Exhibit 99.1

 

 

 

 

 

 

Message from the Chairman

 

I am pleased to report that BeFra delivered another quarter of strong results, with Q3 net revenue growing 6.6% year-over-year and 7.4% year-to-date, reflecting solid performance across all business units, and reaffirming the strength of our strategic plan.

 

Betterware Mexico achieved its fourth consecutive quarter of net revenue year-over-year growth, consolidating its “back to growth momentum”, and paving the way for a stronger growth coming forward. Jafra Mexico continues to deliver exceptional growth, led by the continued execution of our acquisition business plan. Jafra US saw another consecutive quarter of growth, as we continue to find the road to success in the US market.

 

We are well-positioned for a strong close to the year, supported by key initiatives in Q4, including the improved re-design of the Jafra Mexico catalog, innovative merchandising at Betterware Mexico, and capitalizing the launch of our new Shopify+ website for Jafra US.

 

In terms of profitability, our Q3 Adjusted EBITDA grew an impressive 11.7% year-over-year, highlighting our ability to leverage our growth, and underscoring the relevance of a diverse product portfolio between our Betterware and Jafra brands. Strong profitability at Jafra Mexico helped offset temporary challenges at Betterware Mexico, where gross margin was temporarily impacted by the peso depreciation and higher freight costs. Despite these challenges in Betterware Mexico, it is important to mention that we have implemented corrective measures, expecting gross margin recovery starting in Q4, if no other external movements appear. This, together with our ongoing commitment seeking the maximum expense productivity, has led us to achieve great operating leverage with growth.

 

On a related note, we would like to stand out that our balance sheet remains strong, with an extraordinary 41.9% increase in Free Cash Flow in Q3 year on year, and the lowest Net Debt to EBITDA ratio since the Jafra acquisition.

 

All in all, BeFra’s momentum continues to strengthen withing the consumer product goods and the direct selling industry, leveraging our pillars of innovation, business intelligence, and technology. Our evolving business model, cutting-edge brands, and financially strong business, empower our sales force and keep us ahead. With 24 years of constant double digit growth, we are not just on a sustainable growth path, we are poised to continue to thrive.

 

As we head into Q4, I am confident we will meet our full-year targets, driven by our strong teams and sound strategies. Our focus on growth, innovation, efficiency and profitability across all business remains unwavering, ensuring that we are well-positioned for long-term success.

 

Luis G. Campos

Chairman of the Board

 

2

 

 

 

Q3 2024 Select Consolidated Financial Information

 

   Q3   9M 
   2024   2023   2024   2023 
Net Revenue  $3,330,394   $3,123,507   +6.6%  $10,322,290   $9,607,815   +7.4%
Gross Margin   71.2%   70.2%  +100 bps   72.4%   72.1%  +25bps
EBITDA  $156,545   $529,424   -70.4%  $1,568,071   $1,901,416   -17.5%
EBITDA Margin   4.7%   16.9%  -1,225bps   15.2%   19.8%  -460bps
Adj. EBITDA  $591,575   $529,424   +11.7%  $2,003,100   $1,901,416   +5.3%
Adj. EBITDA Margin   17.8%   16.9%  +81 bps   19.4%   19.8%  -38bps
Net Income  $-115,614   $196,991   -158.7%  $479,300   $643,358   -25.5%
Adj. Net Income  $180,531   $196,991   -8.4%  $775,445   $643,358   +20.5%
EPS  $-3.10   $5.28   -158.7%  $12.84   $17.24   -25.5%
Adj. EPS  $4.84   $5.28   -8.4%  $20.78   $17.24   +20.5%
Free Cash Flow  $417,379   $294,227   +41.9%  $1,235,471   $1,599,274   -22.7%
Net Debt / Adj. EBITDA   1.76    2.08        1.76    2.08     
Interest Coverage   3.52    2.55        3.52    2.55     
                             
Associates                            
Avg. Base   1,127,767    1,212,618   -7.0%   1,173,222    1,217,716   -3.7%
EOP Base   1,151,069    1,212,755   -5.1%   1,151,069    1,212,755   -5.1%
Distributors                            
Avg. Base   65,235    62,746   +4.0%   64,785    61,535   +5.3%
EOP Base   64,433    62,132   +3.7%   64,433    62,132   +3.7%

 

This quarter, we are reporting adjusted EBITDA, Net Income and EPS to reflect the one-time effect of the sale of Jafra Mexico’s former headquarters on BeFra’s consolidated financial results. The sale resulted in a non-cash accounting loss of Ps. 435M as the property was sold for Ps. 385.7M, notably below its book value of Ps. 811M. The transaction price reflects the current market value of the asset. Essentially, this accounting loss does not impact on BeFra’s operational performance. The sale will generate post-tax cash inflows of Ps. 315M over the next three years: Ps. 70M expected in November 2024, Ps. 135M in 2025, Ps. 85 in 2026, and Ps. 25.7M in Q2 2027. Excluding this non-recurring event, core EBITDA growth remains strong and continues to align with our strategic goals.

