Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 2023 Earnings Presentation
35 slides from Propel Funeral Partners's earnings presentation, Feb 22, 2023
Slide 1: FY23 First Half Results
INVESTOR PRESENTATION 2022 | PROPEL FUNERAL PARTNERS FY23 First Half Results Investor Presentation 22 February 2023 1
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This presentation contains summary information about Propel Funeral Partners Limited No representation or warranty, express or implied, is made as to the fairness, accuracy, (ACN 616 909 310) (Propel) and its activities current as at the date of this presentation. com
Slide 3: Presenters
Presenters Albin Kurti Lilli Gladstone Fraser Henderson Managing Director Chief Financial Officer Head of M&A, General Counsel and Company Secretary 3
Slide 4: Agenda
Agenda 1. Key highlights for 1H FY23 2. 2. Company overview 3. 3. 1H FY23 financial results detail 4. 4. Industry trends and acquisitions 5. Berry Funeral Directors - Adelaide, South Australia 5. Summary and outlook 6. 6. Q&A Appendices Eagars Funerals - New Plymouth, New Zealand 4
Slide 5: 1. Key highlights for 1H FY23
1. Key highlights for 1H FY23 5
Slide 6: Key Highlights for 1H FY23
Key Highlights for 1H FY23 Revenue Funeral Volumes Average Revenue Per Funeral 1 TRADING1 $83.8m 9,061 $6,346 23.3% 14.3% 7.5% (comparable up 8.3%) Operating EBITDA Operating NPAT Cash Flow Conversion 2 EARNINGS1 $23.1m $11.0m 99.2% 25.6%2 34.9%2 80bps Dividend Gearing Ratio Funding Capacity4 CAPITA
Slide 7: 2. Company Overview
2. Company Overview 7
Slide 8: Geographic Presence
Geographic Presence 152 operating locations (83 owned / 69 leased), including 35 cremation facilities and 9 cemeteries 1 August 2013 2 February 2023 Queensland Queensland Western 29 1 South Australia Australia 14 34 New South Wales 5 1 ACT 19 Victoria 32 New Zealand Tasmania 18 Geographic footprint
Slide 9: Brand Portfolio
Brand Portfolio Diversified single and multi-site brands with strong local community awareness Australia NZ Pinegrove Funerals ismore Funeral Services Acquisitions completed or announced since 1 July 2022 9
Slide 10: Volume and Revenue Growth
Volume and Revenue Growth Propel has maintained a strong growth trajectory 1 Funeral volumes 2 Revenue ($m) 16,537 145.2 13,916 13,299 120.4 110.8 11,304 10,111 95.1 9,061 80.9 83.8 7,928 14.3% 68.0 23.3% 6,054 46.1 2,967 22.4 1,625 10.9 906 6.0 278 465 1.2 2.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY1
Slide 11: Earnings Growth
Earnings Growth Propel has maintained a strong growth trajectory 1 Operating EBITDA ($m) 2 Operating NPAT ($m) 39.0 17.7 36.3 15.3 32.4 14.2 13.3 12.3 11.0 23.8 23.1 21.5 34.9% 18.4 25.6% 8.1 12.3 5.5 2.9 5.8 1.5 3.1 1,2 FY15 FY16 FY17 FY18 FY19 FY20 FY21 0 1 FY22 FY23 FY15 FY16 FY17 FY18 FY19 FY20
Slide 12: Average Revenue Per Funeral Growth
Average Revenue Per Funeral Growth Compound annual growth rate (CAGR) of ~2.9% since FY14 $6,346 7.5% on PCP CAGR ~2.9% (comparable up 8.3%) $5,917 $5,902 $5,672 $5,585 $5,508 $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 1H FY22 1H FY23 12
Slide 13: Cash Flow Conversion
Cash Flow Conversion Consistently strong and has averaged ~99% since FY15 104.0% 103.4% 101.8% 98.9% 96.5% 97.4% 98.4% 99.2% ~99% average 93.7% (since FY15) FY15 FY16 FY17 FY18 FY19 FY20 FY21 1H FY22 1H FY23 13
Slide 14: Performance Summary Since IPO
Performance Summary Since IPO Propel’s share price has outperformed the ASX300 and its listed domestic peer since the IPO in November 2017 Relative share price and index performance 90% Propel Total shareholder return4 70% 50% +60.4%1 ~72% 30% 10% ASX300 Total shareholder value accretion5 +17.9%2 ~$
Slide 15: 3. 1H FY23 Financial Results Detail
3. 1H FY23 Financial Results Detail 15
Slide 16: Financial Summary
Financial Summary Income Statement1 Comments $ million 31-Dec-22 31-Dec-21 Revenue Total revenue 83.8 68.0 • Increased 23.3% on the PCP to $83.8m, primarily due to: Gross profit 58.6 48.5 – comparable funeral volume growth of 5.2% and Average Revenue Per Funeral growth of 7.5% …margin 70.0% 71.3% To
Slide 17: Revenue Bridge and Operating EBITDA Margin
Revenue Bridge and Operating EBITDA Margin Propel generated revenue and margin growth Operating EBITDA margin 27.1% 1 27.6% Comments Total: Organic: Operating EBITDA margin: Funeral Volumes Funeral Volumes 50 bps on the PCP, positively impacted by material growth in comparable: 14.3% on the PCP incl
