GUADALAJARA, Mexico, Oct. 26,
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 third 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 October 27,
2023, to discuss its results for the third quarter of fiscal
year 2023.
3Q2023 Highlights
Group
|
- Revenue Stability and Strong Profitability have driven strong
cash flow generation. In 9M2023 we have generated Ps. 1,634.7,
compared to Ps. 355.5M in
9M2022.
- Total
Net Debt/EBITDA level has continued to
improve, with a 2.1x ratio by 3Q2023
(vs 3.0x in 3Q2022), thanks to debt prepayments, lowering net debt
from
Ps. 6,217.9M to Ps. 5,200.4M. Additionally, remaining debt was
restructured, improving terms and conditions.
- We ended 9M2023
with a strong balance sheet. Compared to Sep'22, inventory
was reduced 9.9%, debt was reduced by 14.8% and stockholders'
equity grew 39.3%.
- We are proposing
a Dividend of Ps. 200M to be paid in November 2023. This would
become the 15th consecutive quarter dividend payment, starting
since we became
public in March 2020, accumulating a total of Ps. 3,760M paid out
dividends over that period.
|
Betterware
|
- Revenue continues to show stability
in 3Q2023, being the fourth consecutive
quarter that revenues improved Quarter on Quarter since 4Q2022. In
fact, 3Q2023
achieved a 3% increase vs 4Q2022. Thus, YoY percent decline in
revenue has decreased from -25% in 1Q2022, to -5% in 3Q2023,
including an increase of 4% in
September. We expect 4Q2023 to present YoY growth of
6%.
- We have regained
strong profitability. EBITDA for 3Q2023 closed at Ps. 328M,
10.1% above 3Q2022, with a 3.3pp margin expansion. 9M2023 EBITDA
closed at
Ps. 1,184M, -6.6% vs. 9M2022, with a 2.3pp margin
expansion.
- Strong cash flow generation
is back. We generated Ps. 1,272M
of operating cash flow in 9M2023 vs. Ps. 399M in
9M2022.
|
Jafra
Mexico
|
- Net revenue for 3Q2023 increased 11.6%
YoY. For 9M2023, it
increased 17.4% YoY. It is worth noting that our consultant
base closed 13.9% above last year.
- EBITDA for 3Q2023
closed at Ps. 209M, 23.3% below 3Q2022, due to 3Q2022
reversal of "pre-acquisition" provisions
that positively impacted its EBITDA. Without
the reversal of provisions from last year, our EBITDA would have
remained at the same level. Our 9M2023 EBITDA is Ps. 755M
(16.1% margin), well beyond
our estimates.
- Also
contributing to group cash flow generation with Ps. 548M of
operating cash flow in 9M2023.
|
Jafra
USA
|
- Undergoing a
complete business turnaround.
- We saw progress
toward our first goal of achieving business stability, having
decreased EBITDA losses to (Ps. 6.8M) in 3Q2023, compared with (Ps.
35.7M) in 3Q2022.
- Going forward we
will continue our efforts to improve profitability and focus our
efforts on revenue growth.
|
Message from Betterware's Chairman
We ended 3Q2023 with extraordinary results for the Group,
experiencing stable net sales in Betterware, better than expected
results in Jafra Mexico and Jafra US, and achieving expense savings
and operating efficiencies, which led to an increase in profit
margin and outstanding cash flow generation.
Betterware Mexico has continued to show strength through its
revenue stabilization at almost 2x revenue of 2019. This has
allowed us to deliver strong profitability and cashflow
generation. After delivering 3% growth from 4Q2022 to 3Q2023,
we feel confident that our initiatives have us positioned generate
YoY growth.
At Jafra Mexico, the successful replication of our three
business pillars of Product Innovation, Technology, and Business
Intelligence, continues to yield positive results, both for the
quarter and year-to-date. We are expecting a record year for Jafra
Mexico, both in terms of net revenue and EBITDA.
Finally, at Jafra US, we are undergoing a complete business
turnaround, with focus on business stability and back to growth
strategies. We have witnessed initial positive results, although
further improvements are needed to reach breakeven levels, and
consistent growth.
We continue to focus on further differentiating the Company
through Product Innovation, Technology and Business Intelligence,
as we are confident that the future of our Group will continue to
be founded on the relations between our people and our customers,
coupled with the technological tools we develop to ease our
network's sale experience and our customer's purchase
experience.
