Q1 2025 Performance Overview - BeFra Group's net revenue decreased by 2.9%[2] - EPS decreased significantly by 48.7% due to lower sales, profitability, and higher taxes[3] - Gross Margin declined by 353 basis points, primarily due to FX pressures in Betterware Mexico and Jafra Mexico[3] Betterware Mexico - Betterware Mexico revenues declined by 9.8%, marking the first decline since Q3 2023[6] - The distributor base decreased by 6.0%, and the associate base declined by 10.4%[6] - Gross Margin contracted by 473 basis points due to increased costs driven by the depreciation of the Mexican Peso, with costs increasing from $18 to $20[7] - EBITDA for Betterware Mexico declined by 31.6%[7] Jafra Mexico - Jafra Mexico's net revenues increased slightly by 1.1%[10] - Gross margin declined by 398 basis points due to volume-price initiatives and a shift toward lower-priced products[10] - EBITDA decreased by 25.2%, impacted by the decline in Gross Margin and increased promotional activities[10] Jafra US - Jafra US net revenues decreased by 4.7% in USD[13] - EBITDA declined by 9.3%, impacted by one-time legal settlements[13] Financial Position and Outlook - The board of directors has proposed a Ps 200 million dividend for Q1 2025, subject to approval[28] - Management maintains its 2025 financial guidance, projecting high single-digit growth in net revenue and EBITDA[26, 27]

Financial Data and Key Metrics Changes - Consolidated net revenues decreased by 2.9% year over year, primarily due to a challenging macroeconomic environment [16] - The Mexican peso depreciated approximately 20% year over year, impacting gross margins and profitability [16][22] - Consolidated EBITDA decreased by 29.1%, with Betterware Mexico EBITDA falling by 31.6% and Jafra Mexico EBITDA decreasing by 25.2% [19][20] - Consolidated EPS decreased by 48.7%, reflecting lower sales and overall profitability [22] - The net debt to EBITDA ratio increased to 2.08%, compared to 1.83% in Q1 2024, but remains in line with internal policy [23] Business Line Data and Key Metrics Changes - Betterware Mexico revenue declined by 9.8% year over year, while Jafra's growth slowed from double digits to single digits [17] - Consolidated gross margin contracted by 303 basis points, driven by peso depreciation and increased costs of imported goods [18] - Jafra Mexico experienced margin compression due to investments in volume-driving promotions [20] Market Data and Key Metrics Changes - Consumer trends in Mexico showed significant softening, particularly in discretionary categories like household goods [7] - Disruption in consumption was noted in both the US and China, affecting overall sales [8] Company Strategy and Development Direction - The company is focusing on strategic pricing, increased promotional activity, and deeper engagement with the sales force to drive growth [26][29] - Plans to monitor sourcing options due to tensions in China, with potential manufacturing alternatives being evaluated [29] - The company is halting expansion into the US market for Betterware, while continuing to invest in Jafra US [63][65] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current macroeconomic challenges but expressed confidence in the long-term growth fundamentals of the business [35][72] - The company maintains its full-year guidance for 2025, expecting net revenue and EBITDA growth in the range of 6 to 9% [24][60] Other Important Information - The board of directors proposed a 200 million peso dividend for Q1 2025, reflecting a commitment to shareholder returns despite current economic uncertainties [23][24] - Free cash flow was negative for the quarter, attributed to increased working capital and higher tax payments [21] Q&A Session Summary Question: Inventory levels and future cash flow - Management noted that the increase in inventory was a one-time event related to product renovations and innovations, expecting a decrease in the future [40] Question: Opportunities from China - Management acknowledged a decrease in container prices as a potential advantage but could not confirm improved pricing from Chinese manufacturers yet [44] Question: FX impact and future comparisons - Management confirmed that Q1 was the hardest comparison due to significant peso depreciation, with expectations for more stable comparisons in the coming quarters [48] Question: Quarter performance and trends - Management observed a softening in consumption as Q1 progressed, with expectations for stabilization rather than a rebound in the near term [54][60] Question: Halting US expansion - Management clarified that the halt refers specifically to Betterware US, while Jafra US will continue to operate and invest in growth [63][65]

