InvoCare delivers “Solid Profit” in 2019

The headline from a Motley Fool piece that you can read here states, “InvoCare delivers solid profit and dividend growth in FY2019”.  Australia’s largest funeral and cremation provider recorded revenue growth of 4% for the year which led to a 19.6% increase in after tax operating earnings.

For the year, InvoCare brought in revenue of AUS $ 500.35 million (US $329.17 million) and recorded after tax net profits of AUS 63.75 million (US$41.94 million).

The article mentioned that the gains were derived for InvoCare from a combination of market share gains, acquisitions, and the number of deaths increasing toward the long-term trend.

InvoCare has been making capital improvements in what they call their “Protect and Grow” strategy.  The article states that in 2019 InvoCare completed the renovation of 106 properties and plans to renovate another 74 locations in 2020.  Part of the “Protect and Grow” strategy is to be able to have facilities that can offer more contemporary product offerings.

CEO Martin Earp is quoted in the article, “The results of 2019 have proven the positive impact of our investment in the Protect and Grow strategy. . . This is reflected in both our continuing strong customer satisfaction scores as well as improved profitability from these renovated locations.”

Funeral Director Daily take:  This article reinforced an old thought that I have always had.  That is, as a small funeral home owner, putting capital improvements into your business instead of your personal life, will eventually pay off and allow you to take out even more for your personal life at a later date.  I was fortunate when I started.  I was single until age 30, needed little money to live on, and was able to pour profits back into our facility and staffing.  That led to big gains in death calls, market share, and profitability in years to come. . . . I’m a big believer in patience, patience, patience and delayed gratification.

Another thing I realized in reading this article was the comparative size of InvoCare.  We recently commented on Houston based public company Carriage Services in this forum.  While InvoCare is Australia’s largest death care company, it pales – as most companies do in comparison with Service Corporation International.  InvoCare’s revenue is less than 1/10 of SCI’s, however, it is a pretty comparable peer with Carriage Services.

Carriage Services did just over $274 million in revenue in 2019. InvoCare reported slightly more revenue than Carriage Services at US$329 million.  It is interesting to note, however, that InvoCare’s net profit after tax (US$ 41.9 million)was about double what  Carriage Services reported for Adjusted Net Income ($22.5 million).

Related—  If you want an idea about the contemporary capital improvements that InvoCare put into their facilities, Funeral Director Daily did an article on that in 2018 which you can access here to eventually view photos from one of their facilities.

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