GUADALAJARA, Mexico, July 27,
2023 /PRNewswire/ -- Betterware de Mexico S.A.P.I. de
C.V. (NASDAQ: BWMX), ("Betterware" or the 'Company"), announced
today its consolidated financial results for the second quarter of
fiscal 2023. The figures presented in this report are expressed in
nominal Mexican Pesos (Ps.) unless otherwise noted, presented and
approved by the Board of Directors, prepared in accordance with
IFRS, and may include minor differences due to rounding. The
Company will host a conference call at 9:00
am (Eastern Time) on July 28,
2023, to discuss its results for the second quarter of
fiscal year 2023.
2Q2023 Highlights
Group
|
- The acquisition
of Jafra continues to demonstrate its great value for the
Group, providing greater resilience, diversification, and
complementarity in its products aimed at the markets of Mexico and
the United States.
- During the quarter,
solid progress was achieved, stabilizing the main variables,
aligning expenses at the level of sales, and controlling costs to
maximize margins and profitability.
- We continue to
improve our balance sheet, which is increasingly solid. High
cash flow generation has enabled us to reduce total debt during the
quarter and improve the leverage ratio.
|
Betterware
|
- Net revenue for
2Q2023 grew 4.0% relative to 1Q2023, giving us two consecutive
quarters of growth. Recent trends confirm business stabilization
and return to growth.
- In line with our
expectations, the Distributor EOP base of 2Q2023 grew 5.0%
compared to 1Q2023, which gives us strength to drive the growth of
our Associates' base in the future.
- Significant
improvement of EBITDA and EBITDA margin compared to 1Q2023, due to
a better expense structure aligned to current level of sales, as
well as lower input costs, an improvement in supply chain
conditions, higher average product prices in our catalogs, and a
positive impact of the appreciation of the Mexican Peso. These
results have allowed us to significantly increase our cash flow
generation.
|
Jafra
Mexico
|
- JAFRA Mexico had an
outstanding performance in 2Q2023, closing the period above
expectations, and registering a 14.5% increase in net revenue and
25.0% increase in EBITDA when compared to 2Q2022. This was driven
by a growing base of consultants, along with higher activity and
productivity rates, as well as higher margins.
- The new
Consultants´ App, launched in May 2023, is already enhancing their
capabilities to manage their businesses more
efficiently.
- New products have
been favorably received growing their share of net revenue to 12%
by the end of 1H2023, up from 8% in 2022. Innovation and brand
renovation will strengthen our base of Leaders and Consultants,
which should increase revenue and profitability.
- The cash conversion
cycle improved our cash flow generation, decreasing from 41-days to
only 26-days, while comparing 1Q2023 to 2Q2023. The change is
mainly due to an improvement in our payment terms with suppliers,
as well as a decrease in days inventory.
|
Jafra
USA
|
- Management is
focused on completing a full transformation of the business to
improve client and consultant opportunities and bring stability to
the organization. Net revenues are in line with our estimates for
2Q2023 and 1H2023; we expect to stabilize them on the
2H2023.
- In May, Jafra
USA initiated the development of an enhanced e-commerce and virtual
office platform, leveraging the capabilities of the global commerce
platform Shopify, with an expected launch by the end of August
2023.
- We have improved
the level of operating expenses and achieved better-than-expected
EBITDA. We are on the right track to take advantage of the business
opportunity in this market.
|
Message from Betterware´s Chairman
We ended 2Q2023 with excellent results for the Group,
experiencing growth in net sales in Mexico and achieving expense savings and
operating efficiencies which led to an increase in profit margin.
During this period, we made great accomplishments that set the
foundation for us to remain strong into the second half of the
year.
At Betterware we had a positive 2Q2023. We were able to grow the
number of Distributors at the end of the period by 5% when compared
to 1Q2023, and to stabilize the Associate base. We also achieved
sales growth of +4.0% vs. 1Q2023. In June, we achieved an average
gross weekly sale of Ps. 223M, which
represents a growth of 6.6% vs. 1Q2023, and even though sales are
slightly below expectations, we have achieved the level of margins
we had at the beginning of 2022 throughout 1H2023, which led to
EBITDA slightly above our expectations for the period.
Jafra's business evolution continues to be positive. The
transformation of the Innovation and Research and Development areas
has had a significant impact on the results, where new products
have been increasingly participating in total net sales. Regarding
Jafra Mexico´s sales force, the EOP base in 2Q2023 grew 14.8% vs.
EOP base of 2Q2022. Consequently, net revenues increased 14.5% vs
2Q2022, while EBITDA increased 25.0%, supported also by a strict
control in operating expenses. The previous, derived in incremental
margins and contributed significantly to the generation of cash
flow.
On July 10th, 2023, we
prepaid the syndicated loan utilized for Jafra´s acquisition. The
original amount of this credit facility was Ps. 4,499M; we prepaid Ps. 1,250M during 1H2023, ending the period with a
balance of Ps. 3,249M. This amount
was settled with funds coming from different sources, such as long
and short-term credit lines, bonds issued on July 5th, and cash. The refinancing of
this loan allows us to reduce the cost of debt and defer principal
payment obligations that we had in the years 2024 to 2026. The net
deferment for these years is as follows: Ps. 262M in 2024, Ps. 900M in 2025, and Ps. 1,067M in 2026. More than 70% of the Company's
total debt allows early payments at no additional cost. Our goal is
to continue gradually reducing leverage.
Regarding our structure, we appointed Santiago Campos as Chief Transformational
Officer, whose mission is to ensure that the company offers beloved
and relevant brands to the consumer and to become, in the next five
years, one of the leading global direct selling companies in terms
of net revenue and EBITDA. Thinking that we must anticipate market
trends and opportunities in the medium and long term, we decided to
create this position that, together with his team, will be setting
the guidelines and igniting the necessary actions that will
transform our business to boost future revenue streams and/or
productivity by thinking and planning 5 years ahead of time.
The approach is to follow two transformation paths:
Exploitation
- Maximize our key capabilities and reinforce those that are
important for the future
- Ensure successful geographic expansion and replicate the
successful operating model
- Add new categories that allow us to increase share of wallet
and market share
- Promote the necessary technologies (like A.I. initiatives)
across the company to ensure a full data driven digital
transformation.
Exploration
- Evaluate M&A transactions that can be relevant and
strategic to the Company such as product industry diversification
to stabilize even more the stream of future cash flows
- Set and boost Engine 2 initiatives: find new sources of income
based on our scale, capabilities, and operating business model
We are certain that with this new position, the Group will be
able to take advantage of relevant business opportunities in the
future.
We will continue working to achieve greater efficiencies,
focused on further differentiating the Company from our competitors
through innovation, technological support for the sales force, and
data analysis that informs successful strategic decisions.