We are certain that we will continue experiencing the positive
trend we have seen year-to-date and since Jafra's acquisition was
completed, which have us well positioned to achieve sustained and
profitable growth in the long term.
Luis G.
Campos
Executive Chairman of the
Board
3Q2023 Consolidated Selected Financial Information
|
3Q2023
|
3Q2022
|
%
|
9M2023
|
9M2022
|
%
|
Net
Revenue
|
$3,123,507
|
$3,171,289
|
(1.5 %)
|
$9,607,815
|
$8,275,089
|
16.1 %
|
Gross
Margin
|
70.2 %
|
69.0 %
|
122-bps
|
72.1 %
|
68.3 %
|
382-bps
|
EBITDA
|
$529,424
|
$534,930
|
(1.0 %)
|
$1,901,416
|
$1,716,766
|
10.8 %
|
EBITDA
Margin
|
16.9 %
|
16.9 %
|
8-bps
|
19.8 %
|
20.7 %
|
(96-bps)
|
Free Cash
Flow
|
$294,227
|
$391,542
|
(24.9 %)
|
$1,599,274
|
$233,502
|
584.9 %
|
Net
Income
|
$196,991
|
$51,953
|
279.2 %
|
$643,357
|
$622,609
|
3.3 %
|
EPS
|
$5.28
|
$1.39
|
280.6 %
|
$17.24
|
$16.68
|
3.5 %
|
Net Debt / TTM
EBITDA
|
2.1x
|
3.0x
|
|
|
|
|
Interest Coverage
Ratio (TTM)
|
2.6x
|
4.5x
|
|
|
|
|
Group's Consolidated Financial Results
Consolidated net revenue for 3Q2023 was Ps. 3,123.5M, 1.5% lower compared to Ps. 3,171.3M in 3Q2022 explained mainly by
Betterware's slightly lower net revenues due to lower average
associates and distributors base, coupled with lower net revenue in
Jafra US. Year-to-date, consolidated net revenue increased 16.1% to
Ps. 9,607.8M from Ps. 8,275.1M in 9M2022, explained partially by
the inclusion of Jafra's results for the entire period this year,
compared to a partial year in 2022. It is important to note
that the normal seasonality causes 3Q2023 net revenue to be 3.0%
lower to 2Q2023. This reflects moderation in sales force activity
in the summer and back to school period.
At the closing of each fiscal year, December 31st, Jafra Mexico considers
a cut-off in revenue recognition according to the IFRS 15 standard.
The cut off has never been significant compared to annual
consolidated net revenue. As of September
30th, 2023, the YTD cut-off amounted to Ps.
260.2M, which would imply having net
sales at the end of 9M2023 of Ps. 9,347.7M and EBITDA of 1,834.7M as compared to our reported results of
Ps. 9,607.8M and Ps. 1,901.4M, respectively. The cut-off amount would
be added to the net revenue of 4Q2023, and so we expect to close FY
2023 with a not relevant cut-off effect again. We estimate that
Jafra Mexico's annual result will remain in line with our
expectations.
Consolidated gross margin for 3Q2023 expanded 122-bps to 70.2%,
compared to 69.0% in 3Q2022. Margin expansion is explained by
higher gross margins in Betterware and Jafra US, with Jafra
Mexico's gross margin in line with previous quarter, and due to
improvements in supply chain conditions and input costs
normalization globally. And year-to-date, consolidated gross margin
expanded 382-bps to 72.1% compared to 68.3% in 9M2022 mainly due to
the inclusion of Jafra's results, which has a higher gross margin
profile, during the entire period in 2023, compared to most of the
second quarter and onwards in 2022.
Consolidated EBITDA for 3Q2023 decreased 1.0% to Ps.
529.4M from Ps. 534.9M in 3Q2022, while consolidated EBITDA
margin stood at 16.9%, in line with that obtained on 3Q2022, due to
some adjustments in provisions that positively impacted Jafra
Mexico's EBITDA during 3Q2022, but not in 3Q2023, and partially
offset by increased EBITDA in Betterware and Jafra US. And
year-to-date, consolidated EBITDA increased 10.8% to Ps.
