Propel Funeral Partners Ltd. · ASX:PFP
Propel Funeral Partners — H1 FY2024 Earnings Presentation
37 slides from Propel Funeral Partners's earnings presentation, Feb 21, 2024
Slide 1: FY24 First Half Results Investor Presentation
FY24 First Half Results Investor Presentation 21 February 2024 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. Pro
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 of 1H FY24 2. Company overview 3. 1H FY24 financial results detail 4. Industry trends and acquisitions 5. Summary, outlook and guidance 6. Q&A Appendices 4
Slide 5: 1. Key highlights of 1H FY24
1. Key highlights of 1H FY24 PROPEL FUNERAL PARTNERS PrP
Slide 6: Key highlights of 1H FY24
Key highlights of 1H FY24 Revenue Funeral Volumes Average Revenue Per Funeral 1 TRADING1 $102.9m 10,637 $6,630 22.8% 17.4% 4.5% (comparable up ~6%) Operating EBITDA Pro forma2 Operating NPAT Cash Flow Conversion 2 EARNINGS1 $27.4m $11.7m 100.8% 18.5% 6.7% 160 bps Dividend Gearing Ratio2 Fu
Slide 7: 2. Company Overview
2. Company Overview PROPEL FUNERAL PARTNERS PrP
Slide 8: Geographic Presence
Geographic Presence 187 operating locations1 (113 owned / 74 leased), including 37 cremation facilities and 9 cemeteries 1 August 2013 2 February 2024 Queensland Queensland 1 Western 29 Australia South Australia 15 44 New South Wales 12 1 ACT 19 Victoria 49 New Zealand Tasmania 18 Geographic footpri
Slide 9: Brand Portfolio
Brand Portfolio Diversified single and multi-site brands with strong local community awareness Australia NZ Pinegrove Funerals ismore Funeral Services Southern Funeral Home Acquisitions completed or announced since 1 July 2023. 9
Slide 10: Volume and Revenue Growth
Volume and Revenue Growth Propel has maintained a strong growth trajectory 1 Funeral volumes 2 Revenue ($m) 168.5 18,029 16,537 145.2 13,916 13,299 120.4 110.8 11,304 102.9 22.8% 10,637 17.4% 95.1 10,111 9,061 80.9 83.8 6,054 46.1 2,967 22.4 1,625 906 10.9 278 465 2.2 6.0 1.2 FY12 FY13 FY14 FY15
Slide 11: Earnings Growth
Earnings Growth Propel has maintained a strong growth trajectory 1 Operating EBITDA ($m) 2 Operating NPAT ($m) 20.9 46.0 39.0 17.7 36.3 15.3 32.4 14.2 13.3 27.4 18.5% 12.3 11.0 11.7 6.7% 23.8 23.1 21.5 12.3 5.5 5.8 2.9 3.1 1.5 1 1 1 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY15 FY16 FY1
Slide 12: Average Revenue Per Funeral Growth
Average Revenue Per Funeral Growth Compound annual growth rate (CAGR) of ~3.1% since FY14 $6,630 ~4.5% on PCP CAGR ~3.1% $6,346 (comparable up ~6%) $6,038 $5,917 $5,672 $5,508 $5,585 $5,223 $5,099 $4,899 $4,976 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H FY23 1H FY24 12
Slide 13: Cash Flow Conversion
Cash Flow Conversion Consistently strong and has averaged ~99% since FY15 104.0% 103.4% 101.8% ~99% average 98.9% 100.2% 99.2% 100.8% 96.5% 97.4% 93.7% (since FY15) FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H FY23 1H FY24 13
Slide 14: Performance Summary Since IPO
Performance Summary Since IPO Propel’s share price has outperformed the ASX300 since the IPO in November 2017 Relative share price and index performance 100% Total shareholder return3 80% Propel ~107% +91.1% 1 60% 40% ASX300 Total shareholder value accretion4 +26.9%2 20% ~$368m 0% -20% Material grow
Slide 15: 3. 1H FY24 Financial Results Detail
3. 1H FY24 Financial Results Detail
Slide 16: Financial Summary
Financial Summary Pro forma Income Statement1 Comments $ million 1H FY24 1H FY23 Revenue Total revenue 102.9 83.8 • Increased 22.8% on the PCP to $102.9m, primarily due to: Gross profit 71.4 58.6 – comparable Average Revenue Per Funeral growth of ~6% …margin 69.4% 70.0% Total operating costs (44.0)
Slide 17: Revenue Bridge and Operating EBITDA Margin
Revenue Bridge and Operating EBITDA Margin Resilient Operating EBITDA margin despite lower industry death volumes (expected to be temporary) Operating EBITDA margin 27.6% 26.6% Comments Total: Organic: Operating EBITDA margin: Funeral Volumes Funeral Volumes Resilient Operating EBITDA margin of 26.6
Slide 18: Cash Flow
Cash Flow Statutory actuals1 Comments $ million 1H FY24 1H FY23 Receipts from customers (inc GST) 113.1 91.6 Operating activities Payments to suppliers and employees (inc GST) (86.8) (69.7) • Operating Cash Flow increased 19.7% on PCP 26.3 22.0 • Cash Flow Conversion remained strong at 100.8% Income
Slide 19: Balance Sheet
Balance Sheet Statutory actuals1 Comments $ million 31-Dec-23 30-Jun-23 Cash and cash equivalents 8.0 46.9 Cash and net debt position Contract assets 75.7 64.5 • $8.0m of cash (30 June 2023: $46.9m) Other current assets 20.6 17.9 • $175.4m of net debt2 (30 June 2023: $93.7m) Total Current Assets 104
