Exhibit 99.1

 

 

 

 

 

Q1 2020 Earnings Release

 

BETTERWARE REPORTS AN INCREASE OF 27.5% IN NET SALES AND 17.2% IN EBITDA VS Q1 2019

 

Guadalajara, Jalisco, Mexico, May 11, 2020. - Betterware de Mexico S.A.P.I. de C.V. (“Betterware” or the “Company”), announced today its consolidated financial results for the first quarter 2020. The figures presented in this report are expressed in nominal Mexican Pesos (Ps.) unless otherwise noted, are un-audited, prepared in accordance with IFRS and may include minor differences due to rounding.

 

Message from the Executive Chairman

 

It is a pleasure to share our financial and operating highlights for Q1 2020 (our first quarterly earnings release) which follows the achievement of a paramount milestone in our operating history, during mid-March, we became the first Mexican company to be directly listed on Nasdaq. The proceeds obtained from the listing will contribute to bolster our business platform, in order to pursue our long-term goals.

 

In this regard, the incremental commercial outreach provided by our solid distribution network comprised of more than 25,000 distributors and 475,000 associates, together with the inherent benefits from the deployment of cutting-edge technologies, constant product innovation and data analysis, allowed us to reinforce our leadership in the home solutions sector in Mexico.

 

We have reviewed our commercial strategy for the rest of 2020 and have made the necessary adjustments considering the possible adverse impacts derived from the COVID-19 contingency. We revised our fixed and variable expenses and capex, to focus on expenses and investments related to maintaining the expected sales growth.

 

Finally, we will continue strengthening our logistics and commercial outreach, including the opening of our new distribution center planned for the fourth quarter of 2020, which will utilize new technologies and automation to improve our operating efficiencies. The economic benefits from these initiatives will be reflected in our 2021 results and future periods.

 

Luis Campos

Executive Chairman

 

Message from the CEO

 

The results obtained during Q1 2020 were the outcome of the growth in distributors (+36.1% vs Q1 2019) and associates (+31.4% vs Q1 2019), which propelled the Company's net sales to reach Ps. $967.9 million, representing an increase of 27.5% compared to the same period of the previous year. Additionally, EBITDA for Q1 2020 amounted to Ps. $238.4 million (+17.2% vs Q1 2019) and Net Income to Ps. $145.5 million (+21.6% vs Q1 2019).

 

Our results in Q1 2020 were adversely affected during the last two weeks of March due to the COVID-19 pandemic. Our sales estimates were not achieved by Ps. 13.0 million, amount which reduced 0.7pp the expected sales growth for the quarter. Additionally, the Mexican Peso devaluation against the US Dollar impacted our expected gross margin for the quarter, reducing it by 1.8 pp, resulting in a gross margin of 56.1%, and our expected EBITDA margin of 28.5% was also reduced by 3.5 pp resulting in a 25.0% EBITDA margin.

Regarding our financial position, as of March 31, 2020, our net debt to EBITDA ratio remained at healthy levels of 0.2x; while a strong generation of cash led to a 25.9% increase in the Adjusted Levered Free Cash Flow, thus boosting our liquidity.

 

Andres Campos

CEO & Board Member

 

 

 

 

 

Q1 2020 Earnings Release

  

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

Consolidated Statements of Financial Position

As of March 31, 2020 and 2019

(In Thousands of Mexican Pesos)

 

   Mar-31
2020		   Mar-31
2019		 
Assets        
Cash and cash equivalents   277,858    132,723 
Trade accounts receivable, net   337,004    281,103 
Accounts receivable from related parties   1,010    420 
Inventories   319,423    352,316 
Prepaid expenses   37,915    49,255 
Other assets   26,565    17,611 
Derivative financial instruments   65,501    - 
Total current assets   1,065,276    833,428 
Property, plant and equipment, net   243,503    94,611 
Right of use assets, net   21,305    33,634 
Deferred income tax   5,082    - 
Intangible assets, net   307,088    314,537 
Goodwill   348,441    348,441 
Other assets   3,688    24,632 
Total non-current assets   929,107    815,855 
Total assets   1,994,383    1,649,283 
           
Liabilities and Stockholders’ Equity          
Borrowings   125,921    148,581 
Accounts payable to suppliers   681,215    453,430 
Accrued expenses   81,367    67,386 
Provisions   54,404    37,318 
Income tax payable   37,431    45,259 
Value added tax payable   41,496    24,827 
Statutory employee profit sharing   6,364    3,780 
Lease liability   16,985    26,814 
Derivative financial instruments   3,142    8,509 
Total current liabilities   1,048,325    815,904 
Employee benefits   1,189    1,211 
Derivative financial instruments   23,789    8,120 
Deferred income tax   78,501    69,347 
Lease liability   4,989    7,876 
Borrowings   322,568    546,925 
Total non-current liabilities   431,036    633,479 
Total liabilities   1,479,361    1,449,383 
           