1,901.4M from Ps. 1,716.8M, due to the inclusion of Jafra's results
during the entire period in 2023, compared to most of the second
quarter and onwards in 2022. Year-to-date consolidated EBITDA
margin stood at 19.8%.
Consolidated net income for 3Q2023 significantly increased
279.2% to Ps. 197.0M from Ps.
52.0M in 3Q2022, due to easy
comparison base, partially offset by 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. 5.28, compared to Ps. 1.39 in 3Q2022.
Year-to-date, consolidated net income increased 3.3% to Ps.
643.4M from Ps. 622.6M in 9M2022, mainly explained by the
inclusion of Jafra's results for the entire period this year,
compared to most of the second quarter and onwards in 2022. EPS for
9M2023 was Ps. 17.24, compared to Ps. 16.68 in 9M2022.
For the first nine months of the year, consolidated cash flow
from operations increased significantly to Ps. 1,634.7M from Ps. 355.5M in 9M2022, primarily due to improved cash
flow generation in Betterware and Jafra Mexico.
Balance Sheet
As of 3Q2023, the Company's financial position remains strong,
reflecting the main attributes of our differentiated business
model, namely high cash flow generation and asset light business
model. As of September
30th, 2023, the Company had Ps. $496.1M in cash and cash equivalents. Accounts
payable increased 42.8%, inventory decreased 9.9%, and accounts
receivable increased 4.6% from September
30th, 2022. The Company noted that it is
comfortable with the level and composition of its inventory, which
supports future growth. We ended the quarter with a cash conversion
cycle of 59 days in 3Q2023.
Debt Restructuring
As mentioned in our previous earnings release, on July 10th, 2023, we prepaid the
syndicated loan utilized for Jafra's acquisition. This debt
restructuring improved the terms and conditions we had on the
syndicated loan, reducing our interest rate spread, as well as
enhancing the maturity profile. More than 70% of the Company's
total debt allows early payments at no additional cost. Our goal is
to continue gradually reducing leverage.
Net debt at quarter end was Ps. 5,200.4M, which represents a relevant decrease
relative to the Ps. 6,217.9M at the
end of 3Q2022. Our leverage ratio decreased on a YoY basis from
3.0x Net Debt to Trailing-Twelve-Months EBITDA ratio in 3Q2022 to
2.1x in 3Q2023, which demonstrates strong progress toward reducing
our leverage ratio below 2.0x by the end of the year.
3Q2023 and 9M2023 Financial Results by Business
Betterware
Financial Metrics
|
3Q2023
|
3Q2022
|
%
|
9M2023
|
9M2022
|
%
|
Net
Revenues
|
$1,420,739
|
$1,503,087
|
(5.5 %)
|
$4,254,128
|
$4,966,719
|
(14.3 %)
|
Gross
Margin
|
56.2 %
|
55.4 %
|
87-bps
|
59.7 %
|
59.9 %
|
(12-bps)
|
EBITDA
|
$328,295
|
$298,167
|
10.1 %
|
$1,184,159
|
$1,267,932
|
(6.6 %)
|
EBITDA
Margin
|
23.1 %
|
19.8 %
|
327-bps
|
27.8 %
|
25.5 %
|
231-bps
|
This is the fourth consecutive quarter with stable net revenues,
which remain in the range of $1,400M
to $1,500M. It is worth mentioning
that each passing quarter becomes more comparable to the same
period of the previous year, which demonstrates stability and a
starting point for growth. 3Q2023 sales are equivalent to
87.3% growth compared to 3Q2019, the pre-pandemic comparable
period.
Net revenue during the quarter was slightly impacted by a lower
average associate and distributor base during the period, coupled
with a decline in associate's activity levels, and mostly offset by
an 8.2% increase in average associate orders. Year-to-date,
Betterware's net revenue declined 14.3%, explained by a lower
average associate and distributor base, down 18.0% and 9.5%,
respectively, partially offset by a 10.5% increase in average
associate orders.
Gross margin for 3Q2023 expanded 87-bps compared to 3Q2022,
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, gross margin was roughly in line compared to
9M2022.
EBITDA for 3Q2023 increased 10.1% compared to 3Q2022, aided by a
leaner operating structure, aligned with the current level of net
revenue, coupled with lower freight and raw material costs. Due to
efficient expense control and gross margin expansion, EBITDA Margin
increased 327-bps during the quarter, compared to 3Q2022.
