This article first appeared on GuruFocus .
Release Date: August 25, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Propel Funeral Partners Ltd ( ASX:PFP ) reported FY26 revenue of $226.6 million, within guidance, and operating EBITDA of $55.3 million, also within guidance.
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The company achieved strong cash flow conversion of over 100% in FY26, maintaining a high average of approximately 99% since FY15.
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Propel Funeral Partners Ltd ( ASX:PFP ) expanded its network by six locations in FY26 and has deployed approximately $340 million on acquisitions since its IPO, with a robust pipeline of potential deals.
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The company benefits from favorable long-term demographic tailwinds, with death volumes in Australia and New Zealand forecast to increase by 2.8% per annum.
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Propel Funeral Partners Ltd ( ASX:PFP ) ended FY26 with a strong balance sheet, including a gearing ratio of circa 30%, net leverage of 2.2 times, and approximately $170 million in available funding capacity.
Negative Points
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Propel Funeral Partners Ltd ( ASX:PFP ) experienced a period of earnings moderation in FY26, with operating EBITDA margin declining by 0.5% to 24.4%.
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Comparable funeral volumes for the group were approximately 2% below the prior year, and total funeral volumes only increased 1.1%.
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The company faced an unfavorable foreign exchange impact of approximately $1 million on operating EBITDA and a greater than 10% strengthening of the Australian dollar against the New Zealand dollar.
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July 2026 trading showed resilient volumes despite a material contraction in industry death volumes, which the company expects to be temporary but highlights near-term volatility.
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Recent acquisitions generated below network average revenue per funeral, which negatively impacted the group's average revenue per funeral and overall margins.
Q & A Highlights
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Q: The July trading update implies flat year-on-year revenue. Given prices are up 3% and FX is a 3% headwind, is it fair to assume like-for-like volumes are down 4% for the month? A: Lily Zehner, Co-CEO, confirmed the $21.5 million revenue figure included a $600,000 FX headwind, meaning revenue would have been close to $22 million ex-FX. She acknowledged a "material contraction" in industry death volumes based on BDM data in Australia, which Propel was not immune to. However, she noted that average revenue per funeral growth exceeded 3% in July, which was pleasing, and that more color on FY27 trading would be provided at the AGM.
Q: The market appears to be down more like 8% to 10% in July. Are you back to winning share in July, and what has changed versus prior periods when there has been implied share loss? A: Lily Zehner, Co-CEO, cautioned against reading too much into a four-week trading period, stating that industry volumes oscillate and that it is not meaningful to glean market share gains or losses from such a short timeframe.
Q: C2B growth in FY26 was very well controlled. If volumes are tougher again in FY27, could you replicate the 2% cost growth of FY26, or is there no more room for efficiencies? A: Arash Noeen, CFO, stated that while cost management has been strong, replicating the sub-2% growth in FY27 would be difficult, particularly with acquisition impacts. However, he expressed confidence in continuing to manage costs effectively.
Q: Acquisitions are still a key part of the strategy, but there haven't been very material acquisitions since calendar year 2023. What is the pipeline looking like? A: Fraser Henderson, Co-CEO, confirmed the team is busy with multiple vendor discussions at various stages of negotiation. He noted that some opportunities in the pipeline are large multi-brand, multi-location opportunities, and while there was nothing to disclose that morning, the pipeline remains robust.
Q: With the weak winter and flu season impacting volumes, is there typically a catch-up period in the next six to 12 months, or could it take a few years to roll through? A: Fraser Henderson, Co-CEO, explained that people generally die because of age, with events like flu acting as a precursor. He suggested that if deaths didn't occur this winter, they are more likely to occur in the coming season, implying a catch-up in death volumes is expected in due course.
Q: Could you talk to the differences in trading conditions between Australia and New Zealand in late FY26 and into July? A: Lily Zehner, Co-CEO, noted that volumes in New Zealand were slightly stronger than in Australia in late FY26. For July, she clarified that industry data (BDM stats) is only available for the eastern states of Australia, covering roughly 80% of the country, and no comparable data is yet available for New Zealand.
Q: Employment costs seemed to be down around 2% in the second half. What is the ability of the fixed cost base to adjust to a flat or low revenue environment? A: Arash Noeen, CFO, highlighted that roughly 30% of headcount is casual, providing flexibility with volume movements. He also noted the natural cushioning of certain incentives. He stated it is reasonable to assume the cost base grows in line with pricing or inflation, and the company has maintained costs well over the last two years.
Q: Could you talk to the 3% average revenue per funeral growth into FY27 versus the 2% in FY26, and where are you at with supplier price increases? A: Lily Zehner, Co-CEO, explained that average revenue per funeral is driven by pricing, funeral mix, FX, and acquisitions, with pricing being the majority influence. Price increases effective July 1 factored in inflation forecasts. Arash Noeen, CFO, added that supplier price increases are running at just over 3%, in line with CPI, and noted there are still opportunities for cost management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
