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Park Lawn Corp
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Good morning. My name is Jodi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Park Lawn Corporation first quarter results conference call. [Operator Instructions] Thank you. Suzanne Cowan, you may begin your conference.
Thank you, Jodi. Good morning, everyone, and welcome -- thank you for joining us today. My name is Suzanne Cowan, and I'm the Vice President of Business Development and Corporate Affairs at Park Lawn. With me on the call are Andrew Clark, our Chairman and CEO; and Joe Leeder, our CFO. Today's call is being recorded, and a replay will be available shortly after the call.Please be aware that certain information discussed today is forward-looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially. Please see our public filings for more information regarding forward-looking statements.During the call, we will reference non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meaning under IFRS. Please see our public filings for additional information regarding our non-IFRS financial measures, including for reconciliations to the nearest IFRS measures.I will now turn the call over to Andrew Clark, who will provide an overview of our business highlights for Q1 2019.
Thank you, Suzanne, and good morning, everyone. Our results for the quarter ended March 31, 2019, reflect the continued successful execution of our business plan. During Q1, the company increased its credit facility from $150 million to $225 million. The additional credit had provided the company with further flexibility as it continues to pursue its growth strategy. In particular, the revolving credit facility is expected to support our ability to capitalize on organic projects and acquisition opportunity as they arise while maintaining a prudent approach to leverage.In addition, during Q1 2019, we announced the entering into of an agreement to acquire Cress Funeral Service, Inc, a transaction that was closed on April 1, 2019. Cress is an 8-location funeral business in Madison, Wisconsin, which required for USD 20.3 million. We like to welcome everybody in the Cress family to the Park Lawn family. Not, including Cress, over the period from July -- January 1, 2018, to March 31, 2019, the company has added 66 cemetery properties, 52 funeral homes, including 12 on-sites and 14 crematoria to its portfolio. We have expanded and diversified our geographic footprint to include the states of New York, New Jersey, New Mexico, Kansas, Missouri, North Carolina and South Carolina and the province of British Columbia. The company has also added the existing -- [ to ] existing operations in Ontario, Manitoba and Saskatchewan.Immediately after the end of Q1, we launched a $125 million bought deal offering, which ultimately raised over $143 million in gross proceeds, closed the Cress transaction, acquired the assets of John L. Ziegenhein & Sons Undertaking, a 2-location funeral business in St. Louis, Missouri and announced the agreements to acquire Horan & McConaty Funeral Services and The Baue Funeral Home Company, 2 of the U.S.'s leading funeral and cemetery operators. I'd now like to turn the call over to Joe Leeder to review our Q1 2019 financial results in more detail as well as our outlook.
Thanks, Andrew, and good morning, everyone. You will find a detailed breakdown of our 2019 first quarter operating results in our financial statements and MD&A, which are available on our website and on SEDAR.Our total revenue for the quarter was $50.2 million, an increase of 84% compared with revenue of $27.2 million in 2018. And if I exclude revenue from acquired businesses over the past year, currency-adjusted growth from comparable business units grew organically by 1.8%. And this revenue growth was primarily attributable to our cemetery operations in the U.S. with most operating regions contributing to this organic growth. The revenue growth came as a result of increased pre-need sales production, expansion of cemetery inventory, opening of new properties and increased investment income from our trust funds. The growth in our U.S. cemetery operations was offset somewhat by a slower start to the year in our Canadian cemetery business, and Funeral Home revenue was largely flat year-over-year. We also saw continued improvement in our gross margin this quarter, improving by 300 basis points to 81.4% compared with 78.5% last year. The overall improvement in gross margin is largely attributable to acquired cemetery businesses as these businesses require a lower contribution to [ perpetual ] care funds on property sales, the inclusion of additional Funeral Home business at higher gross margin and higher investment income from our comparable business units.Our overall operating expenses for the first quarter increased to $34.6 million from $17.9 million last year as a result of the inclusion of the acquired businesses. Looking specifically at the general admin, maintenance and selling expenses from comparable business operations, adjusted for foreign currency, there was a modest net increase in operating expenses of approximately [ $280,000 ] this year.Most of this increase is attributable to higher costs to support the