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Park Lawn Corp
You don't have any saved screeners yet
Good
day,
ladies
and
gentlemen,
and
welcome
to
the
Park
Lawn
Corporation
fourth
quarter
year-end
2021
earnings
call.
At
this
time,
all
participants
have
been
placed
on
a
listen-only
mode,
and
the
floor
will
be
open
for
questions
and
comments
after
the
presentation.
It
is
now
my
pleasure
to
turn
the
floor
over
to
your
host,
Jennifer
Hay,
General
Counsel
at
Park
Lawn.
Ma'am,
the
floor
is
yours.
Thank
you,
Holly,
and
good
morning,
everybody.
This
is
Jennifer
Hay
and
I
am the
General
Counsel
at
Park
Lawn.
Thank
you
for
joining
us
on
today's
fourth
quarter
2021
earnings
call.
Today's
call
is
being
recorded
and
a
replay
will
be
available
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
meanings
under
IFRS.
Please
see
our
public
filings
for
additional
information
regarding
our
non-IFRS
financial
measures,
including
for
reconciliation
to
the
nearest
IFRS
measures.
I
will
now
hand
the
call
over
to
Park
Lawn
CEO,
Brad
Green,
to
open
our
discussion
today.
Thank
you,
Jennifer,
and
good
morning,
everyone.
In
addition
to
Jennifer,
with
me
on
our
call
today
is
our
CFO,
Dan
Millett.
We
had
a
solid
fourth
quarter
that
capped
yet
another
strong
financial
year
of
financial
performance
and
growth.
During
Q4,
we
experienced
revenue
growth
of
10%
to
roughly
CAD
99.5
million
over
a tough
comparable
quarter
from
2020.
And
for
the
full
year,
saw
revenue
growth
over
2020,
a
14%
to
approximately
$369.5million
despite
significant
foreign
exchange
headwinds
year-over-year.
As
we
continue
to
see
a
lasting
effect
of
COVID-19
in
the
communities
we
serve,
revenue
growth
from
our
comparable
businesses
during
the
quarter
grew
modestly
by
0.7%
and
resulted
in
a
10.4%
increase
from
the
prior
year
when
excluding
the
foreign
exchange
headwinds.
Also
for
the
quarter,
Park
Lawn
achieved
a
4%
increase
year-over-year
in
adjusted
EBITDA
to
CAD 25.1
million
and
an
approximate
23%
margin.
For
the
fiscal
year
2021,
we
saw
a
20%
increase
in
adjusted
EBITDA
to CAD
95.6
million
and
a
25.9%
margin.
As
we
expected,
we
saw
a
decrease
in
comparable
business
call
volume
in
the
quarter
relative
to
the
COVID
impacted
Q4
2020.
However,
we
continued
to
see
average
revenue
per
call
increase
as
our
client
families
have
continued
to
be
very
interested
in
celebrating
and
memorializing
their
loved
ones
after
being
told
that
they
could
not
do
so
during
the
pandemic
restrictions.
Year-over-year
in
our
comparable
businesses,
the
average
revenue
per
call
grew
by
approximately
9%.
From
the
cemetery
perspective,
the
pandemic
continued
to
act
as
a
significant
triggering
event,
supporting
strong
pre-need
sales
activity
and
as
we
mentioned
previously,
we
expect
that
the
triggering
effect
will
continue
to
positively
impact
pre-need
sales
as
the
pandemic
will
not
be
forgotten
any
time
soon.
Turning
to
acquisitions,
to
put
it
bluntly,
we
had
both
a
very
successful
quarter
and
year
in
executing
our
growth
strategy.
During
the
fourth
quarter,
we
closed
on
five
businesses,
which
added
nine
funeral
homes,
three
cemeteries
and
one
on-site
to
our
existing
portfolio.
Significantly,
the
Ingram
business
that
we
closed
in
December
provides
us
entry
into
another
new
high
growth
market
in
Georgia.
Throughout
the
year,
we
completed
a
total
of
10 acquisitions,
deploying
approximately
$125.7
million.
The
combined
transactions
represent
a
total
of
6,306
calls,
1,229
internments,
coming
from
26
stand-alone
funeral
homes,
7
stand-alone
cemeteries
and
4
on-sites.
All
of
these
acquisitions
were
added
within
our
range
of
previously
stated
multiples.
I'd
now
like
to
turn
the
call
over
to
Dan,
who
will
review
our
Q4
financial
results
in
more
detail.
Thank
you,
Brad,
and
good
morning,
everyone.
You'll
find
a
detailed
breakdown
of
our
fourth
quarter
results
in
our
financial
statements
and
MD&A,
which
are
available
on
our
website
and
on
SEDAR.
My
comments
this
morning
will
focus
on
the
operating
results
for
the
fourth
quarter.
As
Brad
mentioned,
Q4
of
2020
was
anticipated
to
be
and
was
a
tough
comparable
for
Q4
2021.
Despite
this,
we
were
still
able
to
achieve
total
net
revenue
growth
of
approximately
10.1%
over
the
quarter
from
CAD
90.4
million
to CAD
99.5
million,
while
continuing
to
experience
a
foreign
exchange
headwind
of
approximately
3%
due
to
the
appreciation
of
the
Canadian
dollar.
As
we
previously
shared,
approximately
90%
of
our
revenue
is
generated
from
our
US
businesses.
So
this
headwind
can
have
a
meaningful
effect
on
our
results.
However,
beginning
in
2022,
we
are
transitioning
to
a
US
dollar
reporting
currency,
which
will
help
reduce
the
volatility
experienced
from
foreign
exchange
differences.
Revenue
growth
from
our
comparable
businesses grew
modestly
at
0.7%
year-over-year
excluding
the
foreign exchange
headwind,
but
decreased
by
2.5%
when
accounting
for
the
foreign
exchange.
Impacting
this
growth
was
three
mausoleums
delivered
in
Q4
2020
providing
approximately
CAD 3.6
million
of
revenue
at
a
very
high
margin
and
no
mausoleums
were
delivered
in
Q4
2021.
However,
looking
forward,
as
we
see
the
death
rate
continue
to
be
less
impacted
by
COVID
and
COVID
related
deaths,
we
expect
the
growth
in
our
comparable
businesses
to
normalize
further
into
2022.
