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Rotoplas: Fourth Quarter 2021 and Full Year Results

MEXICO CITY, Feb. 9, 2022 /PRNewswire/ — Grupo Rotoplas S.A.B. de C.V. (BMV: AGUA*) (“Rotoplas” or “the Company”), America’s leading company in water solutions, reports its unaudited fourth quarter and full year 2021 results. The information has been prepared in accordance with the International Financial Reporting Standards (IFRS).  

BMV: AGUA

Figures are expressed in millions of Mexican pesos.

HIGHLIGHTS 

4Q21 vs 4Q20

  • Net sales grew 14.3% and exceeded Ps. 2,800 million for the third consecutive quarter, driven by brand strength and leadership.
  • In line with the Company’s strategy, price increases during the second half of the year contributed to the sequential recovery of margins. The EBITDA margin increased 5.4 percentage points compared to 3Q21, to 18.1%.
  • Net income increased 55.1% due to the recovery in operating income and lower financial expenses.

Full Year 2021 vs 2020

  • In a particularly volatile year of unstable supply chains and rising costs, the agility and coordination provided by Flow program helped the Company achieve its growth and profitability objectives.
  • The strategy of temporarily absorbing cost increases to gain market share during the first half of the year and increasing the portfolio’s profitability during the second half proved to be successful, better positioning product brands in all regions.
  • Accumulated net sales increased 26.3% exceeding the annual growth target of 17.0%
    • Product sales increased 29.8% in 2021, driven by over 20% increases in all three categories. Of the total growth, 18.2% corresponds to volume increases and 11.6% to price increases. Likewise, sales from new solutions represented 2.6% of total revenues.
    • Service sales, which represent 4.5% of total revenues, contracted by 20.4% impacted by the lack of maintenance billing in the drinking fountain business and a slowdown in the water treatment and recycling plant businesses. bebbia continues to post double-digit growth, however, as it is still a developing business it is not able to offset the other divisions.
  • The gross margin closed at 38.1%, a 350 bps decrease due to increased raw material and freight costs in all regions.
  • Despite the lag between price increments and cost increases, Adj. EBITDA1 reached Ps. 1,764 million, which  in absolute terms represent an achievement of 98% the annual objective. The EBITDA margin closed at 16.2%, a 200 bps decrease.
  • A reduction in EBITDA of Ps. 393 million for the full year is estimated due to temporary absorption of cost increases. As a result of the increase in market share a 1.8x return on the cost is estimated.
  • During the year, cumulative net income was Ps. 322 million, 6.8% higher than 2020, without considering the non-recurring financial gain from the early closing of foreign exchange rate hedges in March 2020.
  • The increase in working capital was due to sales growth and the measures taken to ensure inventory in the face of raw material scarcity. The Company achieved a factory efficiency of 99.53% for the timely delivery of 100% of orders to more than 90,000 distributors and customers served directly.
  • At the end of December, the Net Debt / Adj. EBITDA leverage ratio was 1.3x and the cash conversion cycle was optimized by 7 days.
  • During the year, 4.7% of sales were allocated to CapEx. The first phase of investments for the technological updates to Mexican plants began with the pilot launch of the new generation water tanks designed for the long-term sustainability of the category. Additionally, production capacity was increased in several countries and investments were made in the digitalization of businesses such as Acuantia and bebbia.
  • The ROIC closed at 14.5%, 235 bps higher than the cost of capital and in line with the long-term sustainable value generation plan. ROIC has increased 83.5% since the start of the Flow transformation program in August 2019.

1 Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 4Q21 it considers Ps. 76 million of Flow expense and Ps. 10 million donations and in 4Q20 it considers Ps. 71 million of Flow expense and Ps. 1 million donations. Cumulatively, it considers Ps. 301 million of Flow expenses and Ps. 19 million for donations in 2021 as well as Ps. 167 million expense for Flow and Ps. 10 million for donations in 2020.

Other relevant highlights

  • In April, the Sustainability Strategy 2021-2025 was launched, focused on creating 360* value for all stakeholders and throughout the water cycle. Additionally, the strategy places people, the planet, and economic benefit on the same level of importance.
  • In November, the Company acquired a minority stake in Banyan Water , a tech-company specialized in software for digital water management.
  • In December, the sustainability goals  were made public, highlighting the commitment to be a net zero emissions company by 2040 and an increase from 23% to 30% in the participation of women in the workforce by 2025.
  • The implementation of the sustainability strategy has been successful with a 10% increase in the rating granted by SAM from S&P Global and an upgrade from BB to BBB by MSCI.
  • During the year, the first Annual Report aligned with the TCFD recommendations was published and the CDP questionnaire was completed for the second consecutive year. 
  • Rotoplas was included for the first time in the S&P Global Sustainability Yearbook 2022.
  • The organizational culture initiatives within the Flow program have achieved a sustained improvement in the Company’s work environment.
  • During the year, more than Ps. 22 million were allocated to social investment in Mexico, Argentina, Peru, and Central America, impacting 15,857 people.