With solid foundations, we will continue growing revenues and
profitability, and will generate greater value for our
shareholders. Our first half performance and expectations for the
remainder of the year have us well positioned to achieve our 2023
guidance, and we are certain that we are on a great momentum to
continue experiencing the positive trend that we have been
demonstrating in our results, which encourages us to continue
working to achieve the annual objective and maintain the trend of
sustained growth in the long term.
Luis G.
Campos
Executive Chairman of the
Board
2Q2023 Consolidated Selected Financial Information
|
2Q2023
|
2Q2022
|
%
|
1H2023
|
1H2022
|
%
|
Net
Revenue
|
$3,220,097
|
$3,243,604
|
(0.7 %)
|
$6,484,308
|
$5,103,800
|
27.0 %
|
Gross
Margin
|
73.3 %
|
69.6 %
|
368-bps
|
73.0 %
|
67.9 %
|
517-bps
|
EBITDA
|
$717,433
|
$615,266
|
16.6 %
|
$1,371,992
|
$1,181,836
|
16.1 %
|
EBITDA
Margin
|
22.3 %
|
19.0 %
|
331-bps
|
21.2 %
|
23.2 %
|
(200-bps)
|
Free Cash
Flow
|
$755,735
|
($16,947)
|
NA
|
$1,305,047
|
($158,040)
|
NA
|
Net
Income
|
$258,370
|
$289,422
|
(10.7 %)
|
$446,367
|
$570,656
|
(21.8 %)
|
EPS
|
$6.94
|
$7.77
|
(10.7 %)
|
$11.98
|
$15.31
|
(21.7 %)
|
Net Debt / TTM
EBITDA
|
2.0x
|
2.8x
|
|
|
|
|
Interest Coverage
Ratio (TTM)
|
2.7x
|
10.0x
|
|
|
|
|
Group's Consolidated Financial Results
Consolidated net revenue for 2Q2023 was Ps. 3,220.1M, practically in line with 2Q2022 net
revenue of Ps. 3,243.6M. Performance
is mainly attributed to the growth in net revenue in Jafra Mexico,
partially offset by a decline in Betterware´s net revenue due to a
lower associate and distributor base. Jafra Mexico and Jafra
USA results for the quarter
accounted for 48% and 7% of consolidated net revenue,
respectively.
During the quarter, we continue to see positive performance in
Jafra Mexico, and a continued stabilization in Betterware´s network
of distributors and associates, which has led to two consecutive
quarters of net revenue growth.
Year-to-date, consolidated net revenue increased 27.0% to Ps.
6,484.3M from Ps. 5,103.8M in 1H2022. This increase is explained
entirely by the Jafra acquisition, completed in April 2022. Comparable net revenue, which only
includes Betterware, decreased by 18.2% due to lower average active
associates and distributors and lower activity rates. It is
relevant to mention that Betterware´s network of associates and
distributors has stabilized, resulting in net revenue for the first
half of the year 84.5% higher than the pre-pandemic comparable
period (1H2019).
Consolidated gross margin for 2Q2023 expanded 368-bps to 73.3%,
compared to 69.6% in 2Q2022. Margin expansion is explained by
higher gross margins in all of the group´s subsidiaries due to the
appreciation of the Mexican Peso, and to improvements in supply
chain conditions and input costs normalization globally.
Year-to-date, the consolidated gross margin expanded 517-bps to
73.0% compared to 67.9% In 1H2022 mainly due to the inclusion of
Jafra´s results, which has a higher gross margin profile, during
the entire period in 1H2023, compared to most of the second quarter
in 1H2022.
Consolidated EBITDA for 2Q2023 increased 16.6% to Ps.
717.4M from Ps. 615.3M in 2Q2022, largely attributed to
significant profitability improvement in Betterware and Jafra
Mexico, coupled with positive EBITDA contribution from Jafra
USA. Consolidated EBITDA margin
for the quarter expanded 331bps mainly explained by margin
improvement in Betterware.
For the first half of the year, consolidated EBITDA increased
16.1% to Ps. 1,372.0M from Ps.
1,181.8M, due to the inclusion of
Jafra´s results during the entire period in 1H2023, compared to
only part of the second quarter in 1H2022, coupled with higher
operating leverage in Betterware.
Consolidated net income for 2Q2023 decreased 10.7% to Ps.
258.4M from Ps. 289.4M in 2Q2022, reflecting a 57.2% increase in
interest expense due to the syndicated loan utilized for Jafra´s
acquisition, higher interest rates in Mexico, coupled with a negative effect related
to the realized and unrealized loss in FX (forwards closed vs. real
exchange rate). Earnings Per Share (EPS) for the quarter were Ps.
6.94, compared to Ps. 7.77 in 2Q2022.
Year-to-date, consolidated net income declined 21.8% to Ps.
446.4M from Ps. 570.7M in 1H2022, mainly explained by higher
interest expense related to the Jafra acquisition (1Q and 2Q2023
vs. just 2Q2022 with the acquisition´s debt) and the negative
impact due to a loss in FX explained above. EPS for 1H2023 was Ps.
11.98, compared to Ps. 15.31 in 1H2022.
Consolidated cash flow from operations for 2Q2023 improved
significantly compared to 2Q2022, going to Ps. 764.8M, from Ps. 38.9M in 2Q2022, due to improved inventory
management, along with cost and expense savings related to
corporate restructuring expenses to align with the new level of
sales at Betterware and the inclusion of Jafra operations in our
results.
Consolidated CAPEX for 2Q2023 decreased 83.8% compared to
2Q2022, going to Ps. 9.1M from Ps.
55.9M in 2Q2022, driven by lower
investment requirements after the completion of the Betterware
distribution center during 2021 and low investment requirements in
Jafra due to the current installed capacity.
As a result, consolidated free cash flow, measured as cash flow
from operations less CAPEX, for 2Q2023 improved to Ps. 755.7M from Ps. (16.9M) in 2Q2022, primarily driven by improved
cash flow generation at Betterware, recovering the key feature of
our business model of high cash flow generation.
For the first 6 months of the year, consolidated cash flow from
operations increased significantly to Ps. 1,318.8M from Ps. (52.9M) in 1H2022, primarily due to improved cash
flow generation in Betterware and Jafra Mexico. On a comparable
basis, which only considers Betterware´s operations, cash flow from
operations increased to Ps. 751.6M
for the period.
Consolidated CAPEX decreased 87.0% to Ps. 13.7M in 1H2023, from Ps. 105.1M in 1H2022, primarily from the focus on
integrating Jafra operations into our business, and rationalizing
capital investments in Betterware. On a comparable basis,
Betterware's CAPEX decreased 86.9% YoY to Ps. 12.3M. And for the semester, free cash flow
increased to Ps. 1,305.0M from Ps.
(158.0) in 1H2022, driven by improved free cash flow generation in
Betterware and Jafra Mexico, partially offset by USA operations.
