Grupo Rotoplas S.A.B. (AGUA) Q4 2024 earnings summary

Executive summary

• 2024 was a challenging year, with net sales down 8% to MXN 11,201 million and a 19% year-over-year drop in 4Q24, mainly due to Argentina's recession and macroeconomic crisis; excluding Argentina, sales would have grown 7.8%.

• Strategic investments in manufacturing upgrades, digital transformation, and e-commerce channels were completed, including migration to Google Cloud and new omnichannel platforms.

• Service sales grew 45.6% in 4Q24 and 43.6% for 2024, driven by bebbia, which surpassed 133,000 subscribers and achieved record customer satisfaction.

• Workforce was reduced by 4% to streamline operations, incurring extraordinary severance expenses and focusing on expense optimization and free cash flow generation.

• ESG initiatives led to a 12% reduction in Scope 1 and 2 emissions, publication of a sustainable development report, and achievement of five out of six public ESG targets.

Financial highlights

• Excluding Argentina, quarterly sales grew 7.5% and full-year sales 7.8%; service sales now account for 8% of total revenue.

• Net income declined 46% year-over-year to MXN 169 million, with a 4Q24 net loss of MXN 122 million; full-year EBITDA margin was 13.3%, down 420 bps.

• Gross margin for 2024 was 44.9% (down 80 bps), and operating margin was 7.9% (down 520 bps); 4Q24 gross margin was 40.8%.

• Mexico sales rose 10% year-over-year, with services maintaining double-digit growth; Argentina net sales dropped 41% and had negative Q4 EBITDA margin.

• U.S. net sales fell 6% for the year, while other countries saw 12% sales growth, led by Peru, Central America, and Brazil.

Outlook and guidance

• Focus remains on reversing EBITDA decline, optimizing expenses, and generating free cash flow, with selective CapEx prioritizing high-return projects and maintenance.

• No specific EBITDA margin or 2025 guidance provided due to market uncertainty; cautious optimism for Argentina and expected improvement in the U.S. as market conditions shift.

• ESG targets include 100% tier-1 supplier ESG evaluation and 1.7M m³ water purified by 2025.

• Bebbia will remain focused on Mexico for now, with future international expansion possible.