Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 FY2020 Earnings Presentation
39 slides from Propel Funeral Partners's earnings presentation, Feb 27, 2020
Slide 1: FY20 First Half Results
FY20 First Half Results Investor Presentation 27 February 2020
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 1H FY20 2. Business overview 3. 1H FY20 financial results detail 4. Industry trends and acquisitions 5. Outlook 6. Q&A Appendix 4
Slide 5: 1. Key highlights for 1H FY20
1. Key highlights for 1H FY20
Slide 6: Key highlights for 1H FY20
Key highlights1 for 1H FY20 1 Revenue: Volumes: Average Revenue Per Funeral: TRADING $57.0 6,646 $5,764 million funerals 21.0% 17.8% 3.2% on FY19 2 Operating EBITDA: Operating NPAT: Cash Flow Conversion: EARNINGS $16.6 $7.8 99.2% million million 42.1% (up 25.9% ex AASB 16) 22.6% (up 24.6% ex AASB 16
Slide 7: 2. Business overview
2. Business overview
Slide 8: Geographic presence
Geographic presence 128 locations (71 owned / 57 leased), including 31 cremation facilities and 9 cemeteries August 2013 February 2020 Queensland Queensland 1 Western 24 Australia South Australia 11 31 New South Wales 3 1 ACT 17 Victoria 22 New Zealand Tasmania 19 Geographic footprint is difficult t
Slide 9: Brand portfolio
Brand portfolio Diversified single and multi-site brands with strong local community awareness Australia New Zealand Pinegrove Funerals ismore Funeral Services Acquired in 1H FY20 or expected to acquire by 30 June 2020 9
Slide 10: Volume and revenue growth
Volume and revenue growth Propel has maintained a strong growth trajectory Funeral volumes Revenue ($m) 11,304 95.1 10,111 80.9 6,646 57.0 6,054 17.8% 46.1 21.0% 5,644 47.1 2,967 22.4 1,625 10.9 906 6.0 278 465 2.2 1.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY12 FY13 FY14 FY15 FY16 FY17 FY18 F
Slide 11: Earnings growth
Earnings growth Propel has maintained a strong growth trajectory Operating EBITDA ($m) Operating NPAT ($m) 23.8 13.3 12.3 21.5 16.6 7.8 12.3 42.1% (up 25.9% 22.6% ex AASB 16) 5.5 (up 24.6% 11.7 6.4 ex AASB 16) 5.8 2.9 3.1 1.5 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 1H Actual 1H A
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% $5,764 $5,585 3.2% on FY19 $5,508 $5,223 $5,099 $4,976 $4,899 FY14 FY15 FY16 FY17 FY18 FY19 1H FY20 12
Slide 13: Cash Flow Conversion
Cash Flow Conversion Cash Flow Conversion has been consistently strong, averaging ~98% since FY15 120% 104.0% 98.9% 97.4% 99.2% 100% 93.7% 96.5% 80% 60% 40% 20% 0% FY15 FY16 FY17 FY18 FY19 1H FY20 13
Slide 14: 3. 1H FY20 financial results detail
3. 1H FY20 financial results detail
Slide 15: Financial Summary – Statutory Result
Financial Summary – Statutory Result Income statement Comments Revenue $ million 31-Dec-19 31-Dec-18 • Increased 21.0% on the PCP to $57.0 million, primarily due to: Total revenue 57.0 47.1 – the impact of seven acquisitions completed in FY19 and 1H FY20 Gross profit 40.7 33.1 – increases in compara
Slide 16: Operating EBITDA ($m) – Impact of AASB 16
Operating EBITDA ($m) – Impact of AASB 16 1 AASB 16 adopted on 1 July 2019, with no cash impact and no change to operations Consistent Impact of AASB 16 Statutory Accounting Basis 25.9% 42.1% 1 Refer to appendices for additional disclosures on AASB 16 16
Slide 17: Operating NPAT ($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 24.6% 22.6% 1 Refer to appendices for additional disclosures on AASB 16 17
Slide 18: Revenue bridge and Operating EBITDA margin
Revenue bridge and Operating EBITDA margin Operating EBITDA Margin 24.8% 29.1% (25.7% ex AASB 16) Comments Total growth: Organic growth: Operating EBITDA Margin: ARPF ARPF 430 bps ( 90 bps Pro forma) on the PCP, influenced by: • 3.2% on FY19, impacted by the financial profile • 3.2% on FY19 primaril
Slide 19: Cash flow
Cash flow Statutory actuals Comments Operating activities $ million 31-Dec-19 31-Dec-18 • Cash Flow Conversion strong at ~99.2% (PCP: ~92.5%) Receipts from customers (inc GST) 62.2 52.1 Payments to suppliers & employees (inc GST) (45.4) (41.3) • Performance Fee paid in cash 16.8 10.8 • Increase in i
Slide 20: Balance Sheet
Balance Sheet Statutory actuals Comments $ million 31-Dec-19 30-Jun-19 Net debt position Cash and cash equivalents 6.7 5.3 • $60.5m of net debt Contract assets 48.5 47.9 • Drawn senior debt of approximately $67m versus $13m at 30 June Other current assets 13.8 10.6 2019 Total Current Assets 69.1 63.
