Propel Funeral Partners (PFP) H2 2024 earnings summary

Executive summary

• Achieved record growth in FY 2024, with revenue up 24.2% to AUD 209.2 million, driven by higher funeral volumes, stronger average revenue per funeral, and contributions from acquisitions, despite a 20% contraction in funeral 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%.

• Expanded network through 12 acquisitions, deploying over AUD 100 million, and broadened presence in both metropolitan and regional markets in Australia and New Zealand.

• Well-positioned for FY 2025, with positive trading momentum, strong funding, and a robust acquisition pipeline in a fragmented industry.

• Dividend increased to AUD 0.144 per share (14.4cps), fully franked, with an 85% payout ratio.

Financial highlights

• Revenue increased 24.2% year-over-year to AUD 209.2 million, with a 4% rise in average revenue per funeral and 5.5% comparable growth.

• Operating EBITDA rose 20.5% to AUD 55.4 million; pro forma operating NPAT up 12.2% to AUD 23.4 million; statutory NPAT was AUD 20.1 million.

• Gross margin was 69.8%, with comparable gross margin exceeding 71%.

• Cash flow from operations was AUD 34.4 million, with cash flow conversion at 99%.

• Final dividend of AUD 0.072 per share, bringing total FY 2024 dividends to AUD 0.144 per share.

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.

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

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

• Continued focus on acquisitions, though timing remains uncertain.