BWMX Betterware de Mexico SAPI de CV

Betterware de México, S.A.P.I. de C.V. (NYSE: BWMX) ("BeFra" or the "Company"), announced today its consolidated financial results for the second quarter 2024. The figures presented in this report are expressed in nominal Mexican Pesos (Ps.) unless otherwise noted, presented and approved by the Board of Directors, prepared in accordance with IFRS, and may include minor differences due to rounding.

The Company will host a conference call at 9:00 am (Eastern Time) on July 26, 2024, to discuss its results for the second quarter of 2024.

Message from the Chairman

BeFra demonstrated steady and encouraging growth once again this quarter, with net revenue increasing 5.3% and 8.0% in Q2 2024 and H1 2024, respectively. The positive net revenue trend was consistent across all business units, reflecting more balanced growth and underscoring the effectiveness of our strategic growth initiatives and commercial excellence. The revenue growth also demonstrates the strength of BeFra’s business model and evidences sustainable expansion, establishing a strong foundation for continued success this year and beyond. We expect to achieve our 2024 guidance for EBITDA as well as revenue, as our seller base expands, and average order sizes continue growing.

Betterware Mexico maintained its positive trajectory with a 2.2% and 7.0% YoY increase in net revenue for the second quarter and first-half, respectively. This marked the third consecutive quarter of growth and indicates a solid recovery in post-pandemic momentum. The growth also reflects higher productivity levels resulting from initiatives that enable our associates to focus more on selling.

Jafra Mexico’s performance remained strong, with revenue growing 9.0% and 10.1% YoY in Q2 2024 and H1 2024, respectively, while EBITDA increased 28.2% and 33.2% during the same periods, all of which underscores our improving commercial and operational efficiencies that are enabling us to effectively harness the beauty market’s rapid growth.

Jafra US achieved a significant milestone in the second quarter, with YoY revenue growth turning positive for the first time since the acquisition. Revenue grew 1.2% in pesos and a 4.4% in USD, as a result of the turnaround plan that we have implemented since we acquired the company and led by this unit’s new leadership team. Its strengthening recovery combined with the solid growth of the Mexican business, means Jafra remains a highly accretive acquisition. It has also diversified BeFra in terms of revenues and geography, enhanced our growth profile, and made us a more resilient company overall.

For over two decades, we have consistently achieved, on average, more than 20% growth in net revenue and profitability. Our asset-light business model, with a small percentage of fixed costs, provides exceptional operating flexibility that helps ensure long-term, accretive growth and that has relatively low capital requirements. Our strategy and focus remain on long-term performance that offers substantial returns to our stockholders, in terms of growth and yield. For perspective, since going public in March 2020, Betterware has doubled in size, and with the acquisition of Jafra our business has grown almost fourfold, while EBITDA for the Group has increased by over threefold.

Although increasing household penetration and share of wallet in Mexico remain our near and medium-term priority, we are beginning to expand more internationally, targeting the home solutions segment of the large and rapidly growing US Hispanic market and laying the groundwork to enter Peru. We endeavor to replicate our success in these geographies while further diversifying BeFra and extending our leadership in direct selling. Thank you for supporting us on this exciting journey.

Luis G. Campos Chairman of the Board

Q2 2024 Select Consolidated Financial Information

Q2

 

H1

2024

2023

 

2024

2023

Net Revenue

$3,389,393

$3,220,097

+5.3%

 

$6,991,896

$6,484,308

+7.8%

Gross Margin

72.2%

73.3%

-103 bps

 

72.9%

73.0%

-7 bps

EBITDA

$656,136

$717,433

-8.5%

 

$1,411,526

$1,371,992

+2.9%

EBITDA Margin

19.4%

22.3%

-292 bps

 

20.2%

21.2%

-97 bps

Free Cash Flow

$458,437

$755,735

-39.3%

 

$818,092

$1,305,047

-37.3%

Net Income

$300,768

$258,370

+16.4%

 

$594,938

$446,366

+33.3%

EPS

$8.06

$6.92

+16.4%

 

$15.94

$11.96

+33.3%

Net Debt / EBITDA

1.80x

2.02x

 

 

1.80x

2.02x

 

Interest Coverage

3.22x

2.65x

 

 

3.22x

2.65x

 

 

 

 

 

 

 

 

Associates

 

 

 

 

 

 

Avg. Base

1,176,458

1,209,573

-2.7%

 

1,195,950

1,220,266

-2.0%

EOP Base

1,149,990

1,210,993

-5.0%

 

1,149,990

1,210,993

-5.0%

Distributors

 

 

 

 

 

 

 

Avg. Base

65,752

61,719

+6.5%

 

64,560

60,929

+6.0%

EOP Base

65,810

62,462

+5.4%

 

