InvoCare posts 2023 first half numbers amid TPG takeover

August 31, 2023/Finance/

InvoCare, Australia’s largest Death Care provider, announced its First Half results for 2023 last week. That was a little over two weeks after they agreed to be purchased by private equity firm TPG Global for a price announced at about US$ 1.18 billion.

InvoCare, which also has operations in New Zealand and Singapore, and operates in the funeral/cremation, cemetery, and pet death care spaces, announced Operating Revenue of AUS $ 289.2 million (US$ 185.68 million) which was up from what they call their comparative half or Previous Corresponding Period (PCP). It was up 2%, but according to their press release which you can obtain here, the company’s Operating EBITDA on those sales was AUS $ 62.4 million (US$ 40.6 million), down 9% from the PCP.

Here’s what the company’s CEO, Olivier Chretien said about the results, ““2023 was always going to be a transition year for the Group with mortality rates stabilizing in our key markets following last year’s unprecedented and volatile demand, our
cost of doing business continuing to be impacted by inflation . . . . “

Here’s more of what was said in the press release:

On Pre-Paid Funerals — “The reinvigorated pre-paid funerals strategy was enacted in the half with early signs of success. Pre-need contract volumes sold grew 22% on the PCP and pre-need contract averages were 7% higher than at-need funeral case averages in the same period. . . “

On Pet Cremations — “The Pet Cremations business saw the benefit of last year’s investment in implementing a consistent national approach to service, product, and price changes, delivering close to 50,000 cremations in the half (up 1% on
the PCP), and growing pet case average by 8% . . . “

On InvoCare’s Outlook — “Management remains focused on maintaining strategic momentum into the second half, while operating the business in line with the Conduct of Business terms (Clause 7.1) of the SID.

Mortality rates are expected to revert to long-term averages (after three years of volatility), with the impact of
the 2023 flu season remaining comparatively benign mid-way through the third quarter.

Mr Chretien said, “In the near term, the team remains focused on continuing to serve our client families to
the highest standard and executing our strategies. At the same time, we will work towards completing the
scheme of arrangement with TPG, which is anticipated to complete in the last quarter of the year.”

Funeral Director Daily take: There’s lots of great information in the press release and also in an InvoCare Investor Presentation dated August 28, 2023, which you can also access here.

Here’s one take that I had, and I believe my math to be correct. If you double that first-half Operating EBITDA to account for a full year’s number you come up with about US$ 81.2 million. Considering that TPG has related that it is paying about US$ 1.18 billion for the company, that would be an EBITDA sales multiple of about 13.6 x. . . . .In my book, that is a steep price, so shareholders of InvoCare should feel pretty good.

I also could not help but notice in the investor presentation that among the plans and goals for the company are to “Accelerate the Growth” of their key brands, notably Simplicity and to grow the platform of “Digital Self-Serve”. From my point of view, it is apparent that InvoCare has taken notice of the consumer’s increased desire for simple services and many potential client’s desire to be able to “take care of things” from their home i.e. digitally.

More news from the world of Death Care: