TORONTO, ONTARIO (March 30, 2020) - Today, Park Lawn Corporation (TSX: PLC) (“PLC” or the “Company”) announced its results for the fourth quarter (“Q4”) and year ended December 31, 2019. The results show strong revenue growth, with a year-over-year increase of 51.3% and an increase of 36.2% for Q4, as compared to the same period in 2018. Net Earnings attributable to PLC shareholders were $6,906,841 in 2019 compared to $6,722,456 in 2018. On a fully diluted per share basis, this represents $0.246 for 2019, as compared to $0.325 in 2018.
“2019 was another transformative year for PLC with robust acquisition growth as well as a significant focus on the successful integration of our expanding US platform, which is a testament to our strong and highly capable management team. The success of 2019 positions us well for the emerging challenges of 2020. In a time of adversity, the entire PLC team remains focused on what we can control: the continued, consistent execution of PLC’s growth strategy via a combination of organic growth, margin expansion and continued acquisition activity,” stated Brad Green, Interim CEO.
After adjusting for certain non-cash, non-recurring, or one-time items, including acquisition costs and costs related to the integration of acquired businesses, Adjusted Net Earnings, attributable to PLC shareholders increased by $6,218,214 to $22,359,678 in 2019 from $16,141,464 in 2018. On a fully diluted per share basis, this represents $0.795, compared to $0.781 in the prior year, a 1.8% increase and $0.160 for Q4 2019 compared to $0.210 for the same period last year, a decrease of 23.8%.
Adjusted EBITDA attributable to PLC shareholders increased to $53,254,756 in 2019 from $34,702,126 in 2018, resulting in a year-over-year, increase of 53.5%. On a fully diluted per share basis, this represents $1.894 for 2019 compared to $1.680 for 2018, an increase of 12.7% per share.
Adjusted EBITDA margins attributable to PLC shareholders showed improvement over the course of 2019 resulting in a year-over-year increase of 10 basis points to 22.0% for 2019 compared to 21.9% for 2018.
Businesses acquired prior to January 1, 2019 performed very well in 2019 exceeding the Adjusted EBITDA expectations established prior to purchase, indicating solid improvement from the time of purchase under the Company’s management. The improvements were driven by a combination of more efficient operations of the business and significant organic growth.
We continue to integrate and synergize the businesses acquired in 2019, which underperformed in the year as compared to longer term performance expectations. While revenues were in line with internal expectations, these highly funeral dominant businesses generally require a longer runway to normalize selling, general and administrative expenses. We fully expect that the financial results of these businesses, like the businesses in our other markets, will improve over time as integration continues, driving lower effective purchase price multiples and better returns on capital.
As part of our integration and growth strategy, we have increased overhead expenses in both our Toronto and Houston support offices. These costs have principally arisen through investments in people and additional infrastructure and resources to support our growth. While this has a short term drag on earnings, Adjusted EBITDA and Adjusted EBITDA margins, we remain confident that these investments will assist in bringing efficiencies from reduced costs at the divisional level in 2020 and make the business more scalable as we move towards achieving our previously disclosed aspirational growth target of $100 million in pro forma Adjusted EBITDA by the end of 2022.
Highlights from 2019 include:
• The Company invested approximately $180 million in six strategic acquisitions greatly expanding its U.S. presence.
• The Company successfully integrated the operations and human resources systems of four of the five legacy acquisitions.
• The Company successfully built a multi-faceted foundation support center in Houston that will allow the Company to fully integrate, grow and scale in support of achieving previously announced growth targets.
• In April 2019, the Company successfully completed a $125 million bought deal offering to support its ongoing growth initiatives.
• In November 2019, the Company further supported its ongoing growth strategy by completing an upsize to its credit facility wherein it increased its borrowing capacity from $175 million to $250 million, with a $50 million accordion and an extension on the maturity until January 18, 2025.
Park Lawn Responds to COVID-19 Challenges
In North America, we are all adjusting and adapting to daily changes as a result of the COVID-19 pandemic. While the health and safety of our employees remains our top priority, it is not lost on us that the Company provides an essential public function and has a unique and critical responsibility to the communities and families it serves in responding to the COVID-19 pandemic. As a whole, our businesses have been designated as essential services and therefore, each one of the Company’s business locations remains open and ready to provide service for their communities in this time of need.
