Propel Funeral share price climbs higher after providing FY20 guidance

The Propel Funeral Partners Ltd (ASX: PFP) share price is climbing this morning after the company delivered a trading update and provided FY20 guidance.

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The Propel Funeral Partners Ltd (ASX: PFP) share price is climbing this morning after the company delivered a trading update and provided FY20 guidance.

At the time of writing, Propel Funeral shares are up 4.51% to $3.01, reducing the company’s year-to-date share price loss to 11.47%.

What did Propel Funeral announce?

As previously disclosed, COVID-19 restrictions in Australia and New Zealand affected Propel’s ability to offer a full range of services to its clients.

As a result, the company’s comparable average revenue per user (ARPU) in the month of April fell by approximately 10% on the prior corresponding period.

However, the easing of funeral attendee limits in both countries contributed to an ~8% increase in ARPU in May compared to the previous month.

Propel expects ARPU to continue to increase as attendance limits at funeral services are progressively eased in Australia. Funeral attendance limits have now been increased to at least 50 mourners in most Australian states. Meanwhile, limits have been removed altogether across the pond in New Zealand.

As for funeral numbers, Propel’s total funeral volumes were approximately 1% higher in May compared to April. Additionally, the company expects to exceed 13,000 funerals in FY20, up from 11,304 in FY19. This includes part contribution from the acquisitions of Gregson & Weight and Grahams Funeral Services which were completed in November 2019.

In terms of cost-cutting, Propel’s previous trading updates in late March and early May detailed a number of strategies intended to mitigate the potential financial impacts of COVID-19. These measures included the deferral of non-essential capital expenditure, managing staff costs, and raising its liquidity position. Accordingly, at the end of April, Propel had $49 million cash on its books compared to just $6.7 million as at 31 December 2019. 

The company also revealed this morning that some of its businesses have received government subsidies.

FY20 guidance

Along with the trading update, Propel also shed some light on FY20 guidance this morning.

Stating it is on track for another record year, Propel quantified its expectations by providing revenue guidance of approximately $110 million. This compares to $95.1 million revenue achieved in FY19.

The company also provided guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). It is expecting full-year operating EBITDA of approximately $32 million, up from $23.8 million in FY19.

Propel is set to release its FY20 full-year results in late August 2020. In the meantime, the company stated it will continue to monitor the impacts of COVID-19 on its teams, trading and suppliers.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Propel Funeral Partners Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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