Slide 20: Capital Management
Capital Management Available funding capacity of ~$172 million and significant debt covenant headroom Funding Capacity Comments $ million $ million Funding capacity Senior debt facility limit 275.0 • Increase in senior debt facility limit to $275m (previously $255m) • Estimated net proceeds from the
Slide 21: 4. Industry Trends and Acquisitions
4. Industry Trends and Acquisitions
Slide 22: 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 New Zealand 2.9% CAGR 60,000 300,000 (2031-2040) 2.1% CAGR (2031-2040) 50,000 250,000 2.5% CAGR 1.9% CAGR (2024-2030) (2023-2030) 0.8% CAGR (1990-2019) 40,000 200,000 0.9 %
Slide 23: 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 CY232 InvoCare InvoCare ~25% ~21% Others Others ~74% ~70% ~1% ~9% 1. Note: 159,052 actual deaths (ABS data) for market size, 1,920 funerals performed by Propel
Slide 24: Acquisitions
Acquisitions Propel has committed ~$92 million1 on acquisitions YTD in FY24 (~$284 million1 since its IPO) 1 1H FY24: 1. Olsens Funerals Jul-23 Sydney, NSW Consideration: ~$78 million 2. J Fraser & Sons Jul-23 Southland, NZ Revenue3: ~$30 million 3. Harbour City Funeral Home Aug-23 Wellington, NZ Lo
Slide 25: 5. Summary, Outlook and Guidance
5. Summary, Outlook and Guidance
Slide 26: 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 (>15 fold increase in Revenue and Operating EBITDA since FY15) • Consistent growth in key operating metrics (funeral vo
Slide 27: Outlook
Outlook Demand for funeral services in underpinned by favourable demographics 1 Expected growth drivers for the remainder of FY24: • favourable demographics in Australia and New Zealand • its strong funding position • acquisitions completed and announced to date and other potential future acquisitio
Slide 28: FY24 guidance
FY24 guidance Propel reaffirms its FY24 guidance range1 for Revenue of $200m-$220m and Operating EBITDA of $54m-60m Revenue ($m) Operating EBITDA ($m) 220.0 High1 60.0 High1 200.0 Low1 54.0 Low1 168.5 46.0 145.2 39.0 36.3 120.4 32.4 110.8 95.1 23.8 80.9 21.5 FY18 FY19 FY20 FY21 FY22 FY23 FY24G FY18
Slide 29: 6. Q&A
6. Q&A PROPEL FUNERAL PARTNERS PrP
Slide 30: Appendices
Appendices PROPEL FUNERAL PARTNERS PrP
Slide 31: Definitions
Definitions Adjusted Effective Tax Rate means income tax expense divided net profit before tax, adjusted for non deductible and non assessable items. Average Effective Interest Rate means the average interest rate on senior debt, including the interest rate swap (where relevant) and establishment fe
Slide 32: Statutory Financial Summary
Statutory Financial Summary Income Statement $ million 1H FY24 1H FY23 Statutory Statutory Total revenue 102.9 83.8 Gross profit 71.4 58.6 …margin 69.4% 70.0% Total operating costs (44.0) (35.5) Operating EBITDA 27.4 23.1 …margin 26.6% 27.6% Depreciation (7.1) (5.5) Operating EBIT 20.3 17.6 …margin
Slide 33: Income Statement Analysis
Income Statement Analysis Comments $ million 1H FY24 1H FY23 Funeral operations 91.7 73.7 Revenue segments: Cemetery, crematoria and memorial gardens 10.2 9.0 • 89.2% generated from funeral operations (1H FY23: 88.0%) Other trading revenue 1.0 1.0 • 9.9% generated from cemetery and memorial gardens
Slide 34: NPAT to Operating NPAT Reconciliation
NPAT to Operating NPAT Reconciliation $ million 1H FY24 1H FY23 Pro forma Statutory Statutory net profit after tax 8.3 10.2 Add: Interest expense (tax effected) 1.6 Pro forma net profit after tax 9.9 Add: Acquisition costs 1.9 0.8 Add: Net other income and expenses 0.1 0.2 Add: Net financing charge
Slide 35: Pro forma Balance Sheet
Pro forma Balance Sheet $ million 31-Dec-23 30-Jun-23 Pro forma Statutory Cash and cash equivalents 9.6 46.9 Contract assets 75.7 64.5 Other current assets 20.6 17.9 Total Current Assets 106.0 129.3 Property, plant & equipment 266.9 216.2 Right-of-use assets 31.0 31.1 Goodwill 190.2 155.4 Other non-
Slide 36: Distributable Earnings and Dividend
Distributable Earnings and Dividend Reconciliation $ million 1H FY24 1H FY23 Pro forma Statutory Net profit/(loss) after tax 9.9 10.2 Distributable Earnings calculation Acquisition costs 1.7 0.6 Net financing charge on prepaid contracts 0.2 0.3 Distributable Earnings 11.7 11.1 Dividend payout ratio
Slide 37: Propel Funeral Partners
PROPEL FUNERAL PARTNERS PrP
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