Rotoplas: Third Quarter 2024 Results
MEXICO CITY, Oct. 22, 2024 /PRNewswire/ -- Grupo Rotoplas S.A.B. de C.V. (BMV:AGUA) ("Rotoplas", "the Company"), America's leading company in water solutions, reports its unaudited third quarter 2024 results. The information has been prepared in accordance with the International Financial Reporting Standards (IFRS).
Figures are expressed in millions of Mexican pesos.
HIGHLIGHTS | 3Q24 vs 3Q23
Net sales closed the quarter at Ps. 2,838 million, 6.0% below 3Q23, due to Argentina's performance amidst the country's economic recession, which could not be offset by growth in other regions. Excluding Argentina, net sales would have increased by 3.9%.
- Product sales decreased by 6.9%, primarily impacted by the macroeconomic situation in Argentina and a slowdown in Mexico caused by heavy rainfall, with monthly precipitation up to 33% higher than the average of the last 10 years. This reduced the demand for storage solutions and limited the ability to offset the impact in Argentina.
- Service sales increased by 8.9%, driven by the continued growth of bebbia, which reached 127,000 subscribers and, in August, launched bebbia SMART, a platform that allows users to check water consumption and quality data from their mobile device.
Gross profit stood at Ps. 1,179 million, 12.3% lower than in 3Q23. The gross margin decreased by 290 bps, reaching 41.6%, due to lower sales which affected the absorption of fixed costs.
Operating income stood at Ps. 89 million, a 73.6% decrease compared to 3Q23. Operating expenses increased by 0.7% in absolute terms compared to the previous quarter, with the main impact on margins being the decline in sales. The increase in operating expenses is attributed to higher logistics costs and the development of digital initiatives focused on empowering users with data on water quantity and quality for better management.
EBITDA closed at Ps. 247 million, 47.3% lower than in 3Q23. The EBITDA margin was 8.7% compared to 15.5% in 3Q23.
Net result for the quarter was a loss of Ps. 73 million, compared to a profit of Ps. 229 million in 3Q23. This result is largely due to lower sales volumes, which impacted operating income.
HIGHLIGHTS | CUMULATIVE 2024 vs 2023
Net sales reached Ps. 8,477 million, 3.3% below the same period last year. This result primarily reflects the impact of the economic situation in Argentina and the lack of drought in the United States. Excluding Argentina, net sales would have increased by 7.9%.
- Product sales decreased by 5.9%, impacted by the economic contraction in Argentina, as well as weather conditions and lower agricultural activity in the United States.
- Service sales grew by 42.9%, representing 7.7% of total sales, driven by the expansion of bebbia, strong traction from water treatment plants, and the development of rieggo.
Gross profit stood at Ps. 3,921 million, decreasing by 2.4%. The gross margin closed at 46.3%, an increase of 50 bps, mainly driven by an effective commercial strategy during the first half of the year.
Operating income reached Ps. 817 million, 32.3% lower than in 2023. This decrease is due to lower expense absorption, as well as an increase in logistics costs and the development of new digital capabilities to drive the growth of the service platform.
Accumulated EBITDA closed at Ps. 1,253 million, a decrease of 20.6%. The EBITDA margin stood at 14.8%.
Net income reached Ps. 291 million, an increase of 20.6% compared to Ps. 241 million the previous year, due to lower financial expenses. Last year, extraordinarily high financial expenses were recorded due to the strength of the Mexican peso, which resulted in a negative valuation of MXN/USD exchange rate hedging instruments.
ROIC decreased by 740 basis points, closing at 10.3%, 40 bps below the cost of capital.
Net Debt/EBITDA leverage closed at 2.1x, driven by the decrease in EBITDA over the last 12 months.
During the period, Ps. 382 million was invested in CapEx, primarily focused on expanding production capacity and modernizing key operational processes to improve efficiency and competitiveness in Mexico.