At the end of 2Q2023, the Company's balance sheet reflects
greater strength than first quarter. We maintain financial
discipline and have focused on improving Jafra's cash conversion
cycle, which has allowed us to reduce our leverage ratio.
YoY, inventories decreased 20.0% to Ps 2,021.7M in 2Q2023 from Ps. 2,527.6M in 2Q2022, mainly reflecting improved
inventory management in all of the Group´s subsidiaries, coupled
with a reduction in the excess inventories we held in Betterware.
As mentioned in our previous results report, we had excess
inventories of Ps. 300M in Betterware
due to lower-than-expected sales, and we have plans to gradually
reduce inventory to align with sales growth through 2023 and 2024,
without compromising sales of best-performing products and
categories. Excess inventory was reduced by approximately Ps.
130M during 1H2023, slightly above
our plans.
During 1H2023 we prepaid Ps. 1,250M to the syndicated loan used for the
acquisition of Jafra (Ps. 1,000M in
1Q2023 and Ps. 250M in 2Q2023) and
reduced the outstanding balance to Ps. 3,249M.
On July 5th, 2023, we
successfully concluded the offering of a two-tranche bond issuance
for a total of Ps. 814M with
maturities across 4 and 7 years, offered in the Mexican Market. The
4-year tranche amounted to Ps. 314M
with a variable coupon of 28-day TIIE (28-day Interbank Interest
Rate) + 0.90% payable monthly, while the 7-year tranche amounted to
Ps. 500M with a fixed coupon of
11.23% payable semi-annually.
On July 10th, we
prepaid the syndicated loan with resources coming from long and
short-term loans, long-term fixed-rate bonds, long-term
variable-rate bonds, and cash.
The estimated weighted average interest rate for our debt´s
whole term went from 10.73% to 9.55% once refinanced the syndicated
loan. Long-term bank debt with a fixed rate represents now
28.4% of our total leverage, while 71.6% of our debt is at a
variable rate, with the possibility of prepaying it at no cost.
We released principal payment obligations for a total amount of
Ps. 2,229M until the end of 2026. We
defer net principal payments of Ps. 262M in 2024, Ps. 900M in 2025, and Ps. 1,067M in 2026.
Net debt at the end of the semester closed at Ps. 5,071.6M, which represents a 17.7% decrease
compared to 2Q2022. Our leverage ratio decreased year-over-year, to
2.0x in 2Q2023 from 2.8x net debt to the last twelve trailing
months´ EBITDA in 2Q2022 and from 2.2x in 1Q2023.
2Q2023 and 1H2023 Financial Results by Business
Betterware
- Key Operating and Financial Metrics
|
|
2Q2023
|
2Q2022
|
%
|
1H2023
|
1H2022
|
Associates
|
Avg. Base
|
753,743
|
907,989
|
(17.0 %)
|
753,160
|
952,890
|
EOP Base
|
756,637
|
873,423
|
(13.4 %)
|
756,637
|
873,423
|
Weekly Churn
Rate
|
3.6 %
|
3.3 %
|
27-bps
|
3.6 %
|
3.6 %
|
Weekly Activity
Rate
|
27.0 %
|
28.2 %
|
(118-bps)
|
27.4 %
|
30.3 %
|
Avg. Weekly
Order
|
$1,068
|
$938
|
13.9 %
|
$1,035
|
$926
|
Distributors
|
Avg. Base
|
40,825
|
44,404
|
(8.1 %)
|
39,927
|
46,268
|
EOP Base
|
41,981
|
43,434
|
(3.3 %)
|
41,981
|
43,434
|
Weekly Churn
Rate
|
2.1 %
|
2.1 %
|
1-bps
|
2.0 %
|
2.1 %
|
Weekly Activity
Rate
|
77.5 %
|
78.3 %
|
(84-bps)
|
78.4 %
|
80.2 %
|
Avg. Weekly
Order
|
$6,867
|
$6,887
|
(0.3 %)
|
$6,811
|
$7,169
|
|
|
2Q2023
|
2Q2022
|
%
|
1H2023
|
1H2022
|
%
|
Net
Revenues
|
$1,444,406
|
$1,603,436
|
(9.9 %)
|
$2,833,389
|
$3,463,632
|
(18.2 %)
|
Gross
Margin
|
61.8 %
|
58.3 %
|
356-bps
|
61.5 %
|
61.8 %
|
(31-bps)
|
EBITDA
|
$443,508
|
$403,195
|
10.0 %
|
$855,864
|
$969,765
|
(11.7 %)
|
EBITDA
Margin
|
30.7 %
|
25.1 %
|
556-bps
|
30.2 %
|
28.0 %
|
221-bps
|
Betterware´s network of distributors and associates continued to
show positive stabilization trends during 2Q2023, in line with
beginning of the year expectations and with 1Q2023. On a QoQ basis,
our associate´s EOP base was practically in line with the previous
quarter, (1.0%) relative to 1Q2023, showing improving churn rates
and weekly activity rates. Average associates during 2Q2023 were
0.2% higher than in 1Q2023, demonstrating positive results of our
commercial strategies.
In terms of distributors, our EOP base grew 5.0% relative to
1Q2023. As we have mentioned before, growth in our distributors´
base gives us strength to boost growth in our associates´ base
going forward.
Year-to-date trends reinforce our view that our commercial
efforts are having a positive impact on our top line, as we
achieved two consecutive quarters with QoQ net revenue growth and
our 1H2023 net revenues account for almost double the level we had
on 1H2019, the pre-pandemic comparable period.
In terms of our profitability, the company showed positive
results both on a QoQ basis and a YoY basis, due to continued
improvement in terms of international freight and input costs,
coupled with an improved expense structure, which is now in line
with our current level of operations, and allowed us to show
significant expansion in terms of EBITDA and EBITDA margin. Coupled
with profitability improvements, year-to-date results show great
improvement in our cash flow generation, a key characteristic of
our asset-light business model.
May and June´23 continued with a better trend in sales force
growth indicators. At the distributors level, during these two
months we achieved a net profit of 224 distributors per week on
average, driven by better incorporation and churn rates than the
last year. In the case of associates, we also achieved better
rates, although the effect was neutral (neither grew nor
decreased). We expect to improve churn rate in the coming months,
maintaining the levels of incorporation of associates above 3%.
For 2Q2023, Betterware´s net revenue declined 9.9% to Ps.
1,444.4M from Ps. 1,603.4M in 2Q2022, mainly reflecting a lower
average associate and distributor base during the period, down
17.0% and 8.1%, respectively, coupled with a decline in associate´s
activity levels, from 28.2% to 27.0%. This was partially offset by
a 13.9% increase in average associate orders. Compared to 2Q2019,
the pre-pandemic comparable period, Betterware´s net revenue grew
83.2%.
Compared to 1Q2023, net revenue increased 4.0%, achieving QoQ
growth for two consecutive quarters, with the size of our network
stabilizing while improving weekly activity and Associate´s
incorporation rates.
