Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 FY2019 Earnings Presentation
32 slides from Propel Funeral Partners's earnings presentation, Feb 25, 2019
Slide 1: FY19 First Half Results
FY19 First Half Results Investor Presentation 25 February 2019
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation contains summary information about Propel Funeral Partners Limited (ACN 616 909 310) (Propel) and its activities current as at the date of this presentation. Propel assumes no obligation to update such information. The information in this presentatio
Slide 3: Presenters
Presenters Albin Kurti Managing Director and Head of Investments Lilli Gladstone Head of Finance Fraser Henderson Head of M&A, General Counsel and Company Secretary 3
Slide 4: Agenda
Agenda 1. Death volume fluctuations 2. Key highlights for 1H FY19 3. Business overview 4. 1H FY19 financial results detail 5. Industry trends and acquisitions 6. Outlook 7. Q&A Appendix 4
Slide 5: 1. Death volume fluctuations
1. Death volume fluctuations
Slide 6: Death volumes fluctuate
Death volumes fluctuate Death volume growth is forecast to accelerate and prior YoY declines rebounded quickly Number of deaths per annum in Australia – 1990 to 20171 203k 180,000 161k +42k in 1 +41k in 27 years 10 years 160,000 140,000 120k 120,000 100,000 2 In 2027, death 80,000 volumes are 60,000
Slide 7: 2. Key highlights for 1H FY19
2. Key highlights for 1H FY19
Slide 8: Key highlights for 1H FY19
Key highlights for 1H FY19 1 Revenue: 20.9% to $47.1 million (1H FY18: $38.9 million) TRADING Funeral volumes: 11.7% to 5,644 (1H FY18: 5,053). LFL volumes 509 funerals ARPF: 2.2% to $5,549 (1H FY18: $5,427). LFL ARPF 3.0% 2 Operating EBITDA: 6.4% to $11.7 million (1H FY18: $11.0 million) Operating
Slide 9: 3. Business overview
3. Business overview
Slide 10: Geographic presence
Geographic presence 109 locations (55 freehold / 54 leasehold), including 25 cremation facilities and 8 cemeteries June 2013 February 2019 Queensland Queensland 1 Western 14 Australia South Australia 10 29 New South Wales 3 1 ACT 17 Victoria 16 New Zealand Tasmania 19 FY12 FY13 FY14 FY15 FY16 FY17 F
Slide 11: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired or signed binding legal documentation since 1 July 2018 11
Slide 12: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory despite soft market conditions Funeral volumes Revenue ($m) 10,111 80.9 6,054 46.1 47.1 5,644 11.7% 20.9% 5,053 38.9 2,967 22.4 1,625 10.9 906 6.0 278 465 1.2 2.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1HFY19 FY12 FY13 FY14 FY15
Slide 13: Earnings growth
Earnings growth Propel’s earnings have proved resilient despite soft market conditions Operating EBITDA1 ($m) Operating NPAT1 ($m) 21.5 12.3 12.3 11.7 6.4% 6.4 11.0 5.5 1.3% 6.3 5.8 2.9 3.1 1.5 FY15 FY16 FY17 FY18 1HFY19 FY15 FY16 FY17 FY18 1HFY19 1H Actual 1H Actual 1Historical information is Profo
Slide 14: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~3% since FY14 $5,549 CAGR ~3% $5,508 2.2% $5,427 $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 1HFY19 1H Actual 14
Slide 15: 4. 1H FY19 financial results detail
4. 1H FY19 financial results detail
Slide 16: Financial summary
Financial summary Income statement1 Comments $ million 31-Dec-18 31-Dec-17 Revenue Total revenue 47.1 38.9 • increased 20.9% on 1H FY18 primarily due to: – the impact of six acquisitions completed in FY18 and 1H FY19 Cost of sales (14.0) (11.9) – solid ARPF Gross profit 33.1 27.0 … margin 70.2% 69.4
Slide 17: Revenue bridge and Operating EBITDA
Revenue bridge and Operating EBITDA Operating EBITDA1 11.0 11.7 Margin 28.1% 24.8% Comments Total growth: Organic: Operating EBITDA Margin Average Revenue Per Funeral (ARPF) ARPF 1.8% on FY18, influenced by: – 2.2% on 1H FY18, including the financial – 3.0% on 1H FY18 primarily influenced by – below
Slide 18: Cash flow highlights
Cash flow highlights Statutory actuals Comments Operating cash flow $ million 31-Dec-18 31-Dec-17 • Operating EBITDA conversion to ungeared, pre-tax, Receipts from customers (inc GST) 52.1 43.1 operating cash flow solid at ~93% (1H FY18:~100%) Payments to suppliers and employees (inc GST) (41.3) (32
Slide 19: Strong financial position
Strong financial position Statutory balance sheet Comments $ million 31-Dec-18 30-Jun-18 Net cash position Cash and cash equivalents 10.3 28.3 – $10.3m of cash (as at 31 December 2018) Trade and other receivables 5.0 4.2 – no senior debt (borrowings relate to hire purchase) Contract assets 46.5 45.6
Slide 20: 5. Industry trends and acquisitions
5. Industry trends and acquisitions
Slide 21: 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 60,000 1.8% CAGR 2.1% CAGR (2026-2050) (2026-2050) 300,000 50,000 2.4% CAGR 1.0% CAGR 250,000 (2017-2026) 0.7% CAGR (2017-2026) 0.9% CAGR 40,000 (1990-201
Slide 22: Acquisitions (since IPO)
Acquisitions (since IPO) Propel has committed $77.3 million1 on acquisitions since the 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 2018 2
Slide 23: 6. FY19 Outlook
6. FY19 Outlook
Slide 24: Outlook
Outlook Propel is well positioned and remains focussed on the Investment Strategy Recovery expected: Historical experience suggests that the significant, YoY decline in death volumes experienced in calendar year 2018 should be temporary, given: – the growing and ageing population; and – prior year Y
Slide 25: 7. Q&A
7. Q&A
Slide 26: Appendix
Appendix
Slide 27: Definitions
Definitions ARPF means Average Revenue Per Funeral excluding disbursements and delivered prepaid funeral impacts. Cash flow conversion means Operating EBITDA converted into ungeared, pre-tax operating cash flow. Cps means cents per share. Distributable Earnings means NPAT adjusted for certain non-ca
Slide 28: Income statement analysis
Income statement analysis Income Statement Comments $ million 31-Dec-18 31-Dec-17 Funeral operations 40.9 35.6 Revenue segments: Cemetery, crematoria and memorial gardens 5.2 2.6 • 86.8% generated from funeral operations Other trading revenue 1.0 0.8 • 11.0% generated from cemetery and memorial Tota
Slide 29: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 1HFY19 Statutory NPAT 6.4 Distributable Earnings calculation: Acquisition costs 0.6 Net financing charge 0.5 Distributable Earnings 7.5 Dividend payout ratio (actual) 75% Number of shares on issue 98,163,089 Dividend per share (Rounded) 5.
Slide 30: 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 31: Simplified corporate structure
Simplified corporate structure Management Agreement QLD NSW/ACT VIC TAS SA WA NZ Property Trust Freehold Operating subsidiaries Properties 31
Slide 32: Propel Funeral Partners
PROPEL FUNERAL PARTNERS PrP
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