 

●Net Revenue Growth: Consolidated net revenue grew by 6.6% year-over-year in the third quarter and 7.4% for the first nine months of 2024, reflecting a consistent growth trajectory. All business units achieved YoY growth. Betterware Mexico marked its fourth consecutive quarter of year-over-year growth, while Jafra Mexico continues to excel, delivering a 9.2% YoY increase in the quarter.

 

●Robust EBITDA Growth: Adjusted EBITDA grew by 11.7% for the quarter and increased 5.3% for the first nine months. This reflects the resilience of core operations despite challenges which included exchange rate fluctuations and cost pressures, such as freight costs. The growth highlights the success of operational efficiencies achieved over the last year, strategic growth initiatives underway across all business units, and the group’s diversified portfolio of product categories.

 

●Free Cash Flow (FCF) Generation. Free Cash Flow (FCF) increased by 41.9% this quarter, largely driven by a more efficient working capital management. By shortening the Cash Conversion Cycle, BeFra is able to convert growing revenues into cash more quickly, resulting in stronger cash flow generation.

 

●Adjusted Net Income Contracted by 8.4% in Q3, primarily due to an increase in tax provisions for the period. This impact could be temporary, with a potential reversal by year-end following the final calculation of the annual inflation effect. For the first nine months of the year, net income increased by 20.5%, mainly driven by a decrease in interest expense and a gain on FX forwards.

 

For more details, please refer to the results of each business unit in the following pages.

 

3

 

 

 

Unmatched Financial Strength and Performance

 

Strong balance sheet at the end of Q3 2024.

 

-BeFra’s balance sheet further strengthened in Q3 2024, with net-debt-to-EBITDA decreasing 15.5% YoY to 1.76x and interest coverage increasing 38.0% to 3.52x, providing greater financial flexibility to further reduce debt leverage, continue investing in growth and efficiency initiatives, and pay dividends.

 

-BeFra’s inventory increased 15.0% vs last year to prevent any supply chain disruptions that could affect our fulfillment capabilities for the Q4 season.

 

Our key financial metrics reflect our strength and show why to invest in BWMX:

 

Cash Flow & Liquidity ratios

 

BeFra continues to demonstrate robust cash flow generation, as is illustrated in the table below.

 

   Q3 2024   Q3 2023   ∆ 
Current Ratio   1.07x   1.06x   +0.3%
FCF / Adj. EBITDA   70.6%   55.6%   +1,498 bps
CCC (days)   38    58    -20bps

 

*CCC: Cash Conversion Cycle

 

Asset Light Business

 

The Company’s asset-light business model enables flexibility to swiftly adapt to challenging conditions.

 

   Q3 2024   Q3 2023   ∆ bps 
Fixed Assets / Total Assets   19.5%   25.9%   -634bps
Variable Cost Structure   75.1%   71.6%   +351bps
Fixed Cost Structure   24.9%   22.2%   +270bps
SG&A / Net Revenues   51.7%   51.5%   +21bps

 

Fixed Assets decreased significantly due to the sale of the Jafra Mexico building in Mexico City.

 

Return on Investment

 

Over the years, the Company has consistently delivered exceptional returns, making this business highly attractive to our investors.

 

   Q3 2024   Q3 2023   ∆ 
Equity Turnover   14.12x   10.08x   +40.1%
ROE   69.4%   70.1%   -72 bps
ROTA   11.0%   13.1%   -210bps
Dividend Yield   11.91%   7.72%   +419bps

 

*Equity Turnover = Net Revenues TTM / Equity
*ROTA = Net Income TTM / (Cash + Accounts Receivable + Inventories + Fixed Assets)
*Calculation of Dividend Yield Using the Closing Price on September 30, which was $12.68.

 

Leverage

 

Current debt primarily stems from the acquisition of Jafra, and the Company is committed to reducing debt levels ahead of the original schedule.

 

   Q3 2024   Q3 2023   ∆% 
Debt to EBITDA   1.87x   2.28x   -18.0%
Net Debt to EBITDA   1.76x   2.08x   -15.5%
Interest Coverage   3.52x   2.55x   +38.0%

 

4

 

 

 

Capital Allocation

 

Strategic Focus on Balance Sheet: BeFra’s balance sheet remains a priority. As of September 30, 2024, Net Debt-to-EBITDA was 1.76x, a decrease from 2.08x at the end of Q3 2023.