growth of our business, including higher personnel cost and higher public company costs such as legal, audit, listing fees, et cetera. The remainder of the increase in operating expenses was attributable to selling and advertising cost, including sales commissions, which were incurred to support our revenue growth initiatives. Our maintenance costs from comparable business units was marginally down compared with prior years.Interest expense in 2019 higher by $1 million. This relates directly to the utilization of our credit facilities to fund acquisitions throughout 2018. And share-based compensation expense, which is a noncash expense associated with the issuance of our additional DSUs and RSUs was also higher in 2018 as individual units were issued to employees from newly-acquired businesses during the year. The details of our equity incentive plans and the grants made during the year are detailed in our year-end financial statements and our management information circular.This quarter, we also incurred $1.7 million in acquisition and integration cost associated with recently-announced transactions. As you know, these costs are expensed rather than capitalized and amortized over [ future ] periods.Our effective income tax rate for the current quarter was 26.3%. This is slightly higher than the 22% to 24% range that we had communicated in previous calls but in line with our Canadian and U.S. statutory rates of approximately 26% and modestly higher than the 23% rate in Q1 of 2018. And with the increase in our U.S.-based businesses, we believe that it is reasonable to expect our effective tax rate to be in the 25% range going forward.So as a result of all of the above, our net earnings attributable to our shareholders was 3.1 -- $3.3 million in 2019 compared to $1.7 million last year. This represents fully diluted earnings per share of $0.141 compared to $0.108 last year. As you know, we also report 2 non-IFRS earnings measures in our financial statements and MD&A. The purpose of the non-IFRS measures is to adjust for after-tax impact of certain nonoperating or nonrecurring or noncash expenses in the current quarter. These include integration, acquisition costs and share-based compensation expense.After making adjustment for these items, our adjusted net earnings to our shareholders is $5.2 million compared to $2.8 million in 2018 and that's an increase of 83%. On a per share basis, which is how we like to look at growth, adjusted net earnings was $0.219 per share this year compared to $0.182 last year, and that's a 20% increase year-over-year.In addition, our adjusted EBITDA for our shareholders in 2019 was $11.7 million compared to $5.8 million last year, a year-over-year increase of 102%. And again, on a per share basis, adjusted EBITDA was $0.497 per share compared to $0.375 last year. And that is an increase of 32.5% year-over-year. This significant double-digit growth year-over-year in our per share earnings and EBITDA again reflects the impact of deploying approximately $275 million in acquisitions throughout 2018.With the capital deployed, our adjusted per-share earnings and EBITDA now reflect a more realistic run rate for our current business. And as we exited Q1, we had additional borrowing capacity available on our credit facility, which we used to fund the Cress Funeral Services acquisition on April 1, and the Ziegenhein acquisition later in May. Our adjusted EBITDA profit margin for 2019 increased by 200 basis points to 23.7% compared to 21.7% last year, and we have seen significant improvement in the EBITDA profit margins in recent quarters as a result of the acquisition of higher-margin businesses, overall improvement in margins from comparable business units and spreading our corporate expenses across a broader earnings base.That is a trend we expect will continue as we integrate the acquired businesses and execute our growth strategy in the coming years. And just a few words on our balance sheet. As at March 31, 2019, we had a consolidated bank and other debt of approximately $94 million. We subsequently borrowed an additional $31 million to acquire Cress and Ziegenhein, bringing our total debt to $125 million. The net proceeds from the [ bought deal ] financing that closed in April provided us with a $138 million in cash. This together with the $14 million cash on hand leaves us with approximately $27 million of net cash on hand. This level of cash combined with our credit facility of $225 million provides the company with the necessary capital to fund the recently-announced acquisitions and will leave us with approximately $100 million in net consolidated debt, which will be well below our communicated comfort range of 2 to 2.5x debt-to-EBITDA leverage ratio. Also, a pipeline of future revenue currently sits on our balance sheet in the form of deferred revenue, cash, and pre-need trust funds and pre-need insurance contracts and this backlog of revenue currently sits at approximately $475 million representing a significant source of future revenue for the company. During our Q2 earnings call last year, we indicated that we were targeting approximately $25 million in organic CapEx spending over the next 18 to 24 months and $40 million over the next 3 to 5 years. This capital