Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — FY2021 Earnings Presentation
39 slides from Propel Funeral Partners's earnings presentation, Aug 25, 2021
Slide 1: FY21 Full Year Results
FY21 Full Year Results Investor Presentation 25 August 2021
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation contains summary information about Propel Funeral Partners Limited (ACN 616 909 310) No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or (Propel) and its activities current as at the date of this p
Slide 3: Presenters
Presenters Albin Kurti Lilli Gladstone Fraser Henderson Managing Director Head of M&A, General Chief Financial Officer Counsel and Company Secretary 3
Slide 4: Agenda
Agenda 1. Key highlights for FY21 2. Company overview 3. FY21 financial results detail 4. Industry trends and acquisitions 5. Summary and outlook 6. Q&A Appendices 4
Slide 5: 1. Key highlights for FY21
1. Key highlights for FY21
Slide 6: Key highlights for FY21
Key highlights for FY21 1 Revenue Funeral volumes Average Revenue Per Funeral TRADING1 $120.4m 8.7% 13,916 4.6% $5,917 4.3% (up 2.8% on the pre-COVID period2) 2 Operating EBITDA Operating NPAT Cash Flow Conversion EARNINGS1 $36.3m 11.9% $15.3m 7.6% 101.8% 160bps 3 Total Dividends Gearing Ratio Fundi
Slide 7: COVID-19 impacts
COVID-19 impacts Average Revenue Per Funeral growth despite below trend death volumes 1 Average Revenue Per Funeral $5,756 $5,917 $5,672 $5,421 Unlike the widespread impacts of strict funeral attendee limits in Australia and New Zealand during Q4 FY20, Average Revenue Per Funeral impacts during FY21
Slide 8: COVID-19 responses
COVID-19 responses Focused on people safety, essential service continuity and financial resilience 1 People safety • communicating government guidelines and directives to staff and mourners • ensuring sufficient supply of PPE • cessation of certain services (e.g. catering) • working from home, where
Slide 9: Management internalisation completed
Management internalisation completed Management internalisation completed on 26 July 2021 As described in the Explanatory Memorandum1: 1 The management internalisation involved: • the assignment and termination of the management agreement between the Company and the Manager • payment of a $15.0 mill
Slide 10: 2. Company overview
2. Company overview
Slide 11: Geographic presence
Geographic presence 136 locations (77 owned / 59 leased), including 32 cremation facilities and 9 cemeteries August 2013 August 2021 Queensland Queensland 1 Western 26 Australia South Australia 13 33 New South Wales 2 1 ACT 17 Victoria 25 New Zealand Tasmania 19 Geographic footprint is difficult to
Slide 12: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired during FY21 12
Slide 13: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory despite COVID-19 impacts Funeral volumes Revenue ($m) 120.4 13,916 13,299 110.8 4.6% 8.7% 11,304 95.1 10,111 80.9 6,054 46.1 2,967 22.4 1,625 10.9 906 6.0 278 465 2.2 1.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12
Slide 14: Earnings growth
Earnings growth Propel has maintained a strong growth trajectory despite COVID-19 impacts Operating EBITDA ($m) Operating NPAT ($m) 36.3 15.3 32.4 11.9% 14.2 7.6% 13.3 12.3 23.8 21.5 12.3 5.5 2.9 5.8 1.5 3.1 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY15 FY16 FY17 FY18 FY19 FY20 FY21 14
Slide 15: Dividend growth
Dividend growth Total dividends declared in connection with FY21 are up 17.5% on the prior year Dividends Declared (cps) Comments 11.75 • Dividends declared in connection with FY21 totalled 11.75 cps fully franked (FY20: 10 cps), which represents: 17.5% ‒ a payout ratio of ~81% of Distributable Earn
Slide 16: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~2.7% since FY14 CAGR ~2.7% $5,917 $5,672 4.3% $5,585 (up 2.8% on the pre-COVID period1) $5,508 $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 1 1 July 2019 to 31 March 2020 16
Slide 17: Cash Flow Conversion
Cash Flow Conversion Cash Flow Conversion has been consistently strong, averaging ~99% since FY15 104.0% 103.4% 101.8% 98.9% 97.4% 36.9 10.2% 96.5% 33.5 93.7% 23.1 20.6 12.2 5.4 3.2 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Operating Cash Flow ($m) Cash Conversion 17
Slide 18: Performance summary since IPO
Performance summary since IPO Propel’s share price has outperformed the ASX300 and its listed domestic peer since IPO Relative share price and index performance Comments Propel vs ASX300 vs InvoCare Since Propel’s IPO on 23 November 2017 and as at 30 June 2021: 50% Propel • Propel’s share price was
Slide 19: 3. FY21 financial results detail
3. FY21 financial results detail
Slide 20: Financial Summary
Financial Summary Statutory actuals Comments $ million 30-Jun-21 30-Jun-20 Revenue Total revenue 120.4 110.8 • Increased 8.7% on FY20 to $120.4m despite below trend funeral volumes, primarily due to: Gross profit 86.8 79.6 – contributions from five acquisitions completed in FY20 and FY21 …margin 72.