 

Quarterly Dividends and Shareholder Value: Considering BeFra’s results to date, management remains committed to enhancing shareholder value through quarterly dividends. The board of directors has proposed a Ps. 250 million dividend for Q3 2024, pending approval at the Company’s Ordinary General Shareholders’ Meeting on October 28, 2024. This would mark the nineteenth consecutive quarterly dividend payment since BeFra’s IPO in March 2020. Future levels of dividend payouts are expected to meet this quarter’s proposed amount, contingent upon BeFra’s financial performance and the ongoing debt repayment plan.

 

The Company has introduced a new investment policy to provide clear guidelines for the efficient and sustainable use of BeFra’s Free Cash Flow, fully aligned with strategic priorities. This policy reinforces BeFra’s commitment to fostering long term growth, maintaining a solid financial foundation, and delivering consistent value to shareholders. The leverage ratio has been set within a range of 1.5x to 2.5x Net Debt to EBITDA, depending on the growth opportunities that arise. FCF deployment will prioritize inorganic growth initiatives, while ensuring the appropriate allocation of resources for dividends and capital expenditures.

 

2024 Guidance and Long-Term Growth Prospects

 

Looking ahead, BeFra is well-positioned to deliver a strong year-end finish within the Company’s guidance range. While Revenue is expected within range, EBITDA for the full year will be closer to the lower end range due to the temporary impact on the margin of Betterware Mexico seen in the Q3.

 

   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.

 

5

 

 

 

Q3 2024 Financial Results by Business

 

Betterware Mexico

 

Key Financial and Operating Metrics

 

   Q3   9M 
   2024   2023   2024   2023 
Net Revenue  $1,465,577   $1,420,739    +3.2%  $4,496,979   $4,254,128    +5.7%
Gross Margin   54.8%   56.2%   -148bps   57.1%   59.7%   -262bps
EBITDA  $279,889   $328,295    -14.7%  $966,463   $1,184,159    -18.4%
EBITDA Margin   19.1%   23.1%   -401bps   21.5%   27.8%   -634bps

 

Associates

Avg. Base   694,277    768,042    -9.6%   708,022    758,121    -6.6%
EOP Base   700,893    759,310    -7.7%   700,893    759,310    -7.7%
Monthly Activity Rate   66.3%   65.2%   +109bps   66.8%   66.7%   +12bps
Avg. Monthly Order  $2,034   $1,823    +11.6%  $2,038   $1,822    +11.8%
Distributors                              
Avg. Base   44,639    42,551    +4.9%   44,159    40,801    +8.2%
EOP Base   43,939    41,932    +4.8%   43,939    41,932    +4.8%
Monthly Activity Rate   98.0%   97.9%   +5bps   98.2%   98.2%   - 
Avg. Monthly Order  $21,531   $21,944    -1.9%  $22,261   $22,982    -3.1%

 

Highlights

 

●Net Revenue Growth: Betterware Mexico achieved 3.2% year-over-year growth in Q3, marking its fourth consecutive quarter of annual growth, with a 5.7% increase for the first nine months. While growth slowed compared to the first half, the Company continues to gain overall momentum and expects a strong Q4.

 

oRevenue growth was driven by a higher pricing mix, reflecting a shift toward higher priced items that drive Associates’ average monthly order. Net revenue was also significantly enhanced by the revamp of Betterware’s main categories: On the Go, Kitchen, Hygiene, Home Solutions and Food Preservation, each reflecting double-digit growth on a year-to-date basis.

 

oIncreased productivity among Distributors and Associates continues to be an important sales driver, rather than the expansion of Betterware’s sales force, with activity levels and average order values increasing YoY. The Company expects that the increased productivity will precede an expansion of the base.

 

●Temporary EBITDA contraction. Lower than expected sales and the decline in gross margin led to an EBITDA contraction in Q3 and YTD. Gross margin decreased by 148 bps YoY in Q3, and 262 bps year-to-date (YTD), mainly due to the Mexican peso depreciation (the Peso weakened relative to the US dollar by 14.5% from its lowest point in Q1 2024 and by 10.7% compared to the average seen in the first half of the year), and to the international freight costs, which surged by 154% from the beginning of the year. However, adjustments have been made and will be reflected in Q4, in addition to the fact that international freight costs have started to decline.

 

●Comprehensive financing costs include gains or losses from foreign exchange hedges used to mitigate currency risk related to purchases priced in USD. In Q3 2024, we recorded a Ps. 59M gain, bringing the year-to-date total to Ps. 93M. If hedge accounting had been applied, these gains would have increased the gross margin by 162 basis points in Q3 to 56.4%, and by 135 basis points year-to-date to 58.5%. The Company is evaluating initiating the process to transition to hedge accounting for FX risk management to more accurately reflect these gains or losses in the gross margin.

