Exhibit 99.1
Message from the Chairman
We are very proud of our performance during the first quarter of 2024, which is a year of transformation for our company as multiple growth and efficiency initiatives gain additional traction. BeFra’s resurgent growth accelerated during the quarter, sustained by a strong back-to-back growth trend at Betterware Mexico, driven by product innovation and effective marketing strategies, and by the ongoing successful expansion of Jafra Mexico, which has proven to be a highly accretive acquisition. What’s more, there is still ample room to substantially grow the latter business even further. During the quarter, we made substantial changes to Jafra US’s commercial strategy and are now seeing early and encouraging signs of a recovery. In addition to the success of our many growth initiatives, we have been further reducing BeFra’s cost structure to build in additional operating leverage, while also improving working capital management to increase our capital efficiency.
Betterware Mexico has identified a clear path to growth, recording a 12.0% year-over-year increase in net revenue compared to Q123. This marked its highest net revenue since Q222. April marks the two-year anniversary of acquiring Jafra, so the first quarter results of Jafra Mexico are particularly gratifying. This business maintained its impressive growth trajectory with an 11.3% year-over-year increase in net revenue and a 38.0% surge in EBITDA. Since the acquisition, Jafra Mexico’s net revenue has grown 46%, its EBITDA margin has expanded 800 bps to 20.7%, and the cash conversion cycle fell from 223 days to 110 days. We are exceedingly proud that Jafra remains Mexico’s leading fragrance company, both in terms of sales and volume. Achieving this market position is a source of motivation to become the top beauty company in Mexico, as we further develop and introduce new product categories.
In our international operations, significant effort has been devoted to substantially improving the performance of Jafra US, where we have succeeded in optimizing direct and operating expenses. Our primary focus has been and will continue to be on stabilizing net revenues, establishing a solid foundation for growth that we expect to resume in the second half of the year. Higher efficiency levels coupled with comprehensive improvements to the commercial strategy are expected to drive additional momentum as the year proceeds.
International expansion is one of the cornerstones of our growth strategy. On April 16th we officially launched Betterware US, locating the headquarters in Dallas, Texas and going live with a website. Our initial focus remains the U.S.’s large and rapidly growing Hispanic market, starting with Texas. It is important to note that we are entering the U.S. home solutions market with an entirely new business model, one that targets the ecommerce as well as direct selling verticals. This model was designed from the customer up and enables Betterware to take a customer-first, digitally connected approach to the U.S. market. Meanwhile, our preparations for launching Betterware operations in Peru are proceeding well, with a launch targeted for the first quarter of 2025.
We recognize that significant challenges remain at BeFra, but we are still confident in our ability to continue effectively addressing these head-on to reestablish a firm profitable growth trajectory across the company and further deleverage its balance sheet. Significant progress in reducing costs as well as inventory levels are behind our confidence, along with the significant traction that our growth strategies continue gaining. A more solid foundation to grow upon, combined with the addition of new and dynamic leaders, positions us well for renewed success. As always, we have set ambitious goals but remain committed to maintaining high standards that further our mission of creating more opportunities for many to enhance their lives.
Luis G. Campos
Chairman of the Board
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Q124 Select Consolidated Financial Information
| Q124 | Q123 | |||||||||||
| Net Revenue | $ | 3,602,503 | $ | 3,264,211 | +10.4 | % | ||||||
| Gross Margin | 73.6 | % | 72.8 | % | +79 | bps | ||||||
| EBITDA | $ | 755,390 | $ | 654,560 | +15.4 | % | ||||||
| EBITDA Margin | 21.0 | % | 20.1 | % | +92 | bps | ||||||
| Free Cash Flow | $ | 359,655 | $ | 549,312 | -34.5 | % | ||||||
| Net Income | $ | 294,146 | $ | 187,997 | +56.5 | % | ||||||
| EPS | $ | 7.90 | $ | 5.05 | +56.5 | % | ||||||
| Net Debt / EBITDA | 1.8 | x | 2.2 | x | ||||||||
| Interest Coverage | 3.2 | x | 2.8 | x | ||||||||
| Q124 | Q123 | |||||||||||
| Associates and Consultants | ||||||||||||
| Avg. Base | 1,215,441 | 1,230,958 | -1.3 | % | ||||||||
| EOP Base | 1,205,869 | 1,220,053 | -1.2 | % | ||||||||
| Distributors and Leaders | ||||||||||||
| Avg. Base | 63,541 | 60,138 | +5.7 | % | ||||||||
| EOP Base | 65,315 | 61,042 | +7.0 | % | ||||||||
Highlights
| ● | Sustained revenue growth: Consolidated Net revenue increased by 10.4% year-on-year (YoY), primarily due to growth of the Betterware and Jafra brands in Mexico. |
| ● | Solid EBITDA growth: EBITDA increased by 15.4% with a 92 bps YoY EBITDA margin increase, to 21.0%. This was despite a 7.3% decrease in Betterware Mexico EBITDA from a temporary increase in distribution costs at this business with lower Net Revenue and Gross Margin at Jafra US. |