AGUA*

  • In May, a capital reimbursement in cash of $0.45 per share was paid to shareholders.
  • In November, a capital reimbursement in kind was paid with treasury stock, delivering one share for every 15 shares held.  
  • The performance of AGUA*’s stock in the year was 11.2%. Including capital reimbursements, the annual return was 19.7%.
  • In December, BTG Pactual initiated coverage of AGUA*, with a buy recommendation and a target price of $39 pesos.

KEY FIGURES | FINANCIAL DATA

4Q

12M

2021

2020

%Δ

2021

2020

%Δ

Income
Statement

Net Sales

2,800

2,450

14.3%

10,915

8,644

26.3%

% gross margin

39.4%

41.6%

(220) bps

38.1%

41.6%

(350) bps

Operating Income

327

315

4.0%

1,064

1,047

1.7%

% margin

11.7%

12.8%

(110) bps

9.8%

12.1%

(230) bps

EBITDA

422

404

4.4%

1,443

1,397

3.3%

Adjusted EBITDA1

508

476

6.7%

1,764

1,575

12.0%

% margin

18.1%

19.4%

(130) bps

16.2%

18.2%

(200) bps

Net Income2

102

66

55.1%

322

569

(43.4%)

% margin

3.7%

2.7%

100 pb

3.0%

6.6%

(360) bps

Balance
Sheet

Cash and cash equivalents

1,629

3,092

(47.3%)

Total Debt

4,007

4,117

(2.7%)

Net Debt

2,378

1,024

NM

Cash Flow

Operating Cash Flow

248

1,258

NM

CapEx

515

291

77.0%

Working Capital

(783)

(59)

NM

Other

Net Debt / Adj. EBITDA

 1.3 x

 0.7 x

0.6 x

ROIC

14.5%

12.4%

210 bps

Cash Conversion Cycle

71

78

(7) days

OPERATING FIGURES | January – December 2021

Operating

New solutions

13

e-commerce clients

32,000+

Employees

3,381

bebbia users

60,000+

Government transactions

3.7%

CO2 saved
(vs bottled water)

16,063 tons

1 Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 4Q21 it considers Ps. 76 million of Flow expense and Ps. 10 million donations and in 4Q20 it considers Ps. 71 million of Flow expense and Ps. 1 million donations. Cumulatively, it considers Ps. 301 million of Flow expenses and Ps. 19 million for donations in 2021 as well as Ps. 167 million expense for Flow and Ps. 10 million for donations in 2020.
2 Net income before discontinued operations.

MESSAGE | CEO

Dear Investors,

We faced several challenges in 2021, but I am proud to say that we were able to adapt our strategy in an agile fashion to achieve our growth and profitability objectives for the year. We remain focused on achieving our sustainable growth plan toward 2025 and on doubling our sales in five years.

We prioritized the well-being of our employees and our stakeholders while we also focused our efforts on guaranteeing product delivery to distributors and customers, which proved to be a major challenge in the face of the high demand environment, coupled with unstable supply chains that led to raw material shortages and cost increases.

Through our pricing strategy and increased investment in working capital, we were able to gain market share in all the countries where we operate and consolidate our leadership in the Americas. In addition, we initiated a technological evolution project for storage solutions to continue improving the customer experience and invested in assets to increase production capacity in several countries.

We made progress in digitalization, modernizing our e-commerce platforms, improving the user experience in bebbia and Acuantia, and forming strategic alliances such as the one with Banyan Water, a tech company specializing in water management software, which will help us develop the new generation of products and services for more efficient water use.

Flow has been key to our ability to act in an agile and coordinated way. In 2021 we reaped the benefits of initiatives launched in previous years and in turn designed new initiatives that will mature in the years to come, giving us greater confidence to achieve our medium- and long-term objectives.

In 2022, we plan to make disciplined investments to continue to evolve Rotoplas and meet the needs of customers and investors with a sustainable approach. We are also committed to making our operations more sustainable and helping our customers reduce their environmental impact and become more resilient to climate change. 

