Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — FY2020 Earnings Presentation
44 slides from Propel Funeral Partners's earnings presentation, Aug 25, 2020
Slide 1: FY20 Full Year Results
FY20 Full Year Results Investor Presentation 25 August 2020
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 2. COVID-19 impacts and responses 3. Company overview 4. FY20 financial results detail 5. Industry trends and acquisitions 6. Outlook 7. Q&A Appendices 4
Slide 5: 1. Key highlights
1. Key highlights
Slide 6: Key highlights for FY20
Key highlights for FY20 1 Revenue: Volumes: Average Revenue Per Funeral: TRADING1 $110.8 13,299 $5,672 million funerals 16.5% 17.6% 1.6% YoY / 2.1% comparable 2 Operating EBITDA: Operating NPAT: Cash Flow Conversion: EARNINGS1 $32.4 $14.2 103.4% million million 36.4% (up 19.7% ex AASB 16) 6.5% (up 8
Slide 7: 2. COVID-19 impacts and responses
2. COVID-19 impacts and responses
Slide 8: COVID-19 impacts
COVID-19 impacts Funeral attendee limits introduced in late March 2020 have changed numerous times Timeline of funeral attendee limits since late March 2020 18 March 23 March 25 March 26 March 28 April early May 29 May early June 25 August Australia1 500 attendees 10 attendees 30 attendees At least
Slide 9: COVID-19 impacts
COVID-19 impacts Average Revenue Per Funeral and funeral volumes were negatively impacted in Q4 FY20 1 Average Revenue Per Funeral $5,756 $5,862 $5,403 $4,972 Funeral attendee limits1 and social distancing measures introduced in late March 2020 to curb the spread of COVID-19: • affected Propel’s abi
Slide 10: COVID-19 responses
COVID-19 responses Focused on people safety, essential service continuity and financial resilience 1 People safety 2 Essential service continuity 3 Financial resilience • ensuring sufficient supply of PPE • ensuring staff able to cross state/territory • prudently increasing cash at bank borders and
Slide 11: 3. Company overview
3. Company overview
Slide 12: Geographic presence
Geographic presence 130 locations (72 owned / 58 leased), including 31 cremation facilities and 9 cemeteries August 2013 August 2020 Queensland Queensland 1 Western 24 Australia South Australia 13 32 New South Wales 3 1 ACT 17 Victoria 21 New Zealand Tasmania 19 Geographic footprint is difficult to
Slide 13: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired in FY20 or expected to be acquired by 31 December 2020 13
Slide 14: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory Funeral volumes Revenue ($m) 13,299 110.8 17.6% 11,304 95.1 16.5% 10,111 80.9 6,054 46.1 2,967 22.4 1,625 906 10.9 465 6.0 278 1.2 2.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Slide 15: Earnings growth
Earnings growth Propel has maintained a strong growth trajectory Operating EBITDA ($m) Operating NPAT ($m) 32.4 14.2 36.4% 13.3 6.5% (up 19.7% 12.3 (up 8.4% ex AASB 16) ex AASB 16) 23.8 21.5 12.3 5.5 5.8 2.9 3.1 1.5 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 15
Slide 16: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~2.5% since FY14 CAGR ~2.5% $5,672 $5,585 1.6% on FY19 $5,508 (comparable up 2.1% on FY19) $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 FY19 FY20 16
Slide 17: Cash Flow Conversion
Cash Flow Conversion Cash Flow Conversion has been consistently strong, averaging ~99% since FY15 120% 50.0 104.0% 103.4% 98.9% 97.4% 40.0 90% 93.7% 96.5% 30.0 $m 60% 20.0 30% 10.0 0% - FY15 FY16 FY17 FY18 FY19 FY20 Operating Cash Flow (RHS) Cash Conversion (LHS) 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 Propel vs ASX300 vs InvoCare Comments 40% Since Propel’s IPO on 23 November 2017 and as at 30 June 2020: 30% • Propel’s share price was up
Slide 19: 4. FY20 financial results detail
2. 4.COVID-19 Impact FY20 financial results detail XXXX 19
Slide 20: Financial Summary – Statutory Result
Financial Summary – Statutory Result Income statement Comments Revenue $ million 30-Jun-20 30-Jun-19 • Increased 16.5% on FY19 to $110.8 million, primarily due to: Total revenue 110.8 95.1 – the impact of seven acquisitions completed in FY19 and FY20 Gross profit 79.6 67.3 – comparable ARPF growth o
Slide 21: Operating EBITDA ($m) – Impact of AASB 16
Operating EBITDA ($m) – Impact of AASB 16 1 AASB 16 adopted on 1 July 2019, with no cash impact and no change to operations Consistent Impact of AASB 16 Statutory Accounting Basis 19.7% 36.4% 1 Refer to appendices for additional disclosures on AASB 16 21
Slide 22: Operating NPAT ($m) – Impact of AASB 16
Operating NPAT ($m) – Impact of AASB 16 1 AASB 16 adopted on 1 July 2019, with no cash impact and no change to operations Consistent Impact of AASB 16 Statutory Accounting Basis 8.4% 6.5% 1 Refer to appendices for additional disclosures on AASB 16 22
Slide 23: Revenue bridge and Operating EBITDA margin
Revenue bridge and Operating EBITDA margin Propel generated significant revenue and margin growth despite COVID-19 impacts Operating EBITDA Margin 25.0% 29.2% (25.7% ex AASB 16) Comments Total: Organic: Operating EBITDA Margin: ARPF ARPF 420 bps ( 70 bps Pro forma) on FY19, influenced by: • 1.6% on