Year-to-date, EBITDA decreased 6.6%, while EBITDA margin expanded
231-bps compared to 9M2022; last year we experienced significant
adjustments in the demand for our products, and we had to incur in
extraordinary expenses to align our operations to the current level
of net revenue, which caused non-comparability on a quarterly
basis.
Update on Business strategies 2023
During the quarter, we have made great advancements in our 2023
commercial strategies, namely:
- Product offer: we recovered 100% the main concepts we
previously removed from our catalog to adapt our portfolio during
the pandemic.
- Innovation: This year has been very intensive in the generation
of new products and new categories, which have started to have a
gradual impact on total sales. In addition, we recovered 100% of
our core product offering. We will continue to promote product
innovation to keep our catalogue attractive to the final
consumer.
- Staff on the field: We have continued to recover our sales
staff and perfected its work processes on the field. This
strengthened team is positively supporting recruitment and sales,
representing a key element of our strategy to achieve the expected
results.
These advancements, on top of the previous quarter strategies
that we have executed throughout the year, such as catalogue
redesign, product innovation, "Ideal catalogue" structure, and
recovery of in-person events, among others.
For the 4Q2023, we have reduced prices on more than 160 SKUs, to
reflect favorable exchange rate, freight costs, and raw material
price decreases, expecting increasing returns on revenue from
volume.
Long Term Growth Opportunity
According to our research, the Living Solutions market in
Mexico has stabilized. With
a total market share of only 4%, and estimated home penetration of
only 25%, we are optimistic of our ability to deliver growth in
this market going forward.
On the international front, we are focused on expanding to
the United States and South America. The progress made in
the United States is very
positive, and we are planning to begin pilot operations in 1Q2024.
Likewise, we have recently hired the new country manager for
Betterware Peru, and we expect to begin operations late 2024 or
early 2025.
Jafra Mexico
Financial Metrics
|
3Q2023
|
3Q2022
|
%
|
9M2023
|
Net
Revenue
|
$1,488,435
|
$1,333,036
|
11.7 %
|
$4,687,615
|
Gross
Margin
|
83.0 %
|
83.2 %
|
(15-bps)
|
82.8 %
|
EBITDA
|
$209,267
|
$272,435
|
(23.2 %)
|
$755,538
|
EBITDA
Margin
|
14.1 %
|
20.4 %
|
(638-bps)
|
16.1 %
|
* 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.
|
2023 will be a record year for Jafra Mexico in both net revenue
and EBITDA. The extraordinary results are a combination of
maintaining and growing the sales force, boosting product
innovation, renewing the Jafra brand, and managing the business in
a disciplined and responsible manner. On the production side, we
have also achieved efficiencies derived from better negotiations on
raw material prices, greater production volume, better planning,
and synergies with Betterware.
Jafra Mexico's 3Q2023 results reflect a significant improvement
when compared to 3Q2022, as net revenue for the quarter increased
11.7%, driven by an increase in the EOP base of consultants of
13.9% to 422,956 from 371,230 in 3Q2022. Although there was
lower activity (52.2% vs. 56.9% in 3Q2022), there was greater
productivity ($2,088 vs. $1,995 in 3Q2022). Specifically, the month of
September, which is normally a complicated month, had a very good
result, exceeding 3Q2022 net revenue by 16.8%.
Gross margin for the quarter was 83.0%, practically at the same
level as that achieved in 3Q2022. Year-to-date, gross margin was
82.8%, in line with our beginning of the year estimates.
EBITDA for 3Q2023 declined 23.2% compared to 3Q2022, totally
explained by some adjustments in provisions that positively
impacted EBITDA during 3Q2022 but not during current year period.
Excluding these provisions, EBITDA margin would have closed
practically at the same level of 3Q2022. Year-to-date, EBITDA was
Ps. 755.5M and EBITDA margin reached
16.1%, in line with our beginning of the year estimates.
Update on Business Strategies for 2023
We have continued to successfully execute our commercial
strategies, namely:
- Product Innovation. We continue to accelerate our product
innovation process, which contributed 13.9% of 3Q2023 revenue, as
compared to approximately 7% last year. We already began recovering
market share in our Color and Skin Care categories and continue
strengthening our leadership in the Fragrances market.
- Catalogue Redesign. We continue to improve our catalogue
design, making it more attractive for our consumers, thus yielding
a higher conversion in sales.