65,810

62,462

+5.4%

• Net revenue growth. Consolidated net revenue increased by 5.3% and 7.8% YoY in the quarter and semester respectively, driven by sustained commercial strategy success in all three business units. The Company expects to continue strengthening its growth trajectory to achieve its goals in H2 2024. More details can be found within the below section for each respective business unit.
• EBITDA Margin slightly below expectations. Q2 2024 EBITDA margin was 19.4%, adversely impacted by Betterware Mexico’s temporary gross margin contraction. It is important to note that Q2 2023 22.3% EBITDA margin was favorably impacted by the USD/MXP exchange rate. Notably, H1 2024 EBITDA increased by 2.9% YoY, with margin recovery expected in the coming quarters in line with historic levels and guidance for 2024.
• Free Cash Flow (FCF) generation aligned with historical levels. Q2 2024 FCF represented 70% of EBITDA for the quarter, consistent with prior quarters. The YoY decline was due to extraordinary cash generation in the Q2 2023 which represented 105% of Q2 2023 EBITDA, primarily due to an extended supplier payment period at Jafra Mexico which increased from 30 to 120 days in 2023 and which returned to normalized levels in 2024. Q2 2024 CAPEX increased by Ps. 64M due to increased investments during the quarter including software development and Jafra Mexico’s new office fit-out.
• EPS growth. Q2 2024 EPS increased by 16% YoY and by 33% YoY for H1 2024, primarily due to a decrease in net financing cost. BeFra remains focused on an improved cost of capital with continued balance sheet deleveraging.

For more details, please refer business unit results.

Balance Sheet Strength and Financial Performance

Ended Q2 2024 with Strong balance sheet.

• Further strengthened BeFra balance sheet in Q2 2024, providing greater financial flexibility to reduce debt leverage, invest in growth and efficiency initiatives, and pay dividends.

Key financial metrics:

BeFra’s key financial metrics highlight robust Q2 2024 performance, reflecting a highly profitable profile and an outstanding track record of growth. The Company achieved an impressive CAGR of 23.0% in net revenue and 24.5% in EBITDA in the 2001 to 2023 period.

Liquidity ratios

Sustained strength in cash flow generation:

Asset Light Business

Asset light business model enables flexibility to adapt to challenging conditions.

 

Q2 2024

 

Q2 2023

 

∆

 

Q2 2024

 

Q2 2023

 

∆ bps

Current Ratio

1.03

 

1.06

 

-2.8%

Fixed Assets / Total Assets

26.5%

 

25.6%

 

+90

FCF / EBITDA

70.0%

 

105.3%

 

-3,545 bps

Variable Cost Structure

76.7%

 

69.2%

 

+750

CCC (days)

42

 

71

 

-29

Fixed Cost Structure

23.3%

 

25.8%

 

-250

 

 

 

 

 

SG&A / Net Revenues

51.0%

 

49.1%

 

+170

 

 

Profitability

Consistent profitability.

Leverage

Debt position primarily due to Jafra acquisition

Remain committed to accelerated deleveraging.

 

 

Q2 2024

 

Q2 2023

 

∆

Q2 2024

 

Q2 2023

 

∆ %

Equity Turnover

8.69

 

9.76

 

-11.0%

Debt to EBITDA

1.95

 

2.31

 

-15.6

ROE

77.0%

 

56.7%

 

+2,030 bps

Net Debt to EBITDA

1.80

 

2.02

 

-10.9

ROTA

18.5%

 

11.0%

 

+750 bps

Interest Coverage

3.22

 

2.65

 

+21.5

ROA

11.0%

 

6.6%

 

+430 bps

Dividend Yield

10.69%

 

6.88%

 

+381 bps

*Calculation of Dividend Yield Using the Closing Price on June 28, which was $14.61.

Capital Allocation

Strategic Focus on Balance Sheet: BeFra’s balance sheet remains a strategic priority. The Company is on track to achieve its objective of decreasing Net Debt-to-EBITDA to at least 1.5x by the end of 2024. The Company’s Net Debt-to-EBITDA ratio as of June 30, 2024 was 1.8x, decreasing from 2.0x at the end of Q2 2023.

Sale of Jafra Mexico Headquarters: will result in an expected Ps. 34.1 M pesos in Q3 2024, with over Ps. 315 M to be collected over the next three years. Additionally, BeFra plans to sell another small property in Mexico City, previously used as employee parking, currently valued between Ps. 40 M and Ps. 50 M. All proceeds from these property sales will be allocated to servicing the Company’s outstanding debt.

Quarterly Dividends and Shareholder Value: the Company remains committed to enhancing shareholder value through quarterly dividends. BeFra’s board of directors approved a Ps. 250 M dividend for Q2 2024, representing the eighteenth consecutive quarterly dividend payment since the Company’s March 2020 IPO. Future dividends are expected to meet or exceed this quarter's proposed amount, contingent upon BeFra’s financial performance and ongoing debt repayment plan.

2024 Guidance and Long-Term Growth Prospects

BeFra is well-positioned for a robust second half of the year. First half 2024 results, with net revenue and EBITDA aligned with the Company’s projections set at the beginning of the year, supports the Company’s current guidance, as detailed below:

2024

2023

Var %

Net Revenue

$ 13,800 – 14,400

$ 13,010

6.1% - 10.7%

EBITDA

$ 2,900 – 3,100

$ 2,721

6.6% - 13.9%

*Figures in millions Ps.