Carlos Rojas Aboumrad

INVITE | EARNINGS CALL

Thursday, February 10 | 10:00am Mexico City Time (11:00am, EST)

Carlos Rojas Aboumrad (CEO) | Mario Romero Orozco (CFO)

Link: https://rotoplas.zoom.us/webinar/register/WN_DkxKQu20QEOO438DTi5-ng 
Password: 4Q21

GUIDANCE | 2021-202

Metric

2021 revised guidance

2021 results

Increase in net sales

≥ 17.0%

26.3%

OK

Adjusted EBITDA Margin

Adjusted EBITDA

17.0% – 18.0%

Ps. 1,800

16.2%

Ps. 1,764

NO

98%

Net Debt / Adj. EBITDA

≤ 2.0x

1.3x

OK

ROIC

ROIC = WACC + 200 bps

ROIC = WACC + 235 bps

OK

In July 2021, the Company decided to increase the guidance for sales growth and decrease the adjusted EBITDA margin due to the increase in demand and the restrictions within the supply chain. However, the annual adjusted EBITDA objective was not adjusted in absolute terms, since a greater sales growth should offset a lower margin. The Company achieved 98% of the annual adjusted EBITDA objective in absolute terms.

Guidance 2022 – 2025

Metric

Guidance 2022

Objectives 2025

Guidance

Increase in net sales

≥ 15%

2x sales (vs 2020)

Adjusted EBITDA Margin

16.5% – 17.5%

≥ 20%

Net Debt / Adj. EBITDA

≤ 2.0x

≤ 2.0x

ROIC

ROIC ≥ WACC + 200 bps

ROIC ∼ 20%

SALES & EBITDA | BY REGION AND SOLUTION (millions of Mexican pesos)

Figures by geographic region

4Q

12M

2021

2020

%Δ

2021

2020

%Δ

Mexico

Sales

1,345

1,300

3.5%

5,665

4,953

14.4%

Adj. EBITDA1

255

319

(20.0%)

1,011

1,133

(10.8%)

% Margin

18.9%

24.5%

(560) bps

17.9%

22.9%

(500) bps

Argentina

Sales

826

602

37.2%

2,627

1,669

57.4%

Adj. EBITDA1

171

80

NM

448

213

NM

% Margin

20.7%

13.4%

730 bps

17.1%

12.7%

440 bps

United States

Sales

305

214

42.4%

1,293

981

31.8%

Adj. EBITDA1

15

(7)

NM

81

(1)

NM

% Margin

4.9%

(3.3%)

820 bps

6.3%

(0.1%)

640 bps

Other

Sales

324

335

(3.1%)

1,329

1,041

27.6%

Adj. EBITDA1

67

84

(20.3%)

223

230

(3.1%)

% Margin

20.6%

25.0%

(440) bps

16.7%

22.1%

(540) bps

Figures by solution

4Q

12M

2021

2020

%Δ

2021

2020

%Δ

Products

Sales

2,700

2,288

18.0%

10,428

8,033

29.8%

Adj. EBITDA1

546

473

15.5%

1,853

1,586

16.8%

% Margin

20.2%

20.7%

(50) bps

17.8%

19.7%

(190) bps

Services

Sales

101

163

(38.3%)

487

611

(20.4%)

Adj. EBITDA1

(39)

3

NM

(89)

(11)

NM

% Margin

NM

1.8%

NM

NM

NM

NM

Adjusted EBITDA

4Q

12M

2021

2020

%Δ

2021

2020

%Δ

EBITDA

422

404

4.4%

1,443

1,397

3.3%

Flow Implementation Costs

76

71

6.8%

301

167

80.0%

Donations

10

1

NM

19

10

89.4%

Adj EBITDA.1

508

476

6.7%

1,764

1,575

12.0%

1 Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 4Q21 it considers Ps. 76 million of Flow expense and Ps. 10 million donations and in 4Q20 it considers Ps. 71 million of Flow expense and Ps. 1 million donations. Cumulatively, it considers Ps. 301 million of Flow expenses and Ps. 19 million for donations in 2021 as well as Ps. 167 million expense for Flow and Ps. 10 million for donations in 2020.

Since the second quarter of 2020, “one-off” expenses began to be recognized for the implementation of the Flow program. These are non-recurring expenses that have short and long-term benefits for income, expenses, working capital, and organizational culture to ensure permanent and positive change. 4Q21 was the last period where these “one-off” expenses were recognized.