Slide 21: 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 to be ‘cleaned down
Slide 22: 4. Industry trends and acquisitions
4. Industry trends and acquisitions
Slide 23: 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) (2029-2050) 300,000 50,000 2.5% CAGR 0.9% CAGR 250,000 (2018-2029) 0.8% CAGR (2018-2029) 0.9% CAGR 40,000 (1990-201
Slide 24: 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% 1Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by
Slide 25: Acquisitions (since IPO)
Acquisitions (since IPO) Propel has committed $124.6 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$4.8m Newhaven NQ (QLD) June 201
Slide 26: 5. Outlook
5. Outlook
Slide 27: Outlook
Outlook Propel has started 2H FY20 positively, is well positioned and focussed on its growth strategy Operating EBITDA ($m) Positive start to 2H FY20: • total funeral volumes during the first 7 weeks of 2020 were materially higher than the PCP, however, death volumes fluctuate over short time horizo
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 in the period. ARPF means Average Revenue Per Fun
Slide 31: Impact of AASB 16 – Income Statement Reconciliation
Impact of AASB 16 – Income Statement Reconciliation $ million 31-Dec-19 AASB 16 31-Dec-19 31-Dec-18 Statutory Adjustments 1 Pro forma Statutory Total revenue 57.0 57.0 47.1 Gross profit 40.7 40.7 33.1 …margin 71.5% 71.5% 70.2% Total operating costs (24.2) (1.9) (26.1) (21.4) Operating EBITDA 16.6 (1
Slide 32: Impact of AASB 16 – Cash flow Reconciliation
Impact of AASB 16 – Cash flow Reconciliation $ million 31-Dec-19 AASB 16 31-Dec-19 31-Dec-18 Statutory Adjustments Pro forma Statutory Receipts from customers (inc GST) 62.2 62.2 52.1 Payments to suppliers & employees (inc GST) (45.4) (1.9) (47.2) (41.3) 16.8 (1.9) 14.9 10.8 Performance fee (inc GST
Slide 33: Impact of AASB 16 – Balance Sheet Reconciliation
Impact of AASB 16 – Balance Sheet Reconciliation $ million 31-Dec-19 AASB 16 31-Dec-19 30-Jun-19 Statutory Adjustments Pro forma Statutory Total Current Assets 69.1 69.1 63.8 Property, plant & equipment 128.6 0.8 129.4 97.9 Right-of-use assets 40.0 (40.0) (0.0) - Goodwill 123.5 123.5 106.4 Other Non
Slide 34: NPAT to Operating NPAT reconciliation
NPAT to Operating NPAT reconciliation $ million 31-Dec-19 31-Dec-18 Statutory Statutory Profit after income tax 3.4 6.4 Add: Acquisition costs 1.4 0.6 Add: Performance fee 4.1 - Add: Net foreign exchange losses 0.0 0.0 Add: Other non-operating expenses 0.2 - Add: Net loss on disposal of assets 0.1 0
Slide 35: Income statement analysis
Income statement analysis Income Statement Comments $ million 31-Dec-19 AASB 16 31-Dec-19 31-Dec-18 Statutory Adjustments Pro forma Statutory Revenue segments: Funeral operations 49.4 49.4 40.9 • 86.7% generated from funeral operations (PCP: 86.8%) Cemetery, crematoria and memorial gardens 6.3 6.3 5
Slide 36: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 31-Dec-19 NPAT 3.4 Distributable Earnings calculation Acquisition costs 1.4 Net financing charge on prepaid contracts 0.3 Distributable Earnings 5.1 Dividend Payout Ratio 78% Number of share on issue 98,735,427 Dividend per share (Rounded)
Slide 37: 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 38: Simplified corporate structure
Simplified corporate structure Management Agreement QLD NSW/ACT VIC TAS SA WA NZ Property Trust Freehold Operating subsidiaries Properties 38
Slide 39: Propel Funeral Partners
PROPEL FUNERAL PARTNERS PrP
Propel Funeral Partners — H1 FY2020 Earnings Presentation on 6ix