Slide 18: Cash Flow
Cash Flow Statutory actuals Comments $ million 31-Dec-22 31-Dec-21 Operating activities Receipts from customers (inc GST) 91.6 74.3 • Operating Cash Flow increased 17.2% on the PCP Payments to suppliers and employees (inc GST) (69.7) (55.5) • Cash Flow Conversion remained strong at ~99.2% (1H FY22:
Slide 19: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 31 Dec 22 30 Jun 22 Cash and cash equivalents 6.0 7.9 Cash and net debt position Contract assets 53.3 53.1 • $6.0m of cash (30 June 2022: $7.9m) Other current assets 17.6 13.1 • $61.1m of net debt1 (30 June 2022: $40.3m) Total Current Assets 76.8 74
Slide 20: Capital Management
Capital Management Funding Capacity Comments $ million Funding capacity Debt facility limit at 31 December 2022 200.0 • Senior debt facilities of $200m Net Debt as at 31 December 20221 (61.1) • Binding cash commitments, subsequent to 31 December 2022: ‒ Acquisitions totalling $33.5m Commitments: ‒ F
Slide 21: 4. Industry Trends and Acquisitions
4. Industry Trends and Acquisitions 21
Slide 22: Increasing Number of Deaths
Increasing Number of Deaths Number of deaths is the most significant driver of revenue in the death care industry 1 Australia 2 NZ 350,000 70,000 1.9% CAGR 1.7% CAGR (2032-2050) (2033-2050) 300,000 60,000 3.1% CAGR 1.6% CAGR 250,000 (2021-2032) (2022-2033) 50,000 0.9% CAGR 1.0% CAGR (1990-2021) (199
Slide 23: Market share estimate (funeral volumes)
Market share estimate (funeral volumes) Propel has increased its market share in the highly fragmented Australian funeral industry 1 CY151 2 CY222 InvoCare InvoCare Others ~24.6% ~21.7% Others ~74.2% ~70.7% ~1.2% ~7.6% 1 Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performe
Slide 24: Acquisitions
Acquisitions Propel has committed $191.8 million1 on acquisitions since its IPO 1 During 1H FY23, Propel deployed ~$11 million2 on acquisitions in QLD, VIC and NZ including: two the businesses, assets and related infrastructure (including two cremation facilities and a freehold property3) associated
Slide 25: 5. Summary and Outlook
5. Summary and Outlook 25
Slide 26: 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 27: Outlook
Outlook Demand for essential funeral services is underpinned by favourable demographics 1 Propel has started 2H FY23 with positive trading momentum. In the month of January 20231, revenue was materially higher than the PCP, reflecting: • higher Average Revenue Per Funeral • continued growth in total
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Slide 29: Appendices
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Slide 30: Definitions
Definitions Adjusted Effective Interest Rate means the average interest rate on senior debt, including the interest rate swap and establishment fees but excluding the commitment fee on undrawn debt. Adjusted Effective Tax Rate means income tax expense divided net profit before tax, adjusted for non
Slide 31: Financial Summary
Financial Summary Income Statement $ million 31-Dec-22 31-Dec-21 Statutory Statutory Total revenue 83.8 68.0 Gross profit 58.6 48.5 …margin 70.0% 71.3% Total operating costs (35.5) (29.4) Operating EBITDA 23.1 19.1 …margin 27.6% 28.1% Depreciation (5.5) (5.0) Operating EBIT 17.6 14.0 …margin 21.0% 2
Slide 32: Income Statement Analysis
Income Statement Analysis Comments $ million 31-Dec-22 31-Dec-21 Revenue segments: Funeral operations 73.7 59.5 • 88.0% generated from funeral operations (1H FY22: 87.6%) Cemetery, crematoria and memorial gardens 9.0 7.3 Other trading revenue 1.0 1.2 • 10.8% generated from cemetery and memorial gard
Slide 33: NPAT to Operating NPAT Reconciliation
NPAT to Operating NPAT Reconciliation 31-Dec-22 31-Dec-21 31-Dec-21 $ million Statutory Pro forma Statutory Net profit/(loss) after income tax 10.2 7.2 (9.2) Add: Acquisition and transaction costs 0.8 0.7 1.1 Add: Other non-operating expenses 0.3 0.3 0.3 Add: Net financing charge on pre-paid contrac
Slide 34: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 31-Dec-22 31-Dec-21 Net profit/(loss) after tax 10.2 (9.2) Distributable Earnings calculation Acquisition and transaction costs 0.6 0.8 Net financing charge on prepaid contracts 0.3 0.3 Termination fee - 10.5 Share based payment revaluatio
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