2021

%

2020

%

Sales

Mexico

5,665

52%

4,953

57%

Argentina 

2,627

24%

1,669

19%

United States

1,293

12%

981

11%

Other

1,329

12%

1,041

12%

Total

10,915

100%

8,644

100%

Adjusted EBITDA

Mexico

1,011

57%

1,133

72%

Argentina 

448

25%

213

13%

United States

81

5%

(1)

0%

Other

223

13%

230

15%

Total

1,764

100%

1,575

100%

Mexico

Net sales for the quarter increased by 3.5% vs 4Q20 driven by the products category, which offset weaker services sales.

  • Product sales grew in all three categories, storage, water flow and improvement, with the last two categories showing double-digit growth.
  • Service sales decreased due to the lack of water fountain revenues from schools and the slow recovery in the water treatment and recycling plants businesses. bebbia continues to show an accelerated growth rate and rieggo recorded sales related to its first projects.

Cumulative net sales increased by 14.4% to Ps. 5,665 million, as a result of double-digit growth in products.

In 2021, the first phase of investments was made to launch the new generation of water tanks that seek to guarantee the long-term sustainability of the storage category. In addition, investments were made to increase production capacity in the water flow category and in the digitalization of bebbia.

Adjusted EBITDA for the quarter was Ps. 255 million, 20.0% lower than 4Q20, mainly due to the increase in raw material and logistics costs, which were not offset by the price increases during the second half of the year. 

The adjusted EBITDA margin was 18.9% compared to 24.5% in 4Q20 and cumulative adjusted EBITDA reached Ps. 1,011 million, with a 17.9% margin.

Argentina

Net sales for the quarter increased 37.2% vs 4Q20 driven by double-digit growth in the three categories (storage, water flow and improvement). Likewise, the development of new channels and cross-selling across different segments helped improve brand positioning.

Adjusted EBITDA for the quarter reached Ps. 171 million vs Ps. 80 million in 4Q20. Adjusted EBITDA Margin increased 730 bps, benefiting from price increases above raw material cost increases and strict expense control.

Cumulative net sales increased 57.4% vs 2020, driven by all three categories highlighting record volumes in the water flow and improvement categories due to the sale of water heaters.

During the year, there was accelerated growth and an increase in market share in all three segments. In addition, manufacturing plants operations were optimized to meet growing demand.

Cumulative EBITDA reached Ps. 448 million compared to Ps. 213 million in 2020.  Adjusted EBITDA margin for the year was 17.1%, an expansion of 440 bps driven by better sales mix by product and by channel, as well as price increases.

NOTE: Adoption of IAS 29, Financial Reporting in Hyperinflationary Economies.

Due to Argentina experiencing inflation above 100% in the last three years, it is considered a hyperinflationary economy. In accordance with IAS 29, an adjustment for inflation has been made to the Financial Statements to consider changes in purchasing power.

International Accounting Standard (IAS) 29, Financial Information in Hyperinflationary Economies establishes that the results of operations in Argentina should be reported as if they were hyperinflationary as of January 1, 2018. Moreover, an adjustment for inflation in the Financial Statements should be made to account for the change in the purchasing power of the local currency.

In 2021, the impact of the above resulted in an increase of Ps. 76 million in financial expenses, negatively impacting the Comprehensive Financing Result. After accounting for taxes, the effect on net income amounts to Ps. 47 million.

United States

Net sales for the quarter increased by 42.4% to Ps. 305 million, as a result of the growth of the e-commerce business that has shown better online conversion rates, and the development of the septic business.

The strength of the Company’s balance sheet and its purchasing power helped to increase the inventory of products before price increases from suppliers, resulting in an expansion in the adjusted EBITDA margin of 820 bps to 4.9%.

On a cumulative basis, net sales reached Ps. 1,293 million, a 31.8% increase compared to 2020, driven by changes in consumption habits derived from the pandemic, improvements in the user experience on the websites, and the launch of septic solutions under the brand Acuantia.

Cumulative adjusted EBITDA was Ps. 81 million, recording an adjusted EBITDA margin of 6.3%, a 640 bps expansion vs 2020.

Other Countries

Net sales from other countries (Peru, Guatemala, El Salvador, Costa Rica, Honduras, Nicaragua, and Brazil) reached Ps. 324 million in the quarter, a 3.1% decline when compared to 4Q20, affected by Peru since the depreciation of the currency impacted its growth in Mexican pesos. Cumulatively, net sales increased by 27.6% vs 2020.

In Peru, the diversification of the business towards the improvement and water flow categories continued, as well as the development of new sales channels. The water flow category continues to penetrate the market with products imported from the plants in Mexico and Argentina, generating efficiencies in the production process.

In Central America, all countries grew and gained market share, maintaining leadership within the region. During the quarter, Tuboplus continued to increase its penetration in Guatemala.

