Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 2022 Earnings Presentation
39 slides from Propel Funeral Partners's earnings presentation, Feb 23, 2022
Slide 1: FY22 First Half Results
FY22 First Half Results Investor Presentation 23 February 2022
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 1H FY22 2. Company overview 3. 1H FY22 financial results detail 4. Industry trends and acquisitions 5. Summary and outlook 6. Q&A Appendices 4
Slide 5: 1. Key highlights for 1H FY22
1. Key highlights for 1H FY22
Slide 6: Key highlights for 1H FY22
Key highlights for 1H FY22 1 Revenue Funeral volumes Average Revenue Per Funeral TRADING1 $68.0m 15.2% 7,928 14.9% $5,902 0.5% (up 2.5% on the pre-COVID period2) 2 Pro forma3 Operating EBITDA Pro forma3 Operating NPAT Cash Flow Conversion EARNINGS1 $18.4m 17.8% $7.8m 30.4% 98.4% 80bps 3 Interim Divi
Slide 7: COVID-19 impacts
COVID-19 impacts Average Revenue Per Funeral resilient, despite COVID-19 impacts 1 Average Revenue Per Funeral Average Revenue Per Funeral in 1H FY22 was $5,902: • up 0.5% on the PCP • up 2.5% on the pre-COVID-19 period1 COVID-19 impacts were less severe than during the initial wave of the pandemic
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 Internalisation1 completed Management Internalisation completed on 26 July 2021 1 The Management Internalisation involved: • the assignment and termination of the management agreement between the Company and the Manager • payment of a $15.0 million termination fee to the Manager, settled
Slide 10: 2. Company overview
2. Company overview
Slide 11: Geographic presence
Geographic presence 145 locations (78 owned / 67 leased), including 32 cremation facilities and 9 cemeteries August 2013 February 2022 Queensland 1 Geographic footprint is difficult to replicate, with funeral homes dating back to the late 1800s and early 1900s 11
Slide 12: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services 12 Completed or announced since 1 July 2021
Slide 13: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory despite COVID-19 impacts Funeral volumes Revenue ($m) 13,916 13,299 120.4 11,304 110.8 10,111 95.1 7,928 80.9 14.9% 68.0 6,054 6,897 15.2% 46.1 59.0 2,967 22.4 1,625 906 10.9 278 465 6.0 1.2 2.2 FY12 FY13 FY14 FY15 FY16 FY17
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 14.2 13.3 12.3 23.8 21.5 19.0 19.1 8.4 8.3 18.4 17.8% (Pro forma) 7.8 30.4% (Pro forma) 12.3 5.5 15.6 6.0 2.9 5.8 1.5 3.1 FY15 FY16 FY17 FY18 FY19 FY20 F
Slide 15: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~2.7% since FY14 CAGR ~2.7% $5,874 $5,902 $5,672 0.5% $5,508 $5,585 (up 2.5% on the pre-COVID period1) $5,223 $5,099 $4,899 $4,976 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H FY21 1H FY22 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 104.0% 103.4% 98.9% 97.4% 97.6% 98.4% 96.5% 93.7% FY15 FY16 FY17 FY18 FY19 FY20 1H FY21 1H FY22 16
Slide 17: 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 31 December 2021: 80% Propel • Propel’s share price
Slide 18: 3. 1H FY22 financial results detail
3. 1H FY22 financial results detail
Slide 19: Financial Summary - Statutory
Financial Summary - Statutory Statutory Income Statement Comments $ million 31-Dec-21 31-Dec-20 Revenue Total revenue 68.0 59.0 • Increased 15.2% on the PCP to $68.0m, primarily due to: Gross profit 48.5 42.7 – the contributions from seven acquisitions completed in FY21 and 1H FY22 …margin 71.3% 72.
