BWX (ASX: BWX) has announced some financial numbers in a FY20 update as well as revealing a capital raising for a new manufacturing facility.
What is BWX?
BWX Ltd 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 USA, and the range is available online throughout Asia.
The FY20 update
The natural beauty business announced that its FY20 revenue has grown by 25% to $187.6 million. Looking at the individual brands, Sukin revenue rose 55%, Andalou Naturals revenue went up 10%, Mineral Fusion revenue went up 16% and Nourished Life revenue increased 15%.
BWX’s EBITDA (click here to learn what EBITDA means) was $30.9 million, including the AASB 16 accounting change. Excluding AASB 16, EBITDA was $27.5 million, up 30% compared to last year. The gross margin improved by 2% compared to last year, increasing to 58%.
Net profit after tax increased by 48% to $14.1 million.
BWX was pleased to boast of its market share growth in two key sales channels. Its market share of natural skincare in Coles (ASX: COL) increased from 59.6% in February 2020 to 62.8% in May 2020. In the Australian pharmacy market, its share has grown from 29.2% at February 2020 to 30.8% in May 2020.
Its balance sheet position was net debt of $32 million at 30 June 2020.
BWX capital raising
BWX is going to raise $50 million, with $33.7 million to fund the construction of a new manufacturing facility and support office which is expected to be completed in December 2021. It’s expected to add to earnings per share (EPS) from FY23.
There will be a fully underwritten institutional placement of $40 million, with a $10 million share purchase plan for regular retail investors.
The capital raising price will be $3.40, being a 7.1% discount to yesterday’s closing share price.
The new facility is expected to be able to produce bigger volumes in the future and enhance margins. It’s expected to improve quality and consistency of products. The new facility will enhance control over the end to end supply chain and it will reduce material waste by around 50%.
Summary
FY20 seemed like a solid year for BWX, quite the turnaround from the 2018 to 2019 difficulties.
In FY21 BWX is expecting revenue and EBITDA growth of at least 10% in FY21 as well as a $4.5 million net profit boost due the company agreeing to the final payment relating to the Andalou Naturals business.
I think BWX is on the right course now. Further growth in FY21 is promising and the facility sounds like a good move to take BWX to the next level of production. I’d be happy to buy a parcel of BWX shares, particularly if I could take part in the capital raising.
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