| - | Gross margin expanded by 79 bps, primarily driven by margin improvements at Jafra Mexico: 89 bps from reduced material costs due to successful supplier negotiations, 33 bps from decreased obsolescence costs, and 27 bps from a favorable exchange rate effect. Conversely, an unfavorable sales mix of low-margin SKUs adversely impacted at Betterware Mexico Gross Margin by 70 bps. |
| - | Jafra Mexico EBITDA increased 38.0%, contributing 51% to the group’s EBITDA, a reflection of consistently profitable growth since its acquisition in April 2022. |
| - | Strong demand in Mexico’s home solutions and beauty markets, robust consumer demand, and BeFra’s growth strategies and financial discipline are expected to drive sustained Net revenue and EBITDA growth. |
| ● | Continued deleveraging trend: Net-Debt-to-EBITDA ratio decreased to 1.78x in Q124 from 1.83x in Q423 with an increased Interest Coverage ratio, to 3.2x. |
| ● | Strong EPS growth: Outperformance across most key metrics resulted in a 56.5% YoY increase in earnings per share. |
Q224 Priorities
| ● | Revenue growth: Continued effective execution of 2024 commercial plan across businesses. |
| ● | Cost control: Maintain GM at an optimal level between 69% and 70% in 2024 through continued cost improvement and efficiency strategies. These include currency hedges, continued raw materials and product cost negotiations with suppliers, and implementing design-to-cost engineering throughout the Company’s operations. |
| ● | Betterware US launch: Betterware began formal operations in the U.S. in April 2024, with an initial focus on the Hispanic population in Texas. The projected investment in 2024 remains approximately USD$ 6 million. |
| ● | Betterware Peru preparations. BeFra’s Peru operations general manager is building a management team to lead the 2025 launch of Betterware Peru. This entails full buildout of the Company’s operations within this market and developing the infrastructure necessary to ensure the rapid and successful penetration of the country’s home solutions market. |
3
Q124 Financial Results by Business
Betterware Mexico
Key Financial and Operating Metrics
| Q124 | Q123 | |||||||||||
| Net Revenue | $ | 1,555,027 | $ | 1,388,983 | +12.0 | % | ||||||
| Gross Margin | 60.0 | % | 61.1 | % | -117 | bps | ||||||
| EBITDA | $ | 382,107 | $ | 412,356 | -7.3 | % | ||||||
| EBITDA Margin | 24.6 | % | 29.7 | % | -512 | bps | ||||||
| Q124 | Q123 | |||||||||||
| Associates | ||||||||||||
| Avg. Base | 716,645 | 752,577 | -4.8 | % | ||||||||
| EOP Base | 724,707 | 764,024 | -5.1 | % | ||||||||
| Monthly Activity Rate | 67.70 | % | 68.10 | % | -40 | bps | ||||||
| Avg. Monthly Order | $ | 2,052 | $ | 1,767 | +16.1 | % | ||||||
| Distributors | ||||||||||||
| Avg. Base | 42,886 | 39,028 | +9.9 | % | ||||||||
| EOP Base | 44,482 | 39,991 | +11.2 | % | ||||||||
| Monthly Activity Rate | 98.50 | % | 98.50 | % | +2 | bps | ||||||
| Avg. Monthly Order | $ | 23,582 | $ | 23,562 | +0.1 | % | ||||||
Highlights
| ● | Sustained Net Revenue strength. A second consecutive quarter of positive YoY performance, with accelerated Net revenue growth (+12.0% YoY). |
| - | Expansion in Associates’ average monthly order size by 16%, primarily due to the effective implementation of diverse marketing and sales strategies. |
| - | Successful execution of commercial plan: |
| ■ | Successful launch of new food container brand, “Gurmy”, revitalizing the category and achieving a month-on-month revenue increase. Also strengthened Betterware’s “hydration” subcategory with the introduction of successful new products. |
| ■ | Enhanced merchandising strategy: recalibrating prices and promotions across all concepts to drive market success. |
| ■ | Introduced new B+ app functionality to improve operational use for salesforce. |
| ■ | Launched new “segmented” Associate and Distributor promotions, contributing to the lowest historical decrease in “Holy Week” revenue, which in 2024 occurred in March (this holiday usually occurs in April). |
| ■ | Strengthened “personal companionship method” with our Field Managers, improving the salesforce’s impact in the field. |
| ● | Strong increase in Distributor base. Achieved a nearly 10% increase in Betterware’s Distributor base with maintained activity and average order levels. This typically precedes an Associate base increase, as Distributors are key “group builders.” |
| ● | Improved cash conversion cycle. A decrease in the cash conversion cycle to 40 days, with a 13 days turnaround, from 53 days in Q123. This considerable improvement resulted primarily from improved inventory turnover, decreasing to 143 days in Q124 from 185 days in Q123. |
| ● | Slight decrease in Associates headcount. The number of Associates decreased slightly Q124, in both average and end-of-period metrics. Despite steady activity and recruitment rates, the churn rate remains high. This is expected to improve in the remainder of the year, contributing to a net YoY increase in the Associates base. Increased Associate productivity represents an important foundation for the Company’s further expansion. |
| ● | Slight Gross margin contraction. Gross Margin was primarily impacted by an increased mix of promotional products in total sales, which rose to 39% in Q124 from 33% in Q123. |
| ● | Decrease in EBITDA and EBITDA Margin. EBITDA declined 7.3% year on year, primarily due to increased promotion and distribution expenses. This increase is expected to normalize for the remainder of the year, the Company’s full year 2024 EBITDA target therefore remains unchanged. |