- Rebranding. In September, we officially launched the new brand
image of Jafra, which extends its appeal to a younger demographic,
while re-vamps sales force emotional attractiveness to the
brand.
- Technology: In May 2023 we
launched the first version of JafraNet, the new app for Leaders and
Consultants. We further develop functions on the app, as we have
done in Betterware. We are also rolling out our CHATBOT in
November, which will allow us to service our Leaders and
Consultants more efficiently.
Long Term Growth Opportunity
The Beauty and Personal Care market in Mexico grew 8.5% in 1H2023, while Jafra Mexico
grew 12.5%. As of this 3Q2023, Jafra Mexico has a share of
3.5% of the Total Market, which represents a great opportunity to
grow going forward. Among other things, we will focus on home
penetration, innovation, and revenue growth management to achieve
this growth.
On the international front, we are analyzing the prospect of
expansion to Peru and Colombia.
Jafra USA
Financial Metrics
|
3Q2023
|
3Q2022
|
%
|
9M2023
|
Net
Revenue
|
$215,952
|
$335,166
|
(35.6 %)
|
$667,691
|
Gross
Margin
|
74.1 %
|
73.7 %
|
40-bps
|
76.2 %
|
EBITDA
|
($6,856)
|
($35,672)
|
NA
|
($36,999)
|
EBITDA
Margin
|
(3.2 %)
|
(10.6 %)
|
NA
|
(5.5 %)
|
* 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.
|
In August and September, Jafra US has consistently exceeded
initially projected performance levels. These months have marked a
critical period of comprehensive business transformation, in which
we have been actively reshaping our business strategies to improve
opportunities, both for consultants and leaders and for our end
customers, while promoting organizational stability. With this
momentum in mind, we maintain our optimistic outlook for improved
performance in the fourth quarter of 2023 and beyond. As our
strategies continue to evolve and mature, we are confident in our
ability to unlock and realize the full potential of our
business.
3Q2023 results reflect the expected performance as net revenue
for the quarter declined 35.6% compared to 3Q2022, driven by a
15.4% appreciation of the Mexican Peso YoY, a YoY decline of 6.7%
in our average consultant base, coupled with 661-bps lower activity
rates and partially offset by higher average orders. Measured in US
Dollars, net revenue declined 24.9% compared to 3Q2022. However,
August and September net revenues grew when compared to the
immediately previous month; September net revenues grew 18% vs.
August.
For the first nine months of the year, Jafra USA contributed with Ps. 667.7M to our net revenue, representing 7% of the
group's consolidated net revenue.
Gross margin for the quarter was 74.1%, expanding 40-bps vs.
3Q2022, mainly explained by sales mix, with higher share of revenue
of lower gross margin products, and partially offset by lower
manufacturing costs. Year-to-date, gross margin was 76.2%, in
line with our beginning of the year estimates.
EBITDA for 3Q2023 of negative Ps. 6.9M but improving compared to negative Ps.
35.7M in 3Q2022. Results were a
consequence of efficient expense control related to synergies and
optimizations after the acquisition. Year-to-date, EBITDA
continues on negative territory, 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 goal of
achieving 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. The key elements
of our comprehensive strategy where we have been focused on are,
among others:
- Product Innovation: We have embarked on a mission of continuous
innovation, introducing our first Vegan skin-care line, new makeup
formats, and extensions to key brands.
- Product Marketing: Simplifying and reinforcing our product
marketing strategy by increasing the page count of our client
brochure to boost activity and productivity percentages.
- Digital Marketing: Expanding digital and social media training
resources, leading to higher web traffic, improved ROI, and
productivity.
- Business development: Strengthening our consultant and client
network, and providing effective sales training.
- Technology: Our investment in state-of-the-art technological
solutions includes the development of an enhanced e-commerce and
virtual office platform, developed on Shopify +.
- Business Intelligence: Leveraging advanced analytics and market
research to make informed decisions and address an elevated
attrition rate among new consultants.
We remain committed to driving positive change and steering the
company towards stability by the end of 4Q2023, and thereafter
sustained growth and profitability.
Long Term Growth Opportunity
The US represents a huge opportunity for us. It is the #1
direct selling market worldwide, with an important growth in the
Hispanic market, which is more natural to us. It is also one
of the most relevant Beauty and Personal Care markets in the
world.
