The BWX Limited (ASX: BWX) share price soared by more than 8% in early trade before pulling back to $4.41 per share, following the release of the company's full-year results for the period ending 30 June 2020 (FY20).
How did BWX perform in FY20?
A leading owner and wholesale distributor of branded skin and haircare products, BWX's brand portfolio consists of Andalou Naturals, Mineral Fusion, Nourished Life and Sukin – the number one organic skincare brand in Australia and the company's largest revenue generator.
Key highlights from BWX's FY20 report include:
- Net profit after tax of $15.2 million, up 59%
- Revenue of $187.7 million, up 25.5%
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $27.5 million, up 30%
- Forecast for FY21 underlying EBITDA of $30.25 million
- Sukin sales revenue of $81.7 million, up 55%
- Underlying earnings per share of 12.3 cents, compared to 8.9 cents in FY19
The company reported a strong balance sheet, with operating cash flow of $28 million, and bank debt obligations of $60.6 million and deferred payment on acquisition of $9.7 million.
BWX declared a fully franked final dividend of 2.6 cents per share for FY20, which is within the company's dividend payout guidance of 35–50%.
Revenue in the company's Australia Pacific market increased by 43% on the prior corresponding period, and the North America region increased by 7%. The acceleration of online shopping has supported growth through BWX's direct-to-consumer model.
All segments of BWX's core brands continued to increase market share in FY20. The company reports that Sukin remains the number 1 natural skincare brand in Australia. Sukin accounted for half of the net revenue from the company's entire portfolio range.
COVID-19 impact
BWX advised it has strengthened its balance sheet in response to the uncertainty of COVID-19. The company has diversified its supply chain for raw materials and components to adjust to increased consumer demand.
The company recently launched a natural hand sanitiser, which has become a core staple for consumers. BWX has been accelerating its direct-to-consumer model to capture future growth due to the behavioural shift around health and hygiene.
Sales and operations planning systems have been assisting decision makers with reliable rolling forecasts. Cost and inventory management have been tightly controlled to minimise product oversupply and material wastage.
Outlook
While management will continue to closely monitor external market conditions, the group anticipates further market share growth. Essential services such as pharmacies and supermarkets are expected to underpin sales through BWX's expanded product offering.
Long term, the company is targeting a $50 million supermarket skincare business in Australia, a $100 million conventional skincare business in the US, and is working towards $30–$50 million in revenue from its European operations by 2023.
Additionally, BWX's new operation facility and support office is due for completion by 1H FY22. It is forecasted to provide an earnings uplift to the business in FY23.
BWX is aiming to achieve growth in revenue and EBITDA of at least 10% in FY21.
At the time of writing, the BWX share price has given up some of its early gains, currently up 3.48% to $4.41 per share.