| ● | Decreased excess inventory: Excess inventory decreased by 17% year on year and is expected to continue for the remainder of the year. |
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Q224 Priorities
| ● | Solid promotion and innovation plan: The plan’s primary goal is to maintain strong average monthly orders and adequate average activity rates to decrease the Associate churn rate. |
| ● | Reduce inventories: Control excess inventory generation decreasing a minimum of 80% of current levels, targeting approximately Ps. 200 million to Ps. 220 million in reductions. |
| ● | Increase Associates base: Focus on both increased recruitment and retention of Associates through strengthened productivity, improved incentives, and enhanced ease of doing business with BeFra. This reduces churn in the base while fostering strong relationships with new members. |
5
Jafra Mexico
Key Financial and Operating Metrics
| Q124 | Q123 | |||||||||||
| Net Revenue | $ | 1,849,996 | $ | 1,662,405 | +11.3 | % | ||||||
| Gross Margin | 85.0 | % | 82.0 | % | +293 | bps | ||||||
| EBITDA | $ | 383,120 | $ | 277,547 | +38.0 | % | ||||||
| EBITDA Margin | 20.7 | % | 16.7 | % | +401 | bps | ||||||
| Q124 | Q123 | |||||||||||
| Consultants | ||||||||||||
| Avg. Base | 469,290 | 448,982 | +4.5 | % | ||||||||
| EOP Base | 451,692 | 427,280 | +5.7 | % | ||||||||
| Monthly Activity Rate | 53.8 | % | 51.7 | % | +211 | bps | ||||||
| Avg. Monthly Order | $ | 2,362 | $ | 2,063 | +14.5 | % | ||||||
| Leaders | ||||||||||||
| Avg. Base | 18,927 | 19,030 | -0.5 | % | ||||||||
| EOP Base | 19,159 | 18,952 | +1.1 | % | ||||||||
| Monthly Activity Rate | 95.0 | % | 94.3 | % | +65 | bps | ||||||
| Avg. Monthly Order | $ | 2,698 | $ | 2,259 | +19.4 | % | ||||||
Highlights
Highly accretive and successful acquisition: improvements in all key Jafra Mexico performance metrics within the first two years subsequent to its acquisition, most importantly revenue, EBITDA and cash conversion:
 |
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| ● | Sustained Net Revenue growth. Jafra Mexico’s Net revenue increased 11.3% compared to Q123, driven primarily by reinforcing the BeFra business model focused on expanding the Consultant base with important product innovation, which accounted for 18% of its total Net revenues. Jafra Mexico’s new catalog concept featuring a monthly special edition with an attractive layout and simplified navigation drove further growth during the quarter, complemented by robust digital marketing efforts and strong innovation. It is important to note a higher-than-expected cut-off effect in March; excluding this effect, Q124 Net revenue would have increased by 18.9%. The cut-off effect will positively impact Q224 results. |
| ● | Fragrances and color categories saw notable growth. These categories contributed significantly to revenue and EBITDA growth during the quarter. |
| ● | Consultant base responding to the ongoing strategy. Jafra Mexico’s Consultant base expanded 4.5% YoY and 1.6% sequentially, benefitting from strategic promotional activities initiated in early 2024 aimed at reactivation and retention. Although the Leaders base has not yet reached Q123 levels, this has shown continued progress over the last two quarters. This uptick is a direct result of the 2023 strategy to promote more Consultants to Leaders and enhance recruitment through appealing incentives. |
6
| ● | Solid increase in average monthly orders. 9.6% YoY growth due to a 2.4 SKU increase in average order size, primarily driven by Fragrance category innovations. This was also supported by a 211 bps increase in the Consultants’ activity rate, year on year. |
| ● | Gross Margin improvement. Jafra Mexico Gross Margin improved by 293 bps YoY: 54 bps from a favorable exchange rate impact, 175 bps from reduced material costs due to successful supplier negotiations, and a 64 bps gain from decreased obsolescence costs. |
| ● | EBITDA and EBITDA margin increased substantially. EBITDA increased 38.0% YoY while the corresponding margin expanded 401 bps, driven by higher Net revenue, a higher gross margin, and greater efficiency in administrative expenses (decreasing 13.4% in the quarter on an annual basis). These improvements reflect enhanced synergies and optimization strategies implemented in 2022 and 2023. |
| ● | Strong cash flow. Jafra Mexico generated substantial operational cash flow of Ps. 253 million; a 20.4% increase compared to Q123, contributing to a strong balance sheet at the end of the quarter. The Company has remained focused on extending Days Payables since early 2022, offering invoice factoring to suppliers and renegotiating terms and conditions when appropriate. This initiative was completed at the end of 2023, with the full positive impact expected in 2024 reflected in increased margins and enhanced availability of cash, while the cash conversion cycle improved, extending DPO to 82 days. |
Q224 Priorities
| ● | Sustained revenue momentum. Continued growth strategy execution to drive double-digit growth in 2024. |
| ● | Improve Skin Care performance. While the Skin Care category has grown compared to last year, this has not met expectations due to competitive pricing and a core portfolio refresh. The introduction of the new Jafra Skin Care Line, aimed at attracting younger consumers, will be supported by an extensive category plan. This strategy includes a mix of traditional and digital marketing, sample programs, special events, virtual consultations, and sales force training to boost category performance. |