Also
during
the quarter,
the
company's
operating
expenses,
including
general
and
administrative,
advertising
and
selling
and
maintenance
expenses,
increased
by
approximately
CAD
5.6
million
for
the
three-month
period
ended
December
31, 2021,
over
the
same
period
in
2020.
This
increase
is
primarily
the
result
of
acquired
operations,
partly
offset
by
the
impact
of
foreign
exchange.
As
a
result
of
another
quarter
of
exceptional
sales
and
a
commitment
to
operations,
our
net
earnings
attributable
to
PLC
shareholders
for
Q4
2021
was
approximately
CAD
8.96
million,
or
CAD
0.26
per
share,
compared
to
CAD
6.26
million,
or
CAD
0.21
per
share,
for
Q4 2020,
representing
a
43%
increase
in
the
aggregate.
Furthermore,
the
adjusted
net
earnings
attributable
to
PLC
shareholders
for
the
fourth
quarter
of
this
year
was
approximately
CAD 12.8
million,
or
CAD
0.37
per
share,
compared
to
CAD
10.5
million,
or
CAD
0.35
per
share,
in
Q4 2020.
This
represents
an
increase
of
approximately
22%
in
adjusted
net
earnings.
The
net
earnings
and
adjusted
net
earnings
on
a
per
share
basis
were
impacted
by
the
equity
raise
completed
in
September
of
the
year,
as
approximately
CAD 4.5
million
more
shares
were
outstanding
on
a
diluted
basis
year-over-year.
As
Parkland
continues
to
deploy
its
equity
into
accretive
acquisitions,
we
expect to
see
further
growth
in
our
per
share
metrics.
Turning
now
to
the
balance
sheet.
We
ended
the
year
with
approximately
a
$110
million
drawn
on
our
revolving
credit
facility.
Other
debt
of
approximately
CAD
17
million,
finance
leases
of
approximately CAD
6
million,
and
cash
on
hand
of
approximately
$26
million.
Excluding
our
debentures,
our
net
debt
was
approximately
a
CAD
107
million
at
December
31, 2021.
At
the
end
of
December,
our
leverage
ratio
was
approximately
0.98
times
based
on
the
terms
of
our
credit
facility
and
approximately
1.78
times
including
outstanding
debentures.
As
previously
indicated,
as
we
move
through
the
upcoming
quarters
and
continue
to
expand
our
business
through
acquisition
activity,
we
expect
the
leverage
ratio
to
gradually
increase.
We
estimate
our
current
liquidity
is
in
excess
of
CAD
200
million,
which
is
readily
available
to
be
deployed
in
ongoing
in
future
organic
and
acquisition
growth
initiatives.
Finally,
as
we
close
out
2021,
I
want
to
highlight
again
that
beginning
January
1, 2022,
we
have
transitioned
to
a
US
dollar
financial
presentation
currency
to
minimize
some
of
the
impact
that
our
businesses
sustained
from
foreign
exchange
risk.
So,
starting
with
our
next
quarter,
Q1
2022,
we'll
be
reporting
in
USD.
I
will
now
turn
the
call
back
to
Brad
for
some
closing
comments
regarding
what
you
can
expect
as
we
move
into
2022
and
beyond.
Thanks,
Dan.
As
you
know,
in
2018,
we
announced
a
long-term
aspirational
goal
of
achieving
CAD
100
million,
which
equates
to
about
$79
million
– US
– and
pro
forma
adjusted
EBITDA
by
the
end
of
2022.
Although
we
have
just
started
2022, before
we
consider
any
impact
of
potential
acquisitions
this
year,
we
expect
this
number
will
be
exceeded.
We
began
to
anticipate
this
would
be
the
case
in
early
2021
as
does
many
of
you
listing
on
the
phone.
As
a
result,
we
began
an
extensive
internal
strategic
process
in
the
early
part
of
2021
that
focused
on
our
goals
beyond
2022.
And
I'm
certainly
glad
that
we
did,
because
we
started
getting
more
and more
questions
on
that
subject
as
2021
drew
to
a
close.
As
a
result
of
this
strategic
process,
we
have
a
new
long-term
aspirational
target
to
achieve
by
the
end
of
2026
which
is
as
follows.
Park
Lawn
expects
that
it
will
achieve
a
total
of
$150
million,
a
pro
forma
adjusted
EBITDA,
translating
into
adjusted
net
earnings
of
$2.00
per
share.
Before
I
go
through
how
we
plan
to
get
there,
I
think
it's
important
to
again
emphasize
that
we
are
changing
our
currency
presentation
for
2022
that Dan
just
mentioned.
We're
announcing
this
aspirational
target
in
US
dollars,
not
Canadian
dollars,
which
is
different
than our
2018
goal.
So
in
US
dollars,
we
plan
to
go
from
$79
million
to
$150 million
in
pro
forma
adjusted
EBITDA
by
the
end
of
2026.
Now,
how
do
we
plan
to
reach
this
new
five
year
aspirational
goal?
We
know
where
we
came
from and
we
know
how
we
got
here,
so
we
know
what
it
will
take
to
return
to
goal.
First,
as
a
premier
operating
company
in
funeral
and
cemetery
businesses,
we
will
continue
to
capitalize
on
our
ongoing
operational
improvements
in
both
our
existing
and
acquired
businesses
to
continue
revenue
growth
and
margin
expansion.
Second,
we
expect
operational
and
financial
efficiencies
through
the
full
implementation,
deployment
and
integration
of
our
proprietary
industry
software
system.
Third,
our
organic
growth
opportunities
will
continue
to
play
a
part
in
these
goals, such
as
continue
to
identify
on-site
opportunities
at
existing
cemeteries,
like
you
can
see
with
our
completed
on-site
in
Houston,
our
almost
completed
Westminster
project
in
Toronto,
or
what
we've
just
begun
at
Waco
Memorial
Park,
one
of
our
Texas
properties.
Fourth,
this
expansion
and
addition
of
new
inventory
at
our
existing
cemeteries,
which
will
include
things
like
new
mausoleums,
new
permanent
placement
offerings
for
cremated
remains
and
further
development
and
expansion
of
gardens
for
traditional
burials
for
private
estates.