Brazil has shown better traction in closing contracts for new water treatment and recycling plants due to the post-pandemic economic recovery, as well as regulatory changes in water management and sanitation.

Adjusted EBITDA in other countries reached Ps. 67 million in the quarter, a 20.3% decrease explained by the sustained increase in logistics and raw material prices, the development expenses for water treatment plants in Brazil, and the impact from currency depreciation in Peru.

Cumulative adjusted EBITDA decreased 3.1% compared to the same period of 2020 with a margin of 16.7%.

ANALYSIS | COSTS AND EXPENSES  

Gross Profit

The gross profit for the period increased by 8.3% to Ps. 1,103 million. The gross margin contracted by 220 bps, from 41.6% in 4Q20 to 39.4% in 4Q21. The contraction is related to the sustained increase in raw material and logistics costs. However, the gross profit increased 450 bps against 3Q21, for a sequential recovery in margins.

Cumulatively, gross profit reached Ps. 4,153 million, 15.4% higher than the same period of last year. The cumulative gross margin contracted by 350 bps because of the Company’s strategy to temporarily absorb the increases in the cost of raw materials during the first half of the year to strengthen its market share.

Operating Income

Operating income amounted to Ps. 327 million for the quarter, 4.0% higher vs 4Q20. Even with the recognition of Ps. 76 million expenses for the implementation of Flow and Ps. 10 million for donations, the increase in expenses remains below sales growth, thus showing operating leverage.

Cumulatively, operating income increased by 1.7% to Ps. 1,064 million. The cumulative operating margin was 9.8%, 230 bps lower compared to the same period of 2020, due to the impact on the gross margin from the sustained rise of raw material and freight costs.  

Comprehensive Financing Result

In 4Q21, Ps. 184 million in financial expenses were registered, a decrease of 28.4% compared to 4Q20. Expenses for the quarter include Ps. 101 million of debt interest, commissions, and leasing expenses, as well as Ps. 60 million for the valuation of financial instruments, and Ps. 23 million for monetary position in Argentina.

On a cumulative basis, a financial expense of Ps. 623 million was registered vs. Ps. 203 million the year before. In 2020, there was an extraordinary gain of Ps. 382 million for the early closing of financial instruments.

Financial expenses for 2021 include the payment of interest, commissions and leasing for Ps. 442 million, Ps. 114 million for the valuation of financial instruments and foreign exchange losses, as well as Ps. 67 million for monetary position in Argentina.

Net Result

The net result before discontinued operations in the quarter was a profit of Ps. 102 million, compared to profit of Ps. 66 million in 4Q20. This represents a 55.1% increase related to the recovery of operating income and lower financial expenses.

The cumulative net profit before discontinued operations was Ps. 322 million, 6.8% higher compared to the same period of last year, without considering the non-recurring financial gain due to the early closing of exchange rate hedges in March 2020.

CapEx

12M

2021

%

2020

%

%Δ

Mexico

395

77%

138

47%

NM

Argentina

58

11%

79

27%

(26.4%)

United States

16

3%

18

6%

(10.4%)

Others

45

9%

56

19%

(18.9%)

Total

515

100%

291

100%

77.0%

Capital investments represented 4.7% of cumulative sales, an increase of 77.0% compared to the previous year.

Capital investments include:

  • In Mexico, the first phase of investments in new technology to produce the new generation of water tanks began. These investments will continue in 2022 and 2023 to upgrade all manufacturing plants. In addition, investments were made in machinery to increase production capacity in the water flow category and in the digitalization of bebbia.
  • Ps. 11 million allocated to water treatment plants in Mexico and Ps. 25 million in Brazil, representing 7% of the total amount.
  • In Argentina, investments have been made in the automation of the improvement category manufacturing plant.
  • In the United States, resources were allocated to website improvements and the development of the septic business.
  • CapEx allocated to growth initiatives within the Flow program amounted to Ps. 268 million, which represents 52.0% of total CapEx for the period. This includes investments in all countries and in different categories or businesses.

ANALYSIS | BALANCE SHEET

Cash Conversion Cycle (Days)

12M

2021

2020

Δ days

Inventory Days

75

54

21

Accounts Receivable Days

51

59

(8)

Accounts Payable Days

55

35

20

Cash Conversion Cycle

71

78

(7)

Inventory Days: Average Inventory / (3M Cost of Sales / 90)
Accounts Receivable Days: Average Accounts Receivable (3M Sales / 90)
Accounts Payable Days: Average Suppliers / (3M Cost of Sales / 90)

The 7-day optimization of the cash conversion cycle is the result of better negotiations with clients and suppliers, which allowed an increase in inventory to guarantee raw material supply in the face of accelerated growth and supply chain pressures.

