Propel Funeral Partners Moves Up Post The AGM

Propel Funeral Partners Limited (ASX: PFP) had its AGM on November 20, 2018 i.e., today. The presentation included the FY18 results, commentary of Q1 FY19 trading, future outlook of the company and further confirmation regarding the nonpayment of the performance fee for FY19.

After the successful debut of the company on ASX on November 23, 2017, PFP has put all its efforts towards the strong growth of the business and the outcome of such efforts was well seen with the excellent results delivered by the company for FY18.Â

PFP succeeded in beating all the guidance forecast that was issued in February 2018 and delivered the results above the issued guidance data.

PFP has maintained its track record of delivering strong revenues and earnings growth by posting 76% growth in the revenues up to $80.9 million backed by 67% increase in funeral volumes and a 5.5% growth in Average Revenue Per Funeral. Operating EBITDA grew by 75% to $21.5million which was up by 16% from the forecast made on prospectus and above the guidance issued in February, and operating NPAT grew more than two times up to $12.3 million which was 19% above the prospectus forecast. In FY18, cash conversion remained very strong at 97%.

Strong financial performance beating the issued guidance estimation has helped the board to provide healthy returns to the shareholders by declaring a fully franked dividend of 6.4 cents per share, growth of 10% over the forecasted guidance provided in the prospectus. Strong balance sheet for the year FY18, with no reported debt and cash at bank reported at $28.3million for FY18 was noted. Propel entered into senior debt facility with Westpac for $50.0million in August, 2018. The debt facility is available for general corporate purpose which also includes the acquisitions.

Propel has expanded its operations in new locations, and has made entry in 33 new locations in FY18 providing its presence in total to around 103 locations. PFP has made entry in new markets in Western Australia and the ACT and its expansion in QLD, NSW and VIC. In FY19, PFP has added 5 new locations which include 4 free hold properties that provide a total of 108 locations till date i.e. November 20, 2018.

On November 19, 2018, PFP entered into a conditional sale agreement, under which PFP will acquire 100% of the Manning Great Lakes Memorial Gardens, situated near Taree in NSW. PFP will acquire this extremely high margin business that covers almost 700 cremations and burials on a yearly basis. PFP continues to explore other suitable and selective acquisition opportunities. PFP has made a solid base for FY19, with Q1 revenues up by 20% to approximately $24 million and operating EBITDA remaining above at 26% and Average Revenue per Funeral within target growth range of 2%-4%.

In terms of future outlook, many things are based on cyclical nature of the funeral industry, current death volumes which are temporary with reversal expected in the second half of FY19, and solid Q1 trading update. PFP moved up 1.136% on November 20, 2018 Â and traded at $2.67.


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