Q2 2024 Financial Results by Business

Betterware Mexico Key Financial and Operating Metrics

Q2

 

H1

2024

2023

 

2024

2023

Net Revenue

$1,476,375

$1,444,406

+2.2%

 

$3,031,402

$2,833,389

+7.0%

Gross Margin

56.4%

61.8%

-538 bps

 

58.3%

61.5%

-324 bps

EBITDA

$304,467

$443,508

-31.4%

 

$686,574

$855,864

-19.8%

EBITDA Margin

20.6%

30.7%

-1,008 bps

 

22.6%

30.2%

-756 bps

 

 

 

 

 

 

 

Associates

 

 

 

 

Avg. Base

713,144

753,743

-5.4%

 

714,895

753,160

-5.1%

EOP Base

699,033

756,637

-7.6%

 

699,033

756,637

-7.6%

Monthly Activity Rate

66.4%

66.7%

-33 bps

 

67.04%

67.4%

-37 bps

Avg. Monthly Order

$2,027

$1,877

+8.0%

 

$2,040

$1,822

+11.9%

Distributors

 

 

 

 

 

 

 

Avg. Base

44,953

40,825

+10.1%

 

43,920

39,927

+10.0%

EOP Base

45,009

41,981

+7.2%

 

45,009

41,981

+7.2%

Monthly Activity Rate

98.0%

98.1%

-7 bps

 

98.3%

98.3%

-3 bps

Avg. Monthly Order

$21,669

$23,440

-7.6%

 

$22,626

$23,500

-3.7%

Highlights

• Slight YoY Net Revenue increase despite inability to fully capture increased demand. Third consecutive quarter of YoY increase in Net Revenue (+2.2%), and 7.0% YoY increase for H1 2024, despite decreased sellout of some key SKUs in Q2 2024. Decreased sellout during the quarter was due to China-Mexico sea route supply chain disruptions and inaccurate demand forecasting for certain key products. The estimated net revenue loss during the quarter exceeded Ps. 300 M as Betterware’s most productive Distributors and Associates reduced their activity due to lack of desired product availability, resulting in abandoned orders. Excluding the quarter’s decreased sellout effect, the Company would have achieved double-digit growth. Betterware Mexico has since implemented measures to mitigate this in the future.
  • Product innovation, merchandising, and in-person field management strategies significantly contributed to stable performance during the quarter, reflected in growth within nearly all categories.
• Strengthened monthly purchases despite lack of Associate Base growth. Q2 2024 average order per Associate increased by 8.0% YoY, enabling increased share of wallet.
• Addressing Gross Margin challenges. Decreased Q2 2024 gross margin was primarily due to higher import taxes on 116 Betterware SKUs, which increased by an average of 17%, higher international freight costs resulting from the Middle East conflict, a surge in China to Mexico shipment demand, also with slight sales mix misalignment towards less profitable items.
  • Notably, gross margin has remained stable for the past 10 years, averaging 59.0% despite exchange rate and freight rate volatility.
  • The Company has regained margin strength and stability, achieving a 58.3% gross margin for the first half of 2024 after considerable 2020 and 2021 challenges. The Company remains committed to maintaining long-term margin stability to achieve its 58%-59% average gross margin target established at the beginning of 2024.
• Short term EBITDA margin decrease. Q2 2024 EBITDA decreased by 10 pp, primarily due to a gross margin contraction, lower-than-expected net revenue, and slightly higher distribution costs during the quarter. Betterware anticipates returning to 26% EBITDA margin levels in the second half of 2024.
• Decreased inventory levels. Excess inventory decreased to $232M during the quarter, from $360M, with continued declines expected as the Company remains focused on achieving further inventory reductions.

H2 2024 Priorities

• Product Innovation: the Company’s robust innovation plan for H2 2024 is set to continue delivering strong results.
• Demand Forecasting: continued enhancement of forecasting models to mitigate stockouts.
• Cost Control: recalibrating merchandising plans to achieve expected revenue growth and profitability despite import taxes and freight cost effects.
• Pricing Strategy: new pricing position within marketing team to develop more effective pricing structures that enhance market share and profitability.
• Inventory Reduction: implementing strategies to further reduce excess inventory of specific SKUs.
• Incentive Program: refined our core incentive program to promote Associates’ activity and retention.

International Expansion

• Initial Launch of Betterware US. Pilot phase focuses on growth strategies in three Texas cities (Dallas, San Antonio and McAllen). If successful, this will transition from the pilot phase in the second half of the year.
• Betterware Peru Continued Progress Towards H1 2025 Launch. Similar dynamics to the Mexico market enables Betterware to leverage its considerable market experience. 

