Arbor announces first quarter results

TSX ABO.A and ABO.B

TORONTO, March 7, 2012 /PRNewswire/ - Arbor Memorial Services Inc. announced today its results for the 13 weeks ended January 29, 2012 and January 30, 2011.

⁽¹⁾ Restated for effects of adoption of International Financial Reporting Standards.

The Company adopted International Financial Reporting Standards ("IFRS") this quarter and accordingly restated its prior year results on the same basis of reporting.  The effective date of the transition was November 1, 2010.  The primary adjustments to the 13 weeks ended January 30, 2011 were an increase to depreciation expense of $1.8 million, as a result of electing to use fair value as deemed cost on transition, which was partially offset by lower income tax expense of $0.6 million.  Including other smaller adjustments, net earnings for the 13 weeks ended January 30, 2011 was reduced by $1.3 million from $5.3 million to $4.0 million.

Revenue for the first quarter of 2012 increased by $1.9 million or 3.0% over 2011.  Sales increased by $2.1 million or 3.6% while investment and other income decreased by $0.2 million or 3.3%.  Sales in the cemetery division increased by $0.5 million or 2.1% due primarily to higher sales of pre-need and at-need interment rights of $0.8 million and $0.3 million, respectively, which were partially offset by lower deliveries of pre-need bronze memorials of $0.6 million.  Sales in the funeral division increased by $1.5 million or 4.7% due to higher sales from new operations of $1.3 million and a higher average sale per service for existing operations of 3.8%.  These positive factors were partially offset by a reduction in the number of services at existing operations of 2.3% and lower sales from sold funeral branch operations of $0.2 million.  Existing funeral home sales increased by $0.4 million or 1.4%.  Investment and other income decreased by $0.2 million or 3.3% to $5.3 million due primarily to lower cemetery and funeral referral fee income.  The lower referral fee income occurred due to reinvestment of fixed income investments in recent years at lower rates.  Pre-need cemetery contracts written increased in the quarter by $0.7 million or 3.8% and pre-need funeral contracts written increased by $1.3 million or 10.0%.

Operating earnings decreased by $0.7 million or 11.5% from 2011 to $5.1 million.  The decrease was the result of lower earnings in the cemetery division of $0.6 million or 37.2% and lower earnings in the funeral division of $0.2 million or 2.2%, which were partially offset by a lower loss in the corporate division of $0.1 million or 3.2%.  The reduction in earnings in the cemetery division was due to lower than historical growth in sales of $0.5 million or 2.1% compared to growth in operating expenses of $0.9 million or 4.8% and a lower gain on disposal of assets of $0.2 million. The increase in cemetery expenses was mainly due to higher selling expenses as a result of higher contracts written and higher marketing expenses, higher administrative costs as a result of internal restructuring and higher expenses attributable to new reception centres.  Excluding the impact of new reception centres and the gain on disposal of assets, cemetery operating earnings decreased by $0.3 million or 19.9%.  Excluding the impact of new and sold funeral operations and the gain on disposal of assets, operating earnings in the funeral division decreased by $0.6 million or 6.8%.

Net earnings decreased by $0.3 million or 7.9% from 2011 to $3.6 million.  The reduction in net earnings was the result of a $0.7 million or 11.5% decline in operating earnings, which was partially offset by lower income taxes of $0.3 million or 24.1%.  Excluding operating earnings of new and sold operations, the gain on disposal of assets and acquisition transaction costs, operating earnings decreased by $0.9 or 15.6%.

Arbor Memorial Services Inc. owns 41 cemeteries, 27 crematoria, 8 reception centres located on cemetery premises and 82 funeral homes in eight provinces of Canada.

SOURCE Arbor Memorial Services Inc.