Debt

12M

2021

2020

%Δ

Total Debt

4,007

4,117

(2.7%)

Short-term Debt

9

63

(86.2%)

Long-term Debt

3,998

4,054

(1.4%)

Cash and Cash Equivalents

1,629

3,092

(47.3%)

Net Debt

2,378

1,024

NM

Debt Maturity Profile

Total debt was Ps. 4,007 million and corresponds to the AGUA 17-2X sustainable bond. During the quarter, the loan in Argentina for Ps. 69 million was paid.

Currency

Amount in MXN

Rate

Maturity

AGUA 17-2X Sustainable Bond

Mexican Pesos

Ps. 4,007 million

8.65%

June 2027

As of December 31, 2021, interest coverage (LTM Adjusted EBITDA / LTM interest payments) was 4.3x.

FINANCIAL RATIOS 

12M

2021

2020

%Δ

Net Debt / Adjusted EBITDA1

1.3 x

0.7 x

0.6 x

Total Liabilities / Total Stockholders’ Equity

1.0 x

1.0 x

0.0 x

Net Earnings per Share*

0.66

1.17

(43.4%)

* Net income before discontinued operations divided by 486.2 million shares, expressed in Mexican pesos.

Leverage as of the fourth quarter of 2021 was within the Company’s debt guideline of 2.0x Net Debt/Adjusted EBITDA.

1 Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 4Q21 it considers Ps. 76 million of Flow expense and Ps. 10 million donations and in 4Q20 it considers Ps. 71 million of Flow expense and Ps. 1 million donations. Cumulatively, it considers Ps. 301 million of Flow expenses and Ps. 19 million for donations in 2021 as well as Ps. 167 million expense for Flow and Ps. 10 million for donations in 2020.

ROIC / Cost of Capital

ROIC: NOPAT L12M/Invested Capital t, t-1.

Invested Capital: Total Assets – Cash and Cash Equivalents – Short-Term Liabilities.

ROIC excludes

Flow

program execution costs in 2Q20 – 4Q21 as they are one-off.

In line with the 2021-2025 business plan for sustainable growth, ROIC amounted to 14.5% at the end of December, a 210 bps increase vs the previous year and 235 bps higher than the cost of capital, generating economic value to continue positively impacting stakeholders.

Financial Derivatives

The use of derivative financial instruments is governed by the recommendations and policies issued by the Board of Directors and supervised by the Audit Committee, which provides guidelines on the management of exchange risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment of excess liquidity.

The derivative financial instrument positions managed by the Company are annual; therefore, as of December 31, 2021, Grupo Rotoplas had no open positions.

Market Value

Instrument

MXN/USD exchange rate forward

ESG | ENVIRONMENTAL, SOCIAL AND GOVERNANCE 

Highlights from advances in sustainability matters in the year:

  • More than Ps. 22 million designated to social investment in Mexico, Argentina, Peru, and Central America, impacting 15,857 people.  
  • 130 rainwater harvesting systems installed in homes in Mexico that had no access to water.
  • Strategic alliances with more than 20 organizations like the UNDP, Harpic, Cruz Roja, and Un Kilo de Ayuda to keep enhancing water resources management.
  • Launch of the Rotoplas & UNAM Foundation award to promote wastewater treatment.
  • Participation in the United Nations Global Compact Accelerator, with a special focus on gender equity and climate change.
  • At the end of the year, the Company held its AGUA Day 2021, where its commitment to be a carbon neutral Company by 2040 was established. The following sustainability goals for 2025 were also made public:

 

2021

2022

2025

Profit

Direct suppliers evaluated with ESG criteria

0

20%

100%

Client satisfaction (NPS Score)

67

68

80

Planet

CO2 intensity -Scope 1 and Scope 2- per ton of processed resin

0.51

0.50

0.41

m3 of water purified by our solutions (cumulative)

164k

314k

1.7mm

People

People given access to water and sanitation

330k

549k

1.0mm

Women in the workforce

23%

24%

30%

For more information on our ESG programs, visit our sustainability website:
https://rotoplas.com/sustentabilidad/home-eng/

AGUA* | PERFORMANCE & ANALYST COVERAGE

4Q

2021

2020

%

AGUA*

Closing price

28.11

25.28

11.2%

Closing price + reimbursements

30.25

25.28

19.7%

P/BV

2.1 x

2.0 x

    0.1 x

EV/EBITDA

9.1 x

8.5 x

0.6 x

During 2021, two capital reimbursements were made, one in cash and one in kind, a total of Ps. 2.14 per share. 