 

Q4 2024 Priorities

 

●Product Innovation: Betterware is launching an ambitious product innovation plan in Q4, with a robust pipeline in place for the rest of the year to ensure sustained growth and continued market relevance.

 

●Pricing Strategy: The Company is also implementing a comprehensive pricing strategy to protect margins while remaining competitive. This plan will enable Betterware to mitigate external cost impacts, maintain profitability, and strengthen its market position, further enhancing consumer loyalty.

 

●Incentives Program: The Associates and Distributors incentive program has been refined to better align rewards with performance, driving increase activity levels, as noted before.

 

International Expansion

 

●International operations. We continue to build a strong foundation and establish our presence in the U.S. and Peru, making progress with the strategic initiatives we have planned for each market. We anticipate initial tangible results and more relevant financial contributions from Betterware US by the end of 2025, reflecting investments and projects currently underway in this sizable market. Since these projects began, total investments in the U.S. and Peru have amounted to $80.2 million. Without these investments, Betterware Mexico’s EBITDA would have been Ps. 1,047 million, representing an EBITDA margin of 23.3%.

6

 

 

 

Jafra Mexico

 

Key Financial and Operating Metrics

 

   Q3   9M 
    2024   2023   2024   2023 
Net Revenue  $1,623,697   $1,486,816    +9.2%  $5,144,830   $4,685,996    +9.8%
Gross Margin   85.7%   83.0%   +274bps   85.5%   82.8%   +275bps
EBITDA  $-116,882   $209,267    -155.9%  $610,716   $755,538    -19.2%
EBITDA Margin   -7.2%   14.1%   -2,127bps   11.9%   16.1%   -420 bps
EBITDA Adj  $318,148   $209,267    +52.0%  $1,045,746   $755,538    +38.4%
EBITDA Margin Adj   19.6%   14.1%   +552bps   20.3%   16.1%   +42bps

 

Associates

Avg. Base   403,340    414,968    -2.8%   435,027    430,413    +1.1%
EOP Base   421,073    422,956    -0.4%   421,073    422,956    -0.4%
Monthly Activity Rate   51.6%   52.2%   -60bps   52.0%   51.7%   +27 bps
Avg. Monthly Order  $2,347   $2,088    +12.4%  $2,290   $2,081    +10.0%
Distributors                              
Avg. Base   18,823    18,553    +1.5%   18,883    18,812    +0.4%
EOP Base   18,722    18,555    +0.9%   18,722    18,555    +0.9%
Monthly Activity Rate   93.2%   94.0%   -79bps   94.2%   94.1%   +1bps
Avg. Monthly Order  $2,694   $2,236    +20.5%  $2,594   $2,319    +11.9%

 

Highlights

 

●High Single-digit Growth in Net Revenue. Net revenue for the third quarter increased by 9.2% YoY, also with a cumulative 9.8% increase over the first nine months. These results were primarily driven by YTD increases of 17.2% in Fragrances, 7.9% in Toiletries, and 6.4% in Cosmetics, reflecting the strong performance of Jafra’s best-selling products and key innovations such as the Gii fragrance and the new Dermocosmetic Skin Care line, BioLab.

 

In Q3, the average Associate base contracted 2.8% year-over-year. Net revenue growth was driven by increased productivity and a higher average monthly order (+12.4%). While recruitment and retention remain priorities, the higher-value transactions from the existing Associate network are a positive indicator for future base growth.

 

●Exceptional Adjusted EBITDA Growth. Adjusted EBITDA grew significantly; 52.0% for the quarter and 38.4% year-to-date, driven by a combination of increased sales, improved gross margins, and operating expense efficiencies. Gross margin expanded by 274 bps for the quarter and 275 bps year-to-date, derived from higher volume manufacturing efficiencies.

 

Q4 2024 Priorities

 

●Product Innovation Plan: Jafra has a strong product innovation pipeline for the remainder of the year, with key launches planned. Product innovations introduced this quarter, including BioLab, have already gained market share, positioning Jafra well for continued growth.

 

●New Catalog Design: A new and improved catalog design was launched in October 2024, which is expected to have a strong impact of the sales growth.

 

●Enhanced Incentives Program Communication: Jafra’s incentive program communication is also being refined to boost sales force engagement and to drive sponsorship, recruitment, and Consultant retention to achieve sustained growth levels.