Finally
and
probably
the
most
important,
we
fully
expect
to
continue
to
pursue
acquisition
opportunities
in
high
growth
markets
in
both
the
US
and
Canada.
As
you've
seen
in
the
past
few
years,
our
focus
has
transitioned
to
high-performing
businesses
in
strategic
markets
as
these
businesses
tend
to not
only
integrate
more
quickly,
but
are
generally
more
accretive.
You've
also
seen
us
focus
on
strategic
tuck-in
opportunities,
where
the
addition
of
a
new
rooftop
offers
considerable
benefit.
We
expect
to continue
with
the
pace
of
$75
million
to $125
million
US
in
acquisitions
per
year,
depending
on
the
opportunities.
We
are
excited
of what's
to
come
as
we
look
into
2022
and
beyond.
Finally,
I
want
to
finish
our
call
today
by
commending
our
teams
for
their
extraordinary
performance
in
all
respects,
especially
during
the
last
two
years
in
the
most
unusual
and challenging
of
times.
Through
their
hard
work,
dedication
and
achievement,
we
as
a
company
have
been
able
to
deliver
to
our
shareholders
tremendous
growth
and
continued
opportunity
since
the
end
of
June
2018.
Since
that
time,
we've
delivered
an
increase
of
over
300%
in
adjusted
EBITDA
and an
increase
in
adjusted
net
earnings
per
share
of
119%.
As
we
have
repeatedly
stated, we
are
not
a
consolidator
but
an
operator
of
funeral
homes and
cemetery
businesses
that
grows
through
acquisitions.
It
is
this
vision,
which
is
shared
by our
entire
team
that
makes
us
different,
makes
us
successful
and will
continue
to make
us
successful
as
we
look
towards
2026.
That
concludes
our
prepared
remarks
and
I
will
now
turn
it
over
to
the
operator
for
any
question.
Ladies
and
gentlemen,
the
floor
is
now
open
for
questions.
[Operator Instructions]
Your
first
question
for
today
is
coming
from
George
Doumet.
Please
announce
your
affiliation,
then
pose
your
question.
Hi,
guys.
Good
morning.
I
just
wanted
to ask
you
a little
bit
about
your
long-term
aspirational
EBITDA
guidance
of
$150 million – US,
it
looks
like
it
implies
about
50%
CAGR.
Should
we
assume
that
a
third
of
that
maybe,
Brad,
is
organic
and
two-thirds
of
it
is
M&A,
kind
of
in
line
what
we've
been
doing?
Yeah, George.
Truth
be
told,
I
think
a
little
bit
more
right
now
would
be
on
the
acquisition
side,
as
we've
gotten
a
lot
of
our
existing
businesses
and
made
improvements
to
those
businesses.
And
as
we
in
the
near-term
feel
a
little
bit
of
effect
from
COVID,
I
think
that's
going
to
be
a
little
bit
more
weighted
to
the
acquisitions.
But
kind
of
as
we
get
further
along
in
our
goal,
I
think
that
will
start
to
flip
maybe
a
little
bit
closer
to
what
you're
seeing
as
we
see
some
of
the
COVID
stuff
eliminate
and
we
get
into
some
of
that
boomer
generation.
Okay.
That's
[ph]
for a (15:27) good
segue
for
I
guess,
my
next
question.
Maybe
look
at it
specifically
for
2022, do you
guys
think
you
can
actually
maybe
grow
organically
at
all?
I ask
that
because
to your
US
competitors, seem
to
have
guided
for
quite
a
bit
of
revenue
decline
in
2022. So,
I'm
just
wondering what
you
guys
are
thinking
organically
speaking?
Yeah.
George, I think,
our
kind
of
guidance
would
be
the
same
as
we
did,
as
we
suggested and
at
the
end
of
the
Q4
last
year.
And
that
is
we
came
into
this
year
expecting
pretty
much
that
with
the
comps
that
we
had,
we
would
have
pretty
much
flat
organic
growth.
We
knew
that
we
would
grow
by
acquisition
or
thought
we
will
grow
by
acquisition,
so
we
basically
said
that
compared
to
the
other
folks
that
are
publicly
traded
out
there,
that
we
felt
that
we
would
grow
no
matter
what
the
impact
of
COVID
was.
And
I
guess
you're
referring
to
SCI
came
out
at
that
same
time
last
year
and
they
had
a
much
different
opinion
on
what
they
saw
the
market
was
going
to
do.
They
were
modeling
fewer
volume
going
down.
They
were
modeling
funeral
averages
going
down.
They
thought
people
would
be
reluctant
to
gather
in
large
groups.
These
were
all
things
that
they
said
during
their
conference
call
this
time
last
year.
And
we
just
took
a
different
approach.
I
said
during
our
conference
call
at
this
exact
time
last
year
in
response
to
a
question
from
Scott
Fromson
that
we
respect
those
guys
and
understand
that
they
have
modeling
and
they're
smart.
But
we
took
a
different
approach.
We're
doing
it
again
this
year,
the
same
way.
They're
seeing
a
significant
pullback
because
they
believe
that
the
deaths
that
occurred
during
the
pandemic
will
all
be
pulled
forward
into
2022. We
just
don't
believe
that's
the
case.
We
believe
it will
be
spread
out
more
than
that.
So,
we'll
say
the
same
thing
that
we
did
last
year.
We
expect
modest
organic
growth,
because
some
of
our
tougher
comparables,
you
just
saw
one,
we'll
have
another
one
in
Q1
of
2022,
and
then
it
feels
like
things
are
getting
back
to
normal
for
us.
So,
we'll
see
some
organic
growth,
but
certainly
not
a
pullback.
So,
we
got
it
right
this
year,
maybe
our
competitors
will
get
it
right
this
year
is
the
best,
but
we
feel
pretty
strong
about
that
answer.
All
right. Appreciate
your
comments.
Thank
you,
Brad.
Your next
question
is
coming
from
Irene
Nattel,
please
announce
your
affiliation,
then
pose
your
question.
Good
morning,
everyone.
RBC
Capital
Markets.
I
just want
to
continue
the
discussion
around
the
2026
guidance,
I'm
trying
to
kind
of triangulate
the
$75
million to
$125
million
in
M&A
with
the
$2
in
EPS,
okay,
and
$150
million
in
EBITDA.
