Park Lawn Corporation 1Q 2020: Revenues increase 47.5%

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Park Lawn Corporation (PLC), the Toronto based funeral and cemetery operator, issued a press release, that you can read here, on its First Quarter 2020 operations earlier this week.  Highlights from that press release seem to be that the company increased its revenues from CAN $50.15 million ( US$35.6 million) in 2019 to CAN $73.98 million (US$ 52.5 million) in 1Q 2020 — that’s an impressive increase of 47.5%.

The company also showed an impressive gross margin or Gross Profit of CAN$ 60.66 million as compared to the first quarter of 2019’s Gross Profit of CAN $40.8 million.  That number shows that they are getting what they can out of those revenues as that is a 48.55% increase in Gross Margin.

While those increased numbers are impressive, it should be noted that they are not “same store” numbers and have to be tempered by the fact that there is a least a couple of large acquisition revenue numbers that are counted in the 2020 numbers but not the 2019 numbers.  Those acquisitions include the Baue Funeral operations in St. Louis and the Horan Funeral operations is Denver.  When you make those types of large scale acquisitions, the revenue numbers will increase.

An area of concern that we noticed from the statement of earnings was that Operating Expenses grew by an even higher percentage than the growth of revenue or Gross Profits.  PLC reported that Operating Expenses grew from CAN$34.5 million in 1Q 2019 to CAN $ 52.7 million for the same quarter of 2020. .. that’s an increase of 52.7%. . .and something that should be reduced through efficiencies.

At the end of the day, however, we did see that Operating Income did increase from CAN $6.2 million for 1Q 2019 to CAN $7.88 million for 1Q 2020.  And, when all things are considered, it is that Operating Income that you want to see increase.  From our point of view, this is a positive result, especially in the case of the high Operating Expenses, where we can see a big chance for efficiencies moving forward to create an even bigger Operating Income.

Finally, net earnings dropped precipitously for the quarter as compared to 2019 because of an amount of non-operating expenses that included  CAN $ 1.7 million in relation to the transition from one CEO to another.

You can see the complete 1Q 2020 Park Lawn Corporation Financial Statements here.

We will follow up with more news from Park Lawn Corporation and their Earnings call in the next week.

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