The Propel Funeral Partners Ltd (ASX: PFP) share price is up 2% after the country's second largest funeral operator announced its half-year result to 31 December 2019.
Propel Funeral Partners' HY20 numbers
Propel reported that its statutory revenue increased by 21% to $57 million.
The revenue increase was supported by a 17.8% increase in funerals performed to 6,646. Death volumes increased in 2019 following a decline in the prior year in most markets which the company operates. For example, registered deaths in Tasmania increased by 394 in 2019 after a decline of 484 in 2018.
Revenue also benefited from a 3.2% rise in the average revenue per funeral to $5,764. Comparable average revenue per funeral growth in the first half of FY20 was also 3.2%.
Operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 42.1% to $16.6 million and the operating EBITDA margin improved by 430 basis points (4.3%) to 29.1%.
The operating net profit after tax (NPAT) rose by 22.6% to $7.8 million. Net profit dropped 47.5% to $3.4 million due to AASB 16, $1.4 million of acquisition costs and the $4.1 million performance fee earned by the manager (due to a total shareholder return of 24.2% in the calculation period). Excluding the impact of AASB 16, operating net profit rose 24.6% to $7.9 million.
Operating earnings per share (EPS) increased by 22.1% to 7.9 cents and statutory EPS fell by 48% to 3.42 cents.
The above results only include around a two month contribution from the Gregson & Weight and Grahams acquisitions and no contribution from the previously announced proposed acquisition of the Dils Group.
Propel dividend and balance sheet
The Board of Propel decided to declare a fully franked interim dividend of 4 cents per share, which was a decrease on the 5.7 cents per share dividend paid a year ago.
In December 2019 Propel expanded and extended its debt facilities with Westpac Banking Corp (ASX: WBC) to $150 million. At 31 December 2019, Propel's debt balance was approximately $67 million. It also has a binding commitment to acquire Dils Group which will require $20 million.
Propel said it's well funded to continue its acquisition led growth strategy with approximately $65 million of available funding capacity.
Propel outlook
The company said the positive trading momentum has continued into the second half, with total funeral volumes during the first seven weeks of 2020 being "materially higher" than the prior corresponding period.
Propel expects to continue to benefit from the ageing population tailwind, recent acquisitions and future acquisitions.
