BWX Limited (ASX: BWX) released its FY19 report this morning, with results mixed against analyst estimates. Here’s what you need to know.
About BWX Limited
BWX is a wholesale distributor and owner of skincare and other wellness products for the beauty sector. It’s best-known for its range of Sukin skincare products, but it also owns Andalou Naturals, Mineral Fusion and Edward Beale. Its products are sold throughout Australia and the USA, and the range is available online throughout Asia.
The Numbers
BWX reported weak revenue growth of 0.5% over FY18, although 2H19 results were 19% higher than 1H19. Underlying EBITDA declined by 47.2% to $21.3 million, while statutory net profit after tax (NPAT) was down 70% and underlying NPAT was down 54.5%.
This video explains the difference between statutory and underlying results.
Dividends
BWX announced a dividend of 2.7 cents per share, which is within the dividend payout guidance range of 35-50%. This results in a full-year dividend of 2.7 cps in FY19, compared to 7.45 cps in FY18.
Analyst Estimates
The analyst estimate from Bloomberg was $10.27 million for NPAT and a dividend of 1.2 cps. BWX’s declared dividend is more than double the estimated dividend, but statutory NPAT came in below estimates at $9.5 million. However, underlying NPAT was $11 million for FY19.
Management Commentary
BWX CEO and Managing Director Dave Fenlon said brand health is still strong despite the financial performance.
“While 2019 presented challenges that are reflected in our financial outcomes for the year, our overall brand health remains strong,” he said.
“The Group will continue its investment in brand building, process improvement, capability and innovation to drive deeper consumer penetration and basket size supporting double digit revenue and EBITDA growth in FY2020.”
FY20 Outlook
As mentioned by Mr Fenlon, BWX expects double-digit growth in FY20. More specifically, BWX is expecting revenue growth of 20-25% and EBITDA growth of 25-35% over the coming year.
Summary
BWX seems positive about its future and the growth in 2H19 is encouraging. However, the financial results for FY19 tell a different story. What I was hoping for was a more thorough explanation of why revenue was flat and why EBITDA and NPAT have taken such big hits. Instead, the report focusses on all of the positives and almost fails to acknowledge the actual results.
Even the CEO said that the year presented challenges, but reading the report, I don’t get much of a sense of what those challenges were. For that reason, I’d rather invest in one of the growth companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