is to be deployed on growth initiatives such as cemetery expansion, on-site and standalone funeral homes, visitation centers and new mausoleum construction. During the current quarter, this year, we spent approximately $2.1 million on these shorter-term targets. Our maintenance capital expenditures for Q1 were $1.3 million, which is below our intended goal to be in line with annual depreciation expense, which is running at approximately $6.5 million.In closing, I'd like to mention a recent change in one of our accounting policies. Effective January 1, 2019, we implemented IFRS 16 dealing with leases. We elected to use the modified retrospective method of implementing this new standard, which records the transitional adjustments through the opening retained earnings without a restatement of prior periods' operating results. And I would point out that the [ competitive ] peer group -- our [ competitive ] peer group in the U.S. also chose to use this retrospective method of applying the new standard. The effect of this new accounting standard is to treat what were previously operating leases for our head office space, our leased funeral home locations and leased machinery and equipment as capital leases going forward. The capitalized leased assets are recorded as right of use assets in our property and equipment assets and a corresponding lease liability amount is included on the balance sheet as debt. The right of use asset is depreciated over the remaining useful life of the assets and an interest expense is recognized as the lease liability is extinguished. The right of use assets and the leased liability are disclosed in note 8 and 16 of our financial statements.There is no material impact to our net income as a result of implementing this accounting change. However, operating lease payments that were previously recorded as expenses are now replaced by depreciation and interest expense. And the net impact is to increase our adjusted EBITDA in the current quarter by approximately $325,000.Now I will now turn the call over to Andrew for some closing remarks.
Thank you, Joe. We are pleased to have delivered another solid quarter, and there continues to be positive progress towards our 2022 aspirational target, which was announced in August of 2018, particularly, on the organic and margin expansion fronts and in most markets on the organic growth front as well. We'd like to take this opportunity to point out that, while, our business specifically and industry more generally are very predictable, over the long-term, that predictability is linear in nature, however, it can vary widely over the short term. Our balance sheet remains in excellent condition, as Joe outlined, and we do remain well positioned to capitalize on both organic and acquisition opportunities as they present themselves. Joe and I will now open up the line to questions.
[Operator Instructions] Your first question comes from the line of Maggie MacDougall of Cormark.
I was wondering if you guys could give us a bit of an overview on the puts and takes for your organic growth in the quarter? It was pretty high in Q4 and it [ was better than ] flat in Q1. So curious if whether May have an impact on that? And whether there is any regional or other influences that are worth noting?
Yes, Maggie, it's a good question. I mean, the significant organic growth issue as Joe rightly pointed out, is really, the softness on the organic side was really focused on the Toronto market particularly. And in particular, in our Westminster cemetery on pre-need -- or I beg your pardon, on at-need crypt sales. It's still a large enough property and the -- that in conjunction with Park Lawn Cemetery here in Toronto are still large enough properties that softness on at-need sales on those markets can [ drag ] organic growth relative to our stated guidelines of, sort of, mid-single digits. So there is not anything systemic that we are worried about at all. I would point out that Q1 last year for the Toronto properties, particularly, was a very, very strong Q1. So we had a difficult comparative from an organic growth perspective specifically in Toronto. But the overall picture is quite -- remains quite positive. We had good organic growth coming out of a number of markets in the U.S. that would -- and almost all of our markets in the U.S. for that matter would be in line with that sort of mid-single-digit range. And that was driven by continued strength at Eternal Sunset in New Jersey, the former Lafayette property. So I don't think there is anything that we are particularly concerned about. We had, as said, softness in at-need at a couple of the larger properties here in Toronto but other than that, fairly stable throughout.
Okay. And then just changing gears. There is some commentary around, I believe, the margin outlook in your prepared remarks. And wondering if you could perhaps provide a bit more color on, sort of, a cadence we should expect over the next 6 to 12 months? As you continue with your U.S. integration. You've got a number of higher-margin acquisitions coming onto the platform that should have some impact as well. Just to make sure we're thinking about margin development correctly? And how that should play out over the next little while?