| ● | Expense improvement. Continued cost control with further streamlining of overall operational expenses. |
7
Jafra US
Key Financial and Operating Metrics
| Q124 | Q123 | |||||||||||
| Net Revenue | $ | 197,480 | $ | 212,823 | -7.2 | % | ||||||
| Gross Margin | 74.0 | % | 76.5 | % | -250 | bps | ||||||
| EBITDA | $ | -9,838 | $ | -35,344 | +259.3 | % | ||||||
| EBITDA Margin | -5.0 | % | -16.6 | % | +1,163 | bps | ||||||
| Q124 | Q123 | |||||||||||
| Consultants | ||||||||||||
| Avg. Base | 29,506 | 29,399 | +0.4 | % | ||||||||
| EOP Base | 29,470 | 28,749 | +2.5 | % | ||||||||
| Monthly Activity Rate | 42.40 | % | 37.70 | % | +470 | bps | ||||||
| Avg. Monthly Order (USD) | $ | 223 | $ | 232 | -3.9 | % | ||||||
| Leaders | ||||||||||||
| Avg. Base | 1,728 | 2,080 | -16.9 | % | ||||||||
| EOP Base | 1,674 | 2,099 | -20.2 | % | ||||||||
| Monthly Activity Rate | 88.3 | % | 81.1 | % | +717 | bps | ||||||
| Avg. Monthly Order (USD) | $ | 216 | $ | 219 | -1.4 | % | ||||||
Highlights
| ● | Sustained upward trend in monthly activity rates: Q124 monthly activity rates for Consultants and Leaders increased by 470 bps and 717 bps, respectively, which is crucial to expanding the Jafra US Consultant and Leader bases during the remainder of the year. |
| ● | End of period Consultant base: The EOP Consultant base increased by 2.5% YoY, aligned with 2024 targets. |
| ● | Positive trend in Color category: The Color category revenues grew 13% YoY, benefiting from cross-category collaboration with Fragrances, which ended the quarter in line with the prior year performance. |
| ● | Quarterly Net Revenue decrease but stabilized on a monthly basis: Jafra US Net revenue decreased 7.2% YoY but stabilized at Ps. 73 million on a monthly basis. The decrease is attributable to a nearly 9% appreciation of the Mexican peso. |
| - | It is important to note that Q124 Net Revenue increased by 2% in US dollars. (Q123 Net revenue calculated at 18.7 pesos per US dollar exchange rate; Q124 Net Revenue calculated at 16.9 pesos per US dollar exchange rate). |
| - | Q124 Net Revenue would have increased by 6.2% excluding the cut-off effect. |
| ● | Skin Care and Toiletries decline: These product category sales decreased relative to the prior period due to an inappropriate pricing strategy. Price levels have since been adjusted to be more competitive. |
| ● | EBITDA and EBITDA margin improving: While Q124 EBITDA was negative, this improved considerably compared to Q123 due to aggressive cost containment throughout 2022 and 2023, reflected in a Ps. 39 million, or 31%, YoY decrease in operating expenses. |
| ● | Gross Margin contraction. Gross margin decreased by 250 bps YoY, primarily due to aggressive promotional strategies and initiatives to liquidate surplus inventory at reduced prices and mitigate the risks associated with inventory obsolescence. |
Q224 Priorities
| ● | Jafra US commercial strategy has been calibrated and refined across all fronts: portfolio management, merchandising, catalog design and pagination, incentive programs, promotions, ease of doing business, and Field Management. Early projections for April revenue indicate a significant revenue increase. Q224 is expected to be a pivotal quarter, with further momentum in the second half of 2024. |
| ● | Jafra US inventory levels: excess inventory has been reduced according to plan. Revenue projection management has been refined, and the focus will be on maintaining more inventory in Queretaro, Mexico rather than Dallas, Texas, U.S. |
8
Balance Sheet Highlights
Strong balance sheet at the end of Q124.
| - | BeFra’s balance sheet further strengthened in Q124, providing greater financial flexibility to reduce debt leverage, invest in additional growth and efficiency initiatives, as well as pay dividends. |
| - | Total assets were Ps. 10,873 million, 16% higher than total liabilities. Total liabilities represented 86% of total assets, decreasing from 89% in Q123, with long-term debt representing 42% and short-term debt 5%. |
| - | Fixed assets represented 27% of total assets, reflecting BeFra’s asset-light structure and ability to generate strong cash flows with a profitable business model. |
| - | Q124 short-term debt, long-term debt, and borrowings decreased by 29% and 8%, respectively, compared to Q123. |
| - | Stockholder’s Equity was Ps. 1,510 million at the end of Q124, a 28% increase compared to Q123, primarily due to retained earnings from previous reporting periods. |
| - | Other key balance sheet metrics: |
| ■ | Current ratio (current assets/current liabilities): 1.04x. |
| ■ | Equity turnover (TTM Net revenue/average stockholder’s equity): 10x. |
| ■ | Return on equity (ROE): 86%. |
| ■ | Return on assets (ROA): 11%. |
| ■ | Return on total assets (ROTA): 26%. |
| ■ | Debt-to-EBITDA ratio: 1.93x. |
| ■ | Net debt-to-EBITDA: 1.78x. |
Capital Allocation
Deleveraging BeFra’s balance sheet remains a strategic priority. The Company intends to use operating cash flow for debt repayments, with the same objective of lowering Net debt-to-EBITDA to at least 1.5x by the end of 2024. Total debt repayments are expected to amount to around Ps. 800 million during the remainder of the year. As of March 31, 2024, Net debt-to-EBITDA was 1.78x, down from 2.24x at the end of Q123.