Year-to-date, Betterware´s net revenue declined 18.2% to Ps.
2,833.4M from Ps. 3,463.6M in 1H2022. The decline is explained by
the same factors as net revenue for the quarter.
Even though we are slightly below the expected sales level,
weekly sales during June'23 reflect a growth of 6.6% vs. average
weekly sales of 1Q2023, with a stable average
purchase-per-Associate.
Betterware´s gross margin for 2Q2023 expanded 356-bps to 61.8%,
compared to 58.3% in 2Q2022, related to the continued improvement
in supply chain conditions and higher average product prices in our
catalogs, coupled with a positive impact of the appreciation of the
Mexican Peso.
Year-to-date, Betterware´s gross margin contracted 31-bps to
61.5% from 61.8% in 1H2022, explained by the high comparison base
due to an abnormally high gross margin during the first quarter of
2022.
Betterware´s EBITDA for 2Q2023 increased 10.0% to Ps.
443.5M from Ps. 403.2M in 2Q2022, aided by a leaner operating
structure, aligned with the current level of net revenue, and
partially offset by the decline in net revenue, due to a lower
associate´s and distributor´s base. Compared to 2Q2019, the
pre-pandemic comparable period, Betterware´s EBITDA grew
120.7%.
Due to efficient expense control and gross margin expansion,
EBITDA Margin expanded 556-bps to 30.7% during the quarter,
compared to 25.1% in 2Q2022, which demonstrates that our operating
expenses are now aligned with our current operations, resulting in
improved profitability levels.
On a QoQ basis, EBITDA increased 7.6% and EBITDA margin expanded
102-bps compared to 1Q2023, which demonstrates continued positive
results of our expense reduction strategies, leading to higher
operating leverage.
Year-to-date, Betterware´s EBITDA declined 11.7% to Ps.
855.9M from Ps. 969.8M in 1H2022, explained by the decline in net
revenue, partially offset by higher operating leverage which led to
an EBITDA margin expansion of 221-bps relative to 1H2022.
- Update on Business strategies
2023
As mentioned in our previous earnings releases, we have been
actively implementing elevated strategies to lay the foundation for
growth and profitability for the years to come. During the quarter,
we have made great advancements in these strategies, as well as
executed other initiatives, namely:
- Product offer: starting in April, we resumed offering our core
product line, recovering the main concepts we previously removed
from our catalog to adapt our portfolio during the pandemic. We
increased the number of SKUs and pages in the catalog, reaching in
June to 375 and 110, respectively.
- Product Innovation: during this period, we launched four
different new categories: Baby & Kids, Bedding, Hydration, and
Pets. Although too early to assess their performance, all of them
had a good volume of sales that represented 12% of total net
revenues for 2Q23. During the 3Q2023, we will introduce Cleaning
Consumables to the catalog.
- New Catalog: as previously mentioned, during 1Q2023, we
improved the design of our digital and physical catalogs, which
resulted in increased excitement, engagement, and better sales
conversion rates. During May, we launched the "pocket catalog" to
help Distributors recruit associates easier and faster. This new
version of the catalog was greatly received by the market, allowing
us to reach more associates and as well consumers, increasing our
monthly printed catalogs from 3 to 4 million units, without
increasing our total spending.
- Technology: after completing the migration of our associates
and distributors to Betterware+ App in February, we have been
working on adding more capabilities to increase our sales network
efficiency and productivity. We incorporated new functionalities to
ease the onboarding of new associates and distributors, and to
improve tracking and visualization of sales network´s performance.
Also, we add the possibility to customize the digital catalog with
the distributor/associate's data to be shared with their
customers.
- Operations: our semi-automated pick-and-pack Tower started
operations by mid-June 2023. We have
observed a good start in productivity ahead of our plans and will
report in more detail next quarter when we have enough time
measured to confirm results.
Jafra
Mexico
- Key Operating and Financial Metrics
|
|
2Q2023
|
2Q2022
|
% vs.
2Q2022
|
1Q2023
|
% vs.
1Q2023
|
Consultants
|
Avg. Base
|
427,289
|
375,655
|
13.7 %
|
448,982
|
(4.8 %)
|
EOP Base
|
424,435
|
365,918
|
16.0 %
|
427,280
|
(0.7 %)
|
Monthly Churn
Rate
|
17.6 %
|
18.9 %
|
(126-bps)
|
20.4 %
|
(276-bps)
|
Monthly Activity
Rate
|
51.2 %
|
54.9 %
|
(374-bps)
|
51.7 %
|
(52-bps)
|
Avg. Monthly
Order
|
$2,091
|
$2,017
|
3.7 %
|
$2,063
|
1.4 %
|
Leaders
|
Avg. Base
|
18,978
|
20,382
|
(6.9 %)
|
19,030
|
(0.3 %)
|
EOP Base
|
18,875
|
20,220
|
(6.7 %)
|
18,952
|
(0.4 %)
|
Monthly Churn
Rate
|
1.6 %
|
1.8 %
|
(20-bps)
|
0.6 %
|
(80-bps)
|
Monthly Activity
Rate
|
93.9 %
|
92.2 %
|
170-bps
|
94.3 %
|
(40-bps)
|
Avg. Monthly
Order
|
$2,463
|
$2,195
|
12.2 %
|
$2,259
|
9.0 %
|
|
2Q2023
|
2Q2022
|
%
|
1Q2023
|
%
|
Net
Revenue
|
$1,536,775
|
$1,342,721
|
14.5 %
|
$1,662,405
|
(7.6 %)
|
Gross
Margin
|
83.3 %
|
81.9 %
|
138-bps
|
82.0 %
|
127-bps
|
EBITDA
|
$268,724
|
$215,025
|
25.0 %
|
$277,547
|
(3.2 %)
|
EBITDA
Margin
|
17.5 %
|
16.0 %
|
147-bps
|
16.7 %
|
79-bps
|
|
* 2Q2022 Jafra´s
financial results include operations since April 7th,
2022. Prior to the acquisition, results are not fully comparable
due to differences in accounting methods. Before the acquisition
Jafra used German GAAP standards and since April 7th,
2022, we use IFRS Standards.
|
The successful replication of Betterware´s three business
pillars of Product Innovation, Business Intelligence and Technology
in Jafra continue to deliver positive results, well ahead of the
expectations we had when we completed the acquisition, as we
continue to recreate the key features of Betterware´s asset-light
business model to improve Jafra´s profitability and cashflow
generation.
Jafra Mexico's management team remains focused on increasing the
consultant and leaders base, providing them with improved training
and tools to increase their online sales, which have already
yielded positive results and should result in increased market
share and better market position in all our categories. During the
quarter, the average ticket has shown constant increases; this
effect occurs from the reactivation of face-to-face dynamics with
the field, in combination with more innovative products.