Financial Data and Key Metrics Changes - Consolidated net revenues decreased by 2.9% year over year, primarily due to a challenging macroeconomic environment [8][10] - Consolidated gross margin declined by 353 basis points, impacted by the depreciation of the Mexican peso and increased costs of goods [10] - Consolidated EBITDA decreased by 29.1%, reflecting weaker sales volumes and compressed gross margins [10][12] - Consolidated EPS decreased by 48.7%, driven by lower sales and overall profitability [12][13] - Free cash flow was negative for the quarter, with historical conversion rates affected by seasonality and increased working capital [11][12] Business Line Data and Key Metrics Changes - Better World Mexico revenue fell by 9.8% year over year, with a significant decline in associates [9][10] - Jafra's growth decreased from double digits to single digits due to margin compression and promotional expenditures [9][10] - EBITDA for Better World Mexico fell by 31.6%, while Jafra's Mexico EBITDA decreased by 25.2% [10] Market Data and Key Metrics Changes - The Mexican peso depreciated around 20% year over year, affecting import costs and overall profitability [8][9] - Consumption trends in Mexico showed signs of softening, particularly in discretionary categories [3][4] - Disruption in consumption was noted in the US and China, impacting overall sales [4][5] Company Strategy and Development Direction - The company operates with a low fixed expense and asset-light model, allowing for better cash flow management during challenging times [4][5] - A focus on pricing strategies, promotional activities, and sales force engagement techniques to drive growth [16][18] - Plans to monitor and adapt sourcing strategies in response to geopolitical tensions, particularly regarding manufacturing in China [18][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current macroeconomic challenges but expressed confidence in the long-term growth fundamentals of the business [3][24] - The company maintains its full-year guidance for 2025, expecting net revenue and EBITDA growth in the range of 6% to 9% [15][24] - Management emphasized the importance of internal strategies and market share growth opportunities to navigate economic uncertainties [44][45] Other Important Information - The Board of Directors proposed a MXN 200,000,000 dividend for Q1 2025, reflecting a commitment to shareholder returns [14][13] - The company is taking proactive steps to protect revenue and margins while ensuring financial health [21][53] Q&A Session Summary Question: Inventory management and future cash flow - Management noted that the increase in inventory was due to branding renovations and innovation preparations, expecting a decrease in inventory levels going forward [26][27] Question: Opportunities from China - Management confirmed that container prices are decreasing, which could be advantageous, but could not confirm improved pricing from Chinese manufacturers at this time [28][33] Question: Q1 performance and future trends - Management observed a softening in consumption as Q1 progressed, with expectations for stabilization rather than a rebound in the near term [39][40] Question: Confidence in guidance despite challenges - Management highlighted strong internal fundamentals and market share growth opportunities as reasons for maintaining guidance, despite economic uncertainties [44][45] Question: US expansion pause - Management clarified that the pause in US expansion refers specifically to Betterware, while continuing to operate and invest in Jafra U.S. [46][47]

Financial Performance - Net revenue for Q1 2025 decreased by 2.9% year-over-year, totaling $3,499,151, primarily due to a 9.8% decline in Betterware Mexico's sales[12][14] - Gross margin contracted by 353 basis points to 66.2%, influenced by higher supply costs and a 20.3% depreciation of the Mexican peso against the U.S. dollar[12][14] - EBITDA fell by 29.1% year-over-year to $535,265, with an EBITDA margin of 15.3%, reflecting lower sales and increased administrative expenses[12][14] - Net income decreased by 48.7% to $151,394, impacted by lower sales and EBITDA, despite a positive effect from reduced interest expenses[12][14] - Free cash flow was negative at -$55,841, primarily due to extraordinary cash outflows and increased working capital requirements[12][14] - Net revenues decreased 9.8% YoY in Q1 2025, marking the first YoY decrease since Q3 2023, primarily due to economic uncertainty and softening demand in Mexico[29] - Gross margin decreased by 473 basis points YoY, with COGS increasing from $18.0 to $20.0, driven by the depreciation of the Mexican peso[29] - EBITDA declined by 31.6%, resulting in a contraction of the EBITDA margin by 594 basis points, reflecting external macroeconomic pressures[29] - Net revenue for Q1 2025 was $3,499,151, a decrease of 8.0% compared to Q4 2024's $3,778,468[46] - Net income for Q1 2025 was $150,728, down 48.0% from $295,263 in Q1 2024[46] - EBITDA for Q1 2025 was $535,265, reflecting a