Yes. We expect it to be quite incremental in nature, Maggie. I don't think our, sort of, thinking about it has changed materially. I mean, I think, we were encouraged by some of the margin growth in this quarter. There were some really positive developments come out of Michigan, for example, in terms of their margin profile. But I think we would not have changed our thinking around margin growth that it would be 150 to 200 basis points or so a quarter is kind of what we're targeting over the next few years. Yes.
Okay. Great. And one final question. You recently announced a large acquisition in the U.S., curious what that does to your M&A pipeline? And what your opportunities look like going forward?
It changes the nature of the M&A pipeline. That the M&A pipeline would be more in line with the -- would be more, sort of, smaller tuck-in type opportunities in nature right now, rather than any -- but look, we still have a number of opportunities both in the pipeline formally and that we believe are coming down the road. So -- but clearly, we moved through a lot of that, within the last week or 10 days, but we do expect it to continue to fill up through the summer. So we're going to focus on getting these closed and onboarded. And look for more, sort of, smaller tuck-ins in nature going forward over the...
Your next question comes from the line of Scott Fromson of CIBC.
Just wondering with the recent acquisitions. There seems to be a bit of a dual-track strategy. You've got Kansas and Missouri being more traditional markets while Denver is more of a cremation or maybe I'll call it progressive market. Is the plan to take the experience from these progressive markets and apply to more traditional markets trying to get ahead of the curve?
I think not necessarily. I mean, I certainly -- we to the extent that the cremation rates in those more traditional markets uptick, I think we'll certainly have the tools to accommodate that. But I -- we're certainly not trying to proactively change those markets. But we certainly have the tools to react. I mean, I think fundamentally, the way we look at that these acquisitions and acquisitions more generally is we start from the bottom up and remain, sort of, agnostic to the market more generally and we're really sort of hyper-focused on the business and the local area market. And to the extent that there are attributes that we can take from those businesses and apply across the portfolio then we'll be doing that. I mean, certainly, the Horan transaction in Denver and Cress in Madison, the business in [ New Mexico ], many of our Canadian businesses those in British Colombia and Ottawa are already high-cremation markets, to begin with. So I think, we have a lot of, sort of, knowledge within our organization as to how to respond to those transitions from more traditional to more cremation-heavy.
Okay. That's great. And second, kind of, follow on that. Can you talk about the opportunities to build additional clusters in the Western U.S.? So building of the Horan acquisition and the new Denver regional headquarters?
Yes. So I think we're certainly looking at that the opportunity in Denver, and quite frankly in St. Louis and any of our existing markets there's opportunity to continue to build out cluster, clusters of assets and businesses. So we can get some operating leverage. The business in Denver and the business in St. Louis specifically in that and in Madison since we're [ talking to ] more recent opportunities. Those are all very good market share in each of their local markets. So to the extent that we can build out around those that will be hugely advantageous to us. There is nothing formally, as I said, we tend to look at these more on a standalone basis and don't necessarily take a view as to our ability or inability as the case may be to acquire other assets in the market when we look at these. But we certainly make assets that may come up for sale in a market more appealing if and when they do come up.
Okay. And final question. Can you talk about any developments and legislation in the [ anti-carbo ] states?
No. I don't think there's been any material developments on any of those states. No.
Your next question comes from the line of Paul Bilenki of TD Securities.
So I guess, first question. If you could just update us on how your integration efforts are progressing? I think you've mentioned last call that you were going to start on Citadel pretty soon after that call. Has that already begun?
Yes. It has. That is underway. I would describe the integration efforts to use a sports reference. We're probably in the sixth or seventh inning of the legacy integration efforts pre the recently announced and close transactions. So I think we're right on schedule on that respect.
Okay. And then how to -- what is the timeline look for the integration of new acquisitions? Is it sort of 12 to 18 months after closing? Or how should we think about that?
No. It will be faster than that. I mean our focus right now candidly is on getting them closed and across the line. As we have indicated, I think through the press release and some of the communications around that, those transactions, I mean, these are fantastic businesses. And they -- [ well ] , we do intend to integrate them, they will be accretive in almost all respects to our existing platform even in advance of the integration efforts. So I wouldn't expect any sort of material stuff to go on from an integration standpoint until -- back in the Q4 when we started -- early Q1, I think, we want to make sure that everybody is stable and in their seats and we try very hard not to -- in businesses like this, not to reinvent the wheel but go at it very, very incrementally. So I'm not sure if that answers your question, Paul, but that's certainly our plan.