And
it
kind
of
seems
to
us
that
at sort of
the
lower
end,
you
can
get
to
the
$150
million,
but
it
kind
of
looks
like
maybe
at
the
higher
end
you're
anticipating
funding
some
from
incremental
equity.
Could
you
walk
us
through
how
you're
thinking
about
all
of
that?
Yeah.
I'll
start
the
answer
and
then
Dan
can
probably
add
some
color
when
it
comes
to
what
the
capital
stack
might
look
like.
This
is
about
as
honest
as
we
– and
transparent
as
we
can
be,
Irene,
which
we
do
frequently.
We
don't
know
who's
going to
be
for
sale
in
which
year,
and
we
don't
know
exactly
where
that
will
fall.
So
it's
very
possible
that
you
could
see
a
year
when
we
would
have
$50
million
in
acquisitions
and
follow
it
up
by
a year
that
we
would
have
$250
million
in acquisitions,
or
we
could
hit
somewhere
in
that
middle
range
or
somewhere
between
that
$75
million to
$150 million
we
could
– or
$125
million, we
could
kind of
get
that
range
every
year
for
five
years,
because I'm
not
sure who's
going
to
come
up,
when.
Dan
can
add
a
little
bit
more
color
to
this,
but
it's
spread
out
over
the
time,
we
believe
that
we
can
reach
this
goal
without
raising
any
additional
equity.
Obviously,
if
something
happens
more
quickly
that
might
change
that
theory,
or
we
might
go
and
raise
the
money
in
some
different
manner.
But
right
now,
we
believe
that
if it
comes
to
in
a
steady
state, kind
of
like
what
you
saw
in
2021,
we
can
finance
this
without
raising
additional
equity.
Yeah.
Irene,
I
concur
with
Brad.
It
all
depends
on
what
comes
when
and
as
I've
always
said,
we're
constantly
looking
at
our
capital
stack.
We
know
we
have
the
ability
to
use
more
debt
right
now,
so
it's
all
a
function
of
what's
out
there
at
any
given
point
in
time.
That
is
incredibly
helpful.
Thank
you.
I
just want
to
ask
about
something
else,
which
is,
I
noted
there's
no
return
metrics
that
are
included
in
these
financial
targets
as
you
and
the
board
were
thinking
this
through.
Can
you
talk
about
your
view
on
ROIC
and
improving
ROIC
on
a
go
forward
basis?
Yeah.
Irene,
it's
Dan,
again.
ROIC
is
something
we
are
continuing
to
think
about,
we
are
continuing
to
look
at.
Simply
put,
it's
primarily
a
function
of organic
growth.
Our
return
on
equity
is
going
to
be
more
of
a
function
on
how
we
can
grow
as
we
just
kind
of
talked
about,
we
think
we
can
use
a
lot
more
debt
from
where
we
are
today
and
fund
a
lot
of
this
growth
through
the
use
of
debt
in
one
way,
shape
or
form.
We
could
have
put
out
five,
six,
seven,
eight
different
metrics,
but
I
think
it's
just
a
lot
to
digest
and
really
what
we
wanted
to be
true
to
who
we
are
and
kind
of
how
we
talk
about
things.
Ultimately,
we
want
to
display
our
growth
capability
through
the
use
of
EBITDA,
which
is
something
that
we
– and
indirectly
our
EBITDA
margin,
which
is
something
we
have
a
little
bit
more
control
as
of that – the
company.
But
also
want to
be
true
to
our
capital
stack.
And
that's
why
we
have
kind
of
the
EPS
metric
out
there
as
well.
So,
that's
kind
of
how
we
looked
at
it
and
we
wanted
to
keep
it
simple
and
straightforward
in
how
we
kind
of
look
at
it
as
a
management
team
and
as
a
company.
That's
really
helpful.
Thanks.
One
final
one
from
me,
sorry.
Brad,
you
alluded
in
your
remarks
or
maybe
Dan,
to
the
software
platform.
Can
you
remind
us
of
where
you
stand
with
that
and
when
it'll
be
fully
rolled
out
and
operational?
Sure.
And
Irene when
I
put
that
comment
in
there,
I
actually
said
to
Jay,
and
this
will
cause
Irene
to
ask
me
where
FaCTS
is.
So
at
least
I
predicted
that
appropriately.
So,
I
think
we
would
have
rolled
out
FaCTS
faster
had
it
not
been
during
the
pandemic,
but
we
don't
allow
that
to
be
an
excuse
around
here.
So
if
I
don't
allow
that,
I
can't
really
use
it
as
one.
So,
I
will
just
say
that
just
rolling
out
FaCTS
took
longer,
because
the
project
was
probably
bigger
than
we
anticipated.
It
is
going
quite
well.
All
of
our
funeral
homes
are
up
and
running
on
FaCTS
right
now.
I'm sorry –
I'll
just
said
it
backwards,
all
of
our
cemeteries
are
up
and
running
on
FaCTS
right
now
and
that's
what's
bluntly,
that's
what's
creating
the
financials
that
we
just
reported.
So,
it's
working and
working
quite
well.
We
plan
on
having
all
of
our
funeral
homes
online
by
the
end
of
this
year,
in
the
same
manner
and
that
will
mean
that
at
least
the
foundational
aspect
of
this
software
is
fully
in
place.
And
so,
just
to
anticipate
the
next
question,
it is
yes,
it's
going
well
enough
that
I've
finally
allowed
an
initial
conversation
on
what
do
we
do
with
this
great
product
for
the
rest
of
the
people
in
our
industry
that
may
or
may
not
need
it,
but
we're
not
even
close
to
understanding
what
that
looks
like
yet.
But
at
least
we
open
the
door
to
allow
those
discussions
to
start.
That
is
great,
thank
you.
Thank
you.
Your
next
question for
today
is
coming
from
Scott
Fromson.
Please
announce
your
affiliation,
then
pose
your
question.
Thank
you.
CIBC.
And
good
morning,
gentlemen.
Morning,
Scott,
[indiscernible]
(24:05)
a
question
on
labor
inflation.
Last
conference
call
you
mentioned
that
you
were
seeing
some
labor
inflation,
but
it
was
nothing
compared
to
other
industries.