We have finalized a purchase agreement for the property currently hosting Jafra Mexico’s offices in Mexico City. The deal is valued at Ps. 385.7 million, with payments spread over a three-year term. These funds will be destined for servicing the Company’s outstanding debt. Jafra Mexico will move to a newly leased office building starting in June 2024.
Given BeFra’s improving performance, the Company remains committed to paying quarterly dividends as another means to increase shareholder value over the long term. The board of directors has proposed a Ps. 250 million dividend for the first quarter 2024, subject to approval at the Ordinary General Shareholders’ Meeting to be held on May 13, 2024. This would mark the 17th consecutive quarterly dividend payment since we went public in March 2020. Future dividends are expected to be equal to or exceed this quarter’s proposed dividend, depending on BeFra’s financial results and taking into consideration the plan to repay debt.
2024 Guidance and Long-Term Growth Prospects
Looking ahead, BeFra remains confident and optimistic about the remainder of the year, given the Company’s substantial achievements to date and further growth prospects. The current outlook assumes BeFra’s Q124 net revenue and EBITDA are aligned with initial forecasts provided at the beginning 2024. Should the company’s results remain strong, BeFra may consider raising guidance. However, guidance remains as is 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. |
The Company’s strategy emphasizes consolidating BeFra’s position within the U.S. and driving growth in the vibrant Mexican market, representing significant growth potential, while capitalizing on multiple growth opportunities and adapting to shifts in market conditions enabling continued growth and profitability.
9
Appendix
Financial Statements
Betterware de México, S.A.P.I. de C.V.
Consolidated Statements of Final Position
As of March 31, 2024 and 2023
(In Thousands of Mexican Pesos)
| Mar 2024 | Mar 2023 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | 425,177 | 579,788 | ||||||
| Trade accounts receivable, net | 1,198,708 | 1,209,278 | ||||||
| Accounts receivable from related parties | 163 | 12 | ||||||
| Inventories | 1,871,274 | 1,845,278 | ||||||
| Prepaid expenses | 133,877 | 113,075 | ||||||
| Income tax recoverable | 127,101 | 217,268 | ||||||
| Other assets | 164,260 | 192,968 | ||||||
| Total current assets | 3,920,560 | 4,157,667 | ||||||
| Property, plant and equipment, net | 2,889,521 | 2,933,315 | ||||||
| Right of use assets, net | 343,547 | 282,343 | ||||||
| Deferred income tax | 437,964 | 319,157 | ||||||
| Investment in subsidiaries | - | 1,236 | ||||||
| Intangible assets, net | 1,628,036 | 1,715,686 | ||||||
| Goodwill | 1,599,718 | 1,599,718 | ||||||
| Other assets | 53,388 | 44,373 | ||||||
| Total non-current assets | 6,952,174 | 6,895,828 | ||||||
| Total assets | 10,872,734 | 11,053,495 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Short term debt and borrowings | 539,195 | 761,419 | ||||||
| Accounts payable to suppliers | 1,670,630 | 1,382,580 | ||||||
| Accrued expenses | 295,535 | 280,890 | ||||||
| Provisions | 763,260 | 791,437 | ||||||
| Income tax payable | - | |||||||
| Value added tax payable | 133,055 | 132,192 | ||||||
| Trade accounts payable to related parties | 1,152 | 104,917 | ||||||
| Statutory employee profit sharing | 163,278 | 162,844 | ||||||
| Lease liability | 114,811 | 94,890 | ||||||
| Derivative financial instruments | 72,701 | 65,545 | ||||||
| Total current liabilities | 3,753,617 | 3,776,714 | ||||||
| Employee benefits | 130,585 | 150,876 | ||||||
| Derivative financial instruments | - | - | ||||||
| Deferred income tax | 697,565 | 832,239 | ||||||
| Lease liability | 241,976 | 184,731 | ||||||
| Long term debt and borrowings | 4,539,134 | 4,926,846 | ||||||
| Total non-current liabilities | 5,609,260 | 6,094,692 | ||||||
| Total liabilities | 9,362,877 | 9,871,406 | ||||||
| Stockholders’ Equity | ||||||||
| Capital stock | 321,312 | 321,312 | ||||||
| Share premium account | -25,264 | -12,182 | ||||||
| Retained earnings | 1,233,531 | 868,132 | ||||||
| Other comprehensive income | -18,148 | 3,470 | ||||||
| Non-controlling interest | -1,574 | 1,357 | ||||||
| Total Stockholders’ Equity | 1,509,857 | 1,182,089 | ||||||
| Total Liabilities and Stockholders’ Equity | 10,872,734 | 11,053,495 | ||||||
