BWX (ASX:BWX) share price plunges 26% after posting after-tax loss in 1H FY22

Shares in BWX are plunging today as the company released its financial results for the half-year ended 31 December 2021.

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Key points

  • BWX reported its earnings today for the half-year ending 31 December 2021 
  • It was a period of underlying earnings growth, although non-recurring expenses seen in its results meant it reported a statutory loss after tax 
  • In the last 12 months, the BWX share price has collapsed into the red by 38% 

Shares in BWX Ltd (ASX: BWX) are on deep in the red today after the company released its interim report and financial results for the half-year ended 31 December 2021.

At the time of writing, the BWX share price is trading down 25.82% at $2.50 apiece after releasing its earnings.

BWX share price plunges amid revenue growth, profit slide

Key takeouts from the company's earnings results today include:

  • Strong Group underlying revenue growth of 26.5% and EBITDA growth of 26.2% year on year (YoY)
  • Statutory revenue of $103.4 million and Statutory net loss after tax (NLAT) of $2.3 million
  • Completion of Flora & Fauna acquisition in 1Q22 and Go-To Skincare in 2Q22
  • Integration and synergies on target; three-year growth strategy established for Go-To Skincare
  • Core brand margin improved 334 basis points YoY to 58.5%
  • Group gross margin up 206 basis points YoY to 55.7%
  • Global points of distribution at 1.6 million and on track to achieve 2 million target by end FY22
  • Clayton Facility supporting a step change in operational and financial performance, targeting 300 basis point margin accretion from FY23
  • Solid balance sheet supporting reinvestment for longer-term growth
  • Strong underlying revenue and EBITDA expected for FY22

What else happened this half for BWX?

The company's results were hallmarked by YoY growth in underlying revenue and EBITDA during its first half. BWX says this was driven by "core brand and acquisition-led growth across Australia/International and USA segments".

Specifically, underlying revenue came in at $107 million, a 26.5% increase on the same time last year. This result was underlined by "three- and six-month contributions from the acquisitions of Go-To Skincare (Go-To) and Flora & Fauna respectively".

Underlying NPAT was $4.7 million, up 22.1% on the prior period. However, including all assessable income, the company actually recorded a net loss after tax of $2.3 million.

BWX says the drop in after tax profit was attributable to one-off items that aren't likely to be seen in its P&L again.

"The decline was driven by the one-off impact of a $5.8 million benefit in 1H21 from settlement of the Egide Compensation Plan to the sellers of the Andalou Naturals business, and costs in 1H22 including one-off acquisition charges of $3.0 million and $3.5 million Chemist Warehouse cost of equity-linked strategic partnership expense", it noted.

Nevertheless, the group's core margins lifted by over 300 basis points to 58.5% which thrust gross margins 200 basis points higher to 55.7%. The result stemmed from efficiency gains in procurement and sourcing, BWX claims.

Management commentary

Speaking on the group's result, current BWX CEO and Managing Director, Dave Fenlon said:

During 1H22, the Group delivered strong underlying growth despite a heavily impacted first quarter which saw approximately 7% of our total distribution points forced to close in line with Government responses to COVID outbreaks across key regions. The second quarter reflected stronger sales momentum which is continuing to accelerate and – coupled with a strong performance in our USA segment – demonstrates a broader retail-led recovery as consumers return to socialising and instore shopping.

What's next for BWX?

According to the release, BWX anticipates "strong underlying revenue and EBITDA growth in FY22" with the bolus of upside to be realised at the back end of FY22.

"This outlook is supported by sales momentum in 2Q22, which is continuing into 3Q22", it says, although no formal numbers were given.

Finalising the group's remarks, incoming BWX CEO and Managing Director, Rory Gration concluded:

January retail performance has maintained the strong momentum seen in the second quarter, which is encouraging. While the environment remains uncertain, our strategic priorities are simple and we will continue to execute through the unlocking of acquisition-led and organic brand growth and increasing our points of distribution.

BWX share price snapshot

In the last 12 months, the BWX share price has collapsed into the red by 38% and is down a further 43% this year to date.

More pain in the last month has meant BWX has shot down by 31% after collapsing around 28% this week.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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