decline in EBITDA margin to 15.3% from 20.4% in Q4 2024[46] Associate and Sales Metrics - The average Associate base decreased by 6.3% to 1,138,418, while the end-of-period base fell by 7.0% to 1,122,047[12][14] - The average base of associates for Betterware Mexico decreased to 645,359 in Q1 2025 from 693,666 in Q4 2024[43] - The average monthly order for Betterware Mexico in Q1 2025 was $2,152, a slight decrease from $2,158 in Q4 2024[43] - Monthly growth rate for Betterware Mexico in Q1 2025 was 18.7%, an increase from 14.3% in Q4 2024[43] - The average monthly order for Jafra Mexico in Q1 2025 was $2,419, a slight increase from $2,439 in Q4 2024[44] - Monthly churn rate for Jafra US in Q1 2025 was 11.8%, a decrease from 14.7% in Q4 2024[45] Strategic Initiatives - Betterware is targeting a 52% reduction in excess inventory for the year, from $529M to $252M, with inventory at $483M as of Q1[29] - Strategic pricing adjustments and increased promotional activities are being implemented to enhance sales engagement and balance affordability with margin protection[29][33] - New compensation plans and catalogue redesigns are set to launch in Jafra US to improve consultant recruitment and sales conversion[36] Future Outlook and Guidance - The company maintains its 2025 financial guidance, projecting net revenue growth of approximately 6.0% to 9.0%[26][25] - Jafra's forward-looking statements indicate potential variability in actual results due to various factors, with no obligation to update these projections[64] Cash Flow and Liquidity - The current ratio declined by 11.9% to 0.92, indicating reduced liquidity[16] - Cash flows from operating activities in Q1 2025 resulted in a net cash outflow of $42,898, compared to a net inflow of $384,223 in Q1 2024[42] - Total cash and cash equivalents at the end of Q1 2025 were $344,073, down from $425,177 at the end of Q1 2024[42] - The proposed dividend for Q1 2025 is Ps. 200M, reflecting management's commitment to shareholder value despite negative free cash flow[24] International Expansion - Betterware's international expansion includes signs of recovery in Guatemala and the launch of operations in Ecuador[32] Jafra Performance - Jafra Mexico's net revenue rose 1.1% YoY, with a gross margin of 73.5%, despite a decline of 398 basis points[30] - Jafra US experienced a 14.6% increase in net revenue in MXN, but a 4.7% decrease in USD YoY, with a strong sales rebound of 27.0% in March[34][36] - EBITDA for Jafra US declined by 9.3% to a negative $633,000, impacted by extraordinary legal settlement expenses of $300,000[36] - Jafra Mexico reported Q4 2023 net revenue of $1,668,956, with a gross margin of 78.8% and an EBITDA of $532,780, resulting in an EBITDA margin of 31.9%[48] - Jafra US experienced Q4 2023 net revenue of $260,256, with a gross margin of 74.4% and an EBITDA of $36,361, leading to an EBITDA margin of 14.0%[49] - Jafra Mexico's Q4 2024 net revenue is projected to increase to $2,038,993, while the EBITDA is expected to rise to $440,630, with an EBITDA margin of 21.6%[48] - Jafra US anticipates a slight decrease in Q4 2024 net revenue to $244,620, with an EBITDA of $891 and an EBITDA margin of 0.4%[49] Reporting Changes - The company will start reporting salesforce metrics under unified terminology for all business units beginning Q2 2024, with no adverse effect on reported results[55] - The company emphasizes the importance of non-IFRS financial measures like EBITDA and EBITDA margin for internal analysis and comparison with industry peers[54] Upcoming Events - The next conference call for Q1 2025 is scheduled for April 24, 2025, at 3:30 pm Mexico City Time[65]

Group 1 - Betterware de Mexico (NYSE: BWMX) reported strong Q4 results with significant growth, although margins were affected by external factors [1] - Jafra Mexico experienced impressive growth, increasing by 22% year over year during the quarter [1] Group 2 - The performance in the Betterware segment contributed positively to the overall results, indicating a robust operational performance [1]

Financial Data and Key Metrics Changes - The company reported a double-digit revenue growth of 11.1% in Q4 2024 compared to the same period last year [4] - Consolidated net revenue for the full year increased by 8.4%, driven by Betterware Mexico's 4.6% growth and Jafra Mexico's 13% growth [19] - EBITDA increased by 2% to MXN 2.8 billion, slightly below the low end of the guidance range of MXN 2.9 billion [6][26] - Adjusted earnings per share grew by 10.5% in Q4 and 17.3% for the full year [26] Business Line Data and Key Metrics Changes - Jafra Mexico achieved a remarkable 22.2% revenue growth in Q4, contributing significantly to overall performance [5][17] - Betterware Mexico demonstrated resilience with a 1.5% net revenue growth in Q4, despite challenges [18] - Jafra U.S. experienced a revenue decrease