Capital Allocation
The priority for cash flow generation has been focused
on debt paydown, which has led to our end-of-period 3Q2023
leverage ratio of 2.1x Net Debt / TTM EBITDA, down from 3.0x in
3Q2022. We have prepaid Ps. 1,235M since we acquired the Jafra debt in
2022.
Having said that, we remain committed to returning value to our
shareholders through quarterly dividends as the Group's results are
stable or growing. 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 November 9th, 2023.
Our financial strength will allow us to distribute dividends in
2023 for a total of Ps. 650M.
Considering the dividend of Ps. 200M
to be paid in November 2023, we will
be reaching the fifteenth consecutive quarter with dividend
payments, adding a total of Ps. 3,760M over a period of 3 years and 7 months,
that is, since we went public in March
2020. The dividend yield has ranged between 4% and 20% per
year, with the estimated yield for 2023 of approximately 7%.
2023 Guidance and Long-Term Growth Prospects
Considering year-to-date results, which have been moderately
below our beginning of the year estimates, we are slightly
modifying our prospects for the rest of the year, adjusting our
previous full year guidance for our consolidated business as
follows:
|
2023
|
2022
|
Var %
|
Net
Revenue
|
Ps. 12,500 - Ps.
12,800
|
Ps.11,508
|
9% - 11%
|
EBITDA
|
Ps. 2,400 – Ps.
2,500
|
Ps. 2,316
|
4% - 8%
|
Although we are adjusting our expected net revenues by 5-10%, we
expect our FY2023 EBITDA to close near the low range of our
original guidance. During the first 9M2023, we were able to
increase our profitability margins, improve our cash conversion
cycle, and, therefore, normalize cash flow generation. Our leverage
level has decreased significantly to Ps. 5,697M in 9M2023 from Ps. 6,689M in 9M2022. The Company will end the year
with a strong balance sheet, which demonstrates the strength and
resiliency of its business model.
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 Betterware exits stability to regain growth,
and 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 September 30,
2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Sep 2023
|
Sep 2022
|
Assets
|
|
|
Cash and cash
equivalents
|
496,068
|
471,585
|
Trade accounts
receivable, net
|
1,275,837
|
1,219,961
|
Accounts receivable
from related parties
|
48
|
229
|
Inventories
|
2,178,018
|
2,416,485
|
Prepaid
expenses
|
129,138
|
119,208
|
Income tax
recoverable
|
112,215
|
-
|
Other assets
|
177,761
|
552,151
|
Total current assets
|
4,369,085
|
4,779,619
|
Property, plant and
equipment, net
|
2,877,944
|
1,815,290
|
Right of use assets,
net
|
339,446
|
137,187
|
Deferred income
tax
|
386,657
|
302,651
|
Investment in
subsidiaries
|
-
|
1,237
|
Intangible assets,
net
|
1,671,845
|
665,905
|
Goodwill
|
1,599,718
|
3,158,464
|
Other assets
|
53,794
|
116,875
|
Total non-current assets
|
6,929,404
|
6,197,609
|
Total assets
|
11,298,489
|
10,977,228
|
Liabilities and Stockholders'
Equity
|
|
|
Short term debt and
borrowings
|
600,123
|
642,647
|
Accounts payable to
suppliers
|
1,944,445
|
1,362,098
|
Accrued
expenses
|
391,572
|
393,486
|
Provisions
|
865,213
|
812,802
|
Income tax
payable
|
-
|
168,380
|
Value added tax
payable
|
51,905
|
77,272
|
Trade accounts payable
to related parties
|
-
|
120,370
|
Statutory employee
profit sharing
|
104,675
|
103,235
|
Lease
liability
|
87,815
|
103,274
|
Derivative financial
instruments
|
25,279
|
29,926
|
Total current liabilities
|
4,071,027
|
3,813,490
|
Employee
benefits
|
161,952
|
227,923
|
Deferred income
tax
|
783,169
|
77,744
|
Lease
liability
|
264,594
|
33,190
|
Long term debt and
borrowings
|
