Death care services provider Propel Funeral Partners (ASX: PFP) has announced the acquisition of two businesses, Community Funerals and Cremation for Pets. The latter acquisition marks Propel’s foray into a new market, that of pet funerals.
Every year, Cremation for Pets conducts up to 400 pet funerals. It’s a booming market, with the pet cremation industry in the country worth approximately $20 million. Additionally, Community Funerals conducts over 200 funerals a year and brings a host of experience as it has been in the industry for over a decade. Together, these businesses generate annual revenue of $1.7 million, which will help propel (pardon the pun) Propel forward.
The two businesses operate across four locations in and around Cairns, Queensland. Of these, Propel has fully acquired one, including the freehold property, and the other three to continue with their lease agreements. Combined, Propel expects they will be earnings accretive within Year 1.
Total consideration for the businesses (inc the freehold) will be $2.7 million comprising $2.4m in cash and the remainder in PFP shares issued at $4.67 each, escrowed for three years. A further $0.23m is payable in cash subject to performance targets being met over the next three years from the business.
This represents the company’s seventh business acquisition in the past 12 months. As per their Half Year report, the Company committed $21 million to six acquisitions in Australia and New Zealand during the first half of FY22. Those included Berry Funeral Directors which supports Adelaide families; Glenelg Funerals, a family-owned business located in Glenelg, SA; State of Grace, a funeral services provider in Auckland, New Zealand; Carol and Terry Crawford Funerals in Geelong, Victoria; Eagars Funerals in New Plymouth, New Zealand, and McKee Funerals in Perth.
Propel Funeral Partners was incorporated in 2017 and owns funeral homes, cemeteries, and the like across regions including Queensland, New South Wales, Tasmania, South Australia, and New Zealand. From collecting and transferring the deceased to conducting their funeral, cremation, and more—the company takes care of numerous death care needs. It is also constantly acquiring related assets, infrastructure, and businesses to provide better care and diversify its business.
According to the Australian Bureau of Statistics, deaths in Australia are expected to double between 2020 and 2050, increasing from 150,000 to over 300,000 per annum. This, in turn, is expected to create more demand for death care services that Propel is positioning to capitalise on.
Propel’s acquisition will establish a presence in Cairns—a region that has been growing rapidly in recent years.
As per their Half Year FY22 report, total funeral volumes are up 15% and comparable funeral volumes are up 7.8% on the prior corresponding period. Plus, the company’s revenue is up more than 15% to $67.9 million for the six months ended 31 December 2021.
In the coming months, Propel has more acquisitions on the cards and is expecting to be bolstered by strong funding. They aim to expand to more locations with favourable demographics. Finally, given that over 60% of Australians are pet owners, Propel’s acquisition of Cremation for Pets will help the company capture a new market and drive growth.
Alinda is a Business Reporter for The Sentiment
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