of 17.6% in U.S. dollars, primarily due to implementation issues with Shopify Plus [18] Market Data and Key Metrics Changes - Betterware Mexico holds an estimated 4% market share in the household product market, with a goal to deepen market penetration [8] - Jafra Mexico aims to become the number one direct sales beauty brand in Mexico, currently holding a 4% market share [37] Company Strategy and Development Direction - The company plans to focus on five priority fronts: conquering Mexico, international expansion, inorganic growth, centralized services, and sustainability [33][39][45] - The strategy includes enhancing operational efficiency, expanding product offerings, and improving sales force engagement [35][38] - The company aims to lower its net debt to EBITDA ratio to 1.5 times or below by 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged unexpected external headwinds affecting profitability, including supply chain disruptions and currency depreciation [6][7] - The outlook for 2025 includes expectations of mid to high single-digit growth for both net revenues and EBITDA [27] - Management expressed confidence in the company's growth trajectory and commitment to delivering long-term shareholder value [28][46] Other Important Information - The company has proposed a dividend of MXN 250 million for Q4, marking the 20th consecutive dividend since its IPO [27] - Adjusted EBITDA for the full year increased by 2%, despite a decline in Betterware Mexico's EBITDA [24] Q&A Session Summary Question: Inventory levels and future expectations - The company experienced inventory shortages in the first half of the year and built up inventory in the second half due to rising freight costs and supply chain disruptions [49] - Normalized inventory levels are expected to be around MXN 2,000 million instead of MXN 2,500 million by the end of 2024 [55]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 11.1% in Q4 2024 compared to the same period last year, driven by strong performance in Jaffra Mexico [3][11] - For the full year 2024, consolidated revenue increased by 8.4% compared to 2023, with Jaffra Mexico achieving a 13% increase and Better World Mexico a 4.6% increase [4][14] - EBITDA increased by 2% to RUB 2.8 billion versus 2023, although it was slightly below the low end of the guidance range [4][18] - Adjusted earnings per share grew by 10.5% in Q4 and 17.3% for the full year, supported by lower interest expenses and gains on derivative instruments [20] Business Line Data and Key Metrics Changes - Jaffra Mexico experienced a remarkable 22.2% revenue growth in Q4, while Better World Mexico showed resilience with a 1.5% growth [3][12] - Jaffra U.S. saw a revenue decrease of 17.6% in U.S. dollars, primarily due to challenges with the implementation of Shopify Plus [13] - Better World Mexico's EBITDA surged by 31.8% in Q4, with a margin expansion of 508 basis points [18] Market Data and Key Metrics Changes - Better World Mexico holds an estimated 4% market share in the household product market, with plans to deepen market penetration [5] - Jaffra Mexico's gross margin improved significantly, rising to 76.3%, driven by a favorable product mix and pricing strategy [17] Company Strategy and Development Direction - The company aims to consolidate its operations in Mexico, focusing on expanding market share and enhancing operational efficiency [25][26] - Plans for international expansion include positioning brands in the U.S. market and entering Latin America, starting with Ecuador [29][30] - The company is committed to inorganic growth by exploring acquisitions that complement existing brands [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged external challenges, including supply chain disruptions and rising costs, but expressed confidence in the company's resilience and growth potential [19][21] - The target for 2025 includes mid to high single-digit growth for both net revenues and EBITDA [21] Other Important Information - The company plans to launch a new online training program for its sales force and enhance digital capabilities [28] - A dividend of Ps. $250,000,000 for Q4 has been proposed, marking the twentieth consecutive dividend since the 2020 IPO [20][21] Q&A Session Summary Question: Inventory levels and normalization - Management indicated that inventory levels rose due to previous shortages and rising costs, with expected normalized levels around MXN 2,000 million for 2024 [37][44]

Group 1 - The individual investor focuses on undercovered companies, particularly in technology, software, electronics, and energy transition sectors [1] - The investor has over 50 companies on their watchlist and has been investing personal capital for over 7 years globally [1] - The investor holds a Master's degree in Electrical Engineering and works as an automotive battery R&D engineer in Sweden [1] Group 2 - The investor aims to identify asymmetric investment opportunities to achieve market-beating returns through diligent research of small to mid-cap companies [1]