Jafra Mexico Key Financial and Operating Metrics

Q2

 

H1

2024

2023

 

2024

2023

Net Revenue

$1,671,137

$1,536,775

+8.7%

 

$3,521,133

$3,199,180

+10.1%

Gross Margin

86.0%

83.3%

+267 bps

 

85.5%

82.6%

+286 bps

EBITDA

$344,478

$268,724

+28.2%

 

$727,598

$546,271

+33.2%

EBITDA Margin

20.6%

17.5%

+313 bps

 

20.7%

17.1%

+356 bps

  Associates Avg. Base

432,450

427,289

+1.2%

 

450,870

438,136

+2.9%

EOP Base

419,931

424,435

-1.1%

 

419,931

424,435

-1.1%

Monthly Activity Rate

50.5%

51.2%

-70 bps

 

52.2%

51.5%

+70 bps

Avg. Monthly Order

$2,284

$2,091

+9.2%

 

$2,261

$2,077

+8.9%

Distributors

 

 

 

 

 

 

 

Avg. Base

19,073

18,853

+1.2%

 

18,913

18,942

-0.2%

EOP Base

19,035

18,721

+1.7%

 

19,035

18,721

+1.7%

Monthly Activity Rate

93.1%

94.0%

-87 bps

 

94.6%

94.2%

+42 bps

Avg. Monthly Order

$2,693

$2,463

+9.3%

 

$2,545

$2,361

+7.8%

Highlights

• Double-digit net revenue increase in H1 2024: 8.7% and 10.1% YoY increase for the quarter and first half, respectively. Jafra has effectively capitalized on continued strength in the beauty market by replicating Betterware’s core growth model while leveraging the new management team’s leadership strength. Notably, H1 2024 growth was predominantly driven by volume (70%) rather than price (30%).
  • Color and Skincare categories led second quarter growth, achieving a 12% year on year increase, a 9% increase in Fragrance and a 5% increase in Toiletries.
• Slight increase in average Associate base, purchase per Associate continues to strengthen. YTD associate base increase of 2.9%, reaching 52.2% in activity levels and an 8.9% increase in average order value, YoY. The Company anticipates a recovery as well as an increase in both the Associate base and order value metrics, as Jafra still has significant potential for increased home penetration.
• Gross margin exceeds expectation. 267 bps increase in Q2 2024 gross margin driven by higher production volume and a favorable higher margin product sales mix (a 127 bps increase), lower material costs (91 bps decrease), and a 52 bps decrease in obsolescence expense. Gross margin improved by 286 bps YTD, due to the same factors.
• Outstanding EBITDA growth. Q2 2024 EBITDA increased by 28.2% YoY, with a 313 bps EBITDA margin increase favorably impacted by revenue growth during the quarter with stable gross margins and expense controls throughout the organization.
• Inventory levels. Inventory remained stable during the quarter, primarily due to a strengthened innovation model which drove revenue increases but also generated excess inventory, representing continued opportunities to improve demand forecasting for regular line items. Inventory levels are expected to normalize as Jafra further refines and recalibrates demand forecasting while implementing strategies to reduce excess inventory.

H2 2024 Priorities

• Product Innovation Plan: Implement comprehensive product innovation plan across all categories.
• Catalog Design: Launch a new and improved catalogue design featuring a cleaner and more engaging layout to drive purchases.
• Merchandising Plan: Begin implementing a more effective merchandising plan, including enhanced pricing and promotion strategies as well as improved pagination management.
• Inventory Reduction: Continue executing plans to decrease inventory levels.

Jafra US Key Financial and Operating Metrics

Q2

 

H1

2024

2023

 

2024

2023

Net Revenue

$241,881

$238,919

+1.2%

 

$439,361

$451,739

-2.7%

Gross Margin

73.6%

77.8%

-416 bps

 

73.8%

77.2%

-338 bps

EBITDA

$7,192

$5,201

+38.3%

 

-$2,646

-$30,143

+91.2%

EBITDA Margin

3.0%

2.6%

+77 bps

 

-0.6%

-6.7%

+610 bps

 

 

 

 

 

 

 

Associates

 

 

 

 

 

 

Avg. Base

30,864

28,541

+8.1%

 

30,185

28,970

+4.2%

EOP Base

31,026

29,921

+3.7%

 

31,026

29,335

+3.7%

Monthly Activity Rate

46.7%

44.4%

+233 bps

 

44.6%

41.1%

+350 bps

Avg. Monthly Order

$232

$236

-1.2%

 

$228

$234

-2.5%

Distributors

 

 

 

 

 

 

 

Avg. Base

1,726

2,041

-15.4%

 

1,727

2,061

-16.2%

EOP Base

1,766

1,760

+0.3%

 

1,766

1,930

+0.3%

Monthly Activity Rate

90.7%

83.8%

+697 bps

 

89.5%

82.45%

+707 bps

Avg. Monthly Order

$229

$220

+4.1%

 

$223

$220

+1.6%

Highlights

• 1.2% YoY Net Revenue Increase - first net revenue increase since Jafra US acquisition. Reflects strong "back to growth" momentum, representing a 4.4% YoY increase in USD terms and a 9.1% YoY increase excluding an "extraordinary positive cut-off effect" on Q2 2023 net revenue. Notably, net revenue increased by a significant 16% in June, primarily driven by an expanding Associate base, also enabled by:
  • Baseline commercial model implemented at Jafra US in early 2024 has proven highly relevant to the US market.
  • Catalog pagination and design, effective incentivization, and stronger Distributor relationships drove sales growth during the quarter.
  • US revenue mix is now more evenly distributed across categories, presenting future growth opportunities across all markets.
  • While the Company had initially anticipated YoY net revenue growth and break-even by the second half of 2024, a strong first half has enabled BeFra to meet growth objectives and generate positive EBITDA ahead of schedule.
• Associate Base expansion. Associate base increased by 3.7% YoY for the first time since the Jafra US acquisition. Jafra US sales will be primarily driven by Associate base expansion due to current low market penetration.
• Positive EBITDA. Q2 2024 EBITDA increased by 38.3% YoY. Achieved near break-even in H1 2024 with continued progress to end the year with positive EBITDA, enabling future self-sustaining growth.

