BWX Ltd (ASX: BWX) published its US roadshow investor presentation today, reiterating that FY2018 EBITDA growth is expected to comfortably exceed the 30.7% increase achieved in FY2017.
BWX also stated that its current acquisition phase is complete, following the recent purchase of U.S. skin, body and hair care brand Andalou Naturals for US$80 million.
It has been a busy period for BWX, which also acquired US natural colour cosmetics brand Mineral Fusion for US$38.4 million on 30 June 2017.
The company expects the US-based acquisitions to open distribution channels in the United States for the entry of other BWX brands, including its highly successful Sukin product range.
The Sukin brand was launched in Australia in 2007 and has quickly become a market leader of natural skincare products.
Sukin generated 85% of group revenue in FY2017 and is sold internationally in countries including the United Kingdom, Canada, New Zealand and China. BWX has enjoyed initial success in selling Sukin in both the UK and Canada, and the company is currently in early stage discussions with potential distributors in Germany, the Middle East and Indonesia.
Domestically, Sukin has continued to experience strong sales growth, with Australian FY2017 revenues up 53.9% on the previous corresponding period. I'm expecting strong sales momentum again in FY2018, after the brand was launched in Coles supermarkets Australia-wide in late August.
Management's stated focus of integrating the recently acquired businesses and growing its existing brands should be applauded, as companies can run into problems if they attempt to expand too quickly, especially when entering new markets.
Hopefully management continues the steady and calculated approach it appears to have successfully demonstrated so far in the UK, Canada, Malaysia and Singapore.
BWX is scheduled to provide its next update on operations and integration progress at its half-year results in February, when I'll be looking for information on potential plans to distribute Sukin products in the United States.
Foolish takeaway
BWX has performed strongly since listing in 2015 and Sukin is a great brand, however it needs to avoid expansion problems for the share price to continue higher, given the company is trading at around 50x FY2017 earnings.
I'll be keeping an eye on the company's progress in expanding the Sukin brand internationally as a key catalyst for growth.