Company Performance - Betterware de Mexico SAPI de C reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.29 per share, and down from $0.31 per share a year ago, representing an earnings surprise of -10.34% [1] - The company posted revenues of $176.15 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 4.72%, but down from $183.09 million year-over-year [1] - Over the last four quarters, Betterware de Mexico has surpassed consensus revenue estimates four times [1] Market Performance - Betterware de Mexico shares have lost about 11.8% since the beginning of the year, while the S&P 500 has gained 21.5% [2] - The current Zacks Rank for Betterware de Mexico is 5 (Strong Sell), indicating expected underperformance in the near future [4] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.47 on revenues of $181.91 million, and for the current fiscal year, it is $1.72 on revenues of $702.45 million [4] - The estimate revisions trend for Betterware de Mexico is currently unfavorable, which may impact future stock performance [4] Industry Context - The Consumer Products - Discretionary industry, to which Betterware de Mexico belongs, is currently in the bottom 40% of the Zacks industry rankings [5] - Research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [5] - Spectrum Brands, another company in the same industry, is expected to report quarterly earnings of $1.13 per share, reflecting a year-over-year change of -16.9% [5]

Financial Data and Key Metrics Changes - Net revenues increased by 6.6% year-over-year and 7.4% over the first nine months of 2024 [3] - Adjusted EBITDA grew by 11.7%, reaching MXN 592 million, with an EBITDA margin expanding by 81 basis points to 17.8% [17] - Adjusted net income decreased by 8.4% year-over-year, totaling MXN 180.5 million, primarily due to increased tax provisions [17] Business Line Performance - Betterware Mexico's net revenue grew by 3.2% in Q3 and 5.7% year-to-date, marking its fourth consecutive quarter of growth [7] - Jafra Mexico's revenue increased by 9.2% in Q3 and 9.8% year-to-date, driven by successful product innovations [9] - Jafra U.S. showed promising results with net revenue up 11.7% in Q3 and 1.9% year-to-date, moving closer to breakeven [11] Market Data and Key Metrics Changes - The depreciation of the Mexican peso negatively impacted gross margins, which fell to 54.8% compared to 56.2% last year [19] - Freight costs increased significantly, affecting gross margins by approximately 150 basis points [19] Company Strategy and Industry Competition - The company is focused on expanding its product portfolio, increasing SKUs from approximately 370 to 420 to capitalize on new categories while maintaining core categories [8] - Strategic investments in international expansion are ongoing, with MXN 8.2 million invested in expanding Betterware into the U.S. and Peru [20] - The company aims to maintain a net debt-to-EBITDA ratio of 1.5 to 2.5 times, depending on acquisition prospects [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing the year strongly, with a solid pipeline of new product launches and strategic initiatives [4][44] - The company remains committed to delivering shareholder value, announcing its 19th consecutive dividend payment [4][24] - Management acknowledged challenges from macroeconomic factors but emphasized operational resilience [3] Other Important Information - The sale of Jafra's former headquarters resulted in a non-cash accounting loss of MXN 435 million, which does not impact operational performance [18] - The company is evaluating the potential application of hedge accounting to better reflect the impact of foreign exchange hedges [21] Q&A Session Summary Question: Increase in SKUs and Pricing Strategy - Management explained that the increase in SKUs targets both new categories and core categories, with a focus on introducing lower-priced items to balance growth [26][28] Question: Inventory Levels - Management confirmed that inventory levels are prepared for the holiday season, addressing previous stock-outs and ensuring readiness for Q4 [29] Question: U.S. Expansion and Peru Rollout - Management indicated that Betterware U.S. is in the piloting phase, with operations already launched, and plans to launch in Peru by Q1 or Q2 of next year [30][31] Question: Cost Structure Changes - Management noted that the cost structure has shifted to be more variable, reflecting growth and optimization efforts in fixed expenses [35][36] Question: Future Inventory Investments - Management stated that additional inventory investments will depend on the stabilization of the supply chain and prices, indicating no need for further buildup if conditions remain stable [40][41]