Propel Funeral (ASX:PFP) share price marching higher on revenue leap

The funeral services company has committed some $148 million on acquisitions.

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Key points

  • Propel Funeral share price lifts on results
  • Revenue increased despite ongoing COVID disruptions
  • Completed acquisitions are expected to benefit the company moving forward

The Propel Funeral Partners Ltd (ASX: PFP) share price is up 1.7% in early afternoon trading.

Propel Funeral shares closed yesterday's trading for $4.53 and are currently at $4.61.

Below we take a look at the ASX funeral services company's financial results for the half year ending 31 December (1H FY22).

Propel Funeral share price gains on revenue leap

  • Revenue increased 15.2% year-on-year to $68 million
  • Pro forma operating earnings before interest, taxes, depreciation and amortisation (EBITDA) of $18.4 million, an increase of 17.8% from the 1H FY21
  • Pro forma1 operating net profit after tax (NPAT) lifted 30.4% to $7.8 million
  • Interim dividend of 6 cents per share (cps) declared, fully franked, equal to the prior corresponding half year

What else happened during the half year?

Despite reporting that its operations were impacted by pandemic lock downs and funeral attendee limits in parts of Australia and New Zealand during the half year, Propel's total funeral volumes increased 14.9% compared to 1H FY21. Comparable funeral volumes were up 7.8%.

Propel Funerals also improved its balance sheet with a $50.2 million share placement to new and existing institutional investors, atop raising $13.7 million from eligible shareholders via a share purchase plan.

As at 31 December 2021, Propel had $423.2 million of total assets, a gearing ratio of 13.3%, and $149.3 million of available funding capacity.

The interim dividend will be paid on 7 April with a record date of 7 March.

What did management say?

Authoring the report, Propel's chairman, Brian Scullin and managing director Albin Kurti noted:

During 1H FY22, Propel reviewed a number of potential acquisition opportunities and committed $21.0 million on … six acquisitions announced in Australia and New Zealand…

Propel remains focused on its core strategy of acquiring assets and social infrastructure which operate in the death care industry in Australia and New Zealand. Since its IPO in November 2017, Propel has committed approximately $147.7 million on acquisitions and continues to explore other potential acquisitions, however, the timing associated with any future acquisitions is uncertain.

What's next?

Looking ahead, the Propel Funeral share price could be getting an extra bit of lift from the company's expectations that it will benefit from "favourable demographics" in Australia and New Zealand.

Propel also highlighted its strong funding position, and expects additional benefits from the acquisitions that have already been announced and completed along with potential new future acquisitions.

While noting that COVID-19's ongoing impacts remain uncertain, Propel reported it has started 2H FY22 with positive trading momentum.

Propel Funeral share price snapshot

The Propel Funeral share price is up 55% over the past 12 months, well outpacing the 5% gains posted by the All Ordinaries Index (ASX: XAO).

So far in 2022, Propel Funeral shares are up 5%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Propel Funeral Partners Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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