Treasury Shares:

As of December 31, 2021, the Company had 4.1 million shares in the treasury, equivalent to an invested amount of Ps. 100.7 million. On November 23, 2021, a capital reimbursement in kind was made with treasury shares at the rate of 1 share for every 15 shares held. To date, no treasury shares have been cancelled.

Analyst Coverage

As of December 31, 2021, analyst coverage was provided by:

Recommendation

TP

BTG Pactual

Mariana Cruz

Buy

$39.00

[email protected]

GBM

Liliana de León

Buy

$48.00

[email protected]

SIGNUM

Alain Jaimes

Buy

$42.22

[email protected]

Miranda Research

Martín Lara / Marimar Torreblanca

Buy

$45.00

[email protected]  
[email protected]

ROTOPLAS’ RESPONSE | COVID-19

Rotoplas continues to implement initiatives to combat the spread of COVID-19.

  • Operating Level:
    • Administrative staff continue to work remotely.
    • Strict safety and hygiene protocols are maintained to protect operational plant and field service personnel.
    • As part of the protocol, periodic screening tests such as molecular tests, serological tests (IgG), and rapid tests (IgG/IgM) are taken.
    • Scheduled sanitizations are carried out in all workplaces.
    • Activities with stakeholders continue to be held virtually.

 

  • Operational status:

4Q21 Operations

 Country or Region

Mexico

 

Continuous operations.

Argentina

United States

Peru

Central America

TRANSFORMATION PROGRAM | FLOW

In 2019, Rotoplas began the “Flow” transformation program to focus the business on economic value creation and sustainable growth. The strategy is based on initiatives that are divided between three pillars:

A.  Profitability of the Current Portfolio

  • levers for income, cost, expenditure and working capital

B.  Growth Initiatives and Execution

  • improve the execution of growth opportunities and capital allocation decisions

C.  Organizational Culture and Health

  • leadership, operational discipline, talent development, accountability, and organizational climate

Flow has evolved and has become part of the culture of innovation and continuous improvement:

In 2019, an in-depth analysis of the Company and its opportunities was carried out to design a roadmap. By 2020, with various initiatives completed, the main value creation goal of a ROIC above the cost of capital was achieved.

In 2021, Rotoplas focused on demonstrating the sustainability of the transformation through continued growth and improvement in profitability.

FINANCIAL STATEMENTS

Income Statement (unaudited figures, in millions of Mexican pesos)

4Q

12M

2021

2020

%Δ

2021

2020

%Δ

Income
Statement

Net Sales

2,800

2,450

14.3%

10,915

8,644

26.3%

COGS

1,697

1,431

18.6%

6,761

5,045

34.0%

Gross Profit

1,103

1,019

8.3%

4,153

3,600

15.4%

% margin

39.4%

41.6%

 (220) bps

38.1%

41.6%

(350) bps

Operating Expenses

776

704

10.2%

3,089

2,553

21.0%

Operating Income

327

315

4.0%

1,064

1,047

1.7%

% margin

11.7%

12.8%

 (110) bps

9.8%

12.1%

(230) bps

Comprehensive Financing Result

(184)

(258)

(28.4%)

(623)

(203)

NM

Financial Income

(13)

25

NM

103

484

(78.7%)

Financial Expenses

(172)

(283)

(39.2%)

(726)

(687)

5.7%

Earnings Before Taxes

143

58

NM

444

846

(47.6%)

Taxes

41

(8)

NM

122

277

(56.1%)

Net Income1

102

66

55.1%

322

569

(43.4%)

% margin

3.7%

2.7%

100 bps

3.0%

6.6%

 (360) bps

Adjusted EBITDA2

508

476

6.7%

1,764

1,575

12.0%

% margin

18.1%

19.4%

 (130) Bps

16.2%

18.2%

(200) bps

Profit (Loss) from Discontinued Op.

(6)

NM

(165)

NM

Net Profit after Discontinued Op.

102

60

70.0%

322

404

(20.3%)

1 Net income before discontinued operations.
2 Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 4Q21 it considers Ps. 76 million of Flow expense and Ps. 10 million donations and in 4Q20 it considers Ps. 71 million of Flow expense and Ps. 1 million donations. Cumulatively, it considers Ps. 301 million of Flow expenses and Ps. 19 million for donations in 2021 as well as Ps. 167 million expense for Flow and Ps. 10 million for donations in 2020.