Slide 21: Revenue bridge and Operating EBITDA margin
Revenue bridge and Operating EBITDA margin Propel generated revenue and margin growth despite COVID-19 impacts Operating EBITDA Margin 29.2% 30.1% Comments Total: Organic: Operating EBITDA Margin: ARPF ARPF 90 bps on FY20, influenced by: • 4.3% on FY20, impacted by the financial profile • 3.7% on FY
Slide 22: Cash flow
Cash flow Statutory actuals Comments $ million 30-Jun-21 30-Jun-20 Operating activities Receipts from customers (inc GST) 132.4 121.7 • Cash Flow Conversion strong at ~101.8% (FY20: ~103.4%) Payments to suppliers & employees (inc GST) (95.9) (87.8) • No Performance Fee triggered in FY21 (FY20: ~$4.5
Slide 23: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 30-Jun-21 30-Jun-20 Cash and cash equivalents 7.5 53.9 Cash and net debt position Contract assets 46.1 47.5 • $7.5m of cash Other current assets 10.9 10.1 • $79.0m of net debt1 Total Current Assets 64.5 111.5 • $86.5m of drawn senior debt (30 June 2
Slide 24: Expanded and extended senior debt facilities
Expanded and extended senior debt facilities Propel has expanded its senior debt facilities by $50 million to $200 million to support its growth strategy Senior Debt Facility Limits/Maturity Comments $200m • The senior debt facilities with Westpac now total $200m, including a revolving working capit
Slide 25: Capital management
Capital management Funding Capacity Comments $ million Funding capacity Debt facility limit at 30 June 2021 150.0 • Increase in senior debt facilities to $200m • Binding cash commitments, subsequent to 30 June 2021: Net Debt as at 30 June 2021 1 (79.0) ‒ termination fee ($7.5m in cash paid on 26 Jul
Slide 26: 4. Industry trends and acquisitions
4. Industry trends and acquisitions
Slide 27: Increasing number of deaths
Increasing number of deaths Number of deaths is the most significant driver of revenue in the death care industry Australia1 New Zealand2 • Death volumes in Australia grew by 0.9% pa between 1990 and • Death volumes in New Zealand grew by 0.7% pa between 1990 20191 and 20202 • Death volumes are expe
Slide 28: Market share estimate (funeral volumes)
Market share estimate (funeral volumes) Propel has increased its market share in the highly fragmented Australian funeral industry CY151 CY202 InvoCare InvoCare ~24.6% ~22.9% Others Others ~74.2% ~70.1% ~1.2% ~7.0% 1 Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by
Slide 29: Acquisitions
Acquisitions Propel has committed $126.7 million1 on acquisitions since its IPO 1 During FY21, Propel deployed $29.6 million2 on acquisitions completed in NZ, WA, QLD and NSW, including: 100% of the issued share capital and certain freehold properties of, among others, Dils Funeral Services Limited,
Slide 30: 5. Summary and outlook
5. Summary and outlook
Slide 31: Summary
Summary Growth track record, stable management, defensive market position and sector thematic are attractive characteristics 1 Long term growth profile • Strong growth track record (>10 fold increase in Revenue and Operating EBITDA since FY15) • Consistent growth in key operating metrics (funeral vo
Slide 32: Outlook
Outlook Demand for essential funeral services remains, underpinned by favourable demographics 1 Death volumes expected to revert to long term trends given: • prior period declines have rebounded quickly • the unusually benign flu seasons in 2020 and 2021 YTD • the growing and ageing populations in A
Slide 33: 6. Q&A
6. Q&A
Slide 34: Appendices
Appendices
Slide 35: Definitions
Definitions Adjusted Effective Tax Rate means income tax expense divided net profit before tax, adjusted for non deductible and non assessable items. ARPF means Average Revenue Per Funeral. Average Revenue Per Funeral means revenue from funeral operations, excluding direct disbursements (such as thi
Slide 36: NPAT to Operating NPAT reconciliation
NPAT to Operating NPAT reconciliation $ million 30-Jun-21 30-Jun-20 Net profit after income tax 14.4 10.6 Add: Acquisition and transaction costs 0.9 1.6 Add: Performance fee - 4.1 Add: Other non-operating expenses 0.3 0.3 Add: Net loss on disposal of assets 0.2 0.1 Less: Tax effect of certain Operat
Slide 37: Income statement analysis
Income statement analysis Statutory actuals Comments $ million 30-Jun-21 30-Jun-20 Revenue segments: Funeral operations 104.5 96.4 • 86.7% generated from funeral operations (FY20: 86.9%) Cemetery, crematoria and memorial gardens 13.7 12.0 • 11.4% generated from cemetery and memorial gardens (FY20: 1
Slide 38: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million FY21 NPAT 14.4 Distributable Earnings calculation Acquisition and transaction costs 0.9 Net financing charge on prepaid contracts 1.0 Government wage subsidies (1.5) New Zealand deferred tax liability restatement (0.1) Distributable Earnin
Slide 39: Propel Funeral Partners
Ta PROPEL r FUNERAL PARTNERS
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