10
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 March 31, 2024 and 2023
(In Thousands of Mexican Pesos)
| Q1 2024 | Q1 2023 | ∆% | ||||||||||
| Net revenue | 3,602,503 | 3,264,211 | 10.4 | % | ||||||||
| Cost of sales | 951,555 | 887,984 | 7.2 | % | ||||||||
| Gross profit | 2,650,948 | 2,376,227 | 11.6 | % | ||||||||
| Administrative expenses | 785,616 | 824,760 | -4.7 | % | ||||||||
| Selling expenses | 1,028,574 | 845,475 | 21.7 | % | ||||||||
| Distribution expenses | 176,725 | 145,177 | 21.7 | % | ||||||||
| Total expenses | 1,990,915 | 1,815,412 | 9.7 | % | ||||||||
| Share of results of subsidiaries | 0 | 0 | 0.0 | % | ||||||||
| Operating income | 660,033 | 560,815 | 17.7 | % | ||||||||
| Interest expense | -164,425 | -210,935 | -22.0 | % | ||||||||
| Interest income | 6,669 | 12,494 | -46.6 | % | ||||||||
| Unrealized loss in valuation of financial derivative instruments | -24,782 | -50,216 | -50.6 | % | ||||||||
| Foreign exchange gain (loss), net | -21,041 | -10,573 | 99.0 | % | ||||||||
| Financing cost, net | -203,579 | -259,230 | -21.5 | % | ||||||||
| Income before income taxes | 456,454 | 301,585 | 51.4 | % | ||||||||
| Income taxes | 162,209 | 113,357 | 43.1 | % | ||||||||
| Net income including minority interest | 294,245 | 188,228 | 56.3 | % | ||||||||
| Non-controlling interest loss | -99 | -232 | -57.3 | % | ||||||||
| Net income | 294,146 | 187,996 | 56.5 | % | ||||||||
| EBITDA breakdown (Ps. million) | ||||||||||||
| Concept | Q1 2024 | Q1 2023 | ∆% | |||||||||
| Net income | 294,245 | 188,228 | 56.3 | % | ||||||||
| (+) Income taxes | 162,209 | 113,357 | 43.1 | % | ||||||||
| (+) Financing cost, net | 203,579 | 259,230 | -21.5 | % | ||||||||
| (+) Depreciation and amortization | 95,357 | 93,744 | 1.7 | % | ||||||||
| EBITDA | 755,390 | 654,559 | 15.4 | % | ||||||||
11
Betterware de México, S.A.P.I. de C.V.
Consolidated Statements of Cash Flows
For the three-months ended March 31, 2024 and 2023
(In Thousands of Mexican Pesos)
| Q1 2024 | Q1 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Profit for the period | 294,245 | 188,229 | ||||||
| Adjustments for: | ||||||||
| Income tax expense recognized in profit of the year | 162,209 | 113,357 | ||||||
| Depreciation and amortization of non-current assets | 95,357 | 93,744 | ||||||
| Interest income recognized in profit or loss | -6,669 | -12,494 | ||||||
| Interest expense recognized in profit or loss | 164,425 | 210,935 | ||||||
| Unrealized loss in valuation of financial derivative instruments | 24,782 | 50,216 | ||||||
| Share-based payment expense | -8,894 | 489 | ||||||
| Gain on disposal of equipment | -1,614 | - | ||||||
| Currency effect | -9 | -4,045 | ||||||
| Movements in not- controlling interest | -42 | -58 | ||||||
| Other gains and losses | - | - | ||||||
| Movements in working capital: | ||||||||
| Trade accounts receivable | -126,253 | -238,216 | ||||||
| Trade accounts receivable from related parties | -59 | 49 | ||||||
| Inventory, net | 162,860 | 277,392 | ||||||
| Prepaid expenses and other assets | 14,418 | -62,914 | ||||||
| Accounts payable to suppliers and accrued expenses | -141,058 | -6,512 | ||||||
| Provisions | -41,488 | -1,975 | ||||||
| Value added tax payable | 14,694 | 43,050 | ||||||
| Statutory employee profit sharing | 30,423 | 27,546 | ||||||
| Trade accounts payable to related parties | 1,152 | 8,058 | ||||||
| Income taxes paid | -257,691 | -129,866 | ||||||
| Employee benefits | 3,435 | -3,031 | ||||||
| Net cash generated by operating activities | 384,223 | 553,954 | ||||||
| Cash flows from investing activities: | ||||||||
| Investment in subsidiaries | - | - | ||||||
| Payments for property, plant and equipment, net | -27,380 | -10,707 | ||||||
| Proceeds from disposal of property, plant and equipment, net | 2,812 | 6,065 | ||||||
| Interest received | 6,669 | 12,494 | ||||||
| Net cash (used in) generated by investing activities | -17,899 | 7,852 | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment of borrowings | -500,000 | -1,000,000 | ||||||
| Proceeds from borrowings | 480,000 | 550,000 | ||||||
| Interest paid | -183,295 | -215,719 | ||||||
| Bond issuance costs | - | - | ||||||
| Lease payment | -38,069 | -32,137 | ||||||
| Share repurchases | - | - | ||||||
| Dividends paid | -249,513 | -99,806 | ||||||
| Net cash used in financing activities | -490,877 | -797,662 | ||||||
