Propel Funeral Partners (ASX:PFP) bolts on three NZ deals as FY26 EBITDA goes flat

A A$9.1m regional roll-up extends the network, but FX caps the FY26 step-up

Propel Funeral Partners (ASX:PFP) has done two things in one announcement today. It has signed up three regional New Zealand bolt-on acquisitions for up to A$9.1 million, and it has handed investors its first formal FY26 guidance.

The acquisitions are classic Propel. Three small, regionally dominant funeral businesses in Gisborne, Balclutha and Rotorua, bought together with a cremation facility and real estate, adding about A$4.0 million of revenue and over 700 funerals a year.

The FY26 guidance is the more interesting half of the release. Revenue is guided to A$225 to A$230 million against FY25 of A$225.8 million, and Operating EBITDA to A$54.5 to A$56.5 million against FY25 of A$56.2 million. The midpoint of FY26 EBITDA sits slightly below where FY25 landed.

For a stock long pitched as a defensive compounder, a flat EBITDA year is the line that needs explaining. Management points at FX, with a more than 10% AUD strengthening against the NZD stripping around A$4 million from revenue and A$1 million from EBITDA.

Why the FY26 guide looks flat even with three acquisitions in the bag

Strip out the FX hit and the underlying business is still growing, just not by much. Propel expects to perform about 22,850 funerals in FY26, a 1% lift on FY25, with comparable Average Revenue Per Funeral up around 2% in constant currency.

That is a long way from the double-digit revenue growth investors got used to in FY23 and FY24, when M&A did most of the heavy lifting. The new NZ bolt-ons settle in Q4 FY26 or Q1 FY27, so the A$4 million of acquired revenue barely touches this year.

Operating costs are guided up 2.5%, against ARPF growth of 2%, which quietly tells you margin leverage is not the story in FY26. The skeptical read is that this is a year where Propel treads water on earnings while building the next leg of M&A optionality.

What the three NZ deals actually buy

Propel is paying A$8.3 million up front in cash from existing debt facilities, plus up to A$0.8 million in earn-out over four years. On A$4 million of revenue, that puts the headline price at roughly 2.3 times sales, which is sensible for regional, owner-operated funeral businesses with real estate attached.

All four sites are being acquired outright on settlement, and one of the three businesses comes with its own cremation facility. That matters because cremation infrastructure is the highest-margin, hardest-to-replicate part of the death care value chain.

Propel now operates from 209 locations, including 41 cremation facilities and 9 cemeteries. These bolt-ons keep tightening its grip on regional NZ where competition remains fragmented.

The last listed funeral name on the ASX still has scarcity value

With Invocare taken private by TPG Capital in 2023, Propel is the only way ASX investors can play the Australian and New Zealand death care thematic. That scarcity value has cut both ways, supporting the multiple but also raising the bar for what counts as a good year.

Since the retirement of co-founder Albin Kurti, the cadence of acquisitions has not slowed, which was a key concern coming out of the 1H25 result. Australian and New Zealand death rates are structurally rising, and Propel keeps adding regional density.

The question is whether the market looks through a soft FY26 print or punishes it.

The Investors Takeaway for Propel Funeral Partners

One year of flat EBITDA does not break the Propel story, but it does test the patience of investors who bought it as a steady compounder. The FY27 read will be far more revealing, because by then the three NZ acquisitions will be in the base and FX comparisons reset.

We would want to see two things over the next 12 months. Continued bolt-on activity at the 2 to 3 times revenue mark Propel has been disciplined about, and evidence that comparable ARPF growth can accelerate beyond 2% as the network leans harder on cremation and premium service mix.

For context on how this sits against the longer-run thesis, investors can read our previous coverage at stocksdownunder.