Park Lawn Corp

Park Lawn Corporation (TSX: PLC) is a cemetery, cremation and funeral provider based out of Canada. The Company provides goods and services related to memorialization and disposition of human remains and are sold on at-need and pre-need basis. The Company have operations all across Canada and the US.

Recent News

On 25 August 2020, Park Lawn announced dividend of $0.038 for month of August and will be paid on 15 September 2020.

Financial Highlights – H1 and Q2 Financial Year 2020 (30 June 2020)

(Source: Company Website) 

In the second quarter of the financial year 2020, driven by growth in funeral and cemetery businesses and successful integration of completed acquisitions for the period, the revenue increased by 44.6% to $84.7 million (Q2 FY2019: $58.6 million). The revenue in H1 FY2020 increased to $158.7 million (H1 FY2019: $108.7 million). Driven by higher revenues, the adjusted EBITDA stood at $19.5 million in the second quarter of the financial year 2020 (Q2 FY2019: $13 million), and adjusted EBITDA stood at $36.6 million in H1 FY2020 (H1 FY2019: $24.8 million). The adjusted net earnings surged significantly by 55.3% to $8.8 million in Q2 FY2020 (Q2 FY2019: $5.7 million). The Company strengthened balance sheet with senior unsecured debenture financing of $86.3 million.

Share Price Performance

PLC 1 year daily technical chart. Source: Refinitiv (Thomson Reuters)

Park Lawn Corporation shares closed at CAD 28.49 at the time of writing after the market close on 28 August 2020. Stock's 52 weeks High is CAD 31.77 and Low is CAD 15.58.

Key Risks

Liquidity and interest rate risks could affect the operations of the Company. Any change in regulations and government policies could affect the overall business of the Company. The outbreak of Covid-19 pandemic resulted in disruption in financial markets, world economy, regional economies and supply chain, which impacted negatively on the financial and operational performance.

Conclusion

The Company has shown an improvement in financial performance in the first half and second quarter of the financial year 2020. Both the top-line and the bottom-line performance have improved, with improved profitability margins. The revenue from core businesses improved along with benefits from successful integration of completed acquisitions. The liquidity position of the company remained strong with the well-positioned balance sheet. The Company implemented operational directives, which helped them to mitigate the impact of pandemic on business. The Company experienced increase in at-need services due to covid-19 in markets like New Jersey, Michigan and Colorado. PLC activities are negatively impacted by the elimination of air travel and disruptions in the supply chain. In long-run, the Group is well-positioned to manage the uncertain challenges.

Based on the above rationale, we have given a “Hold” recommendation for Park Lawn Corporation at the closing price of CAD 28.49 (as on 28 August 2020).

Disclaimer

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