H2 2024 Priorities

• Product Innovation Plan: Implement comprehensive product innovation plan across all categories.
• Catalog Design: July catalog upgrades expected to favorably impact H2 2024.
• Merchandising Plan: Begin roll out of initial version of a more effective merchandising plan, including better pricing and promotion strategies with better-managed pagination.
• Launch Shopify+: new platform launch in August 2024 to capture increased share of online/digital demand in both the Hispanic and General Markets. This platform will also enhance the Sales Force experience, with increased motivation and support.
• Field Strategy: Field strategy revamp, similar to Betterware Mexico, to better prepare and motivate sales force.

Appendix Financial Statements

Betterware de México, S.A.P.I. de C.V.

Consolidated Statements of Final Position

As of June 30, 2024 and 2023

(In Thousands of Mexican Pesos)

June 2024

June 2023

Assets

 

 

Cash and cash equivalents

423,246

728,872

Trade accounts receivable, net

1,082,224

1,166,267

Accounts receivable from related parties

542

30

Inventories

2,062,733

2,021,738

Prepaid expenses

137,214

126,859

Income tax recoverable

137,936

213,784

Derivative Financial Instruments

22,593

-

Other assets

121,204

163,131

Total current assets

3,987,692

4,420,681

Property, plant and equipment, net

2,919,620

2,902,039

Right of use assets, net

319,892

357,831

Deferred income tax

523,568

319,157

Investment in subsidiaries

-

1,236

Intangible assets, net

1,610,915

1,691,781

Goodwill

1,599,718

1,599,718

Other assets

56,888

50,934

Total non-current assets

7,030,601

6,922,696

Total assets

11,018,293

11,343,377

 

 

 

Liabilities and Stockholders’ Equity

 

 

Short term debt and borrowings

589,478

754,232

Accounts payable to suppliers

1,949,182

1,721,562

Accrued expenses

358,363

357,052

Provisions

709,902

788,698

Income tax payable

-

-

Value added tax payable

92,532

132,688

Trade accounts payable to related parties

47,412

116,932

Statutory employee profit sharing

-

77,489

Lease liability

113,267

79,309

Derivative financial instruments

-

80,066

Total current liabilities

3,860,136

4,108,028

Employee benefits

133,626

154,817

Derivative financial instruments

-

-

Deferred income tax

783,169

837,672

Lease liability

230,721

281,447

Long term debt and borrowings

4,455,638

4,685,437

Total non-current liabilities

5,603,154

5,959,373

Total liabilities

9,463,290

10,067,401

 

 

Stockholders’ Equity

 

 

Capital stock

321,312

321,312

Share premium account

- 25,264

- 16,370

Retained earnings

1,284,785

976,795

Other comprehensive income

- 24,275

- 3,984

Non-controlling interest

- 1,555

- 1,776

Total Stockholders’ Equity

1,555,003

1,275,977

Total Liabilities and Stockholders’ Equity

11,018,293

11,343,377

Betterware de México, S.A.P.I. de C.V.

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the three-months ended June 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

 

 

 

Q2 2024

Q2 2023

∆%

Net revenue

3,389,393

3,220,097

5.3%

Cost of sales

940,918

860,763

9.3%

Gross profit

2,448,475

2,359,334

3.8%

 

 

 

 

Administrative expenses

772,840

742,747

4.1%

Selling expenses

950,176

838,525

13.3%

Distribution expenses

167,582

153,189

9.4%

Total expenses

1,890,598

1,734,461

9.0%

 

 

 

 

Share of results of subsidiaries

-

-

-

Operating income

557,877

624,873

-10.7%

 

 

 

 

Interest expense

-170,833

- 206,173

-17.1%

Interest income

11,565

14,994

-22.9%

Unrealized loss in valuation of financial derivative instruments

95,295

- 14,521

-756.3%

Foreign exchange gain (loss), net

-40,212

- 38,535

4.4%

Financing cost, net

-104,185

-244,235

-57.3%

 

 

 

 

Income before income taxes

453,692

380,637

19.2%

 

 

 

 

Income taxes

152,999

125,412

22.0%

 

 

 

 

Net income including minority interest

300,693

255,225

17.8%

Non-controlling interest loss

75

3,145

-97.6%

Net income

300,768

258,370

16.4%

 

 

 

 

 

EBITDA breakdown (Ps. million)

Concept

Q2 2024

Q2 2023

∆%

Net income

300,693

255,225

17.8%

(+) Income taxes

152,999

125,412

22.0%

(+) Financing cost, net

104,185

244,235

-57.3%

(+) Depreciation and amortization

98,259

92,560

6.2%

EBITDA

656,136

717,433

-8.5%

EBITDA Margin

19.4%

22.3%

 

Betterware de México, S.A.P.I. de C.V.