No, that's perfect. And then maybe one, sort of, bigger-picture question. The [ funeral rule ] is slated for review this year and one of the possible talking points for them is putting or acquiring pricing online. I guess, generally, what are your thoughts about having pricing more available online? And how do you think that will impact consumer decision making or your strategy?
We're -- so first of all, we provide pricing online in Canada anyway. That's -- so we're used to that, sort of, paradigm. Secondarily, we believe, fundamentally, as a company that we provide good value for money. And that we provide excellent service and that we serve our families well. And we're not afraid of our pricing. And I think it represents in almost all cases, good value for money in the local markets. So I'm not -- we're not afraid of that at all. And I think it's a competitive advantage for us in some respects.
Your next question comes from the line of Johann Rodrigues of Raymond James.
I was just wondering if you had a sense as to what the comparable business EBITDA margin was like year-over-year.
Yes. I don't have that number at hand, but you'll -- we didn't quite look at it that way.
I think it is suffice to say, well, we don't have the specific number, I think it's reasonable to say that it would be lower than where we are at this point in time particularly because we've seen some really encouraging margin expansion out of the Michigan market. So I think it would be very, very -- it's not -- I think it's better than it has been. But to Joe's point, we don't analyze it necessarily that way.
Okay. And then one thing, Joe, I think you said you guys had a net cash position of $27 million. Was that -- so is that pro forma? At what point in time was that?
That would be, Johann, when we look at where we came out of the quarter and then if we took all of the transactions that we've announced and [ netted ] off the proceeds from the financing. We would sit in that position and [ have ] $27 million ready and available to deploy on the Horan and Baue acquisitions as they close later in the year.
Okay, so it includes Cress and did they...
Yes, Cress, anything that we have closed since the year...
So just not that -- just not Baue and Horan.
Right. After that we're looking at -- we believe we'll be in the $100 million net debt position after we close those transactions.
Your next question comes from the line of Stephen Harris of GMP Securities.
Just wanted to follow up on the impact of some of these acquisitions. You've given us some guidance on CapEx. The acquisitions you guys announced are actually quite significant. Are there other CapEx projects either ongoing or that you plan [ or ] those that will have a material impact on what you intend to do?
Not at this stage, Steve, not that will have a material impact, no. I mean, there is certainly opportunities but as I made reference to an earlier -- in an earlier comment, these businesses are -- what we're focused on getting them closed, getting certain of the, back of house, if you will, integration exercise going forward. But there is no immediate need or immediate, sort of, windfall-type opportunity to invest organic capital in either of these businesses. Although undoubtedly, there will be those that [ we are ahead ] of over time.
Okay. Good. And can you maybe update us a little bit on what you're thinking about balance sheet leverage? There's always been a thought that as your business grew and the base broaden and became more diversified that your ability to take on more debt in your capital structure would increase. And what's your thought there? And where do you think you might go? I mean, service corp is pushing for on their debt ratios, what's your thoughts? And do you think you'd ever get that high? Or are you just not as comfortable with debt there?
That's beyond our comfort zone, quite frankly. I think we're at 2 to 2.5x. That is our target for where we want to be for the foreseeable future, at least through to the end of the aspirational target, I think. We want to maintain considerable balance sheet, flexibility through that. Or as Joe rightly said, we have a laser-like focus right now on per share numbers. So we want to be extremely mindful of that. So -- but I think we want to maintain balance sheet flexibility as well. And that any sort of thought on going beyond 2 to 2.5x will come when we're at, I think, a broader and larger business than we are right now.
[Operator Instructions] Your next question comes from the line of Zachary Evershed of National Bank Financial.
Congrats on the quarter. So first question, I was hoping for more details on the timing of the organic growth projects in terms of timeline between spending, construction and realized benefits? Maybe how you expect that to ramp?