Can
you
update
us
on
the
labor
situation,
in
terms
of
wage
inflation
and
worker
shortages?
Yeah,
so
it's
effectively
the
same.
And
by
that,
it's
always
been
a
struggle
to
find
really
good
funeral
directors
and
really
good
managers
in
certain
markets
and
that
hasn't
changed.
And
so,
I'm
really
referring
to
our
licensed
personnel
in
that
regard.
When
you
have
the
two
corporate
offices,
we
have
one
sitting
in
Houston
and
one
sitting
in
Toronto,
you
obviously
have
a
competitive
market
there
for
people
who
want
the
same
type
of
employees
that
are
sitting
in
those
buildings,
accountants
and
IT
professionals
and
administrative
folks
and
things
like
that.
So
we
see
some
of
that
pressure
here
in
Houston
and
in
Toronto,
for
example.
But
when
you're
really
talking
about
the
bulk
of
our
employees,
the
answer
is
it
doesn't
change and
it's
really
not
going
to
change,
because
those
folks
want
to work
for
us,
they
probably
worked
at
the
same
place
for
years
and
years
and
years,
and
they're
not
really
interested
in
picking
up
and
moving
to
the
funeral
home
across
the
street
or
the
competitor
because
they
want
to stay
in
the
industry
and
work
with
us.
And
I
don't
see
that
changing,
so
you'll
see
us
having
to
deal
with
what
I
would
call
the
base
inflation
like
everyone
else
has
to
deal
with
and
we
will,
as
we
need
to
on
a
business-by-business
basis,
if
we
start
seeing
wage
pressure
through
pricing.
But
I
just
don't
see
it
impacting
us
or
at
least
it
hasn't
yet,
knock
on
wood.
So
that
would
be
my
update
to
that
question.
And
what
about
merchandise,
how
do
you
deal
with
inflation
on
the
merchandise,
pre-need
contracts
as
revenue
is
realized?
And
how
is
the
Merchandise
and
Service
Trust
Fund
set
up
to
deal
with
this
inflation?
Well,
I don't
know
that
you would
necessarily
say,
it's
set
up
to
deal
with
this
type
of
inflation.
But
I'll
break
the
question
down
into
two.
Most
of
our
merchandise
that
we're
providing
when
it
comes
to
the big
dollar
amounts,
are
through
our
casket
suppliers
and
we
have
a
good
relationship
with
them
and
we
manage
that,
the
two
of
them.
And
where
they've
had
price
increases
or
struggles,
we've
gone
back
to
them
and
explained to
them
how
that
would
or
would
not
work
for
us,
and
we've
been
very
successful
in
that
regard.
So
we're
not
seeing
pressure
in
some
of
our
larger
merchandise.
We're
seeing
delivery
problems,
which
is
really
not
what
you're
asking.
But
I'll
just
say
that
we'll
sell
a
monument
and
where
it
used
to
take
three
to
six
weeks
to
get
that
in
and
be
able
to
deliver
it
and
then
recognize
the
revenue,
we
have
a
lot
of
sales
on
our
books
right
now
that
we've
sold
it, but
we
can't
get
it
in.
If
we
can't
get
it
in,
we
can't
recognize
it,
different
problem.
But
that's
going
on.
And
the
Merchandise
or
Trust
Funds
are
set
up,
obviously
you
know
how
that
works.
There's
a
gain
in
the
trust,
it
spreads
out
across
the
contracts
and
those
contracts
are
recognized.
We
get
that
that's
partially
offset
the
inflation –
it
partially
offsets
the
inflation,
but
there's
no
– if
the
inflation
starts
at
7%
or
10%
or
12%
or
it
goes
out
of
control,
there's
trust
funds
aren't
set
up
or
designed
to
handle
that.
Dan
wants
to add
something,
he's waving
at
me
on
the
television.
.
Yeah.
Scott,
I'll
just
say,
those
trust
funds
too
are
set
up
like
any
other
fund,
right?
And
we
deal
with
our
advisors
on
a
regular
basis,
looking
at
the
allocations
in
our
fund,
where
we're
investing,
who
we're
investing
with.
And
as
circumstances
change
within
the
global
market,
we
have
the
ability
to
pivot,
change
our
investments,
as
well.
So
that's
one
thing
we
do.
It's
just
a
very
close
relationship
between
our
investment
advisers
and
our
management
team.
Okay, thanks,
that's
helpful.
Just
a
final
question,
can you
put
a
percentage
figure
on
average
revenue
per
call
increase
and
if
you
can,
broken-down,
between
funeral
home
and
cemetery?
The
average
revenue
per call
was
9%
this
quarter,
that's
on
the
funeral
home
side.
And
so,
when
you
hear
us
talk
about
that
it's
always
on
the
funeral
home
side.
I'm
not
even
sure
that
the
other
publicly
traded
companies
attempt
to
do
an
average
call
on
the
cemetery
side.
And
the
reason
why,
going
back
to
the
previous
answer,
what's
recognized
or
not
recognized
in
a
particular
quarter,
may
or
may
not
have
any
relation
to
the
call
volume.
So
it
just
gets
to
be kind
of
a
wonky
thing
to
look
at.
So
when
you've
heard
us
talk
about
the
average
per
call
over
the
last,
I
don't know,
eight
quarters,
you're
talking about
funeral
homes and
that
was
9%
this
quarter.
That
sounds
good.
I'll
turn
it
over.
Thank
you.
Your
next
question
is
coming
from
Maggie
MacDougall.
Please
announce
your
affiliation,
then
pose
your
question.
Thank
you.
Stifel.
Good
morning,
guys,
thanks
for
taking
my
questions.
Good
morning,
Maggie.
So,
first
off,
on
the
new
five-year
target,
we
talked
a
little
bit
about
the
role
M&A
versus
organic
growth
will
play.
One
question
I
did
have
was
around
the
profitability
assumptions
that
go
into
that
goal.
Can
you
tell
us
how
you
thought
through
the
margin
profile
of
the
business
with
regards
to
setting
out
those
targets,
keeping
in
mind,
more
recently,
the
acquisitions
you've
been
doing
do
seem
to
be
at
a
quite
a
favorable
margin
versus
where
some
of
them
may
have
historically
been?