Constant improvements in our expense structure resulted in a
25.0% YoY growth in EBITDA for the quarter and a 147-bps YoY EBITDA
margin expansion compared to 2Q2022.
Jafra Mexico's 2Q2023 results reflect a strong performance as
net revenue for the quarter increased 14.5% to Ps. 1,536.8M from Ps. 1,342.7M in 2Q2022, driven by a YoY increase of
13.7% in our average consultant base, coupled with higher average
orders and partially offset by lower activity rates. We continue to
strengthen our position in Fragrances category, which was showed
the best relative performance, compared to the rest of our product
line.
On a QoQ basis, net revenue declined 7.6% compared to 1Q2023, in
line with a reduction in activity and a lower average base of
consultants and leaders.
For the first half of the year, Jafra Mexico contributed with
Ps. 3,199.2M to our net revenue,
representing 49% of the group´s consolidated net revenue.
Jafra Mexico´s gross margin for the quarter was 83.3%, 138-bps
higher compared to 81.9% in 2Q2022, explained by higher share of
revenue of higher gross margin products, coupled with a positive
impact of the appreciation of the Mexican Peso.
Year-to-date, Jafra Mexico´s gross margin was 82.7%, in line
with our beginning of the year estimates.
Jafra Mexico´s EBITDA for 2Q2023 increased 25.0% to Ps.
268.7M from Ps. 215.0M in 2Q2022. Results were well ahead of our
expectations in terms of profitability, due to efficient expense
control related to synergies and optimizations after the
acquisition.
Compared to 1Q2023, EBITDA declined 3.2% due to lower net
revenue, while EBITDA margin expanded 79-bps, which confirms our
strategies are in the right track in terms of reducing our
operating expenses.
Year-to-date, Jafra Mexico´s EBITDA was Ps. 546.3M and EBITDA margin was 17.1%, in line with
our beginning of the year estimates, which positions us to reach
our full year consolidated EBITDA guidance.
- Update on Business Strategies for 2023
During the first half of the year, extraordinary results were
achieved across key financial metrics. Net revenue growth was
mainly due to higher activity and productivity, coupled with a
growing consultant base. In terms of costs and expenses, we
achieved several efficiencies which led to savings and significant
improvement in profitability.
For the rest of the year, our strategies will remain focused on
driving sales network growth, retention and reactivation, executing
our previously disclosed business strategies where we continue to
show progress, namely:
- Product Innovation: we continue focused on reinforcing and
updating our product offering to current global and local
consumption trends. We persist to inject into Jafra the essence of
innovation that has always characterized Betterware. In the 1H2023,
we launched 21 new products that helped us gain ground in different
categories, reinforcing our offer in Color, Skin Care and
Fragrances. New products represented 4% of net revenue at the end
of 2021, 6% at the end of 2022, 7% by the end of 1Q2023, and 12%
for the first half of the year. We are reaffirming our leadership
in Fragrances, where we continue to be #1 in sales value and volume
in the Country, and resuming the path in Color to recover market
share that was lost before the acquisition. Part of our strategy is
focused on the process of renovating the Jafra brand to make it
more current, attractive, and appealing, expecting to complete it
by the end of July 2023.
- Business development: our strategies are focused on improving
incorporation, retention, and reactivation rates, while working
towards improving our incentives programs and promotions during key
months, coupled with special focus on the development of future Top
Leaders. The guideline of sustained growth in the base of Leaders
and Consultants continues, considering an increase in sponsorship,
retention, and reactivation, in improvements to the Program and in
special promotions carried out in strategic months. In the same way
it continues to invest in the development of future Top Leaders and
sales force training. Extraordinary sales results were achieved in
2Q2023 because of the sustained activity and productivity of
Leaders and Consultants, as well as proper management of promotions
aimed at encouraging sales force activity. In the financial aspect,
a rigorous control of costs, expenses and collections was
maintained in the quarter. The catalog has had a constant
improvement considering market trends. Additionally, the incentive
program and strategic promotional campaigns have been reinforced to
trigger sales.
- Technology: during May 2023, we
launched our App for Consultants, which allows them to manage their
own business and become more efficient. Within the App, consultants
can check their balance, place orders, pay for them, and track
them, see the promotions of the month, and have access to the most
frequently asked questions. Regarding Jafranet 2.0, our App for
Leaders, we will continue to add features such as lineage control
and management, revenue calculations and multilevel visibility.
During 3Q2023, we will go live with the first stage of our Chat Bot
(will operate through WhatsApp), which will allow us to reduce some
expenses and to move towards a much more technical and automated
operation.
- Operations: continue to focus on cost control and expense
reductions, taking advantage of the identified synergies. Improved
our days payable from 70 in 2Q2022 to 94 in 2Q2023, and our days
inventory from 135 in 2Q2022 to 119 in 2Q2023, significantly
improving our cash conversion cycle. We will continue to strive to
optimize our working capital, as well as improving processes for
leaders and consultants to achieve better service levels.
Jafra USA
|
|
2Q2023
|
2Q2022
|
% vs.
2Q2022
|
1Q2023
|
% vs.
1Q2023
|
Consultants
|
Avg. Base
|
28,541
|
32,026
|
(10.9 %)
|
29,399
|
(2.9 %)
|
EOP Base
|
29,921
|
31,321
|
(4.5 %)
|
28,749
|
4.1 %
|
Monthly Churn
Rate
|
11.5 %
|
11.9 %
|
(42-bps)
|
15.1 %
|
(356-bps)
|
Monthly Activity
Rate
|
44.4 %
|
49.0 %
|
(461-bps)
|
37.7 %
|
(670-bps)
|
Avg. Monthly
Order
|
$253
|
$255
|
(0.7 %)
|
$237
|
6.9 %
|
Leaders
|
Avg. Base
|
2,041
|
2,046
|
(0.2 %)
|
2,079
|
(1.8 %)
|
EOP Base
|
1,760
|
2,174
|
(19.0 %)
|
2,099
|
(16.2 %)
|
Monthly Churn
Rate
|
7.6 %
|
2.0 %
|
558-bps
|
1.8 %
|
578-bps
|
Monthly Activity
Rate
|
83.8 %
|
91.5 %
|
(771-bps)
|
81.1 %
|
268-bps
|
Avg. Monthly
Order
|
$220
|
$241
|
(8.7 %)
|
$219
|
0.6 %
|
|
2Q2023
|
2Q2022
|
%
|
1Q2023
|
%
|
Net
Revenue
|
$238,916
|
$297,447
|
(19.7 %)
|
$212,823
|
12.3 %
|
Gross
Margin
|
77.8 %
|
74.9 %
|
292-bps
|
76.5 %
|
128-bps
|
EBITDA
|
$5,201
|
($2,954)
|
NA
|
($35,344)
|
NA
|
EBITDA
Margin
|
2.2 %
|
(1.0 %)
|
NA
|
(16.6 %)
|
NA
|
|
* 2Q2022 Jafra´s
financial results include operations since April 7th,
2022. Prior to the acquisition, results are not fully comparable
due to differences in accounting methods. Before the acquisition
Jafra used German GAAP standards and since April 7th,
2022, we use IFRS Standards.
|
Year-to-date, JAFRA USA
continues to show the anticipated trend as we are undergoing a full
transformation of the business, adapting our commercial strategies
to improve client and consultant opportunities and bring stability
to the organization. Having said that, we continue to expect
improved performance during 2H2023 and going forward, as our
strategies start to mature, we will achieve our business´s full
potential.