Slide 24: Cash flow
Cash flow Statutory actuals Comments $ million 30-Jun-20 30-Jun-19 Operating activities Receipts from customers (inc GST) 121.7 104.3 • Cash Flow Conversion strong at ~103.4% (FY19: Payments to suppliers & employees (inc GST) (87.8) (81.1) ~97.4%) 33.9 23.2 • Performance Fee paid in cash Performance
Slide 25: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 30-Jun-20 30-Jun-19 Cash and net debt position Cash and cash equivalents 53.9 5.3 • $53.9m cash and $55.9m of net debt1 Contract assets 47.5 47.9 • Drawn senior debt of $109.8m versus $12.9m as at 30 June 2019 Other current assets 10.1 10.6 Total Cu
Slide 26: Capital management
Capital management Funding capacity Comments Debt facilities Debt facility limits / maturity: $ million - Tranche A (matures in August 2022) 50.0 • Expanded to $150.0m in December 2019 - Tranche B (matures in August 2022) 40.0 • Includes a $10.0m working capital facility which is - Tranche C (workin
Slide 27: 5. Industry trends and acquisitions
5. Industry trends and acquisitions
Slide 28: 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 350,000 2.0% CAGR 60,000 1.8% CAGR (2029-2050) (2030-2050) 300,000 50,000 1.1% CAGR 2.5% CAGR (2019-2030) 250,000 (2018-2029) 0.8% CAGR 0.9% CAGR 40,000 (1990-201
Slide 29: Market Share estimate (funeral volumes)
Market Share estimate (funeral volumes) Propel has increased its market share in the highly fragmented Australian funeral industry CY151 CY192 InvoCare InvoCare ~24.6% ~22.9% Others Others ~74.2% ~70.8% ~1.2% ~6.3% 1 Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by
Slide 30: Acquisitions (since IPO)
Acquisitions (since IPO) Propel has committed $125.8 million1,3 on acquisitions since its IPO Funeral Third Party Australia Announced Volumes Cremations Revenue Brindley Group (VIC, NSW) December 2017 1,350 - A$11.0m Norwood Park (ACT, NSW, QLD) January 2018 - 2,000 A$4.8m Newhaven NQ (QLD) June 201
Slide 31: 6. Outlook
6. Outlook
Slide 32: Outlook
Outlook Demand for essential funeral services remains, underpinned by favourable demographics 1 In the month of July 2020: • Resilience in operating earnings continued • Average Revenue Per Funeral continued to improve, with growth over the PCP within the Company’s 2-4% target range • Propel perform
Slide 33: 7. Q&A
7. 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. Adjusted EPS means Operating NPAT divided by the weighted average number of ordinary shares on issue for the year ended 30 June 2020. ARPF means Avera
Slide 36: Impact of AASB 16 – Income Statement Reconciliation
Impact of AASB 16 – Income Statement Reconciliation $ million 30-Jun-20 AASB 16 30-Jun-20 30-Jun-19 Statutory Adjustments 1 Pro forma Statutory Total revenue 110.8 110.8 95.1 Gross profit 79.6 79.6 67.3 …margin 71.8% 71.8% 70.7% Total operating costs (47.2) (4.0) (51.1) (43.5) Operating EBITDA 32.4
Slide 37: Impact of AASB 16 – Cash flow Reconciliation
Impact of AASB 16 – Cash flow Reconciliation $ million 30-Jun-20 AASB 16 30-Jun-20 30-Jun-19 Statutory Adjustments Pro forma Statutory Receipts from customers (inc GST) 121.7 121.7 104.3 Payments to suppliers & employees (inc GST) (87.8) (4.0) (91.8) (81.1) 33.9 (4.0) 30.0 23.2 Performance fee (inc
Slide 38: Impact of AASB 16 – Balance Sheet Reconciliation
Impact of AASB 16 – Balance Sheet Reconciliation $ million 30-Jun-20 AASB 16 30-Jun-20 30-Jun-19 Statutory Adjustments Pro forma Statutory Total Current Assets 111.5 111.5 63.8 Property, plant & equipment 129.3 0.0 129.3 97.9 Right-of-use assets 39.1 (39.1) - - Goodwill 123.2 123.2 106.4 Other Non-c
Slide 39: NPAT to Operating NPAT reconciliation
NPAT to Operating NPAT reconciliation $ million 30-Jun-20 30-Jun-19 Statutory Statutory Net profit after income tax 10.6 12.3 Add: Acquisition costs 1.6 1.6 Add: Performance fee 4.1 - Add: Net foreign exchange losses 0.0 0.0 Add: Other non-operating expenses 0.3 0.3 Add/(Less): Net loss/(gain) on di
Slide 40: Income statement analysis
Income statement analysis Income Statement Comments $ million 30-Jun-20 AASB 16 30-Jun-20 30-Jun-19 Statutory Adjustments Pro forma Statutory Revenue segments: Funeral operations 96.4 96.4 82.3 • 86.9% generated from funeral operations (FY19: 86.5%) Cemetery, crematoria and memorial gardens 12.0 12.
Slide 41: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 30-Jun-20 NPAT 10.6 Distributable Earnings calculation Acquisition costs 1.6 Net financing charge on prepaid contracts 0.5 New Zealand deferred tax liability restatement (1.1) Distributable Earnings 11.6 Dividend Payout Ratio 85% Number of
Slide 42: 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 43: Simplified corporate structure
Simplified corporate structure Management Agreement QLD NSW/ACT VIC TAS SA WA NZ Property Trusts Freehold Operating subsidiaries Properties 43
Slide 44: Slide 44
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