 

7

 

 

 

Jafra US

 

Key Financial and Operating Metrics

 

    Q3     9M  
    2024     2023     2024     2023  
Net Revenue   $ 241,120     $ 215,952       +11.7 %   $ 680,481     $ 667,691       +1.9 %
Gross Margin     73.3 %     74.1 %     -81 bps     73.6 %     76.2 %     -257 bps
EBITDA   $ -6,462     $ -8,138       +20.6 %   $ -9,108     $ -38,281       +76.2 % 
EBITDA Margin     -2.7 %     -3.2 %     +109 bps     -1.3 %     -5.7 %     +439 bps

 

Associates                        
Avg. Base   30,150    29,608    +1.8%   30,173    29,183    +3.4%
EOP Base   29,103    30,489    -4.5%   29,103    30,489    -4.5%
Monthly Activity Rate   41.6%   45.1%   -347bps   43.6%   42.4%   +118 bps
Avg. Monthly Order  $233   $228    +2.2%  $229   $232    -1.0%
Distributors                              
Avg. Base   1,774    1,642    +8.0%   1,743    1,921    -9.3%
EOP Base   1,772    1,645    +7.7%   1,772    1,645    +7.7%
Monthly Activity Rate   87.5%   90.4%   -290bps   88.8%   85.1%   +374bps
Avg. Monthly Order  $233   $217    +7.7%  $226   $219    +3.6%

 

Highlights

 

●Jafra US Continues to Grow Net Revenues. The business has demonstrated a strong turnaround, delivering double-digit net revenue growth for the second consecutive quarter. Q3 net revenues increased by 11.7%, enabling 1.9% year-to-date growth. Strong Q3 revenue was primarily driven by higher productivity per Associate, and Associate base growth. Jafra US net revenues in USD grew by 3.4% during the quarter, reaching $12.7M, and by 3.2% for the first nine months of the year, totaling $38.4M. It is important to stand out that Jafra US successfully launched a Shopify e-commerce platform in September 2024; a technological development designed to enhance sales. The launch of this new platform temporarily affected our activity levels in September, due to a normal “new platform learning curve”, which we expect to be completed in October.

 

●Negative EBITDA Performance. Jafra US reported a slight negative EBITDA for the third quarter primarily due to decreased sales in September due to the new platform launch, and from a slightly reduced gross margin vs last year. However, we continue to reduce losses compared to last year, demonstrating progress related to stabilizing the business. While our focus on profitability is now mainly operational leverage from revenue growth, we continue to attack expense reduction strategies to optimize operational efficiencies.

 

Q4 2024 Priorities

 

●Brochure Revenue Growth: Q4 2024 growth will be led by further optimization of Jafra’s US brochure, which will include strategic pricing adjustments, refined pagination, and an enhanced promotion mix, together with improved design.

 

●Skincare Focus – BioLab Dermocosmetics: Jafra US is positioning BioLab Dermocosmetics as a flagship offering to more successfully access increasing demand for premium, science-based skincare. Jafra US expects to significantly boost skincare sector market share by promoting BioLab.

 

●Promotional Campaigns – “Power Week”: Jafra US is strengthening the execution of “Jafra Power Week”, a nationwide lead-generation campaign aimed at boosting recruitment of Associates and Consultants.

 

8

 

 

 

Appendix

 

Financial Statements

 

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

Consolidated Statements of Final Position

As of September 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

   Sep 2024   Sep 2023 
Assets        
Cash and cash equivalents   316,378    496,068 
Trade accounts receivable, net   1,200,117    1,275,837 
Accounts receivable from related parties   2,407    48 
Inventories   2,504,370    2,178,018 
Prepaid expenses   100,303    129,138 
Income tax recoverable   67,701    112,215 
Derivative Financial Instruments   105,469    0 
Other assets   421,875    177,761 
Total current assets   4,718,620    4,369,085 
Property, plant and equipment, net   2,121,418    2,877,944 
Right of use assets, net   294,056    339,446 
Deferred income tax   523,568    386,657 
Intangible assets, net   1,590,916    1,671,845 
Goodwill   1,599,718    1,599,718 
Other assets   14,387    53,794 
Total non-current assets   6,144,063    6,929,404 
Total assets   10,862,683    11,298,489 
           
Liabilities and Stockholders’ Equity          
Short term debt and borrowings   618,279    600,123 
Accounts payable to suppliers   2,372,500    1,944,445 
Accrued expenses   410,253    391,572 
Provisions   778,992    865,213 
Value added tax payable   44,614    51,905 
Trade accounts payable to related parties   20    0 
Statutory employee profit sharing   86,885    104,675 
Lease liability   107,609    87,815 
Derivative financial instruments   0    25,279 
Total current liabilities   4,419,152    4,071,027 
Employee benefits   139,701    161,952 
Deferred income tax   572,301    783,169 
Lease liability   214,098    264,594 
Long term debt and borrowings   4,334,713    4,743,980 
Total non-current liabilities   5,260,813    5,953,695 
Total liabilities   9,679,965    10,024,722 
           
