Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — FY2022 Earnings Presentation
40 slides from Propel Funeral Partners's earnings presentation, Aug 24, 2022
Slide 1: FY22 Full Year Results Investor Presentation
INVESTOR PRESENTATION 2022 | PROPEL FUNERAL PARTNERS FY22 Full Year Results Investor Presentation 24 August 2022 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 FY22 2. 2. Company overview 3. 3. FY22 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 FY22
1. Key highlights for FY22 5
Slide 6: Key Highlights for FY22
Key Highlights for FY22 Revenue Funeral Volumes Average Revenue Per Funeral 1 TRADING1 $145.2m 16,537 $6,038 20.6% 18.8% 2.0% (up 4.9% on the pre-COVID period2) Pro forma3 Operating EBITDA Pro forma3 Operating NPAT Cash Flow Conversion 2 EARNINGS1 $39.0m $16.9m 100.2% 25.2% 45.0% 160bps Dividend Gea
Slide 7: COVID-19 Impacts
COVID-19 Impacts Average Revenue Per Funeral and comparable funeral volume growth accelerated in 2H FY22 1 Average Revenue Per Funeral 2 Funeral Volumes $6,038 Comparable Average Revenue Per Funeral Comparable Funeral Volumes $5,756 $5,917 $5,421 (growth on the PCP) (growth on the PCP) ▲10.1% 8.9% i
Slide 8: 2. Company Overview
2. Company Overview 8
Slide 9: Geographic Presence
Geographic Presence 144 operating locations (79 owned / 65 leased), including 32 cremation facilities and 9 cemeteries 1 August 2013 2 August 2022 Queensland Queensland 1 25 Western Australia South Australia 16 34 New South Wales 5 1 ACT 16 Victoria 29 New Zealand Tasmania 18 Geographic footprint is
Slide 10: Brand Portfolio
Brand Portfolio Diversified single and multi-site brands with strong local community awareness Australia NZ Pinegrove Funerals ismore Funeral Services Acquisitions completed during FY22 and announced during FY23 10
Slide 11: Volume and Revenue Growth
Volume and Revenue Growth Propel has maintained a strong growth trajectory despite COVID-19 impacts 1 Funeral volumes 2 Revenue ($m) 16,537 18.8% 145.2 20.6% 13,916 13,299 120.4 110.8 11,304 95.1 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
Slide 12: Earnings Growth
Earnings Growth Propel has maintained a strong growth trajectory despite COVID-19 impacts 1 Operating EBITDA ($m) 2 Operating NPAT ($m) 39.6 25.2% (Pro forma) 17.4 36.3 45.0% 39.0 (Pro forma) 32.4 15.3 16.9 14.2 13.3 31.1 12.3 23.8 21.5 11.6 12.3 5.5 5.8 2.9 3.1 1.5 FY15 FY16 FY17 FY18 FY19 FY20 FY2
Slide 13: Average Revenue Per Funeral Growth
Average Revenue Per Funeral Growth Compound annual growth rate (CAGR) of ~2.6% since FY14 CAGR ~2.6% $6,038 2.0% on FY21 $5,917 $5,672 Growth of: $5,508 $5,585 • 4.9% on the pre-COVID period1 $5,223 • 4.3% in 2H FY222 $5,099 $4,899 $4,976 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1 1 July 2019 to
Slide 14: Cash Flow Conversion
Cash Flow Conversion Consistently strong and has averaged ~99% since FY15 104.0% 103.4% 101.8% 98.9% 100.2% ~99% average 96.5% 97.4% 93.7% (since FY15) FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 14
Slide 15: Performance Summary Since IPO
Performance Summary Since IPO Propel’s share price has outperformed the ASX300 and its listed domestic peer since IPO in November 2017 Relative share price and index performance 100% Propel Total shareholder return4 80% 60% +75.2%1 ~86% 40% 20% ASX300 Total shareholder value accretion5 0% +10.2%2 ~$
Slide 16: 3. FY22 Financial Results Detail
3. FY22 Financial Results Detail 16
Slide 17: Financial Summary – Pro forma
Financial Summary – Pro forma Pro Forma Income Statement1 Comments Revenue $ million FY22 FY21 • Increased 20.6% on FY21 to $145.2m, primarily due to: Total revenue 145.2 120.4 – the contributions from nine acquisitions completed in FY21 and FY22 Gross profit 102.5 86.8 – comparable funeral volume g
Slide 18: Earnings Bridge – Statutory to Pro forma
Earnings Bridge – Statutory to Pro forma Statutory Operating EBITDA up 9.3% and Pro forma Operating EBITDA up 25.2% Pro forma Operating EBITDA 25.2% 18
Slide 19: 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 25.8% 26.8% Comments Total: Organic: Pro forma Operating EBITDA margin: Funeral Volumes Funeral Volumes 100 bps on FY21, positively im
Slide 20: Cash Flow