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the six-months ended June 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

 

 

 

H1 2024

H1 2023

∆%

Net revenue

6,991,896

6,484,308

7.8%

Cost of sales

1,892,473

1,748,747

8.2%

Gross profit

5,099,423

4,735,561

7.7%

 

 

 

 

Administrative expenses

1,558,456

1,567,507

-0.6%

Selling expenses

1,978,750

1,683,999

17.5%

Distribution expenses

344,307

298,366

15.4%

Total expenses

3,881,513

3,549,872

9.3%

 

 

 

 

Share of results of subsidiaries

-

-

-

Operating income

1,217,910

1,185,689

2.7%

 

 

 

 

Interest expense

- 327,827

-417,108

-19.6%

Interest income

10,803

27,488

-33.7%

Unrealized loss in valuation of financial derivative instruments

70,513

-64,737

-208.9%

Foreign exchange gain (loss), net

- 61,253

-49,108

24.7%

Financing cost, net

-307,764

-503,465

-38.9%

 

 

 

 

Income before income taxes

910,146

682,223

33.4%

 

 

 

 

Income taxes

315,208

238,769

32.0%

 

 

 

 

Net income including minority interest

594,938

443,454

34.2%

Non-controlling interest loss

-24

2,913

-100.8%

Net income

594,914

446,367

33.3%

 

 

 

 

 

EBITDA breakdown (Ps. million)

Concept

H1 2024

H1 2023

∆%

Net income

594,938

443,454

34.2%

(+) Income taxes

315,208

238,769

32.0%

(+) Financing cost, net

307,764

503,465

-38.9%

(+) Depreciation and amortization

193,616

186,304

3.9%

EBITDA

1,411,526

1,371,993

2.9%

EBITDA Margin

20.2%

21.2%

 

Betterware de México, S.A.P.I. de C.V.

Consolidated Statements of Cash Flows

For the three-months ended June 30, 2024 and 2023

(In Thousands of Mexican Pesos)

Q2 2024

Q2 2023

Cash flows from operating activities:

 

 

Profit for the period

594,938

443,454

 

 

 

Adjustments for:

 

 

Income tax expense recognized in profit of the year

315,208

238,769

Depreciation and amortization of non-current assets

193,616

186,304

Interest income recognized in profit or loss

- 10,803

- 27,488

Interest expense recognized in profit or loss

327,827

417,108

Unrealized loss in valuation of financial derivative instruments

- 70,513

64,737

Share-based payment expense

- 8,894

- 3,699

Gain on disposal of equipment

- 2,653

- 2,358

Currency effect

- 7,754

- 6,066

Movements in not- controlling interest

52

- 46

Other gains and losses

-

-

Movements in working capital:

 

 

Trade accounts receivable

- 9,769

- 195,205

Trade accounts receivable from related parties

- 438

31

Inventory, net

- 28,599

100,932

Prepaid expenses and other assets

50,602

- 53,423

Accounts payable to suppliers and accrued expenses

196,116

405,293

Provisions

- 94,846

- 4,573

Value added tax payable

- 25,829

43,546

Statutory employee profit sharing

- 85,443

- 57,809

Trade accounts payable to related parties

-

20,073

Income taxes paid

- 421,733

- 251,738

Employee benefits

6,476

910

Net cash generated by operating activities

917,561

1,318,752

 

 

 

Cash flows from investing activities:

 

 

Investment in subsidiaries

-

-

Payments for property, plant and equipment, net

- 106,532

- 26,349

Proceeds from disposal of property, plant and equipment, net

7,063

12,644

Interest received

10,803

27,488

Net cash (used) generated in investing activities

- 88,666

13,783

 

 

 

Cash flows from financing activities:

 

 

Repayment of borrowings

- 1,175,000

- 1,600,000

Proceeds from borrowings

1,090,000

875,000

Interest paid

- 299,621

- 383,769

Bond issuance costs

-

-

Lease payment

- 71,731

- 61,025

Share repurchases

-

-

Dividends paid

- 499,027

- 249,513

Net cash used in financing activities

- 955,379

- 1,419,307

Net decrease in cash and cash equivalents

- 126,484

- 86,772

Cash and cash equivalents at the beginning of the period

549,730

815,644

Cash and cash equivalents at the end of the period

423,246

728,872

Key Operating Metrics

Betterware Mexico

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Associates

 

 

 

 

 

 