Within these strategy changes, we protected Leader titles at the
beginning of 2023 to give our leaders time to adjust to business
changes during the first few months of the year. This
resulted in a minimum number of losses from February to May, and a
higher-than-normal leader loss in June when the protection expired.
We anticipated this high loss and as a result implemented a special
incentive in June, July, and August aimed at recovering our Leader
base.
Jafra USA's 2Q2023 results
reflect the expected performance as net revenue for the quarter
declined 19.7% to Ps. 238.9M from Ps.
297.4M in 2Q2022 (which includes net
revenue from April 7th,
2022, onwards), driven by a 9.4% appreciation of the Mexican Peso,
a YoY decline of 10.9% in our average consultant base, coupled with
lower activity rates and lower average orders. Measured in US
Dollars, net revenue declined 11.3% compared to 2Q2022.
Net revenue increased 12.3% QoQ compared to 1Q2023, due to the
negative initial effects of our strategy changes during 1Q2023,
which upset the rhythm of the Hispanic market within Jafra in that
quarter. Net sales were not at an ideal level during 2Q2023, but we
began to see some positive results from the adjustments in our
business strategy, supported by the introduction of new
products.
For the first half of the year, Jafra USA contributed with Ps. 451.7M to our net revenue, representing 7% of the
group´s consolidated net revenue.
As mentioned before, we have identified the source of these
negative trends and we are focused on turning them around, going
through a full revision of our business development and incentives
program to improve the opportunity and attractiveness for our sales
network and our clients. Positive early signs of the impact of our
strategy changes are already materializing and improvements in our
financial results are expected to play out during the second half
of the year.
Jafra USA´s gross margin for the quarter was 77.8%, 292-bps
higher relative to 74.9% in 2Q2022, and 128-bps higher relative to
76.5% in 1Q2023, mainly explained by mix improvements, resulting in
higher share of revenue of high gross margin products, coupled with
lower costs of inputs, cardboard recovery, lower indirect expenses,
among other savings in the manufacture and transportation of
products.
Year-to-date, Jafra USA´s gross margin was 77.2%, in line with
our beginning of the year projections.
The company experienced improvements in terms of profitability,
with Jafra USA´s EBITDA for 2Q2023 of Ps. 5.2M, compared to negative Ps. 3.0M in 2Q2022 (which includes EBITDA from
April 7th, 2022, onwards),
Results were a consequence of efficient expense control related to
synergies and optimizations after the acquisition. EBITDA for the
quarter also showed a significant improvement relative to
1Q2023.
Year-to-date, Jafra USA´s EBITDA continues to be negative, but
corrective actions are showing positive results. Continued
improvement have us confident that we can deliver the profitability
turnaround as previously expected.
- Update on Business Strategies for 2023
The Jafra USA management team
is focused on realigning the company's trajectory, with the
ultimate goal of achieving enhanced profitability and revenue
growth. By fortifying our business pillars: Product Innovation,
Business Intelligence, and Technology, we aim to establish a strong
foundation for Jafra USA's
resurgence. Although not reflective in revenue figures, JAFRA
USA has been making notable
strides on crucial initiatives that will instill confidence among
our field leadership and allow the company to be relevant and
competitive within the US Direct Selling industry.
The key elements of our comprehensive strategy where we have
been focused on are, among others:
- Product Innovation: Jafra USA
is committed to partnering with Jafra Mexico to consistently
introduce cutting-edge products that cater to an evolving beauty
industry. Our efforts are geared towards ensuring that Jafra´s
remains at the forefront of the industry, providing our customers
with an unparalleled experience. The strategic integration of
product innovation with a concerted effort to modernize the Jafra
brand, while effectively conveying our esteemed heritage, ensures
that Jafra is well positioned for growth within the beauty
industry.
- Product Marketing: In alignment with our product innovation
strategy and strategic rebranding efforts, Jafra USA is actively revising its client catalog to
enhance its ability to effectively communicate our product
offerings, deliver added value, and facilitate upselling
opportunities through effective product placement. These revisions
are designed to optimize the catalog's impact.
- Digital Marketing: We are working on brand awareness by
improving and tracking customer conversion through email and text
messages, working to enhance both metrics. Also, we are partnering
with Micro-Influencers, utilizing social ads to reach a new
consumer base, and utilizing Google ads for look-a-like marketing,
matching products in our portfolio to end users. On the training
side, we are focused on creating training specific to new
consultants joining, so they can understand what to do in the first
30 & 60 days, with re-purpose / re-create content to be quick
and consumable (think TikTok videos) to consultants on the go. New
platform to house the content, to be shareable, simple, and
fun.
- Business development: we are implementing a comprehensive
approach that encompasses social and personal community outreach,
regional events, and incentives that support growth initiatives.
This approach supports multiple objectives, including enhancing
brand recognition, consultant base expansion, and increased
engagement among leaders. Through these concerted efforts, we
anticipate a notable uptick in overall activity levels.
- Business Intelligence: leveraging advanced analytics and market
research will enable us to make informed decisions and capitalize
on emerging opportunities. Data-driven insights have revealed an
elevated attrition rate among new consultants in Jafra USA, exceeding industry standards by
approximately 18%. leading us to launch initiatives involving the
implementation of a comprehensive learning management system,
designed to deliver customized educational courses, training
programs, and materials that cater specifically to the needs of new
consultants. Jafra is also focused on identifying key regions.
Specifically, we are dedicated to supporting growth and expanding
the influence of our leaders in five pivotal regions: California, Texas, Florida, North
Carolina, and Illinois.
- Technology: We are diligently investing in state-of-the-art
technological solutions to streamline our internal processes and
enhance our digital platforms. In May, Jafra initiated the
development of an enhanced e-commerce and virtual office platform,
leveraging the capabilities of the global commerce platform,
Shopify. The revamped Jafra.com will introduce an array of
compelling features for our valued customers and consultants,
including subscription services, loyalty programs, product review
functionalities, and enhanced merchandising capabilities. These
additions will elevate the overall user experience and empower our
stakeholders with more effective tools to engage and transact on
the platform. In connection with our enhanced e-commerce platform,
Jafra is proactively enhancing direct communication channels with
our client base through targeted email and text message campaigns,
aimed at attracting a broader clientele and subsequently elevate
our e-commerce conversion rates, ultimately driving revenue
growth.
