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

Net sales reached MXN 3 billion, up 3.4% year over year; products rose 3.2% and services rose 4.7%. Gross profit was MXN 1.3 billion, with a 42% margin, up 70 basis points year over year. Operating income was MXN 217 million, up 4.8%, and EBITDA was MXN 409 million with a 13.4% margin, up 11% and 90 basis points, respectively. Net income was a loss of MXN 201 million versus a profit of MXN 42 million last year, mainly due to higher net financing cost of MXN 334 million and MXN 84 million in taxes, including Argentina-related impacts. For the first half, CapEx totaled MXN 194 million, or 3.4% of sales, 8% below last year. Management did not give formal next-quarter or full-year guidance, but said it expects to keep generating free cash flow through EBITDA growth, working capital discipline and CapEx in the 3% to 4% of revenue range. It also said gross margin should remain resilient despite resin and freight volatility, and reiterated the goal of continued deleveraging and services breakeven.

The CEO framed the quarter as evidence that Rotoplas’s recovery is broadening across geographies and that execution is becoming a structural advantage. He emphasized profitable growth, water innovation, technology, talent and sustainability as the company’s four priorities, with particular enthusiasm for vertical tanks, smart pumps and bebbia. His tone was constructive and confident, but still cautious, noting the company is “not yet where we want to be” and that the macro and weather environment remain volatile.

The CFO focused on margin expansion, cash generation and balance-sheet improvement. He cited MXN 3 billion in sales, MXN 1.3 billion in gross profit at a 42% margin, EBITDA of MXN 409 million at 13.4%, and leverage down to 2.3x from 3.2x a year ago. He explained the net loss was not an operating issue, but mainly reflected higher financing costs, including Argentina-related hyperinflation and FX effects, plus a tax charge tied to deferred tax assets. He also highlighted cash of MXN 1.2 billion, a MXN 82 million shareholder return, the refinancing of the sustainability bond with a new 7-year Bancomext loan, and a 4-year swap fixing half the debt at 7.5% through June 2030.

Analysts asked about free cash flow sustainability, super El Niño effects, gross margin sensitivity, and the U.S. leadership transition. Management said free cash flow should continue if EBITDA keeps improving, working capital stays disciplined, and CapEx remains around 3% to 4% of revenue. On weather, management said El Niño-like volatility could create both shortages and storm-related demand, but dams in Mexico are relatively full and they cannot yet say the net demand effect will resemble 2021-2022. On the U.S. transition, they said Joe Vesey was instrumental in the turnaround but Rebecca Cap Mertens has been with the company for four years and is expected to continue the profitable growth path.