Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — FY2019 Earnings Presentation
37 slides from Propel Funeral Partners's earnings presentation, Aug 26, 2019
Slide 1: FY19 Full Year Results
FY19 Full Year Results Investor Presentation 26 August 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. Key highlights for FY19 2. Business overview 3. FY19 financial results detail 4. Industry trends and acquisitions 5. Outlook 6. Q&A Appendix 4
Slide 5: 1. Key highlights for FY19
1. Key highlights for FY19
Slide 6: Key highlights for FY19
Key highlights for FY19 1 Revenue: Volumes: Average Revenue Per Funeral: TRADING $95.1 11,304 $5,585 million funerals 17.6% 11.8% 1.4% YoY / 2.8% LFL 2 Operating EBITDA: Operating NPAT: Cash Flow Conversion: EARNINGS $23.8 $13.3 97.4% million million 10.6% 8.1% 0.9% 3 Total Dividends: Net Debt: Expa
Slide 7: 2. Business overview
2. Business overview
Slide 8: Geographic presence
Geographic presence 120 locations (64 owned / 56 leased), including 28 cremation facilities and 9 cemeteries August 2013 August 2019 Queensland Queensland 1 Western 20 Australia South Australia 11 31 New South Wales 3 1 ACT 17 Victoria 18 New Zealand Tasmania 19 Geographic footprint is difficult to
Slide 9: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired or signed binding legal documentation since 1 July 2018 9
Slide 10: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory Funeral volumes Revenue ($m) 11,304 95.1 10,111 11.8% 17.6% 80.9 6,054 46.1 2,967 22.4 1,625 10.9 906 465 6.0 278 1.2 2.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 10
Slide 11: Earnings growth
Earnings growth Propel’s earnings have proved resilient despite soft market conditions in 1H FY19 Operating EBITDA ($m) Operating NPAT ($m) 23.8 13.3 21.5 10.6% 12.3 8.1% 12.3 5.5 5.8 2.9 3.1 1.5 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 11
Slide 12: Average Revenue Per Funeral growth
Average Revenue Per Funeral growth Compound annual growth rate (CAGR) of ~2.7% since FY14 CAGR ~2.7% $5,585 $5,508 1.4% YoY 2.8% LFL $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 FY19 12
Slide 13: Cash Flow Conversion
Cash Flow Conversion Cash Flow Conversion has been consistently strong, averaging ~98% since FY15 120.0% 104.0% 98.9% 97.4% 100.0% Operating Cash Flow 96.5% 12.3% to $23.2 million 93.7% 80.0% 60.0% 40.0% 20.0% 0.0% FY15 FY16 FY17 FY18 FY19 13
Slide 14: 3. FY19 financial results detail
3. FY19 financial results detail
Slide 15: Financial summary
Financial summary Income statement Comments $ million FY19 FY18 Revenue Total revenue 95.1 80.9 • Increased 17.6% on FY18 primarily due to: – the impact of eight acquisitions completed in FY18 and FY19 Cost of sales (27.9) (24.5) – solid ARPF Gross profit 67.3 56.4 … margin 70.7% 69.7% Gross profit
Slide 16: Revenue bridge and Operating EBITDA
Revenue bridge and Operating EBITDA Operating EBITDA 21.5 23.8 Margin 26.6% 25.0% Comments Total growth: Organic: Operating EBITDA Margin: ARPF ARPF 1.6% on FY18, influenced by: – 1.4% on FY18, impacted by the financial – 2.8% on FY18 primarily influenced by pricing – below trend death volumes (on a
Slide 17: Cash flow highlights
Cash flow highlights Statutory actuals Comments Operating activities $ million FY19 FY18 • Cash Flow Conversion strong at ~97.4% (FY18: Receipts from customers (inc GST) 104.3 89.1 ~96.5%) Payments to suppliers and employees (inc GST) (81.1) (68.5) • Minor working capital movements which can be Inco
Slide 18: Strong financial position
Strong financial position Statutory balance sheet Comments $ million 30-Jun-19 30-Jun-18 Net debt position Cash and cash equivalents 5.3 28.3 – $7.6m of net debt Trade and other receivables 5.4 4.2 – Drawn senior debt of $12.9m (other borrowings of $0.5m) Contract assets 47.9 45.6 Other current asse
Slide 19: Capital management
Capital management Liquidity summary (as at 26 August 2019) Comments Debt facility limits / maturity: $ million Debt facilities - Tranche A (matures in August 2021) 50.0 – Expanded to $100m in August 2019 - Tranche B (matures in August 2022) 40.0 – Includes a $10m working capital facility which is t
Slide 20: 4. Industry trends and acquisitions
4. 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: Market Share estimate (funeral volumes)
Market Share estimate (funeral volumes) Propel has increased its market share in the highly fragmented Australian funeral industry CY151 CY182 InvoCare InvoCare ~24.6% ~23.0% Others Others ~74.2% ~71.4% ~1.2% ~5.6% 1Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by
Slide 23: Acquisitions (since IPO)
Acquisitions (since IPO) Propel has committed $116.8 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 24: Acquisition of Gregson & Weight
Acquisition of Gregson & Weight Gregson & Weight is the largest funeral operator on the Sunshine Coast in Queensland Overview: - Performs approximately 1,650 annual funerals per annum - Proposed acquisition includes: • three substantial freehold properties and vacant land (totalling circa 13 hectare
Slide 25: 5. Outlook
5. Outlook
Slide 26: Outlook
Outlook Propel is well positioned, focussed on its growth strategy and has started FY20 positively Recovery underway: Historical experience suggests that the YoY decline in death volumes in CY18 should be temporary, given: – prior year YoY declines have rebounded quickly; and – the growing and agein
Slide 27: Outlook
Outlook Propel is well positioned, focussed on its growth strategy and has started FY20 positively Record month: Propel has started FY20 with positive trading momentum. In July 2019, Propel: POSITIVE – performed a record number of funerals, with comparable funeral volumes materially higher than STAR
Slide 28: 6. Q&A
6. Q&A
Slide 29: Appendix
Appendix
Slide 30: 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. ARPF means Average Revenue Per Funeral excluding
Slide 31: Income statement analysis
Income statement analysis Income Statement Comments $ million FY19 FY18 Revenue segments: Funeral operations 82.3 72.3 • 86.5% generated from funeral operations Cemetery, crematoria and memorial gardens 10.6 6.9 • 11.2% generated from cemetery and memorial Other trading revenue 2.2 1.7 gardens – up
Slide 32: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million FY19 NPAT 12.3 Distributable Earnings calculation: Transaction/acquisition costs 1.6 Net financing charge 0.6 Distributable Earnings 14.5 Dividend Payout Ratio 78% Number of shares on issue (as at 26 August 2019) 98,507,917 Dividend per sh
Slide 33: FY20 accounting standard changes
FY20 accounting standard changes Propel will adopt AASB 16 in its FY20 financial statements – Under the new accounting standard AASB 16, the prior distinction between operating and finance leases ACCOUNTING CHANGE has been removed, resulting in all leases being recognised on the balance sheet SUMMAR
Slide 34: 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 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 QLD NSW/ACT VIC TAS SA WA NZ Property Trust Freehold Operating subsidiaries Properties 36
Slide 37: Propel Funeral Partners
PROPEL FUNERAL PARTNERS PrP
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