Stockholders’ Equity          
Capital stock   321,312    321,312 
Share premium account   -25,264    -16,370 
Retained earnings   919,658    974,174 
Other comprehensive income   -31,508    -3,412 
Non-controlling interest   -1,480    -1,937 
Total Stockholders’ Equity   1,182,718    1,273,767 
Total Liabilities and Stockholders’ Equity   10,862,683    11,298,489 

 

9

 

 

 

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 September 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

   Q3 2024   Q3 2023   ∆% 
Net revenue   3,330,394    3,123,507    6.6%
Cost of sales   959,135    930,636    3.1%
Gross profit   2,371,259    2,192,871    8.1%
                
Administrative expenses   792,483    739,928    7.1%
Selling expenses   928,707    867,743    7.0%
Distribution expenses   155,992    147,089    6.1%
Total expenses   1,877,182    1,754,760    7.0%
                
Other expenses - Sale of fixed assets   435,030    0    100.0%
                
Operating income   59,047    438,111    12.8%
                
Interest expense   -161,352    -207,722    -22.3%
Interest income   2,751    11,850    -76.8%
Unrealized gain in valuation of financial derivative instruments   82,876    54,787    51.3%
Foreign exchange loss, net   -27,586    -50,082    -44.9%
Financing cost, net   -103,311    -191,167    -46.0%
                
Income before income taxes   -44,264    246,944    58.2%
                
Income taxes   71,326    50,070    463.6%
                
Net (loss) income including minority interest   -115,590    196,874    -265.8%
Non-controlling interest (loss) gain   -24    117    -120.5%
Net (loss) income   -115,614    196,991    -265.7%

 

EBITDA breakdown (Ps. 591.5 million)
Concept  Q3 2024   Q3 2023   ∆% 
Net (loss) income including minority interest   -115,590    196,874    -265.8%
(+) Income taxes   71,326    50,070    463.6%
(+) Financing cost, net   103,311    191,167    -46.0%
(+) Depreciation and amortization   97,498    91,313    6.8%
EBITDA   156,545    529,424    -70.4%
EBITDA Margin   4.7%   16.9%     
(+) Other expenses - Sale of fixed assets   435,030    0      
Adjusted EBITDA   591,575    529,424    11.7%
Adjusted EBITDA Margin   17.8%   16.9%     

 

Net adjusted income breakdown
Concept  Q3 2024   Q3 2023   ∆% 
Net (loss) income including minority interest   -115,614    196,991    -158.7%
(+) Other expenses - Sale of fixed assets   435,030    0    100.0%
(+) Income taxes for the sale of fixed assets   71,983    0    100.0%
(+) Income taxes – deferred   -210,868    0    100.0%
Net adjusted income   180,531    196,874    -8.4%

 

10

 

 

 

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

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the nine-months ended September 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

   9M 2024   9M 2023   ∆% 
Net revenue   10,322,290    9,607,815    7.4%
Cost of sales   2,851,608    2,679,383    6.4%
Gross profit   7,470,682    6,928,432    7.8%
                
Administrative expenses   2,350,939    2,307,435    1.9%
Selling expenses   2,907,457    2,551,742    13.9%
Distribution expenses   500,299    445,455    12.3%
Total expenses   5,758,695    5,304,632    8.6%
                
Other expenses - Sale of fixed assets   435,030    0    100.0%
                
Operating income   1,276,957    1,623,800    -21.4%
                
Interest expense   -496,610    -624,830    -20.5%
Interest income   20,985    39,338    -46.7%
Unrealized gain (loss) in valuation of financial derivative instruments   153,389    -9,950    -1641.6%
Foreign exchange loss, net   -88,839    -99,190    -10.4%
Financing cost, net   -411,075    -694,632    -40.8%
                
Income before income taxes   865,882    929,167    -6.8%
                
Income taxes   386,534    288,839    33.8%
                
Net income including minority interest   479,348    640,328    -25.1%
Non-controlling interest (loss) gain   -48    3,030    -101.6%
Net income   479,300    643,358    -25.5%

 

EBITDA breakdown (Ps. 2,003 million) 
Concept  9M 2024   9M 2023   ∆% 
Net income including minority interest   479,348    640,328    -58.1%
(+) Income taxes   386,534    288,839    106.8%
(+) Financing cost, net   411,075    694,632    -40.8%
(+) Depreciation and amortization   291,115    277,617    4.9%
EBITDA   1,568,072    1,901,417    -17.5%
EBITDA Margin   15.19%   19.79%     
(+) Other expenses - Sale of fixed assets   435,030    0      
Adjusted EBITDA   2,003,102    1,901,417    5.3%
Adjusted EBITDA Margin   19.4%   19.8%     