Slide 20: Pro forma earnings bridge
Pro forma earnings bridge Pro forma Operating EBITDA grew by 17.8%, driven by materially higher funeral volumes Pro forma Operating EBITDA 17.8% 20
Slide 21: Revenue bridge and Pro forma Operating EBITDA margin
Revenue bridge and Pro forma Operating EBITDA margin Propel generated revenue and Pro forma margin growth, despite COVID-19 impacts Pro forma Operating EBITDA margin 26.5% 27.1% Comments Total: Organic: Pro forma Operating EBITDA margin: Funeral Volumes Funeral Volumes 60 bps on the PCP, positively
Slide 22: Cash flow
Cash flow Statutory actuals Comments $ million 31-Dec-21 31-Dec-20 Operating activities Receipts from customers (inc GST) 74.3 64.1 • Cash Flow Conversion strong at ~98.4% (1H FY21: ~97.6%) Payments to suppliers & employees (inc GST) (55.5) (45.6) • $7.5m cash component of the termination fee 18.8 1
Slide 23: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 31-Dec-21 30-Jun-21 Cash and net debt position Cash and cash equivalents 7.9 7.5 Contract assets 52.4 46.1 • $7.9m of cash Other current assets 12.8 10.9 • $38.2m of net debt1 (30 June 2021: $79.0m) Total Current Assets 73.1 64.5 • $46.1m of drawn s
Slide 24: Capital management
Capital management Funding Capacity Comments $ million Funding capacity Debt facility limit at 31 December 2021 200.0 • Increase in senior debt facilities to $200m • Capital Raising proceeds of $62.3m net of transactions costs Net Debt as at 31 December 20211 (38.2) • Binding cash commitments, subse
Slide 25: 4. Industry trends and acquisitions
4. Industry trends and acquisitions
Slide 26: Increasing number of deaths
Increasing number of deaths Number of deaths is the most significant driver of revenue in the death care industry Australia New Zealand • Death volumes in Australia grew by 0.9% pa between 1990 and 20201 • Death volumes in New Zealand grew by 0.7% pa between 1990 and 20212 • Death volumes are expect
Slide 27: 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% ~22.6% Others Others ~74.2% ~70.4% ~1.2% ~7.0% 1 Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by
Slide 28: Acquisitions
Acquisitions Propel has committed $147.7 million1 on acquisitions since its IPO 1 During 1H FY22, Propel deployed/committed $21.02 million on acquisitions in SA, VIC, WA and NZ including: 100% of the issued share capital and a freehold property (with multiple titles) of Berry Funeral Directors, whic
Slide 29: 5. Summary and outlook
5. Summary and outlook
Slide 30: 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 31: Outlook
Outlook Demand for essential funeral services remains, underpinned by favourable demographics 1 Propel has started 2H FY22 with positive trading momentum. In the month of January 2022: • total and comparable funeral volumes were materially higher than the PCP • a higher mix of full service funerals
Slide 32: 6. Q&A
6. Q&A
Slide 33: Appendices
Appendices
Slide 34: Definitions
Definitions ARPF means Average Revenue Per Funeral. Average Revenue Per Funeral means revenue from funeral operations, excluding direct disbursements (such as third party cemetery fees and third party cremation fees) and delivered pre-paid impacts, divided by the number of funerals in the relevant p
Slide 35: Statutory to Pro forma reconciliation
Statutory to Pro forma reconciliation $ million 31-Dec-21 31-Dec-20 Var % Statutory Operating EBITDA 19.1 19.0 0.4% Less: Management Internalisation (0.1) (1.2) Less: Government subsidies (0.6) (2.2) Pro forma Operating EBITDA 18.4 15.6 17.8% Statutory Operating NPAT 8.3 8.4 -0.7% Less: Management I
Slide 36: NPAT to Operating NPAT reconciliation
NPAT to Operating NPAT reconciliation 31-Dec-21 31-Dec-20 31-Dec-21 31-Dec-20 $ million Pro forma Pro forma Statutory Statutory Net profit/(loss) after income tax 7.2 5.5 (9.2) 8.2 Add: Termination fee - - 15.0 - Add: Share based payment revaluation expense - - 5.4 - Add: Fair value adjustment on te
Slide 37: Statutory Income statement analysis
Statutory Income statement analysis Statutory actuals Comments $ million 31-Dec-21 31-Dec-20 Revenue segments: Funeral operations 59.5 51.3 • 87.6% generated from funeral operations (1H FY21: 87.0%) Cemetery, crematoria and memorial gardens 7.3 6.5 • 10.7% generated from cemetery and memorial garden
Slide 38: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 31-Dec-21 31-Dec-20 Net (loss)/profit after tax (9.2) 8.2 Distributable Earnings calculation Termination fee 10.5 - Share based payment revaluation expense 5.4 - Fair value adjustment on termination shares 0.7 - Acquisition and transaction
Slide 39: Propel Funeral Partners
Ta PROPEL r FUNERAL PARTNERS
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