Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 2021 Earnings Presentation
37 slides from Propel Funeral Partners's earnings presentation, Feb 25, 2021
Slide 1: FY21 First Half Results
FY21 First Half Results Investor Presentation 25 February 2021
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation contains summary information about Propel Funeral Partners No representation or warranty, express or implied, is made as to the fairness, Limited (ACN 616 909 310) (Propel) and its activities current as at the date of accuracy, completeness or correc
Slide 3: Presenters
Presenters Albin Kurti Lilli Gladstone Fraser Henderson Managing Director and Head of Finance Head of M&A, General Head of Investments Counsel and Company Secretary 3
Slide 4: Agenda
Agenda 1. Key highlights for 1H FY21 2. COVID-19 impacts and responses 3. Company overview 4. 1H FY21 financial results detail 5. Industry trends and acquisitions 6. Outlook 7. Q&A Appendices 4
Slide 5: 1. Key highlights for 1H FY21
1. Key highlights for 1H FY21
Slide 6: Key highlights for 1H FY21
Key highlights for 1H FY21 1 Revenue Funeral volumes Average Revenue Per Funeral TRADING1 $59.0m 3.5% 6,897 3.8% $5,874 3.6% on FY20 2 Operating EBITDA Operating NPAT Cash Flow Conversion EARNINGS1 $19.0m 14.8% $8.4m 7.6% 97.6% 160 bps 3 Interim Dividend Gearing Ratio Funding Capacity CAPITAL MANAGE
Slide 7: 2. COVID-19 impacts and responses
2. COVID-19 impacts and responses
Slide 8: COVID-19 impacts
COVID-19 impacts Below trend death volumes partially offset by Average Revenue Per Funeral growth 1 Average Revenue Per Funeral Unlike the widespread impacts of strict funeral attendee limits in Australia and New Zealand during Q4 FY20: • the easing of funeral attendee limits contributed to an incre
Slide 9: COVID-19 responses
COVID-19 responses Focused on people safety, essential service continuity and financial resilience 1 People safety 2 Essential service continuity 3 Financial resilience • communicating government guidelines and • ensuring staff could cross state/territory • ensuring adequate liquidity levels in plac
Slide 10: 3. Company overview
3. Company overview
Slide 11: Geographic presence
Geographic presence 138 locations (77 owned / 61 leased), including 32 cremation facilities and 9 cemeteries August 2013 February 2021 Queensland 1 Geographic footprint is difficult to replicate, with funeral homes dating back to the late 1800s and early 1900s 11
Slide 12: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired in 1H FY21 12
Slide 13: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory Funeral volumes Revenue ($m) 3.8% 3.5% 1H Actual 1H Actual 13
Slide 14: Earnings growth
Earnings growth Propel has maintained a strong growth trajectory Operating EBITDA ($m) Operating NPAT ($m) 14.8% 7.6% 1H Actual 1H Actual 14
Slide 15: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~2.5% since FY14 CAGR ~2.5% 3.6% on FY20 (up 2.1% on pre-COVID period1 in FY20) 1 1 July 2019 to 31 March 2020 15
Slide 16: Cash Flow Conversion
Cash Flow Conversion Cash Flow Conversion has been consistently strong, averaging ~99% since FY15 13.0% 1H Actual 16
Slide 17: 4. 1H FY21 financial results detail
2. 4.COVID-19 Impact results detail 1H FY21 financial XXXX 17
Slide 18: Financial Summary
Financial Summary Income statement Comments $ million 31-Dec-20 31-Dec-19 Revenue • Increased 3.5% on the PCP to $59.0m despite below trend funeral Total revenue 59.0 57.0 volumes, primarily due to: Gross profit 42.7 40.7 – the contributions from five acquisitions completed in FY20 and …margin 72.3%
Slide 19: 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 29.1% 32.2% Comments Total: Organic: Operating EBITDA Margin: ARPF ARPF 320 bps on the PCP, influenced by: • 3.6% on FY20, impacted by the financial profile • 3.5% o
Slide 20: Cash flow
Cash flow Statutory actuals Comments $ million 31-Dec-20 31-Dec-19 Operating activities Receipts from customers (inc GST) 64.1 62.2 • Cash Flow Conversion strong at ~97.6% (PCP: ~99.2%) Payments to suppliers & employees (inc GST) (45.6) (45.4) • No Performance Fee triggered in the third Calculation
Slide 21: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 31-Dec-20 30-Jun-20 Cash and net debt position Cash and cash equivalents 6.8 53.9 • $6.8m of cash Contract assets 46.9 47.5 • $80.8m of net debt1 Other current assets 12.6 10.1 • $87.6m of drawn senior debt (30 June 2020: $109.8m) Total Current Asse
Slide 22: Capital management
Capital management Funding capacity Comments Debt facility limits / maturity: $ million Debt facilities - Tranche A (matures in August 2022) 50.0 • Expanded to $150.0m in FY20 - Tranche B (matures in August 2022) 40.0 • Includes a $10.0m working capital facility which is - Tranche C (working capital
Slide 23: 5. Industry trends and acquisitions
5. Industry trends and acquisitions
Slide 24: 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 25: 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 26: Acquisitions
Acquisitions Propel has deployed $126.7 million1 on acquisitions since its IPO 1 During 1H 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 Limite
Slide 27: 6. Outlook
6. Outlook
Slide 28: 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 season in 2020 • the growing and ageing population in Australia and Ne
Slide 29: 7. Q&A
7. Q&A
Slide 30: Appendices
Appendices
Slide 31: 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 32: NPAT to Operating NPAT reconciliation
NPAT to Operating NPAT reconciliation $ million 31-Dec-20 31-Dec-19 Net profit after income tax 8.2 3.4 Add: Acquisition costs 0.2 1.4 Add: Performance fee - 4.1 Add: Other non-operating expenses 0.1 0.2 Add: Net loss on disposal of assets 0.0 0.1 Less: Tax effect of certain Operating NPAT adjustmen
Slide 33: Income statement analysis
Income statement analysis Income Statement Comments $ million 31-Dec-20 31-Dec-19 Revenue segments: Funeral operations 51.3 49.4 • 87.0% generated from funeral operations Cemetery, crematoria and memorial gardens 6.5 6.3 (1H FY20: 86.7%) Other trading revenue 1.2 1.3 • 11.0% generated from cemetery
Slide 34: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 31-Dec-20 NPAT 8.2 Distributable Earnings calculation Acquisition costs 0.2 Net financing charge on prepaid contracts 0.5 Government wage subsidies (1.5) Distributable Earnings 7.3 Dividend payout ratio (rounded) 82% Number of share on iss
Slide 35: External management structure with 10 year escrow
External management structure with 10 year escrow Management Agreement and escrow provisions put shareholder returns first and align for the long term 1 Exclusivity ❑ The Manager works exclusively for Propel 2 ❑ No salaries or directors fees are paid to the Management Shareholders No performance = n
Slide 36: Simplified corporate structure
Simplified corporate structure Management Agreement PETS QLD NSW/ACT VIC TAS SA WA NZ Property Trusts Freehold Operating subsidiaries Properties 36
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