| Net decrease in cash and cash equivalents | -124,553 | -235,856 | ||||||
| Cash and cash equivalents at the beginning of the period | 549,730 | 815,644 | ||||||
| Cash and cash equivalents at the end of the period | 425,177 | 579,788 | ||||||
12
Key Operating Metrics
Betterware Mexico
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Associates | ||||||||||||||||||||
| Avg. Base | 752,577 | 753,743 | 768,042 | 756,250 | 716,645 | |||||||||||||||
| EOP Base | 764,024 | 756,637 | 759,310 | 741,170 | 724,707 | |||||||||||||||
| Monthly Activity Rate | 68.10 | % | 66.70 | % | 65.20 | % | 66.00 | % | 67.73 | % | ||||||||||
| Avg. Monthly Order | $ | 1,767 | $ | 1,877 | $ | 1,823 | $ | 1,959 | $ | 2,052 | ||||||||||
| Monthly Growth Rate | 15.00 | % | 15.20 | % | 15.70 | % | 14.90 | % | 15.09 | % | ||||||||||
| Monthly Churn Rate | 15.60 | % | 15.50 | % | 15.60 | % | 15.70 | % | 15.84 | % | ||||||||||
| Distributors | ||||||||||||||||||||
| Avg. Base | 39,028 | 40,825 | 42,551 | 42,369 | 42,886 | |||||||||||||||
| EOP Base | 39,991 | 41,981 | 41,932 | 41,825 | 44,482 | |||||||||||||||
| Monthly Activity Rate | 98.50 | % | 98.10 | % | 97.90 | % | 98.10 | % | 98.51 | % | ||||||||||
| Avg. Monthly Order | $ | 23,562 | $ | 23,440 | $ | 21,944 | $ | 23,518 | $ | 23,582 | ||||||||||
| Monthly Growth Rate | 9.10 | % | 10.70 | % | 10.40 | % | 10.00 | % | 10.80 | % | ||||||||||
| Monthly Churn Rate | 8.60 | % | 9.10 | % | 10.40 | % | 10.10 | % | 9.72 | % | ||||||||||
Jafra Mexico
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Consultants | ||||||||||||||||||||
| Avg. Base | 448,982 | 427,289 | 414,968 | 461,712 | 469,290 | |||||||||||||||
| EOP Base | 427,280 | 424,435 | 422,956 | 467,736 | 451,692 | |||||||||||||||
| Monthly Activity Rate | 51.7 | % | 51.2 | % | 52.2 | % | 52.9 | % | 53.81 | % | ||||||||||
| Avg. Monthly Order | $ | 2,063 | $ | 2,091 | $ | 2,088 | $ | 2,181 | $ | 2,362 | ||||||||||
| Monthly Growth Rate | 9.2 | % | 8.9 | % | 10.5 | % | 11.5 | % | 9.5 | % | ||||||||||
| Monthly Churn Rate | 11.3 | % | 9.1 | % | 10.6 | % | 8.3 | % | 10.6 | % | ||||||||||
| Leaders | ||||||||||||||||||||
| Avg. Base | 19,030 | 18,978 | 18,553 | 18,576 | 18,927 | |||||||||||||||
| EOP Base | 18,952 | 18,875 | 18,555 | 18,719 | 19,159 | |||||||||||||||
| Monthly Activity Rate | 94.3 | % | 93.9 | % | 94.0 | % | 95.0 | % | 94.95 | % | ||||||||||
| Avg. Monthly Order | $ | 2,259 | $ | 2,463 | $ | 2,236 | $ | 2,624 | $ | 2,698 | ||||||||||
| Monthly Growth Rate | 1.0 | % | 1.0 | % | 1.1 | % | 1.4 | % | 1.6 | % | ||||||||||
| Monthly Churn Rate | 1.6 | % | 1.4 | % | 1.4 | % | 1.1 | % | 0.8 | % | ||||||||||
Jafra US
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Consultants | ||||||||||||||||||||
| Avg. Base | 29,399 | 28,541 | 29,608 | 31,268 | 29,506 | |||||||||||||||
| EOP Base | 28,749 | 29,921 | 30,489 | 31,117 | 29,470 | |||||||||||||||
| Monthly Activity Rate | 37.7 | % | 44.4 | % | 45.1 | % | 43.8 | % | 42.40 | % | ||||||||||
| Avg. Monthly Order (USD) | $ | 232 | $ | 236 | $ | 229 | $ | 231 | $ | 223 | ||||||||||
| Monthly Growth Rate | 9.7 | % | 12.9 | % | 14.5 | % | 12.5 | % | 11.3 | % | ||||||||||
| Monthly Churn Rate | 15.0 | % | 11.5 | % | 13.8 | % | 11.5 | % | 13.1 | % | ||||||||||
| Leaders | ||||||||||||||||||||
| Avg. Base | 2,080 | 2,041 | 1,642 | 1,782 | 1,728 | |||||||||||||||
| EOP Base | 2,099 | 1,760 | 1,645 | 1,793 | 1,674 | |||||||||||||||
| Monthly Activity Rate | 81.1 | % | 83.8 | % | 90.4 | % | 90.2 | % | 88.27 | % | ||||||||||
| Avg. Monthly Order (USD) | $ | 219 | $ | 220 | $ | 217 | $ | 215 | $ | 216 | ||||||||||
| Monthly Growth Rate | 1.9 | % | 2.6 | % | 6.3 | % | 7.9 | % | 4.6 | % | ||||||||||
| Monthly Churn Rate | 1.8 | % | 7.6 | % | 8.4 | % | 5.0 | % | 6.9 | % | ||||||||||
13
Key Financial Metrics
Consolidated
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Net Revenue | $ | 3,264,211 | $ | 3,220,097 | $ | 3,123,507 | $ | 3,401,692 | $ | 3,602,503 | ||||||||||
| Gross Margin | 72.8 | % | 73.3 | % | 70.2 | % | 70.0 | % | 73.6 | % | ||||||||||
| EBITDA | $ | 654,559 | $ | 717,433 | $ | 529,424 | $ | 819,484 | $ | 755,390 | ||||||||||
| EBITDA Margin | 20.1 | % | 22.3 | % | 16.9 | % | 24.1 | % | 21.0 | % | ||||||||||
| Net Income | $ | 187,996 | $ | 258,370 | $ | 196,991 | $ | 406,104 | $ | 294,146 | ||||||||||
| Free Cash Flow | $ | 549,311 | $ | 1,305,046 | $ | 1,643,327 | $ | 2,256,395 | $ | 359,655 | ||||||||||
