BWX delivers strong growth in FY 2020 and announces $50 million equity raising

The BWX Ltd (ASX:BWX) share price is in a trading halt this morning as it seeks to raise $50 million to fund its growth plans…

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The BWX Ltd (ASX: BWX) share price won’t be going anywhere on Thursday after the personal care products company requested a trading halt.

Why are BWX shares in a trading halt?

BWX requested a trading halt this morning in order to undertake a $50 million equity raising.

Management advised that these funds will be used primarily to develop and construct a new manufacturing facility and support office to support its future growth.

The new facilities, which are expected to cost ~$33.7 million, are expected to be completed in December 2021. After which, management expects them to have a four-year payback period and be earnings per share accretive in FY 2023 and onwards.

BWX Group Chief Operations Officer, Rory Gration, is very positive on these new facilities.

He commented: “This future world-class facility is expected to significantly boost BWX’s in-house manufacturing capacity, capability and competitive advantage; provide up-skilling opportunities for our team; and enhance the ways in which we serve our retail partners, customers, and consumers all over the world.”

“We believe this is an ambitious plan but one that creates further earnings potential to deliver sustainable returns and long-term value creation to shareholders.” he added.

BWX is aiming to raise the funds via a $40 million fully underwritten institutional placement at $3.40 per share (a discount of 7.1% to its last close price) and a $10 million share purchase plan.

Trading update.

In addition to announcing its equity raising, BWX released an update on its performance during FY 2020.

According to the release, BWX delivered a 25% increase in unaudited revenue to $187.6 million, a 30% lift in EBITDA (pre-AASB 16) to $27.5 million, and a 48% jump in statutory net profit after tax to $14.1 million. This was in line with its guidance for FY 2020.

BWX’s CEO and Managing Director, Dave Fenlon, explained: “All core brands performed well and we continued to gain market share, buoyed by their embedded connection with consumers and non-discretionary attributes.”

The chief executive remains positive on the future. He added: “We remain confident in the long-term growth upside across our engine markets of APAC, North America and International, entering FY21 from a position of strength to leverage the wider retail and economic recovery and exploring increased access to China and South East Asia via a direct to consumer model.”

Mr Fenlon also spoke positively about its partnership with supermarket giant Coles Group Ltd (ASX: COL).

“Our exclusive partnership with Coles is one we are proud of and has delivered both considerable growth to Sukin and brought new consumers into our brand,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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