Yeah.
Maggie,
and
part
of
the
reason
we
actually
didn't
put
a
target
out
there
for
margin
is
because
I
think
it
starts
to
become
a
just
a
little
bit
more
of
a
math
game.
We
are
buying
higher
quality
and
better
businesses,
and
as
we
talk
about
near
term
organic
growth
being
a
little
bit
muted
and
growing,
it
gets
a
little
bit
more
difficult.
So
when
we
think
about
our
margins,
we're
looking
at
the
market
share
opportunities
that
we
have,
pricing
opportunities,
development
opportunities.
And
we
do
see
organic
growth
happening
over
that
five-year
period,
but
again
more
weighted
towards
the
end
and
that
flow
through,
that
incremental
growth
flowing
through
to
the
bottom
line
at
a
little
bit
higher
margin
than
kind
of
what
we've
seen
actually
in
the
past.
So
that's
how
we're
thinking
about
it.
Yeah.
Maggie,
I'm
going to
add
something to
that,
which
will
make
Dan
nervous.
I
don't know
if
you
noticed
when
Scott
asked
me
the
financial
question,
he
was
dying
to
get
involved,
because
they
don't
mind
me
running
funeral
homes
and
cemeteries
or
making
acquisitions,
but
when
I
start
talking
about
financial
stuff
too
much,
the
team
gets
nervous.
But
the
reason
why
I
– the
reason
why
we
– in
my
opinion,
we
really
wanted to
move
away
from
that
focus
on
the
margin
is,
when
that
goal
was
put
in
place,
it
was
really
built
around
taking
the
legacy
acquisition,
or is to get
the
legacy
acquisitions
that
Park
Lawn
had
fully
integrating
them
with
what
we
were
doing,
with
layering
on
some
acquisitions.
And
we
said,
okay,
if
we
do
this
right,
we
should
be
about
26%
by
the
end
of
2022.
Okay.
So
we
did
that
right
and
we're
at
26%
before
the
end
of
2022.
What
Dan
just
said,
I
would
say
a
little differently
from
my
standpoint,
what's
going to
drive
that
margin
now
is,
I
mean
small
incremental
improvement
on
those
current
operations, because
you
certainly
can't
expect
it
to
do
what
it
came
from
to
where
it
is
now.
But
it's
really
going
to be
driven
by
the
acquisitions
we
make.
And
I
can't
tell
you
what
the
mix
of
those
acquisitions is
going
to
be,
I
can't
tell
you
what
state
they're
going
to
be
in
at
the
time we
buy
them.
And
until
we
know
what
the
businesses
are,
I
can't
tell
you
where
we
can
improve.
So,
we
didn't
want
to put
a
goal
out
there
that
we
knew
that
we
couldn't
control
or
I
mean,
maybe
we
blow
it
out
of
the water,
maybe
we
don't.
But
either
way,
we're
still going
to
buy
the
good
businesses.
So,
it
just
didn't
make
sense
to
us.
So,
that's
my
non-financial
answer
to
that
question.
Thank
you.
Makes
sense.
Next
question
I
had
was
around
your
M&A
pipeline
and
price
expectations
in
the
market.
Coming
off
of
two
years
of
pandemic,
it
has
been
a
robust
set
of
operating
conditions
for
your
particular
industry,
although
unclear
to
me
that
that's
actually
been
the
case
all
the
way
from
small
operator
to
large.
However,
that
being
said,
would
appreciate
your
comments
around
how
you
deal
with
valuation
or
price
expectations,
given
that
it
has
been
quite
a
strong
market
the
last
couple
of
years.
Yeah.
So,
good
question,
and
the
pandemic
definitely
changed
things
out, and
there's
no
doubt.
Before
any
of
this
happened,
depending
on
the
business,
we
would
pull
5
to 10
years
of
data
from
them
and
our
valuation
and
due
diligence
process,
but
certainly
on
the
valuation
side.
And
in
that
5
to 10
years
of
data,
you
would
always,
as
a
general
rule,
see
a
really
good
year
and
a
really
bad
year,
but
it's
kind
of
interesting
how
it kind
of
all
goes
to
the
average
or
mean,
right.
So,
obviously,
everyone
sees
an
impact
of
what
happened
to
their
business
in
2020
and
2021.
Most
people
don't try
with
a
straight
face
to
say,
that
they
believe
that
that
is
sustainable
going
forward
unless
they're
one
of
the
brokers
in
the
industry.
And
I
know
them
well
enough
to say,
really,
and
then
it
kind
of
goes
back
to
okay,
let's
talk
about
what
this
business
is
to me,
what
this
business
average
is
really
going to
look
like.
So,
the
pandemic
has
had
an
impact.
We
have
to
kind
of
sort
through
whether
or
not
their
growth
that
everyone
is
seeing
is
sustainable
and
if
not,
we
have
to
make
a
decision
as
to
how
much
we
pull
that
back.
Everyone
that
we've
talked
to,
that
joined
our
company
in
2021
and
the
ones
that
we're
talking
to
in
2022,
understand
that.
And
as
a
result
of
that,
I
have
not
seen
any
pressure
on
price.
People
are
not
bringing
in
2021
numbers
and
asking
us
to
apply
multiples
of
that
without
paying
attention
to
the
surrounding
circumstances.
I
think
that's the
question
you
were
asking
me,
if
not.
Yeah.
No,
that's
a
great
information
to
have.
It
sounds
like
you
take
a
long-term
view
on
the
cash
flow
profile
when
you're
looking
at
pricing
deals,
so
makes
a
lot
of
sense.
One
final
one
for
me,
you
guys
are
in
the
fortunate
situation
of
having
sort of
a
domestic
North
American
business,
with very
little geopolitical
risk,
very
little
exposure
to
inflation
relative
to
a
lot
of
other
consumer
products
businesses.
However,
we
are
seeing
gasoline
prices
creep
up
quite
high,
commodities
are
surging
and
it
does –
they're
asking
how
we
should
think
about
your
ability
to
pass
through
even
small
changes
in
operating
costs
that
could
occur
as
this
sort
of
inflation
picture
continues
to
unfold?
That's
an
excellent
question.
And
the
answer
that
I
would
give
you
in
March
of
2022
could
be
different
in
June
of
2022.