Stockholders’ Equity          
Capital stock   220,981    55,985 
Retained earnings   293,876    143,870 
Other comprehensive income   168    45 
Non-controlling interest   (3)   - 
Total Stockholders’ Equity   515,022    199,900 
Total Liabilities and Stockholders’ Equity   1,994,383    1,649,283 

 

 

 

 

 

Q1 2020 Earnings Release

 

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

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the three-months ended March 31, 2020 and 2019

(In Thousands of Mexican Pesos)

 

   Q1 2020   Q1 2019   ∆% 
Net revenue   952,685    747,175    27.5%
Cost of sales   418,069    303,902    37.6%
Gross profit   534,616    443,273    20.6%
                
Administrative expenses   129,612    103,990    24.6%
Selling expenses   135,095    113,192    19.4%
Distribution expenses   40,473    31,398    28.9%
Total expenses   305,180    248,580    22.8%
Operating income   229,436    194,693    17.8%
                
Interest expense*   (40,399)   (22,559)   79.1%
Interest income   2,710    1,709    58.6%
Unrealized gain in valuation of financial derivative instruments   70,879    -    100.0%
Foreign exchange loss, net   (51,837)   (521)   9849.5%
Financing cost, net   (18,647)   (21,371)   -12.7%
                
Income before income taxes   210,789    173,322    21.6%
                
Income taxes   65,289    53,686    21.6%
                
Net income   145,500    119,636    21.6%

 

*Interest expense in 1Q 2020 include a prepayment commission of Ps. 20,700 for the early amortization of an outstanding loan

 

EBITDA breakdown (Ps. $238.4 million)
 
Concept  Q1 2020   Q1 2019   ∆% 
Net income   145,500    119,636    21.6%
(+) Income taxes   65,289    53,686    21.6%
(+) Financing cost, net   18,647    21,371    -12.7%
(+) Depreciation and amortization   8,970    8,654    3.7%
EBITDA   238,406    203,347    17.2%
EBITDA margin   25.0%   27.2%   -2.2pp

 

 

 

 

 

Q1 2020 Earnings Release

 

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

Consolidated Statements of Cash Flows

For the three-months ended March 31, 2020 and 2019

(In Thousands of Mexican Pesos)

 

   Q1 2020   Q1 2019 
Cash flows from operating activities:        
Net income for the period   145,500    119,636 
           
Adjustments for:          
Income tax expense   65,289    53,686 
Depreciation and amortization of non-current assets and right of use assets   8,970    8,654 
Interest income recognized in profit or loss   (2,710)   (1,709)
Interest expense recognized in profit or loss   19,699    22,559 
Unrealized gain in valuation of financial derivative instruments   (70,879)   - 
           
Movements in working capital:          
Trade accounts receivable   (89,917)   (82,327)
Accounts receivable from related parties   (400)   (420)
Inventory   26,131    (50,110)
Prepaid expenses and other assets   18,961    (15,381)
Accounts payable to suppliers and accrued expenses   178,778    38,869 
Provisions   7,715    (1,668)
Value added tax payable    11,197    7,203 
Statutory employee profit sharing   1,358    1,064 
Income taxes paid   (62,567)   (38,723)
Employee benefits   (441)   (144)
Net cash provided by operating activities   256,684    61,189 
           
Cash flows from investing activities:          
Payments for property, plant and equipment   (39,998)   (60,981)
Interest received   1,402    619 
Net cash used in investing activities   (38,596)   (60,362)
           
Cash flows from financing activities:          
Repayment of borrowings   (300,000)   (54,173)
Proceeds from borrowings   74,000    98,243 
Interest paid   (22,923)   (24,602)
Dividends and Capital stock increase, net   94,996    (64,955)
Net cash used in financing activities   (153,927)   (45,487)
Net increase (decrease) in cash and cash equivalents   64,161    (44,660)
Cash and cash equivalents at the beginning of the period   213,697    177,383 
Cash and cash equivalents at the end of the period   277,858    132,723 

 

 

 

 

 

Q1 2020 Earnings Release

 

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, as past results in no way offer any guarantee of future performance. 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.

 

 

 

 

 

Q1 2020 Earnings Release

 

Q1 2020 Conference Call

 

Management will hold a conference call with investors on May 12th, 2020 at 9am Central Standard Time (CST)/10am 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: 13703480

 

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: 13703480