These strategies, among others, form the cornerstone of our
comprehensive plan for Jafra USA's
resurgence. We remain resolute in our commitment to drive positive
change and steer the company towards sustained growth and
profitability.
Capital Allocation
During the second half of 2023, we will remain focused on the
successful integration of the business and the achievement of
identified synergies and operating efficiencies, as well as
improving our financial position. Therefore, most of our cash flow
generation will be destined to prepay debt and reduce our debt
burden.
We expect to continue obtaining good results generated by the
attributes of our differentiated business model, specifically, high
cash flow generation and asset-light structure. Our end-of-period
2Q2023 leverage ratio is at 2.0x Net Debt / TTM EBITDA, down from
2.2x in 1Q2023. By mid-July, once prepaid the syndicated loan, our
Net Debt / TTM EBITDA ratio was 1.96x. We are totally aligned with
our objective leverage ratio of 2.0x, which we expect to continue
reducing towards the end of 2023.
Having said that, we remain committed to returning value to our
shareholders through growing quarterly dividends as the Group's
results are as expected. Therefore, our Board of Directors has
proposed to pay a Ps. 200M dividend
to shareholders for the quarter, which is subject to approval at
the Ordinary General Shareholders' Meeting of August 9th, 2023.
2023 Guidance and Long-Term Growth Prospects
Considering year-to-date results, and still high interest rates,
inflation, and some uncertainties ahead, we are cautiously
optimistic about our short-term prospects and confirm our previous
guidance for our consolidated business:
|
2023
|
2022
|
Var %
|
Net
Revenue
|
Ps. 13,200 - Ps.
14,200
|
Ps.11,499
|
15% - 23%
|
EBITDA
|
Ps. 2,600 – Ps.
2,800
|
Ps. 2,213
|
17% - 27%
|
There are some exogenous risks that may affect the results of
our businesses, such as adverse global and National macroeconomic
conditions, inflation, exchange rate, freight costs, disruptions in
the supply chain, and political matters, among others. Nonetheless,
we may also have several opportunities that can have the opposite
effect, such as the expansion of our sales force, higher margins,
superior activity, greater penetration in the market derived from
different approaches such as new product categories, product
innovation, differentiated sales channels, and of course, taking
advantage of the synergies between Jafra and Betterware.
In the longer term, we are confident in our growth prospects in
Mexico, the US, and
internationally, as our recent Jafra acquisition provides a
compelling and diversified product portfolio as a group,
contributing to our financial strength in changing business
environments.
Betterware de
México, S.A.P.I. de C.V.
Consolidated
Statements of Financial Position
As of June 30, 2023,
and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Jun
2023
|
Jun
2022
|
Assets
|
|
|
Cash and cash
equivalents
|
728,872
|
575,727
|
Trade accounts
receivable, net
|
1,166,267
|
1,170,038
|
Accounts receivable
from related parties
|
30
|
6,414
|
Inventories
|
2,021,738
|
2,527,583
|
Prepaid
expenses
|
126,859
|
149,915
|
Income tax
recoverable
|
213,784
|
-
|
Other assets
|
163,131
|
502,478
|
Total current
assets
|
4,420,681
|
4,932,155
|
Property, plant and
equipment, net
|
2,902,039
|
1,848,424
|
Right of use assets,
net
|
357,831
|
153,006
|
Deferred income
tax
|
319,157
|
302,651
|
Investment in
subsidiaries
|
1,236
|
1,235
|
Intangible assets,
net
|
1,691,781
|
670,457
|
Goodwill
|
1,599,718
|
3,084,893
|
Other assets
|
50,934
|
121,732
|
Total non-current
assets
|
6,922,696
|
6,182,398
|
Total
assets
|
11,343,377
|
11,114,553
|
Liabilities and
Stockholders' Equity
|
|
|
Short term debt and
borrowings
|
754,232
|
679,933
|
Accounts payable to
suppliers
|
1,721,562
|
1,531,240
|
Accrued
expenses
|
357,051
|
333,421
|
Provisions
|
788,698
|
780,945
|
Income tax
payable
|
-
|
88,148
|
Value added tax
payable
|
132,688
|
64,630
|
Trade accounts payable
to related parties
|
116,932
|
120,001
|
Statutory employee
profit sharing
|
77,489
|
73,442
|
Lease
liability
|
79,309
|
114,075
|
Derivative financial
instruments
|
80,066
|
42,904
|
Total current
liabilities
|
4,108,027
|
3,828,739
|
Employee
benefits
|
154,817
|
224,454
|
Deferred income
tax
|
837,672
|
68,326
|
Lease
liability
|
281,447
|
36,891
|
Long term debt and
borrowings
|
4,685,437
|
5,905,688
|
Total non-current
liabilities
|
5,959,373
|
6,235,359
|
Total
Liabilities
|
10,067,400
|
10,064,098
|
|
|
|
Stockholders'
Equity
|
1,277,753
|
1,049,248
|
Non-controlling
interest
|
(1,776)
|
1,207
|
Total Stockholders'
Equity
|
1,275,977
|
1,050,455
|
Total Liabilities
and Stockholders' Equity
|
11,343,377
|
11,114,553
|
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 on June 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Q2
2023
|
Q2
2022
|
∆%
|
Net revenue
|
3,220,097
|
3,243,604
|
(0.7 %)
|
Cost of
sales
|
860,763
|
986,294
|
(12.7 %)
|
Gross
profit
|
2,359,334
|
2,257,310
|
4.5 %
|
|
|
|
|
Administrative
expenses
|
742,747
|
769,034
|
(3.4 %)
|
Selling
expenses
|
838,525
|
781,476
|
7.3 %
|
Distribution
expenses
|
153,189
|
158,138
|
(3.1 %)
|
Total
expenses
|
1,734,461
|
1,708,648
|
1.5 %
|
|
|
|
|
Share of results of
subsidiaries
|
-
|
-
|
0 %
|
|
|
|
|
Operating
income
|
624,873
|
548,662
|
13.9 %
|
|
|
|
|
Interest
expense
|
(206,173)
|
(131,163)
|
57.2 %
|
Interest
income
|
14,993
|
10,301
|
45.6 %
|
Unrealized (loss) gain
in valuation of financial derivative instruments
|
(14,521)
|
28,315
|
(151.3 %)
|
Foreign exchange loss,
net
|
(38,535)
|
(31,888)
|
20.8 %
|
Financing cost,
net
|
(244,236)
|
(124,435)
|
96.3 %
|
|
|
|
|
Income before income
taxes
|
380,637
|
424,227
|
(10.3 %)
|
|
|
|
|
Income taxes
|
125,412
|
135,122
|
(7.2 %)
|
|
|
|
|
Net income including
minority interest
|
255,225
|
289,105
|
(11.7 %)
|
Non-controlling
interest loss
|
3,145
|
317
|
892.1 %
|
Net
income
|
258,370
|
289,422
|
(10.7 %)
|
EBITDA breakdown
(Ps. 717 million)
|
Concept
|
Q2
2023
|
Q2
2022
|
∆%
|
Net income including
minority interest
|
255,225
|
289,105
|
(11.7 %)
|
(+) Income
taxes
|
125,412
|
135,122
|
(7.2 %)
|
(+) Financing cost,
net
|
244,236
|
124,435
|
96.3 %
|
(+) Depreciation and
amortization
|
92,560
|
66,604
|
39.0 %
|
EBITDA
|
717,433
|
615,266
|
16.6 %
|
EBITDA
margin
|
22.3 %
|
19.0 %
|
3.3 %
|
Betterware de
México, S.A.P.I. de C.V.
