Grupo Rotoplas S.A.B. (AGUA) Q3 2024 earnings summary

Executive summary

• Net sales for 3Q24 declined 6% year-over-year to MXN 2,838 million, mainly due to Argentina's recession and heavy rains in Mexico; excluding Argentina, sales rose 3.9%.

• EBITDA for 3Q24 dropped 47% year-over-year to MXN 247 million, with margin at 8.7%; net result was a loss of MXN 73 million versus a profit of MXN 229 million in 3Q23.

• Service platform, especially bebbia and bebbia Smart, showed strong growth, reaching 137,000+ users and positive customer feedback.

• Strategic focus on operational excellence, digitalization, and sustainability, with investments in technology and renewable energy.

• Leadership transition with a new CFO, maintaining continuity in financial strategy.

Financial highlights

• Cumulative 9M24 net sales were MXN 8,477 million, down 3.3% year-over-year; excluding Argentina, up 7.9%.

• Gross margin for 3Q24 contracted 290 bps to 42%; operating margin fell 800 bps to 3%.

• Operating margin and EBITDA margin declined due to lower sales and higher expenses.

• Net loss for the quarter as operating results could not cover financial costs.

• Cash and cash equivalents stood at MXN 616 million, down 3% year-over-year; net debt/EBITDA at 2.1x.

Outlook and guidance

• 2024 guidance revised: net sales expected between -5% and 0%, EBITDA margin 14–15%, Net Debt/EBITDA 2.0x–2.2x, and ROIC 100–200 bps below WACC.

• Argentina's recovery expected to be slow, with cautious, agile decision-making in that market.

• CapEx for 2025 to focus on maintenance, with discretionary spending approved monthly; expected at ~3% of revenues.

• Digital and IT CapEx to decrease in 2025, with OpEx for digital solutions remaining elevated.

• Strategic focus on digital/omnichannel, reversing EBITDA decline, and improving operating margins.