4,743,980
|
5,910,384
|
Total non-current liabilities
|
5,953,695
|
6,249,241
|
Total Liabilities
|
10,024,722
|
10,062,731
|
|
|
|
Stockholders'
Equity
|
1,275,704
|
913,749
|
Non-controlling
interest
|
(1,937)
|
748
|
Total Stockholders' Equity
|
1,273,767
|
914,497
|
Total Liabilities and Stockholders'
Equity
|
11,298,489
|
10,977,228
|
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 September 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Q3 2023
|
Q3 2022
|
∆%
|
Net revenue
|
3,123,507
|
3,171,289
|
(1.5 %)
|
Cost of
sales
|
930,636
|
983,549
|
(5.4 %)
|
Gross profit
|
2,192,871
|
2,187,740
|
0.2 %
|
|
|
|
|
Administrative
expenses
|
739,928
|
708,542
|
4.4 %
|
Selling
expenses
|
867,743
|
859,266
|
1.0 %
|
Distribution
expenses
|
147,089
|
157,968
|
(6.9 %)
|
Total expenses
|
1,754,760
|
1,725,776
|
1.7 %
|
|
|
|
|
Share of results of
subsidiaries
|
-
|
-
|
-
|
|
|
|
|
Operating income
|
438,111
|
461,964
|
(5.2 %)
|
|
|
|
|
Interest
expense
|
(207,722)
|
(184,872)
|
12.4 %
|
Interest
income
|
11,850
|
7,070
|
67.6 %
|
Unrealized gain in
valuation of financial derivative instruments
|
54,787
|
12,978
|
322.2 %
|
Foreign exchange loss,
net
|
(50,082)
|
(25,503)
|
96.4 %
|
Financing cost, net
|
(191,167)
|
(190,327)
|
0.4 %
|
|
|
|
|
Income before income taxes
|
246,944
|
271,637
|
(9.1 %)
|
|
|
|
|
Income taxes
|
50,070
|
220,098
|
(77.3 %)
|
|
|
|
|
Net income including minority
interest
|
196,874
|
51,539
|
282.0 %
|
Non-controlling interest loss
|
117
|
414
|
(71.7 %)
|
Net income
|
196,991
|
51,953
|
279.2 %
|
EBITDA breakdown (Ps. $529
million)
|
Concept
|
Q3 2023
|
Q3 2022
|
∆%
|
Net income including
minority interest
|
196,874
|
51,539
|
282.0 %
|
(+) Income
taxes
|
50,070
|
220,098
|
(77.3 %)
|
(+) Financing cost,
net
|
191,167
|
190,327
|
0.4 %
|
(+) Depreciation and
amortization
|
91,313
|
72,966
|
25.1 %
|
EBITDA
|
529,424
|
534,930
|
(1.0 %)
|
EBITDA margin
|
16.9 %
|
16.9 %
|
0.1 %)
|
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 on September 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
TOTAL 2023
|
TOTAL 2022
|
∆%
|
Net revenue
|
9,607,815
|
8,275,089
|
16.1 %
|
Cost of
sales
|
2,679,383
|
2,623,695
|
2.1 %
|
Gross profit
|
6,928,432
|
5,651,394
|
22.6 %
|
|
|
|
|
Administrative
expenses
|
2,307,435
|
1,797,226
|
28.4 %
|
Selling
expenses
|
2,551,743
|
1,897,794
|
34.5 %
|
Distribution
expenses
|
445,455
|
384,184
|
15.9 %
|
Total expenses
|
5,304,633
|
4,079,204
|
30.0 %
|
|
|
|
|
Share of results of
subsidiaries
|
-
|
(16,611)
|
(100.0 %)
|
|
|
2,319,583
|
|
Operating income
|
1,623,799
|
1,555,579
|
4.4 %
|
|
|
|
|
Interest
expense
|
(624,830)
|
(345,452)
|
80.9 %
|
Interest
income
|
39,337
|
22,783
|
72.7 %
|
Unrealized loss in
valuation of financial derivative instruments
|
(9,950)
|
(58,119)
|
(82.9 %)
|
Foreign exchange loss,
net
|
(99,190)
|
(50,551)
|
96.2 %
|
Financing cost, net
|
(694,633)
|
(431,339)
|
61.0 %
|
|
|
|
|
Income before income taxes
|
929,166
|
1,124,240
|
(17.4 %)
|
|
|
|
|
Income taxes
|
288,839
|
503,830
|
(42.7 %)
|
|
|
|
|
Net income including minority
interest
|
640,327
|
620,410
|
3.2 %
|
Non-controlling interest loss
|
3,030
|
2,199
|
37.8 %
|
Net income
|
643,357
|
622,609
|
3.3 %
|
EBITDA breakdown (Ps. $
million)
|
Concept
|
TOTAL 2023
|
TOTAL 2022
|
∆%
|
Net income including
minority interest
|
640,327
|
620,410
|
3.2 %
|
(+) Income
taxes
|
288,839
|
503,830
|
(42.7 %)
|
(+) Financing cost,
net
|
694,633
|
431,339
|
61.0 %
|
(+) Depreciation and
amortization
|
277,617
|
161,187
|
72.2 %
|
EBITDA
|
1,901,416
|
1,716,766
|
10.8 %
|
EBITDA margin
|
19.8 %
|
20.7 %
|
7.00 %
|
Betterware de
México, S.A.P.I. de C.V.