Depends on the nature of the project. The stand-alone funeral home, for example, or a funeral home combo operation on a cemetery, the capital can be invested over 10 to 12 to 14 months to build those buildings depending on their size and so on. But they are not immediately cash flow positive out of the gate. They take a bit of time to ramp. Conversely, a mausoleum project will provide some immediate cash flow benefits. And they can ramp, the second that they are opened and sign off on by regulatory authorities or whomever needs to sign off on them for sale. They can be providing cash on cash returns the second you open them. So it really depends on the nature of the product and the nature of the development. So I know that's a bit of a 2-pronged answer and not overly specific, but it really depends on what we're investing in.
No, that's actually helpful. And then second question, I was hoping you could dive into the topic of your business unit organization in the U.S. You guys referred to the geographic region on the last call but it seems like that's really firming up? And I was wondering if you could speak to where you expect accountabilities to fall in that framework? And what kind of benefits you are expecting?
Yes. So we have regional VPs in the U.S. and those regional VPs, obviously, are organized around sort of generally speaking geographic clusters of assets. And each of those VPs has sort of broad level oversight over those amalgamations of profit and loss statements. The -- beneath the regional VPs, there is the individual and local regional manager leadership and they have specific P&L responsibility. All of that flows up through to Jay Dodds who's the COO. So from a structural standpoint, we're actually relatively flat. There is only a couple of layers between the field and between Jay. And so that accountability is very, very -- is very clear, and we expect that to -- that will allow us to make relatively quick decisions and we do make quick decisions on market-level activities. And there is accountabilities and financial performance that are virtually identical up through the organization all the way through relating to financial metrics. So we're all aligned and those accountabilities all flow very quickly with not a lot of layers between them.
And your next question comes from the line of Brian Pow of Acumen.
I think most of my questions have been answered. Really just, sort of, wanted to understand a bit about the margin improvement you, sort of, outlined that, sort of, 150 basis points plus per quarter. How much of that is, sort of, driven from, let's say, the expense side? And how much is going to be driven from just driving better sales and that sort of thing?
A lot of it is driven by, sort of, tightening up cost. So as I think we mentioned, we -- a lot of the margin expansion we expect to see comes from those synergies that we expected when we announced the Signature transaction. And we invested in a lot of resource in Houston. So that we can take cost out of the field. So that's a significant driver on the cost side. And it is continuing to clean up and I think we've shown some considerable progress and this is a contributor in this quarter in the Michigan business. And as we've said before, I don't think we any longer have a revenue problem there. And certainly, feel pretty positive that the cost side of it and the sort of ownership over those local decisions in Michigan are driving tighter and better margins there. So I think we don't like to think about revenue synergies necessarily. We sort of have our organic growth targets, which we know are going to help modestly. And then really focus on the things that we absolutely can control, unlike at-need situations we can absolutely control our cost. So the focus certainly from our perspective is there.
Okay. When you look at some of your organic CapEx projects what's your comfort level in terms of your ability to control cost and make sure you don't see some inflation in there that would push up the cost?
Of the CapEx?
Yes.
Like the organic CapEx, specifically?
Yes.
Yes. So most of these contracts we are running are with suppliers that we've dealt with for -- and contractors that we've dealt with extensively. There are, as you can imagine, there are very few sort of specialist mausoleum contractors and they -- we have fixed price contracts with each of them. And we have -- we feel very -- we've got a long history of delivering mausoleum projects on time and on budget. So -- but generally speaking, all of the contracts that we're working on are fixed-price contracts with a relatively small number of contractors and so we have relationships with all of these folks [ and the field ] . And history is of managing them effectively. So -- and [ them ] quite frankly delivering on time and on budget across the board. So we do keep an eye on it very closely. It's an eye that is kept at the regional manager and they, sort of, at the VP level, the regional VP level in managing those projects and it all impacts the sort of, compensation calculations to deliver those on time and on budget.
Okay. And my final question just again around M&A. You're obviously making a name for yourself in the market with all of these successful acquisitions. What would you say the nature of competition? How are they behaving to your success? How should we think of your ability to do transactions? What sort of multiple ranges [ all of those stuff ] going forward?
