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
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