The BWX Ltd (ASX: BWX) share price sank 53% after it finally returned to the ASX after releasing its FY22 result. This represents more pain after earlier falls in 2022.
BWX sells a wide range of natural beauty products, including the brand Sukin.
BWX share price sinks
The beauty products business finally told investors about its FY22 result.
- FY22 statutory net loss of $335.6 million
- This includes a $322.6 million non-cash impairment related to a reduction in the carrying value of intangible assets
- FY22 revenue was $198.3 million
- EBITDA (EBITDA explained) loss of $6.4 million
- Negative operating cashflow of $22.2 million
- FY22 underlying loss of $2.7 million
BWX said that revenue recognition accounting errors resulted in restatement of FY21 and the first half of FY22 results.
FY21 revenue was reduced by $11 million, with EBITDA down by $8.8 million.
The FY22 first half revenue fell $5.7 million, while the EBITDA dropped $5.3 million.
The large impairment was due to retail uncertain, current trading conditions and a reduction of growth assumptions. This “has no impact on debt facilities obligations”.
BWX said that it has confidence in the health of its core brands and the increased consumer demand for natural products.
At 30 June 2022, it had underlying (pre-AASB16) net debt of $64.3 million.
Strategic update
It’s been working on its cost base, and has been working on reducing its net debt. BWX said that it has worked on company-wide cost-saving initiatives of around $10 million per annum.
The company has also been reducing its inventory and restructuring its business.
It’s also reviewing potential sales of some of its non-core businesses.
BWX continues to work on streamlining and simplifying its business.
FY23 update
The company said it’s seeing “good in-market demand” in Australia and the USA, and anticipates improving trading conditions in the second half of FY23.
It’s expecting sales to improve in the second half of FY23.
However, in the first half of FY23, BWX expects to record an operating loss as customer inventory holdings continue to normalise and it ‘recognises’ the restructuring costs.
Debt levels have increased “significantly”, so the company has increased its debt facility with its current lender to draw down an additional $12 million of debt and is working towards a long-term debt restructure in the FY23 second half. It’s expecting net debt to peak at around $95 million.
Guidance
FY23 revenue is expected to be in the range of $205 million to $230 million, while full-year EBITDA is expected to be in the range of between $25 million to $30 million, excluding ‘one-off significant items’.
Final thoughts on the BWX share price
BWX’s board and management “remain committed to returning BWX to sustainable and profitable growth and restoring shareholder confidence.”
The company may well go through a recovery from here, but I think it’s too uncertain about what’s going to happen next, I’m personally not interested after a number of these difficult turnaround attempts. There are other ASX growth shares that I think are more likely to do well.