I don't think our guided multiple ranges have changed significantly, if at all. Over the past year or so, we're certainly -- from a competitive standpoint, we are certainly seeing more opportunities that we mightn't have otherwise been shown prior to the Signature transaction of last year. So by virtue of that, we're going to bump into competitors that we mightn't have otherwise seen. So we tend to see a similar group of faces around a process. We still pass on more opportunities than we go forward on. And so because we are more selective that does limit the number of folks there. But we haven't seen the nature of those players or the multiples change significantly over the last 12 months. Just to clarify, Brian, I think that 150 basis point margin number, that's on a per annum basis, not on a -- and I made that reference in May to that's a per annum not on a per quarter.Per quarter that would be fairly ambitious for us.
Your next question comes from the line of Stephen Harris of GMP Securities.
Just one more follow-up for me. On the Michigan improvement, I know when we -- we met last December, there was a sort of, ambitious agenda there. That looked at everything from cost to processes to people. Can you -- now that you have some hindsight on where the improvement is, can you tell us a little bit more about what's been most impactful to the turnaround there? And just a little more detail on what's working?
I think the most impactful thing there has been a culture of ownership, right? I mean, one of the -- so that goes to people, Steve. And we've -- the way we've sort of -- and Mat Forastiere who runs that business, done an excellent job with it, is instilling a sense of confidence and ownership. And in people and their performance. And when people don't perform or are not prepared to perform, we move them along. And so we've trimmed at the margins a considerable number of people and we haven't done that necessarily through outright terminations and that type of things but we structured things to allow people to, sort of, self-select themselves in or out, particularly, on the sales side. So I think, sort of, changing from a cultural perspective. How people think about their own role and responsibility has been probably the biggest single change.
So the improvement is broad-based. I mean there is a lot of properties in Michigan. Are you seeing the change on a -- majority of the properties are turning around now?
Certainly, the Detroit ones. Those have been where the principal focus has been. And we've -- the revenue numbers there have also been relatively good and that's not necessarily a result of increased volume of sales. But we're doing a better job of capturing more revenue per transaction there. So -- but it's been largely focused on the Detroit markets because that's where the lion's share of the revenue and assets are.
And your next question comes from the line of Raveel Afzaal of Canaccord.
Just a quick question for you guys. When you look at the U.S. market, what are some of the retails where you don't currently have a solid presence? And you think could be attractive enough for a platform-type acquisition going forward?
As I've said before, Raveel, I think -- we think about it bottom up. So we don't necessarily look -- well, not necessarily, we don't look at all at regions specifically we will start with the business, the underlying business, assess how we think it fits with our culture and in the market. And then we will build out a case from there. So we are largely, if not entirely, agnostic to the regions. We don't look at regions and target businesses within that. We kind of look at it the other way.
Got it. And so wouldn't -- I mean, in terms of the macro headwinds or tailwinds wouldn't they vary significant -- from region to region. In some areas, [ exclamation ] rates could be going up significantly in the Bible Belt they would still be very low. So how does that [ play ] then in [to ] your overall decision on where to expand and where not to expand?
It doesn't. I mean, we -- it doesn't, at least not at the first initial pass at it. I mean, most of the businesses that we would look at are going forward have significant market share and significant leadership positions or the ability to be bolted on to businesses that have significant market share or significant leadership positions in the market. So we're not going to go into a heavy cremation market and buy a very traditional business. But again, the -- our business is really a series of micro market, like the average catchment areas is quite small. So you can look at a business within a market where the overall macro number might suggest that you shouldn't be operating a traditional business in that market. But they, sort of, four square miles around that cemetery or funeral home or whatever it happens to be. It could still be quite traditional. So we look at factors like is the community rolling over and that type of thing. Is it gentrifying what have you. But it remains a very, very local business. So the macro trends, while instructive, don't necessarily guide our decisions.
Perfect. And just secondly, if you can just remind us, where you guys are tracking against the $25 million in organic growth CapEx that you guys have underway over the next 12 months?
Yes. We announced that -- revealed last year, we had spent $8 million. I believe it was another $2 million here. So we're getting close to half of it. There's a couple of larger projects that are still in the planning and approval stage at the moment. But I think we are progressing right along where we thought we would be when we announced the $25 million.
And there are no further questions in the queue at this time. I turn the call back over to Andrew Clark for final remarks.
Well, thanks, everybody very much, for your engagement, for your questions today. And for your support. We look forward to continuing to build this business over the coming months and years. Thank you.
This concludes today's conference call. You may now disconnect.