Betterware Mexico
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Net Revenue | $ | 1,388,983 | $ | 1,444,406 | $ | 1,420,739 | $ | 1,472,480 | $ | 1,555,027 | ||||||||||
| Gross Margin | 61.1 | % | 61.8 | % | 56.2 | % | 50.2 | % | 60.00 | % | ||||||||||
| EBITDA | $ | 412,356 | $ | 443,508 | $ | 328,295 | $ | 250,342 | $ | 382,107 | ||||||||||
| EBITDA Margin | 29.7 | % | 30.7 | % | 23.1 | % | 17.0 | % | 24.60 | % | ||||||||||
Jafra Mexico
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Net Revenue | $ | 1,662,405 | $ | 1,536,775 | $ | 1,486,816 | $ | 1,668,956 | $ | 1,849,996 | ||||||||||
| Gross Margin | 82.0 | % | 83.3 | % | 83.0 | % | 86.5 | % | 85.00 | % | ||||||||||
| EBITDA | $ | 277,547 | $ | 268,724 | $ | 207,985 | $ | 532,780 | $ | 383,120 | ||||||||||
| EBITDA Margin | 16.7 | % | 17.5 | % | 14.0 | % | 31.9 | % | 20.70 | % | ||||||||||
Jafra US
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||
| Net Revenue | $ | 212,823 | $ | 238,916 | $ | 215,952 | $ | 260,256 | $ | 197,480 | ||||||||||
| Gross Margin | 76.5 | % | 77.8 | % | 74.1 | % | 74.4 | % | 74.00 | % | ||||||||||
| EBITDA | $ | (35,344 | ) | $ | 5,201 | $ | (6,856 | ) | $ | 36,361 | $ | (9,837 | ) | |||||||
| EBITDA Margin | (16.6 | )% | 2.2 | % | (3.2 | )% | 14.0 | % | (5.00 | )% | ||||||||||
14
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.
Betterware believes that these non-IFRS financial measures are useful to investors because (i) Betterware 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 Betterware’s EBITDA and provide more tools for their analysis as it makes Betterware’s results comparable to industry peers that also prepare these measures.
Definitions: Operating Metrics
| ● | Betterware de México (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 (Consultants and Leaders) |
Avg. Base: Monthly average Consultant/Leader base
EOP Base: Consultant/Leader base at the end of the period
Monthly Churn Rate (Consultants): Average monthly data. Total Consultants lost during the period divided by the number of active Consultants 4 months prior. A Consultant is terminated only after 4 months of inactivity.
Monthly Churn Rate (Leaders): Average monthly data. Total Leaders lost during the period divided by end of period Leader’s base.
Monthly Activity Rate: Average monthly data. Active Consultants/Leaders divided by the end of period Consultant/Leaders base.
Avg. Monthly Order (Consultants): Average monthly data. Total Catalogue Revenue divided by number of consultant orders.
Avg. Monthly Order (Leaders): Average monthly data. Total Leaders Revenue divided by number of leaders 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 creating innovative products that solve specific needs regarding organization, practicality, space saving and hygiene within the household. Betterware’s wide product portfolio includes home organization, kitchen, commuting, laundry and cleaning, as well as other categories that include products and solutions for every corner of the household.
The Company has a differentiated two-tier network of distributors and associates that sell their products through twelve catalogs per year. All products are designed by the Company and under the Betterware brand name through its different sources of product innovation. The Company’s state-of-the-art infrastructure allows it to safely and timely deliver its products to every part of the country, backed by the strategic location of its national distribution center. Today, the Company distributes its products in Mexico and Guatemala, and has plans of additional international expansion.
Supported by its asset light business model and its three strategic pillars of Product Innovation, Business Intelligence and Technology, Betterware has been able to achieve sustainable double-digit growth rates by successfully expanding its household penetration and share of wallet.
15
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.
1Q2024 Conference Call
Management will hold a conference call with investors on April 26th, 2024, at 7:00 am Central Standard Time (CST)/ 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: 13746020
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: 13746020
Contacts.
Company:
BeFra IR
ir@better.com.mx
+52 (33) 3836 0500 Ext. 2011
InspIR:
Investor Relations
Barbara Cano
barbara@inspirgroup.com
16