Arbor announces third quarter results

TSX ABO.A and ABO.B

TORONTO, Sept. 8, 2011 /CNW/ - Arbor Memorial Services Inc. announced today its results for the 13 and 39 weeks ended July 31, 2011 and July 25, 2010.

  13 weeks ended  39 weeks ended
(In $Millions)                                                                      2011  2010(1)  2011  2010(1)
Revenue  65.9  80.9  194.6  212.9
Earnings from continuing operations before
   interest expense and income taxes ("EBIT")(2)  5.1  9.1  21.5  26.4
Net earnings from continuing operations  3.5  6.4  14.8  17.5
Net earnings  3.5  6.4  14.8  17.5
Basic and diluted earnings per share
   from continuing operations ($)  0.33  0.61  1.40  1.65
Basic and diluted earnings per share ($)  0.33  0.61  1.41  1.65

(1) Restated to conform with the current year's presentation.
(2) EBIT is a non-GAAP measure.

Revenue for the third quarter of 2011 decreased by $15.0 million or 18.5% from 2010.  Sales in the cemetery division decreased by $13.2 million or 31.3% due primarily to lower sales of pre-need interment rights of $12.4 million or 58.6%.  The decrease in sales of pre-need interment rights was mainly due to the implementation of a harmonized sales tax ("HST") in Ontario and British Columbia in 2010 that caused many cemetery customers to make their pre-need arrangements in advance of the transition date and the availability of new crypt inventory at one cemetery branch operation in 2010.  Sales in the funeral division increased by $2.2 million or 7.5% due to higher sales from new operations of $1.1 million, a higher average sale per service for existing operations of 2.6% and an increase in the number of services performed by existing operations of 1.1%.  Investment and other income decreased by $3.9 million or 41.6% from 2010 due to lower funeral annuity fee income of $4.0 million or 69.8%.  The lower annuity fee income was primarily due to a decrease in pre-need funeral contracts written as a result of the implementation of HST in Ontario and British Columbia in 2010.

EBIT (a non-GAAP measure) for the third quarter decreased by $4.0 million or 44.3% from 2010 to $5.1 million.  The decrease in EBIT was the result of lower earnings in the cemetery division of $3.4 million or 60.8% and an increase in the loss of the corporate division of $1.2 million or 29.7%, which were partially offset by higher earnings in the funeral division of $0.5 million or 6.9%.  The reduction in earnings in the cemetery division was primarily due to lower sales that occurred as a result of the implementation of HST in Ontario and British Columbia in 2010 as well as a gain on disposal of assets of $0.6 million in 2010 compared to $0.1 million in 2011.  The higher loss in the corporate division in 2011 was primarily due to $1.3 million in transaction costs recorded in 2011 that were related to an acquisition that was not completed.  Excluding acquisition transaction costs and gain on disposal of assets, EBIT decreased by $2.1 million or 24.9%.

Net earnings for the third quarter decreased by $2.9 million or 45.4% from 2010 to $3.5 million.  The reduction in net earnings was the result of a $4.0 million or 44.3% decrease in EBIT and higher interest expense of $0.1 million or 24.4%, which were partially offset by lower income taxes of $1.2 million or 51.3%.  Excluding acquisition transaction costs, gain on disposal of assets and future tax adjustments related to substantively enacted tax rate changes, net earnings decreased by $1.4 million or 24.4%.  The reduction in net earnings after these exclusions was primarily related to lower cemetery sales that occurred due to the implementation of HST in Ontario and British Columbia last year.

Revenue for the first 39 weeks of 2011 decreased by $18.3 million or 8.6% from 2010.  Sales in the cemetery division decreased by $19.7 million or 19.6% due primarily to lower sales of pre-need interment rights of $19.0 million or 43.1%.  The decrease in sales of pre-need interment rights was mostly due to the implementation of a harmonized sales tax ("HST") in Ontario and British Columbia in 2010, the availability of new crypt inventory at one cemetery branch operation in 2010 and reduced availability of crypt inventory at one branch in 2011.  Sales in the funeral division increased by $5.1 million or 5.5% due to higher sales from new operations of $2.6 million, an increase in the number of services performed by existing operations of 1.5% and a higher average sale per service for existing operations of 1.3%. Investment and other income decreased by $3.7 million or 18.4% from 2010 due mainly to a decline of $4.1 million or 43.6% in funeral annuity fee income and a $0.3 million net decrease in other items, which were partially offset by higher cemetery care fund interest and dividends of $0.7 million or 9.3%.  The decrease in funeral annuity fee income was related to a reduction of 57.6% in pre-need contracts written under the annuity program as result of the implementation of HST in Ontario and British Columbia in 2010.

EBIT (a non-GAAP measure) for the first 39 weeks of 2011 decreased by $4.9 million or 18.5% from 2010 to $21.5 million as a result of lower EBIT in the cemetery division of $4.4 million or 33.5% and an increase in the loss of the corporate division of $1.4 million or 10.9%, which were partially offset by higher EBIT of $0.9 million or 3.3% in the funeral division.  The lower EBIT in the cemetery division was primarily due to lower sales of pre-need interment rights as a result of the implementation of HST in Ontario and British Columbia in 2010.  The higher loss in the corporate division in 2011 of $1.4 million was primarily due to $1.3 million in transaction costs recorded in 2011 that were related to an acquisition that was not completed.  Excluding acquisition transaction costs, provision for goodwill impairment and gain on disposal of assets, EBIT decreased by $3.0 million or 11.6%.

Net earnings for the first 39 weeks of 2011 decreased by $2.7 million or 15.2% to $14.8 million.  The decline in net earnings was primarily due to a reduction in EBIT of $4.9 million or 18.5% and an increase in interest expense of $0.2 million or 20.1%, which were partially offset by lower income taxes of $2.3 million or 29.7%.  Excluding acquisition transaction costs, provision for goodwill impairment, gain on disposal of assets and future tax adjustments related to substantively enacted tax rate changes, net earnings declined by $1.8 million or 10.2%.  The decrease in net earnings after these exclusions was primarily related to lower cemetery sales that occurred due to the implementation of HST in Ontario and British Columbia last year.

In addition to the GAAP results provided in this press release, some of the discussion of operating performance is based on EBIT.  EBIT excludes the impact of interest expense and income taxes as disclosed in the statements of earnings.  EBIT is a non-GAAP financial measure that does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies.  This non-GAAP financial measure is more fully defined and discussed in the management discussion and analysis of Arbor Memorial Services Inc. for the year ended October 31, 2010, available on the SEDAR website at www.sedar.com.

Arbor Memorial Services Inc. owns 41 cemeteries, 28 crematoria, 7 reception centres located on cemetery premises and 85 funeral homes in eight provinces of Canada.

SOURCE Arbor Memorial Services Inc.

For further information:

Brian D. Snowdon, President and Chief Executive Officer
Laurel L. Ancheta, Vice-President and Chief Financial Officer
Telephone: (416) 763-4531

Profil de l'entreprise

Arbor Memorial Services Inc.

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