But
as
we
sit
here
right
now,
any
changes
that
we've
experienced
we
can
handle
through
pricing
power
at
a
location
basis
as
necessary.
And
I
will
tell
you
why.
That's
just
not
a
throwaway
statement.
We
are
as
a
general
rule,
not
the
highest
priced
in
our
market
and that
cannot
be
said
of
some
of
the
other
publicly
traded
companies
that
you
follow
or
listen
or
talk
to.
So
we
have –
and
in
some
of
our
markets,
we
may
be
number
three
on
the
pricing
perspective,
but
we're
probably,
as
a
general
rule
number
two
in
most
places
and
that
gives
us
the
ability
to
do
that
a
little
bit.
Now
I
have obviously
read
what
some
of
the
other
companies
said
and
they're
looking
at
staffing
and
maintenance
and
then
I
hear
energy
related
expenses.
May
I
just say,
look,
we
have
a
lot
of
cars,
there's
no
doubt
and
a
lot
of
equipment
in
cemeteries,
but
we're
still
a
tenth
of
the
size
of
the
largest
business
that's
in
this
industry.
So
gas
going
up
does
get
our
attention,
but
probably
not
at
that
same
scale.
Okay.
Thanks
so
much.
I
pass
the line
over.
Thanks,
Maggie.
Your
next
question
for
today
is
coming
from
Zachary
Evershed.
Please
announce
your
affiliation,
then
pose
your
question.
Good
morning,
everyone.
Calling
in
from National
Bank. Thanks
for taking
my
question.
Morning,
Zach.
So
the
$75
million
to
$125
million
per
year
that
you
make
reference
to
for
your
2026
goals
in
acquisition
opportunities,
is
that
the
amount
that
you
intend
to
spend
annually
or
the
incremental
revenue
added?
That's
the
amount
we
intend
to
spend.
Perfect,
thanks.
And
then
for
my
second
question,
I'll
join
the
gang
and
ask
another
one
about
inflation.
And
we're
seeing
a
big
uptick
in
building
materials
and
labor
in
that
industry,
have
the
expected
returns
on
your
organic
projects
been
affected?
Not
yet.
What
we
are
really
seeing
is
it
takes
longer.
Now,
I
will
accept
the
Westminster
project
in
Toronto
that
has
been
kind
of
an
eye
opening
experience
for
those
of
us
who
are
not
used
to
the
cost
of construction,
north
of
the
border.
But
as
a
general
rule,
where
we
are,
if
we
see
that
a
project
is
going
to
take
too
long
or
cost
too
much,
we'll
just
go
to
another
one
on
the
list
and
wait
for
that
to
make
more
sense.
So
right
now,
we
decided
to
start
building
the
funeral
home
in
Waco,
Texas,
there's
a
reason
for
that.
We
have
access
to
material,
labor
and
things
like
that.
We
can
move
it
along.
And
so
that's why
we
decided
to
do
that.
That
did
play
up.
We
looked
past
another
on-site
that
we
were
considering,
because
that their
market
didn't
allow
us
to
do
that,
we
thought
there'd
be
too
much
pressure
on
bringing
in
what
we
needed.
So
right
now,
we're
not
seeing
that
impact,
but
it's
a
good
question
and
that
could
change.
I
mean,
this
continues,
all
of
these
answers
are
going
to
change,
but
right
now
it
just
hasn't
impacted
it
that
much.
That's
clear,
thank
you,
very
much.
I'll
turn
it
over.
Your
next question
for
today
is
coming
from
Daryl
Young.
Please
announce
your
affiliation,
then
pose
your
question.
TD
Securities.
Good
morning,
guys.
Morning,
Daryl.
First
question
is
just
following
up
on
the
capital
stack
and
the
ability
to
achieve
the
2026
target.
If
everything
were
to
go
just
so
without
raising
equity,
what
kind
of
a
leverage
position
would
that
assume,
because I
think
pre
this
announcement
and
pre
your
equity
raise
a
couple
of months
ago
that
you
were
talking
about
potentially
taking
leverage
higher.
So
maybe
just
a
bit
of
an
update
there?
Hey,
Daryl,
it's
Dan..
I'm
going
to
avoid
giving
you
a
direct
answer,
and
I'm
going
to
kind
of
keep
my
answer
as
it's
been
in
the
past,
which
is
less
specific.
And
the
reason
being
for
that
is
because,
a
lot
of
this
is
unknown.
I'm
very
adamant
about
how
we
use
our
different
sources
of
capital
is
very
situational
and
it
depends
on
where
everything
sits
at
the
time
of
need.
But
we
sit
here
at
one
times
leverage.
We
have
a
credit
facility
that
allows
us
at
this
point
up
to
3.75
times.
Our
peers
are
operating
in
the
3.5
times
to
4.5
times,
and
we
are
we
are
much
more
comfortable
getting
closer
to
the
lower
end
of
our
peers
than
we
probably
have
been
in
the
past
and
as
the
management
of
this
company
has
probably
been
in
the
past.
So
that's
my
very
roundabout
way
of
answering
your
question.
Okay,
perfect.
That's
helpful.
And
then
just
one
last
one,
high
level
question
We've
heard
from
some
of
the
US
life
tell us
about
the
potential
for
elevated
death
rates
above
the
2019
baseline,
even
with
the
pullback
in
COVID,
is
that
something
you're
factoring
into
your
outlook
and consideration
or
would
that
represent
upside
if
we
did
have
an
elevated
death
rate
above
2019,
if
that
proved
to
be
true?
Yeah.
Again,
that's
a
good
question,
because
we're
seeing
that,
right,
the
Omicron
and
other
variants
didn't
have
nearly
the
impact
of
what
happened
a
year
ago
on
the
death
rate,
at
least in
the
communities
that
we
serve.
But
we
definitely
see
an
elevated
death
rate
and
we
definitely
read
the
same
things
you
do
that
are
coming
out
from
the life
insurance
companies
as
well
as
different
governmental
agencies.
So,
we're
seeing
that.
Some
people
argue
it's
the
pandemic,
folks
didn't
make
it
to
the
doctor,
folks
were
depressed
being
locked
in
their
homes.
