invest it in the Lafayette property in New Jersey, which is already obviously selling.

Q.  A couple questions came on the acquisition market/pipeline.  We have listed both answers here in different paragraphs.

A.  The pipeline is robust at the moment. We’re feeling pretty good about it. There’s a number of opportunities across a number of jurisdictions. And we’re not seeing any material move away on pricing off where we’ve historically guided to. So we’re feeling pretty confident about our pipeline right now.

There’s — the situation — the acquisition opportunities run the gamut from smaller ones to larger ones. I wouldn’t want to be any more — provide any more conviction at this point in time on any of those given where we are and the forum that we’re on. I would say that just — in terms of the number of funeral homes versus cemetery opportunities, you’re right. That is sort of a numbers game function more than anything else given there are so many more, obviously, privately held funeral home operations than there are cemetery operations. So by virtue of that, we expect to see — continue to expect to see more in terms of volume of those opportunities than we would on cemetery opportunities.

[wpforms id=”436″ title=”true” description=”true”]

 

 

Print Friendly, PDF & Email
Posted in

Funeral Director Daily

Leave a Comment





Subscribe to Funeral Director Daily
Enter your email address to join 3,502 readers who subscribe to all Funeral Director articles.

advertise here banner