Propel Funeral Partners (PFP) H2 2024 earnings summary

Executive summary

• Revenue grew 24.2% year-over-year to AUD 209.2 million, driven by higher funeral volumes, a 5.5% increase in average revenue per funeral, and contributions from acquisitions, despite a temporary contraction in industry death volumes.

• Operating EBITDA increased 20.5% to AUD 55.4 million, with a resilient margin of 26.5% and strong cash flow conversion at 99%.

• Pro forma operating NPAT rose 12.2% to AUD 23.4 million; statutory NPAT was AUD 20.1 million.

• Completed or announced 12 acquisitions in FY24, deploying over AUD 100 million and expanding the network in Australia and New Zealand.

• Well-positioned for FY25 with positive trading momentum, strong funding, and a robust acquisition pipeline.

Financial highlights

• Revenue: AUD 209.2 million (+24.2% YoY); Operating EBITDA: AUD 55.4 million (+20.5% YoY); Operating NPAT: AUD 23.4 million (+12.2% YoY).

• Average revenue per funeral: AUD 6,635 (+4% YoY, comparable up 5.5%).

• Funeral volumes: 21,655, reflecting industry-wide contraction but offset by acquisitions.

• Operating EBITDA margin: 26.5% (down 80bps YoY); gross margin 69.8%, with comparable gross margin exceeding 71%.

• Final dividend of AUD 0.072 per share, fully franked, bringing total FY24 dividends to AUD 0.144 per share (85% payout ratio).

Outlook and guidance

• Expects to benefit from favorable demographics, strong funding, and completed acquisitions, with further opportunities in a fragmented industry.

• July 2024 revenue growth exceeded 20% over the prior corresponding period, reflecting strong organic and acquisition-driven growth.

• Demand for funeral services is not correlated to inflation, interest rates, or the economic cycle, though inflation is expected to impact pricing and costs.

• Management expects the contraction in death volumes to be temporary, with historical rebounds following prior declines.

• Continued focus on acquisitions in a highly fragmented industry, though timing is uncertain.