Balance Sheet (Unaudited figures, in millions of Mexican pesos)

12M

2021

2020

%Δ

Balance Sheet

Cash and Cash Equivalents

1,629

3,092

(47.3%)

Accounts Receivable

1,542

1,430

7.9%

Inventory

1,575

833

89.1%

Other Current Assets

885

636

39.3%

Current Assets

5,631

5,990

(6.0%)

Property, Plant and Equipment – Net

3,011

2,321

29.7%

Other Long-term Assets

4,410

4,302

2.5%

Total Assets

13,051

12,613

3.5%

Short-term Debt

9

63

(86.2%)

Suppliers

944

669

41.1%

Other Accounts Payable

1,034

1,010

2.4%

Short-term Liabilities

1,987

1,742

14.1%

Long-term Debt

3,998

4,054

(1.4%)

Other long-term Liabilities

572

523

9.4%

Total Liabilities

6,557

6,318

3.8%

Total Stockholders’ Equity

6,494

6,294

3.2%

Total Liabilities + Stockholders’ Equity

13,051

12,613

3.5%

Cash Flow (Unaudited figures, in millions of Mexican pesos)

12M

2021

2020

%Δ

Cash Flow

EBIT

1,064

1,047

1.7%

Depreciation

379

350

8.2%

Tax

(173)

(261)

(33.8%)

Working Capital

(783)

(59)

NM

Other

(239)

181

NM

Operating Free Cash Flow

248

1,258

NM

Operating Free Cash Flow Conversion (%)

23.3%

120.2%

NM

Net Interest

(441)

(350)

26.0%

Dividends

(206)

(173)

19.0%

CapEx

(515)

(291)

77.0%

Repurchase Fund

(302)

(615)

(50.8%)

Mergers and Acquisitions

(65)

179

NM

Short and Long-Term Debt

(209)

1,065

NM

Leases

(57)

(48)

19.2%

Other3

85

219

19.0%

Net Change in Cash

(1,464)

1,244

NM

Initial Cash Balance

3,092

1,848

67.3%

Final Cash Balance

1,629

3,092

(47.3%)

3 Other includes Ps. 127 million in prepaid expenses in 2021.

APPENDICES

PRESS RELEASES | 4Q21

  • Rotoplas earnings and events calendar 2022 – January 6 
  • Rotoplas operations status update during December 2021January 4
  • AGUA Day 2021 2025 Sustainable growth story, flowing for a better future – December 14
  • BTG Pactual initiates coverage of AGUA* with buy recommendation and $39 pesos target price – December 9 
  • Rotoplas acquires minority stake in Banyan Water, a tech-company of water management software – November 19 
  • Rotoplas consolidates its position for the fifth consecutive year in the DJSI MILA Pacific Alliance – November 16 
  • Shareholders’ Meeting approves Board of Directors’ proposal for capital reimbursement in kind – November 12 
  • Rotoplas announces support for the Task Force on Climate-related Financial Disclosures – November 4
  • Rotoplas operations status update during October – November 1

For more information, please refer to the Relevant Events section on our website: https://rotoplas.com/investors/relevant-events/#1

CONTACT DETAILS | INVESTOR RELATIONS

Mariana Fernández 

María Fernanda Escobar

[email protected]

[email protected]

Forward-Looking Statements

This press release may include certain forward-looking statements relating to Grupo Rotoplas S.A.B. de C.V. It relies on considerations of the Grupo Rotoplas S.A.B. de C.V. management which are based on current and known information; however, the expectations could vary due to facts, circumstances, and events beyond the control of Grupo Rotoplas, S.A.B. de C.V.

About the Company

Grupo Rotoplas S.A.B. de C.V. is America’s leading provider of water solutions, including products and services for storing, piping, improving, treating, and recycling water. With over 40 years of experience in the industry and 19 plants throughout the Americas, Rotoplas is present in 14 countries and has a portfolio that includes 27 product lines, a services platform, and an e-commerce business. Grupo Rotoplas has been listed on the Mexican Stock Exchange (BMV) under the ticker “AGUA” since December 10, 2014.

Pedregal 24, piso 19, Col. Molino del Rey
Miguel Hidalgo
C.P. 11040, Ciudad de México
T. +52 (55) 5201 5000
www.rotoplas.com  

Cision View original content:https://www.prnewswire.com/news-releases/rotoplas-fourth-quarter-2021-and-full-year-results-301479239.html

SOURCE Grupo Rotoplas S.A.B. de C.V.

Written by Tenner Smith

Tenner Smith - I have experience in financial intelligence and automated intelligence. In industry I have worked on artificial intelligence and machine learning. Tenner Smith is a reporter at DF media.

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