Consolidated
Statements of Profit or Loss and Other Comprehensive
Income
For the six-months
ended on June 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Jun
2023
|
Jun
2022
|
∆%
|
Net revenue
|
6,484,308
|
5,103,800
|
27.0 %
|
Cost of
sales
|
1,748,747
|
1,640,146
|
6.6 %
|
Gross
profit
|
4,735,561
|
3,463,654
|
36.7 %
|
|
|
|
|
Administrative
expenses
|
1,567,507
|
1,088,684
|
44.0 %
|
Selling
expenses
|
1,684,000
|
1,038,528
|
62.2 %
|
Distribution
expenses
|
298,366
|
226,216
|
31.9 %
|
Total
expenses
|
3,549,873
|
2,353,428
|
50.8 %
|
|
|
|
|
Share of results of
subsidiaries
|
-
|
(16,611)
|
(100.0 %)
|
|
1,438,557
|
2,319,583
|
-38.0 %
|
Operating
income
|
1,185,688
|
1,093,615
|
8.4 %
|
|
|
|
|
Interest
expense
|
(417,108)
|
(160,580)
|
159.8 %
|
Interest
income
|
27,488
|
15,713
|
74.9 %
|
Unrealized loss in
valuation of financial derivative instruments
|
(64,737)
|
(71,097)
|
(8.9 %)
|
Foreign exchange loss,
net
|
(49,108)
|
(25,048)
|
96.1 %
|
Financing cost,
net
|
(503,465)
|
(241,012)
|
108.9 %
|
|
|
|
|
Income before income
taxes
|
682,223
|
852,603
|
(20.0 %)
|
|
|
|
|
Income taxes
|
238,769
|
283,732
|
(15.8 %)
|
|
|
|
|
Net income including
minority interest
|
443,454
|
568,871
|
(22.0 %)
|
Non-controlling
interest loss
|
2,913
|
1,785
|
63.2 %
|
Net
income
|
446,367
|
570,656
|
(21.8 %)
|
EBITDA breakdown
(Ps. 1,372 million)
|
Concept
|
Jun
2023
|
Jun
2022
|
∆%
|
Net income including
minority interest
|
443,454
|
568,871
|
(22.0 %)
|
(+) Income
taxes
|
238,769
|
283,732
|
(15.8 %)
|
(+) Financing cost,
net
|
503,465
|
241,012
|
108.9 %
|
(+) Depreciation and
amortization
|
186,304
|
88,221
|
111.2 %
|
EBITDA
|
1,371,992
|
1,181,836
|
16.1 %
|
EBITDA
margin
|
21.2 %
|
23.2 %
|
(2.0 %)
|
Betterware de
México, S.A.P.I. de C.V.
Consolidated
Statements of Cash Flows
For the six-months
ended on June 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Jun
2023
|
Jun
2022
|
Cash flows from
operating activities:
|
|
|
Profit for the
period
|
443,454
|
568,871
|
Adjustments
for:
|
|
|
Income tax expense
recognized in profit of the year
|
238,769
|
283,732
|
Depreciation and
amortization of non-current assets
|
186,304
|
88,221
|
Interest income
recognized in profit or loss
|
(27,488)
|
(15,713)
|
Interest expense
recognized in profit or loss
|
417,108
|
160,580
|
Loss (gain) of
property, plant, equipment sale
|
(2,358)
|
(368)
|
Unrealized loss /(gain)
in valuation of financial derivative instruments
|
64,737
|
71,097
|
Share-based payment
expense
|
(3,699)
|
9,011
|
Currency translation
effect
|
(6,066)
|
1,291
|
Movements in not-
controlling interest
|
(46)
|
5,709
|
Movements in working
capital:
|
|
|
Trade accounts
receivable
|
(195,205)
|
67,664
|
Trade accounts
receivable from related parties
|
31
|
3,857
|
Inventory,
net
|
100,932
|
(233,653)
|
Prepaid expenses and
other assets
|
(53,423)
|
(149,543)
|
Accounts payable to
suppliers and accrued expenses
|
405,293
|
(739,979)
|
Provisions
|
(4,573)
|
(37,107)
|
Value added tax
payable
|
43,546
|
85,719
|
Statutory employee
profit sharing
|
(57,809)
|
(39,058)
|
Trade accounts payable
to related parties
|
20,073
|
120,204
|
Income taxes
paid
|
(251,738)
|
(307,100)
|
Employee
benefits
|
910
|
3,642
|
Net cash generated by (used in) operating activities
|
1,318,752
|
(52,923)
|
Cash flows from
investing activities:
|
|
|
|
|
|
Investment in
subsidiaries
|
-
|
(4,629,997)
|
Payments for property,
plant and equipment, net
|
(26,349)
|
(110,603)
|
Proceeds from disposal
of property, plant and equipment, net
|
12,644
|
5,486
|
Interest
received
|
27,488
|
15,713
|
Net cash generated by (used in) investing activities
|
13,783
|
(4,719,401)
|
Cash flows from
financing activities:
|
|
|
Repayment of
borrowings
|
(1,600,000)
|
(220,010)
|
Proceeds from
borrowings
|
875,000
|
5,368,651
|
Interest
paid
|
(383,769)
|
(231,539)
|
Lease
payment
|
(61,025)
|
(18,985)
|
Share
repurchases
|
-
|
(25,264)
|
Dividends
paid
|
(249,513)
|
(700,000)
|
Net cash generated by (used in) in financing
activities
|
(1,419,307)
|
4,172,853
|
Net decrease in cash and cash equivalents
|
(86,772)
|
(599,471)
|
Cash and cash
equivalents at the beginning of the period
|
815,644
|
1,175,198
|
Cash and cash
equivalents at the end of the period
|
728,872
|
575,727
|
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.
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.
2Q2023 Conference Call
Management will hold a conference call with investors on
July 28, 2023, at 8:00 am Central Time (CT)/ 9:00am Eastern Time (ET). 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: 13740161
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: 13740161
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SOURCE Betterware de México, S.A.P.I. de C.V.