Propel Funeral Partners (ASX:PFP) reported higher revenue and earnings for its FY2026 first half, supported by increased funeral volumes and continued acquisition activity, while management highlighted disciplined cost control and a recently completed debt facility refinance.
First-half results
Co-Founder and Co-CEO Lilli stated that first-half revenue rose 3.1% to AUD 118.8 million, driven by a 3% increase in total funeral volumes including acquisitions. Comparable average revenue per funeral was said to be around 2% above the prior corresponding period (PCP), while network average revenue per funeral was in line with the PCP.
Margins, costs, and revenue drivers
CFO Arash Noaeen said gross margin for the half was 69.7%, with the comparable gross margin in line with FY2025. Operating costs were “well maintained” at about 44% of revenue, described as favorable to FY2025 and in line with the PCP.
Noaeen attributed revenue performance primarily to higher volumes. He said total funeral volumes rose 3% and group average revenue per funeral was in line with the PCP, reflecting pricing effects offset by foreign exchange and acquisition impacts. He noted recent acquisitions are currently generating below-network average revenue per funeral.
On an organic basis, comparable businesses reported funeral volumes in line with the PCP and about a 2% increase in comparable average revenue per funeral, with pricing partially offset by a mix shift toward the end of the half.
The operating EBITDA margin was 25.5%, which management said was 0.5% lower than the PCP due mainly to recent acquisitions and the revenue mix. Propel said disciplined cost control helped, with comparable operating costs up 1.6% versus the PCP, which Noaeen noted was below current inflation.
Cash flow, balance sheet, and debt refinance
Operating cash flows increased 2.6% in the period, with cash conversion above 95%. Propel reported acquisition-related spending of AUD 1.8 million plus AUD 0.4 million in earn-out payments. The company also acquired four freehold properties—three previously leased—for AUD 6.2 million, and incurred capital expenditure of around AUD 12.3 million, with maintenance CapEx at 4.9% of revenue.
As of December 31, 2025, Propel had net debt of AUD 142.8 million. Noaeen also highlighted that Propel’s freehold properties are held at depreciated cost of about AUD 245 million. Prepaid contract funds totaled roughly AUD 83 million, largely invested with third-party friendly societies that primarily invest in cash at fixed interest. During the period, prepaid contracts that “turned at need” in Australia represented less than 10% of the group’s Australian funeral volumes. He added that a reduction in equity versus the prior balance date related to non-cash foreign exchange reserve movements after a 7% fall in the New Zealand dollar against the Australian dollar.
On capital management, Propel announced it agreed with Westpac to extend maturity of its existing AUD 275 million debt facilities from October 2027 to October 2029, and improved pricing that would imply annualized interest cost savings of about AUD 0.7 million (all else equal at that balance date). Propel also established a new AUD 50 million accordion facility, subject to customary drawdown conditions.
Management said the company had AUD 182 million of available funding capacity including the accordion facility, and remained comfortably within covenants with a pro forma net leverage ratio of 2.0x. Lilli also said Propel ended the half with a gearing ratio of 29%.
Dividend and network update
The board declared an interim dividend of AUD 0.075 per share, fully franked, up from AUD 0.074 in the PCP. Management said this reflected a payout ratio of 83%.
In its business overview, Propel said it has grown from one Queensland funeral home in 2013 to 208 locations across Australia and New Zealand, including 41 cremation facilities and nine cemeteries. Of those locations, the company owns 126 (held at cost on the balance sheet at over AUD 245 million).
Industry trends, acquisitions, and outlook commentary
Co-Founder and Co-CEO Fraser Henderson pointed to demographic forecasts as a key long-term industry tailwind, citing that the number of deaths is expected to increase and accelerate in both Australia and New Zealand. He referenced Australian Bureau of Statistics forecasts for death volumes to rise 2.9% per annum from 2026 to 2035 and 2.4% per annum from 2036 to 2045, and Stats NZ forecasts of 2% per annum from 2026 to 2035 and 1.8% per annum from 2036 to 2045.
Henderson also emphasized the industry remains highly fragmented. Propel estimated its market share grew from about 1% in 2015 to about 10% in 2025, while noting there are still many hundreds of independent operators across both countries.
During the half, management said Propel completed two acquisitions adding three locations, and Henderson later specified the acquired businesses as:
- Jones & Co Funeral Services (Tauranga)
- Broadway Funeral Home (Matamata)
- Jacobsen Memorials (Auckland)
Since its 2017 IPO, Propel has committed AUD 306 million to acquisitions, Henderson said, adding that the acquisition pipeline remains “robust” with multiple vendor discussions ongoing.
On trading conditions, management declined to provide granular short-period updates, saying it had moved away from commenting on short periods because they can be misleading. However, it said there had been “no major surprises” in Q3 so far. Henderson also noted that in the second half the company is comparing against a 3% contraction in comparable funeral volumes in the PCP, including what he described as a material contraction in Australia in the three months ended April 30, 2025.
In Q&A, management attributed a sequential EBITDA margin decline from Q1 to Q2 to normal seasonality, the timing and location of acquisitions (noting New Zealand typically runs at a lower margin), and an unfavorable revenue mix late in Q2. Executives also said revenue mix softness in New Zealand and a shift toward lower-value services around December contributed to average revenue per funeral pressure late in the period, though they said mix improved at the start of Q3.
Asked about M&A pace, Henderson said there had been no strategy change or reassessment of pricing and return hurdles, describing the slower cadence as pipeline lumpiness and timing, while reiterating that multiple discussions were “well advanced.”
About Propel Funeral Partners (ASX:PFP)
Propel Funeral Partners Limited provides death care services in Australia and New Zealand. It is involved in the collection and transfer of the deceased; provision of mortuary services; and arrangement and conducting a funeral, cremation, burial, and memorialization activities. As of June 30, 2022, the company owned and operated 144 properties comprising 79 owned and 65 leased, which included 32 cremation facilities and 9 cemeteries. It serves individuals and families dealing with, or preparing for, death and bereavement.