In the normal course and scope of our daily operations, our teams regularly interact with and encounter viruses and infectious diseases such as the coronavirus. As a result, we already have in place robust operating policies and procedures to handle these exact types of circumstances. Nonetheless, we have taken special care during this time to continually re-evaluate our policies and procedures to comply with all regulatory mandates and ensure that all of our team members, who require it for their role, are equipped with the appropriate personal protective equipment. Likewise, we have also updated staffing and service directives such as reducing the number of staff present for a service and restricting the size and number of attendees at services. The Company has also implemented additional safety and precautionary measures as it concerns our team’s day-to-day interaction with the general public. We have a great sense of pride in the professionalism and dedication that our team has exhibited in taking care of the communities they serve in this time of need.
As the COVID-19 crisis evolves, the Company will continue to monitor its impact on our business and will implement contingency plans as necessary and appropriate.
Appointment of Interim CEO
COVID-19 has transformed North America in a matter of a few short weeks introducing an element of uncertainty which may impact the pace and timing of PLC’s previously announced search for a new Chief Executive Officer (“CEO”). As described above, PLC is taking active steps to ensure the Company is optimally positioned for long-term success and growth in a challenging time. In the near term, given the current circumstances, this means ensuring stable leadership with a sharp focus on operations and the continuing integration of our existing business operations.
As such, the Board of Directors has appointed Brad Green to serve in the role of Interim CEO effective, Tuesday, March 31, 2020, to increase stability during the Company’s leadership transition. Mr. Green has served as the President of PLC since May of 2018 and previously served as the CEO of the Signature Group prior to the Company’s acquisition of the business.
Outgoing CEO, Andrew Clark, will continue to work with PLC on a consulting basis while the Board actively pursues a permanent CEO candidate.
Paul G. Smith, Chairman of the Board noted, “We thank Mr. Clark for his contributions to the success of PLC over the past seven years and look forward to working with him as we transition to new leadership. The world has dramatically changed over the past several weeks and we are taking active steps to make certain that Park Lawn continues on its successful trajectory. It is important to maintain proven leadership to enable swift and efficient action for the benefit of our employees, customers and communities. Mr. Green brings years of operational experience to the table and I am confident in his abilities, in a time of uncertainty, to bring continuity to the organization.”
“I am grateful for the confidence and support of the Board and am excited to be given the opportunity to serve as the Interim CEO. I will continue to work with our highly capable management team to navigate these challenging times and continue to deliver value to both the families we serve as well as our shareholders,” stated Mr. Green.
The Company will host a conference call to discuss its 2019 financial results on Tuesday, March 31, 2020. Details are as follows:
• Date: Tuesday, March 31, 2020
• Time: 9:30am EST
• Dial-in Number: Local (647) 427-7450 | Toll Free (888) 231-8191 | Conference ID: 1369428
To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call.
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 five Canadian provinces and fifteen U.S. states.
Adjusted Net Earnings, Adjusted EBITDA and their related per share amounts, and Adjusted EBITDA margins, 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. Please see PLC’s most recent Management’s Discussion and Analysis for how the Company reconciles Adjusted Net Earnings, Adjusted EBITDA and their related per share amount, and Adjusted EBITDA margins to the nearest IFRS measure.
Cautionary Statement Regarding Forward‐Looking Information
This news release may contain 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”, “project”, “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 the impact of COVID-19 on the business, the growth targets that PLC aspires to achieve by the end of 2022, future earnings generated by recent acquisitions completed by the Company, expected synergies and efficiencies from reduced costs in 2020. The forward-looking statements in this news release are based on certain assumptions, including those set out under the heading “Outlook” in PLC’s management’s discussion and analysis for the second quarter of 2018 (filed on SEDAR on August 14, 2018), that recent acquisitions perform as expected, PLC will be able to implement business improvements and achieve costs savings, PLC will be able to retain key personnel, there will be no unexpected expenses occurring as a result of the acquisitions, multiples remain at or below levels paid by PLC for previously announced acquisitions, the CAD to USD exchange rate remains consistent, 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 the PLC will operate in the future, the anticipated adjustments to operations in the COVID-19 pandemic, expected revenues, expansion plans and the PLC’s ability to achieve its goals. 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 the current COVID-19 pandemic and the other factors discussed under the heading “Risk Factors” in PLC’s Annual Information Form available at www.sedar.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.
Chief Financial Officer
(416) 231-1462, ext. 226