KEY FIGURES | 3Q24 vs 3Q23
3Q
9M
2024
2023
%Δ
2024
2023
%Δ
Income Statement
Net Sales
2,838
3,020
(6.0 %)
8,477
8,770
(3.3 %)
% gross margin
41.6 %
44.5 %
(290) bps
46.3 %
45.8 %
50 bps
Operating income
89
335
(73.6 %)
817
1,207
(32.3 %)
% margin
3.1 %
11.1 %
(800) bps
9.6 %
13.8 %
(420) bps
EBITDA1
247
470
(47.3 %)
1,253
1,577
(20.6 %)
% margin
8.7 %
15.5 %
(680) bps
14.8 %
18.0 %
(320) bps
Net Result
(73)
229
NM
291
241
20.6 %
% margin
(2.6 %)
7.6 %
NM
3.4 %
2.7 %
70 bps
Balance
Cash and Cash Equivalent
616
633
(2.7 %)
Debt with cost
4,414
4,114
7.3 %
Net Debt
3,798
3,481
9.1 %
(Cumulative)
Cash Flow
Operating Cash Flow
733
811
(9.6 %)
CapEx
382
274
39.2 %
Working Capital
(529)
(214)
NM
Others
Net Debt / EBITDA
2.1 x
1.6 x
0.5 x
ROIC
10.3 %
17.7 %
(740) bps
Cash Conversion Cycle
49
53
(4) days
KEY FIGURES | JANUARY, SEPTEMBER
Employees
3,640
Sales points
+32,000
Government transactions (% of sales)
4.0 %
e-commerce clients
+5,500
Bebbia units
+127,000
20L water jugs saved
39.7 million
MESSAGE | CEO
Dear Investors,
This quarter has presented significant challenges on both the climatic and economic fronts. In Argentina, the economic recovery has been slower than expected, impacting our sales in that market. Additionally, in Mexico, the transition from extreme drought to record rainfall, the heaviest in 80 years during some months, has slowed the growth of our products, affecting our ability to offset the performance in Argentina.
These phenomena underscore the effects of climate change that we are facing, with increasingly frequent extreme weather events such as prolonged droughts, more intense hurricanes, and unpredictable shifts in rainfall patterns. These factors make demand more volatile and harder to predict, forcing us to find new ways to anticipate market cycles, especially in categories like water storage.
Despite these challenges, our services segment continues to perform well. bebbia keeps growing, and in August we launched bebbia SMART. This has been well received in the market, with 25% of new subscriptions in September opting for this new model.
I would like to highlight the four strategic priorities of our business, which continue to guide our decisions: i) Sustainable growth of products, ii) Sustainable development of services, iii) Digitalization of the water ecosystem, and iv) Creating value for all stakeholders.
In terms of profitability, although expenses remained stable, the decline in sales affected our margins. We will be strategic in controlling costs and expenses, as well as investing in digital capabilities to improve efficiency and results.
Looking ahead, we are excited by the support of public policies that promote efficient water use, which is key to our long-term development. Our strategy remains strong, with clear opportunities to create value.
Lastly, I am proud to mention that S&P Ratings has recognized us as one of the five leading ESG companies globally in our industry, reinforcing our commitment to sustainability and long-term positive impact.
Carlos Rojas Aboumrad
INVITE | EARNINGS CALL
Wednesday, October 23rd, 10:00am Mexico City Time (12:00pm, EST)
Speakers: Carlos Rojas (CEO), Andres Pliego (incoming CFO), Mario Romero (former CFO and Board Member)
Link: https://rotoplas.zoom.us/webinar/register/WN_91ciwNAIRlWMbu1UyDlOQA#/registration
GUIDANCE | 2024-2025
Metric
2024 Revised
Guidance (September)
Guidance
Increase in net sales
(5%), 0%
EBITDA Margin
14.0% - 15.0%
Net Debt/EBITDA
2.0x, 2.2x
ROIC
ROIC = WACC - 100/200 bp
EBITDA | BY REGION AND SOLUTION
3Q
9M
2024
2023
%Δ
2024
2023
%Δ
Mexico
Sales
1,513
1,478
2.4 %
5,046
4,529
11.4 %
EBITDA
243
332
(26.6 %)
1,148
1,223
(6.1 %)
% Margin
16.1 %
22.4 %
(630) bps
22.7 %
27.0 %
(430) bps
Argentina
Sales
728
989
(26.4 %)
1,724
2,510
(31.3 %)
EBITDA
16
169
(90.7 %)
106
386
(72.6 %)
% Margin
2.2 %
17.1 %
NM
6.1 %
15.4 %
(930) bps
United States
Sales
292
288
1.4 %
777
861
(9.8 %)
EBITDA
(30)
(55)
(45.6 %)
(99)
(153)
(35.4 %)
% Margen
(10.2 %)
(19.0 %)
880 bps
(12.7 %)
(17.7 %)
500 bps
Others
Sales
305
265
14.8 %
930
870
6.9 %
EBITDA
