CM – Result FY21: BWX (ASX: BWX) share price stopped due to takeover

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BWX Ltd (ASX: BWX) share price is currently on hold following the release of FY21 results and the announcement of an acquisition.

BWX is a large natural beauty company with a number of different brands including Sukin. < Adjusted for currency and share-linked strategic partnership with Chemist Warehouse, sales increased 8.6% to $ 203.9 million.

Sukin was the standout with sales growth of 16% to $ 95 million Performer. However, both Andalou Naturals and Mineral Fusion recorded a decline in sales.

The gross profit margin increased 134 basis points (1.34%) to 59.3%. This helped increase EBITDA (EBITDA Explained) 11.5% to $ 34.5 million, which was above forecast.

Legal Net Income After Tax (NPAT) increased 60.9 % to $ 23.7 million. Earnings per share (EPS) rose 44.9% to 17.1 cents.

BWX continued to invest in scaling its direct-to-consumer model, which accounted for 29% of sales in FY21.

The new operating and production facility is “within budget and on schedule” to open at the end of the calendar year 2021.

The board of directors has decided on a fully franked final dividend of 3.1 cents per share. This brings the dividend for the full year to 4.1 cents per share – an increase of 5%.

The natural beauty company has closed a deal to purchase 50.1% of Go-To Skincare for approximately $ 89 million . This transaction represents an enterprise value relative to EBITDA in FY21 that is 14.9 times before synergies and 11.9 times after synergies.

This company is an Australian skin care company with a range of products for the « Masstige » market. In FY21, it generated revenue of $ 36.8 million and EBITDA of $ 11.6 million.

Go-To Founder Zoe Foster Blake will remain as Strategic Shareholder, Chief Creative Officer and Board Director . Other co-founders will also remain in the partnership.

The company will remain as an independently operated, standalone, founder-run brand that leverages BWX’s expertise and capabilities in specific areas.

BWX said it is a compelling opportunity to partner with one of Australia’s leading skin care entrepreneurs and support its continued growth.

After $ 3 million in potential synergies, this should increase double-digit earnings per share.

It is expected to benefit from a number of areas such as a year-round contribution from Woolworths Group Ltd (ASX: WOW) that started in the second half of FY21, a year-round contribution from Flora and Fauna, sustained performance of direct-to-consumer stores, benefits year-round from the Chemist Warehouse partnership and recent sales profits made in the retail channels.

BWX seems one being good business to benefit from a growing trend towards natural products. It appears to be making a number of acquisitions that hopefully can all be successfully integrated. More brands can distract management.

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