Cash Flow Statutory actuals Comments $ million FY22 FY21 Operating activities Receipts from customers (inc GST) 158.2 132.4 • Cash Flow Conversion strong at ~100.2% (FY21: ~101.8%) Payments to suppliers & employees (inc GST) (116.4) (95.5) • $7.5m cash component of the termination fee 41.9 36.9 • In
Slide 21: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 30 Jun 22 30 Jun 21 Cash and net debt position Cash and cash equivalents 7.9 7.5 Contract assets 53.1 46.1 • $7.9m of cash Other current assets 13.1 10.9 • $40.3m of net debt1 (30 June 2021: $79.0m) Total Current Assets 74.1 64.5 • $48.1m of drawn s
Slide 22: Capital Management
Capital Management Funding Capacity Comments $ million Funding capacity Debt facility limit at 30 June 2022 200.0 • Increase in senior debt facilities to $200m Net Debt as at 30 June 2022 1 (40.3) • Capital Raising proceeds of $62.3m net of transactions costs • Binding cash commitments, subsequent t
Slide 23: 4. Industry Trends and Acquisitions
4. Industry Trends and Acquisitions 23
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 1 Australia 2 NZ • 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 expected to
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 1 CY151 2 CY212 InvoCare InvoCare Others ~24.6% ~21.7% Others ~74.2% ~71.3% ~1.2% ~7.0% 1 Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performe
Slide 26: Acquisitions
Acquisitions Propel has committed $155.5 million1 on acquisitions since its IPO 1 During FY22, Propel committed $21.02 million on acquisitions in SA, VIC, WA and NZ including: the companies that own Berry Funeral Directors (including the funeral property), which provides funeral directing services i
Slide 27: 5. Summary and Outlook
5. Summary and Outlook 27
Slide 28: 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 29: Outlook
Outlook Demand for essential funeral services is underpinned by favourable demographics 1 Propel’s positive trading momentum has continued into the start of the new financial year: • in the first six weeks of FY23, total and comparable funeral volumes were materially higher than the PCP • in the mon
Slide 30: 6. Q&A
6. Q&A 30
Slide 31: Appendices
Appendices 31
Slide 32: 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 t
Slide 33: 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 34: Management Internalisation Completed
Management Internalisation1 Completed Management Internalisation completed in FY22 1 The Management Internalisation involved: • the assignment and termination of the management agreement between the Company and the former Manager • payment of a $15.0 million termination fee to the former Manager, se
Slide 35: Financial Summary - Statutory
Financial Summary - Statutory $ million FY22 FY21 Total revenue 145.2 120.4 Gross profit 102.5 86.8 …margin 70.6% 72.0% Total operating costs (62.9) (50.5) Operating EBITDA 39.6 36.3 …margin 27.3% 30.1% Depreciation (10.3) (9.7) Operating EBIT 29.3 26.6 …margin 20.2% 22.1% Net interest expense (3.5)
Slide 36: Statutory to Pro Forma Reconciliation
Statutory to Pro Forma Reconciliation $ million FY22 FY21 Var % Statutory Operating EBITDA 39.6 36.3 9.3% Less: Management Internalisation (0.1) (3.0) Less: Government subsidies (0.6) (2.2) Pro forma Operating EBITDA 39.0 31.1 25.2% Statutory Operating NPAT 17.4 15.3 13.8% Less: Management Internali
Slide 37: NPAT to Operating NPAT Reconciliation
NPAT to Operating NPAT Reconciliation FY22 FY21 FY22 FY21 $ million Pro forma Pro forma Statutory Statutory Net profit/(loss) after income tax 16.0 10.5 (0.3) 14.4 Add: Termination fee - - 15.0 - Add: Share based payment revaluation expense - - 5.4 - Add: Fair value adjustment on termination shares
Slide 38: Statutory Income Analysis
Statutory Income Analysis Statutory actuals Comments $ million FY22 FY21 Revenue segments: Funeral operations 127.5 104.5 • 87.8% generated from funeral operations (FY21: 86.7%) Cemetery, crematoria and memorial gardens 15.4 13.7 • 10.6% generated from cemetery and memorial gardens (FY21: 11.4%) Oth
Slide 39: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million FY22 FY21 NPAT (0.3) 14.4 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 costs 1.1 0.9 Net financing cha
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