 

Net adjusted income breakdown
Concept  9M 2024   9M 2023   ∆% 
Net (loss) income including minority interest   479,300    643,358    -25.5%
(+) Other expenses - Sale of fixed assets   435,030    0    100.0%
(+) Income taxes for the sale of fixed assets   71,983    0    100.0%
(+) Income taxes – deferred   -210,868    0    100.0%
Net adjusted income   775,445    643,358    20.5%

 

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

Consolidated Statements of Cash Flows

For the nine-months ended September 30, 2024 and 2023

(In Thousands of Mexican Pesos)

 

   9M 2024   9M 2023 
Cash flows from operating activities:        
Profit for the period   479,348    640,328 
           
Adjustments for:          
Income tax expense recognized in profit of the year   386,534    288,839 
Depreciation and amortization of non-current assets   291,114    277,617 
Interest income recognized in profit or loss   -13,554    -39,337 
Interest expense recognized in profit or loss   489,179    624,830 
Unrealized loss in valuation of financial derivative instruments   -153,389    9,950 
Share-based payment expense   -8,894    -3,699 
Loss  (gain) on disposal of equipment   699,176    -2,483 
Currency effect   -17,021    -5,494 
Movements in non- controlling interest   103    -90 
Other gains and losses   0    3,100 
Movements in working capital:          
Trade accounts receivable   -127,662    -304,775 
Trade accounts receivable from related parties   -2,303    13 
Inventory, net   -470,236    -55,348 
Prepaid expenses and other assets   -170,656    -47,968 
Accounts payable to suppliers and accrued expenses   668,348    656,184 
Provisions   -25,756    71,942 
Value added tax payable   -73,747    -37,237 
Statutory employee profit sharing   -45,970    -30,623 
Trade accounts payable to related parties   20    -96,859 
Income taxes paid   -633,554    -322,241 
Employee benefits   12,551    8,045 
Net cash generated by operating activities   1,283,631    1,634,694 
           
Cash flows from investing activities:          
Payments for property, plant and equipment, net   -174,996    -54,082 
Proceeds from disposal of property, plant and equipment, net   126,836    18,662 
Interest received   13,554    39,337 
Net cash (used in) generated by investing activities   -34,606    3,917 
           
Cash flows from financing activities:          
Repayment of borrowings   -2,071,500    -6,593,695 
Proceeds from borrowings   1,945,000    5,708,974 
Interest paid   -497,796    -529,381 
Bond issuance costs   0    -8,003 
Lease payment   -109,541    -86,958 
Dividends paid   -748,540    -449,124 
Net cash used in financing activities   -1,482,377    -1,958,187 
Net decrease in cash and cash equivalents   -233,352    -319,576 
Cash and cash equivalents at the beginning of the period   549,730    815,644 
Cash and cash equivalents at the end of the period   316,378    496,068 

 

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Key Operating Metrics

 

Betterware Mexico

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Associates                        
Avg. Base   753,743    768,042    756,250    716,645    713,144    694,277 
EOP Base   756,637    759,310    741,170    724,707    699,033    700,893 
Monthly Activity Rate   66.7%   65.2%   66.0%   67.7%   66.4%   66.3%
Avg. Monthly Order  $1,877   $1,823   $1,959   $2,052   $2,027   $2,034 
Monthly Growth Rate   15.2%   15.7%   14.9%   15.1%   13.8%   15.7%
Monthly Churn Rate   15.5%   15.5%   15.7%   15.8%   15.0%   15.6%
Distributors                              
Avg. Base   40,825    42,551    42,369    42,886    44,953    44,639 
EOP Base   41,981    41,932    41,825    44,482    45,009    43,939 
Monthly Activity Rate   98.1%   97.9%   98.1%   98.5%   98.0%   98.0%
Avg. Monthly Order  $23,440   $21,944   $23,518   $23,582   $21,669   $21,531 
Monthly Growth Rate   10.7%   10.4%   9.9%   11.8%   11.4%   10.4%
Monthly Churn Rate   9.1%   10.4%   10.0%   9.7%   11.0%   11.2%

 