Consolidated
Statements of Cash Flows
For the nine-months
ended on September 30, 2023, and 2022
(In Thousands of
Mexican Pesos)
|
|
|
Q3 2023
|
Q3 2022
|
Cash flows from operating
activities:
|
|
|
Profit for the
period
|
640,327
|
620,410
|
Adjustments for:
|
|
|
Income tax expense
recognized in profit of the year
|
288,839
|
503,830
|
Depreciation and
amortization of non-current assets
|
277,617
|
161,187
|
Interest income
recognized in profit or loss
|
(39,337)
|
(22,783)
|
Interest expense
recognized in profit or loss
|
624,830
|
345,452
|
Gain of property,
plant, equipment sale
|
(2,483)
|
(5)
|
Unrealized loss in
valuation of financial derivative instruments
|
9,950
|
58,119
|
Share-based payment
expense
|
(3,699)
|
9,011
|
Currency translation
effect
|
(5,494)
|
(153)
|
Movements in not-
controlling interest
|
(90)
|
4,537
|
Others
|
3,101
|
-
|
Movements in working capital:
|
|
|
Trade accounts
receivable
|
(304,775)
|
17,741
|
Trade accounts
receivable from related parties
|
13
|
7,637
|
Inventory,
net
|
(55,348)
|
(122,555)
|
Prepaid expenses and
other assets
|
(47,968)
|
(167,199)
|
Accounts payable to
suppliers and accrued expenses
|
656,184
|
(852,653)
|
Provisions
|
71,942
|
4,830
|
Value added tax
payable
|
(37,237)
|
98,361
|
Statutory employee
profit sharing
|
(30,623)
|
(9,265)
|
Trade accounts payable
to related parties
|
(96,859)
|
120,573
|
Income taxes
paid
|
(322,241)
|
(433,955)
|
Employee
benefits
|
8,045
|
12,371
|
Net cash generated by operating
activities
|
1,634,694
|
355,491
|
Cash flows from investing
activities:
|
|
|
|
|
|
Investment in
subsidiaries
|
-
|
(4,699,204)
|
Payments for property,
plant and equipment, net
|
(54,082)
|
(129,218)
|
Proceeds from disposal
of property, plant and equipment, net
|
18,662
|
7,229
|
Interest
received
|
39,337
|
27,598
|
Net cash generated by (used in)
investing activities
|
3,917
|
(4,793,595)
|
Cash flows from financing
activities:
|
|
|
Repayment of
borrowings
|
(6,593,695)
|
(370,157)
|
Proceeds from
borrowings
|
5,708,974
|
5,490,252
|
Interest
paid
|
(529,381)
|
(334,987)
|
Costs of
emission
|
(8,003)
|
(88,144)
|
Lease
payment
|
(86,958)
|
(37,599)
|
Share
repurchases
|
-
|
(25,264)
|
Dividends
paid
|
(449,124)
|
(899,610)
|
Net cash (used in) generated by
financing activities
|
(1,958,187)
|
3,734,491
|
Net decrease in cash and cash
equivalents
|
(319,576)
|
(703,613)
|
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
|
496,068
|
471,585
|
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.
3Q2023 Conference Call
Management will hold a conference call with investors on
October 27, 2023, at 8:00 am Central Standard Time (CST)/ 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: 13741758
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: 13741758
Contacts:
Company:
Betterware IR
ir@better.com.mx
+52 (33) 3836 0500 Ext. 2011
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SOURCE Betterware de Mexico