The
things
that
are
affecting
people
now
are
not
the
way
you
would
like
to
see
people
pass
away.
I mean
it
wasn't
a
good
situation.
Whether
or
not
that
that
holds
or
not,
it
remains
to
be
seen.
That
is
not
something
that
we
considered
that
there
would
be
an
elevated
death
rate
over
the
next
five
years.
We
didn't
take
that
into
our
model. We
kind
of
assumed
a
normalizing
of
kind
of
somewhere
between
where
we
are
and
2019
kind
of
going
back
to
what
was
normal. So
the
answer to
your
question
is
we
see
that
out
there.
If
it
stays
that
means
that
we've
got
some
combination
of
the
baby
boomers
hitting
and
then
some
combination
of
a
higher
death
rate
that's
starting
to
occur
in
the
United
States
for
some
socioeconomic
reasons
that
are
far
outside
of
my
pay
grade.
Okay.
That's
great
color.
Thanks
very
much.
That's
it
from
me.
Thank
you.
[Operator Instructions]
We have
a
follow-up
question
coming
from
Scott
Fromson.
Scott
your
line
is
live.
Thanks,
just
one
of
the
acquisition
horse
again.
So,
you're saying
you
think
you
can
do
$75
million to
$125
million of annual
deals,
but
that
seems to
be
a
little
bit
down,
I
know
your
conservative
guys.
And
you've
mentioned
in
the past
that
the
major
constraints
are
time
and the
internal
resources,
not
so
much
capital
or
number
of
opportunities.
Has
that
changed, has
the
pipeline
changed
or
are
you
just
being
conservative?
I
don't
think
either
one
of
the
– first-off,
I
made
it
through
your
first
question,
so
I'm
not
really
comfortable.
I'm
not
sure
I'm
not
comfortable
with
you
coming
back
and
taking
another
shot
at
me,
Scott,
but
I'll
answer
it
anyway...
I
was
taking
a
shot
at
the
horse.
Okay.
Yeah,
I
noticed
that
you
started
that
way.
But
down
here
in
Texas,
we
take
shooting
horses
very
seriously,
I
just
want
you
to
know that,
or
beating
them.
Okay.
So,
here's
the
way
I
would
look
at
that,
I
don't
think
it's
conservative
and
I
don't
think
it's
down,
right?
So
if
you
look
at –
Park
Lawn
bought
the
Signature
Group,
which
is
basically
the
best
management
team
in
2018.
That
was
a
large
purchase,
I
think
it's
the
largest
one
that
Park
Lawn
has
ever
done.
So
that
skews
2018.
2019,
we
added Horan and Valley,
which
together
would
with
would
fall
right
in
the
middle
of
this
target,
right?
So
it
skews
2019. 2020
was
the
pandemic,
when
we
were
all
trying
to
figure
out
what
was
going
on.
And
2021
is
kind
of
the
first
time
that
I
would
say,
okay,
let's –
that
was
a
more
normal
and
more
of
what
I
would
anticipate
on
a
go-forward
basis.
Well,
if
that's
the
case
and
I
don't have
it
right
in
front
of me
again,
but
I
think
we
spent
like
$125
million
last
year
on
those
acquisitions.
So
I
really
do
think
we're
not
being
conservative.
I
think
that
it's
really
more
indicative
of
what
a
normal
year
looks
like.
Now
I'm
going to
add
some
color
on
that.
So
there
are
two
other
publicly
traded
companies
that
are
in
the
acquisition
game,
at
least
here
in
the
US,
you
have
SCI
and
you
have
Carriage.
I
think
Carriage
has
said
they're
going
to
spend
$100 million
on
acquisitions
over
the
next
three
years,
not
in
one
year,
but
over
three.
And
then
SCI
is 10
times
our
size,
it's
been
$100
million
plus
last
year,
basically
the
same
or
less
than
we
did
and
that
was
in
large
part
due
to
a
large
acquisition
in
the
fourth
quarter.
And
we
saw
that
one
too.
So,
I
guess
my
point
is,
I
think
that
the
acquisition
target
that
we
put
out
there
makes
us
say,
I
call
it,
[ph]
the best-to-grow
(46:08)
stock,
wherein
the
other
companies
are
buying
back
their
stock
and
deploying
capital
that
way
and
we're
growing
and
we're
growing
the
right
way,
we're
growing
by
businesses
I
think
they
would
love
to
get
their
hands
on
but
they
can't.
So
we're
growing
at
that
rate
that's
equivalent
to
an
SCI
and passively outgrowing
the
other
publicly
traded
company.
So
I'll
just
[ph]
stub
it
out (46:31), I
think I
probably
said
it
three
times
now.
I
don't
think
it's
conservative.
I
think
it's
exactly
what
our
investors
would
expect
us
to
do
in
a
good
year,
which
is
mimicking
2021.
Okay.
Thanks,
Brad.
That's
helpful.
Thanks
for
clarifying.
All
right.
Thank
you.
Your
next
question
is
coming
from
Kyle
McPhee.
Please
announce
your
affiliation,
then
pose
your
question.
Hi.
Cormac
Securities.
Guys,
you've
made
it
clear
you're
going
to
continue
investing
in
your
funeral
and
cemetery
assets
to
support
organic
growth.
Can
you
quantify
that
in
terms
of
the
non-maintenance
CapEx,
we
should
expect
to see
and
maybe
your
budgets
are
just
relative
to
what
we've seen
in
trailing
years?
Yeah.
Hey,
Kyle,
it's
Dan
again.
We
think
that
spend
is
going
to
be
relatively
consistent
and
as
we
acquire
different
businesses,
we'll
find additional
projects
and
hopefully
on-sites
and
things
of
that
nature.
I
think,
historically,
our
development
spend
is
somewhere
between
3%
and
4%
of
our
revenue.
And I
think
you
can
kind
of
see
that
continue
going
forward.
Okay.
Thank
you
for
the color.
There
appear to
be
no
further
questions
in
queue.
I
would
like
to
turn
the
floor
back
over
to
Brad
Green
for
any
closing
comments.
I
would like
to thank
everyone
for
joining
the
call
today.
And
certainly
in
the
times
that
we
live
in,
everyone
remain
safe
and
look
forward
to talking
to
you
all
next
quarter.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.