Jafra Mexico

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Associates                        
Avg. Base   427,289    414,968    461,712    469,290    432,450    403,340 
EOP Base   424,435    422,956    467,736    451,692    419,931    421,073 
Monthly Activity Rate   51.2%   52.2%   52.9%   53.7%   50.50%   51.6%
Avg. Monthly Order  $2,091   $2,088   $2,181   $2,238   $2,284   $2,347 
Monthly Growth Rate   8.9%   10.5%   11.5%   9.5%   8.4%   12.0%
Monthly Churn Rate   9.1%   10.6%   8.3%   10.6%   10.8%   11.9%
Distributors                              
Avg. Base   18,853    18,553    18,576    18,927    19,073    18,823 
EOP Base   18,721    18,555    18,719    19,159    19,035    18,722 
Monthly Activity Rate   94.0%   94.0%   95.3%   96.0%   93.10%   93.2%
Avg. Monthly Order  $2,463   $2,236   $2,624   $2,396   $2,693   $2,694 
Monthly Growth Rate   1.0%   1.1%   1.4%   1.6%   0.7%   0.9%
Monthly Churn Rate   1.4%   1.4%   1.1%   0.8%   0.8%   1.5%

 

Jafra US

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Associates                        
Avg. Base   28,541    29,608    31,268    29,506    30,864    30,150 
EOP Base   29,921    30,489    31,117    29,470    31,026    29,103 
Monthly Activity Rate   44.4%   45.1%   43.8%   42.4%   46.7%   41.6%
Avg. Monthly Order (USD)  $235   $228   $231   $223   $232   $233 
Monthly Growth Rate   12.9%   14.5%   12.5%   11.3%   14.4%   11.2%
Monthly Churn Rate   11.5%   13.8%   11.5%   13.1%   12.5%   13.7%
Distributors                              
Avg. Base   2,041    1,642    1,782    1,728    1,726    1,774 
EOP Base   1,760    1,645    1,793    1,674    1,766    1,772 
Monthly Activity Rate   83.8%   90.4%   90.2%   88.3%   90.7%   87.5%
Avg. Monthly Order (USD)  $220   $217   $215   $217   $229   $233 
Monthly Growth Rate   2.6%   6.3%   7.9%   4.6%   8.5%   5.8%
Monthly Churn Rate   7.6%   8.4%   5.0%   6.9%   6.7%   5.7%

 

13

 

 

 

Key Financial Metrics

 

Consolidated

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Net Revenue  $3,220,097   $3,123,507   $3,401,692   $3,602,503   $3,389,393   $3,330,394 
Gross Margin   73.3%   70.2%   70.0%   73.6%   72.2%   71.2%
EBITDA  $717,433   $529,424   $819,484   $755,390   $656,136   $591,575 
EBITDA Margin   22.3%   16.9%   24.1%   21.0%   19.4%   17.8%
Net Income  $258,370   $196,991   $406,104   $294,146   $300,768   $108,548 
Free Cash Flow  $936,121   $1,134,621   $1,628,456   $180,217   $522,210   $1,235,471 

 

Betterware Mexico

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Net Revenue  $1,444,406   $1,420,739   $1,472,480   $1,555,027   $1,476,375   $1,465,577 
Gross Margin   61.8%   56.2%   50.2%   60.00%   56.4%   54.8%
EBITDA  $443,508   $328,295   $250,342   $382,107   $304,467   $279,889 
EBITDA Margin   30.7%   23.1%   17.0%   24.60%   20.6%   19.1%

 

Jafra Mexico

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Net Revenue  $1,536,775   $1,486,816   $1,668,956   $1,849,996   $1,671,137   $1,623,697 
Gross Margin   83.3%   83.0%   86.5%   85.00%   86.0%   85.7%
EBITDA  $268,724   $207,985   $532,780   $383,120   $344,478   $318,148 
EBITDA Margin   17.5%   14.0%   31.9%   20.70%   20.6%   19.6%

 

Jafra US

 

   Q2 2023   Q3 2023   Q4 2023   Q1 2024   Q2 2024   Q3 2024 
Net Revenue  $238,916   $215,952   $260,256   $197,480   $241,881   $241,120 
Gross Margin   77.8%   74.1%   74.4%   74.00%   73.6%   73.3%
EBITDA  $5,201   $(8,138)  $37,033   $(9,838)  $7,192   $(6,462)
EBITDA Margin   2.2%   (3.2)%   14.0%   (5.00)%   3.0%   -2.7%

 

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.

 

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

 

Starting Q2 2024, the Company will report salesforce under the same name for all 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 on 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.

 

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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. 

 

Q3 2024 Conference Call

 

Management will hold a conference call with investors on October 24th, 2024, at 3:30 pm Mexico City Time / 5:30 pm 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: 13749450

 

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: 13749450

 

Contacts.

 

Company:

 

BeFra IR

ir@better.com.mx

+52 (33) 3836 0500 Ext. 2011

 

InspIR:

 

Investor Relations

Ivan Peill

ivan@inspirgroup.com

 

16