Avg. Base

752,577

753,743

768,042

756,250

716,645

713,144

EOP Base

764,024

756,637

759,310

741,170

724,707

699,033

Monthly Activity Rate

68.1%

66.7%

65.2%

66.0%

67.7%

66.4%

Avg. Monthly Order

$1,767

$1,877

$1,823

$1,959

$2,052

$2,027

Monthly Growth Rate

15.0%

15.2%

15.7%

14.9%

15.1%

13.8%

Monthly Churn Rate

15.6%

15.5%

15.5%

15.7%

15.8%

15.0%

Distributors

 

 

 

 

 

 

Avg. Base

39,028

40,825

42,551

42,369

42,886

44,953

EOP Base

39,991

41,981

41,932

41,825

44,482

45,009

Monthly Activity Rate

98.5%

98.1%

97.9%

98.1%

98.5%

98.0%

Avg. Monthly Order

$23,562

$23,440

$21,944

$23,518

$23,582

$21,669

Monthly Growth Rate

9.1%

10.7%

10.4%

9.9%

11.8%

11.4%

Monthly Churn Rate

8.6%

9.1%

10.4%

10.0%

9.7%

11.0%

Jafra Mexico

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Associates

 

 

 

 

 

 

Avg. Base

448,982

427,289

414,968

461,712

469,290

432,450

EOP Base

427,280

424,435

422,956

467,736

451,692

419,931

Monthly Activity Rate

51.7%

51.2%

52.2%

52.9%

53.7%

50.5%

Avg. Monthly Order

$2,063

$2,091

$2,088

$2,181

$2,238

$2,284

Monthly Growth Rate

9.2%

8.9%

10.5%

11.5%

9.5%

8.4%

Monthly Churn Rate

11.3%

9.1%

10.6%

8.3%

10.6%

10.8%

Distributors

 

 

 

 

 

 

Avg. Base

19,030

18,853

18,553

18,576

18,927

19,073

EOP Base

18,952

18,721

18,555

18,719

19,159

19,035

Monthly Activity Rate

94.5%

94.0%

94.0%

95.3%

96.0%

93.1%

Avg. Monthly Order

$2,259

$2,463

$2,236

$2,624

$2,396

$2,693

Monthly Growth Rate

1.0%

1.0%

1.1%

1.4%

1.6%

0.7%

Monthly Churn Rate

1.6%

1.4%

1.4%

1.1%

0.8%

0.8%

Jafra US

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Associates

 

 

 

 

 

 

Avg. Base

29,399

28,541

29,608

31,268

29,506

30,864

EOP Base

28,749

29,921

30,489

31,117

29,470

31,026

Monthly Activity Rate

37.7%

44.4%

45.1%

43.8%

42.4%

46.7%

Avg. Monthly Order (USD)

$232

$235

$228

$231

$223

$232

Monthly Growth Rate

9.7%

12.9%

14.5%

12.5%

11.3%

14.4%

Monthly Churn Rate

15.0%

11.5%

13.8%

11.5%

13.1%

12.5%

Distributors

 

 

 

 

 

 

Avg. Base

2,080

2,041

1,642

1,782

1,728

1,726

EOP Base

2,099

1,760

1,645

1,793

1,674

1,766

Monthly Activity Rate

81.1%

83.8%

90.4%

90.2%

88.3%

90.7%

Avg. Monthly Order (USD)

$219

$220

$217

$215

$217

$229

Monthly Growth Rate

1.9%

2.6%

6.3%

7.9%

4.6%

8.5%

Monthly Churn Rate

1.8%

7.6%

8.4%

5.0%

6.9%

6.7%

Key Financial Metrics

Consolidated

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Net Revenue

$3,264,211

$3,220,097

$3,123,507

$3,401,692

$3,602,503

$3,389,393

Gross Margin

72.8%

73.3%

70.2%

70.0%

73.6%

72.2%

EBITDA

$654,559

$717,433

$529,424

$819,484

$755,390

$656,136

EBITDA Margin

20.1%

22.3%

16.9%

24.1%

21.0%

19.4%

Net Income

$187,996

$258,370

$196,991

$406,104

$294,146

$300,768

Free Cash Flow

$549,311

$1,305,046

$1,643,327

$2,256,395

$359,655

$818,092

Betterware Mexico

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Net Revenue

$1,388,983

$1,444,406

$1,420,739

$1,472,480

$1,555,027

$1,476,375

Gross Margin

61.1%

61.8%

56.2%

50.2%

60.0%

56.4%

EBITDA

$412,356

$443,508

$328,295

$250,342

$382,107

$304,467

EBITDA Margin

29.7%

30.7%

23.1%

17.0%

24.6%

20.6%

Jafra Mexico

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Net Revenue

$1,662,405

$1,536,775

$1,486,816

$1,668,956

$1,849,996

$1,671,137

Gross Margin

82.0%

83.3%

83.0%

86.5%

85.0%

86.0%

EBITDA

$277,547

$268,724

$207,985

$532,780

$383,120

$344,478

EBITDA Margin

16.7%

17.5%

14.0%

31.9%

20.7%

20.6%

Jafra US

 

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Net Revenue

$212,823

$238,916

$215,952

$260,256

$197,480

$241,881

Gross Margin

76.5%

77.8%

74.1%

74.4%

74.0%

73.6%

EBITDA

-$35,344

$5,201

-$6,856

$36,361

-$9,838

$7,192

EBITDA Margin

-16.6%

2.2%

-3.2%

14.0%

-5.0%

3.0%

Use of Non-IFRS Financial Measures This announcement includes certain references to EBITDA, EBITDA Margin, Net Debt: EBITDA: defined as profit for the year adding back the depreciation of property, plant, and equipment and right of use assets, amortization of intangible assets, financing cost, net and total income taxes. EBITDA Margin: is calculated by dividing EBITDA by net revenue. EBITDA and EBITDA Margin are not measures recognized under IFRS and should not be considered as an alternative to, or more meaningful than, consolidated net income for the year as determined in accordance with IFRS or as indicators of our operating performance from continuing operations. Accordingly, readers are cautioned not to place undue reliance on this information and should note that these measures as calculated by the Company, may differ materially from similarly titled measures reported by other companies. BeFra believes that these non-IFRS financial measures are useful to investors because (i) BeFra uses these measures to analyze its financial results internally and believes they represent a measure of operating profitability and (ii) these measures will serve investors to understand and evaluate BeFra’s EBITDA and provide more tools for their analysis as it makes BeFra’s results comparable to industry peers that also prepare these measures.

Definitions: Operating Metrics

From the Q2 2024 on, we will report our salesforce under the same name for all our business units, Distributors (previously stated as Leaders in Jafra) and Associates (previously stated as Consultants for Jafra). It is important to note that the metrics are calculated with the same method as previous quarters and the reference name change has no adverse effect in the results of the operating metrics reported by the Company.

Betterware (Associates and Distributors) Avg. Base: Weekly average Associate/Distributor base EOP Base: Associate/Distributor base at the end of the period Weekly Churn Rate: Average weekly data. Total Associates/Distributors lost during the period divided by the beginning of the period Associate/Distributor base. Weekly Activity Rate: Average weekly data. Active Associates/Distributors divided by ending Associate/Distributor base. Avg. Weekly Order: Average weekly data. Total Revenue divided by number of active Associates/Distributors

Jafra (Associates and Distributors) Avg. Base: Monthly average Associate/Distributor base EOP Base: Associate/Distributor base at the end of the period Monthly Churn Rate (Associates): Average monthly data. Total Associates lost during the period divided by the number of active Associates 4 months prior. An Associate is terminated only after 4 months of inactivity. Monthly Churn Rate (Distributors): Average monthly data. Total Distributors lost during the period divided by end of period Distributors’ base. Monthly Activity Rate: Average monthly data. Active Associate/Distributor divided by the end of period Associate/Distributor base. Avg. Monthly Order (Associates): Average monthly data. Total Catalogue Revenue divided by number of Associates orders. Avg. Monthly Order (Distributors): Average monthly data. Total Distributors Revenue divided by number of Distributors orders.

About Betterware de México, S.A.P.I. de C.V. Founded in 1995, Betterware de Mexico is the leading direct-to-consumer company in Mexico focused on offering innovative products that solve specific needs related to household organization, practicality, space-saving, and hygiene. Through the acquisition of JAFRA on April 7, 2022, the Company now offers a leading brand of direct-to-consumer in the Beauty market in Mexico and the United States where it offers Fragrances, Color & Cosmetics, Skin Care, and Toiletries. The combined company possesses an asset-light business model with low capital expenditure requirements and a track record of strong profitability, double digit rates of revenue growth and free cash flow generation. Today, the Company distributes its products in Mexico and in the United States of America.

Forward-Looking Statements

This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “should”, “would”, “plan”, “predict”, “potential”, “seem”, “seek,” “future,” “outlook”, and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The reader should understand that the results obtained may differ from the projections contained in this document and that many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward looking statements. For this reason, the Company assumes no responsibility for any indirect factors or elements beyond its control that might occur inside Mexico or abroad and which might affect the outcome of these projections and encourages you to review the ‘Cautionary Statement’ and the ‘Risk Factor’ sections of our annual report on Form 20-F for the year ended December 31, 2020 and any of the Company’s other applicable filings with the Securities and Exchange Commission for additional information concerning factors that could cause those differences.

The Company undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date hereof. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Further information on risks and uncertainties that may affect the Company’s operations and financial performance, and the forward statements contained herein, is available in the Company’s filings with the SEC. All forward-looking statements are qualified in their entirety by this cautionary statement.

Q2 2024 Conference Call Management will hold a conference call with investors on July 26th, 2024, at 7:00 am Mexico City Time / 9:00am Eastern Time (EST). For anyone who wishes to join live, the dial-in information is: Toll Free: 1-877-451-6152 Toll/International: 1-201-389-0879 Conference ID: 13747694

If you wish to listen to the replay of the conference call, please see instructions below: Toll Free: 1-844-512-2921 Toll/International: 1-412-317-6671 Replay Pin Number: 13747694

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725288115/en/

Company: BeFra IR ir@better.com.mx +52 (33) 3836 0500 Ext. 2011

InspIR: Investor Relations Barbara Cano barbara@inspirgroup.com