GUADALAJARA, Mexico, Feb. 22, 2024 /PRNewswire/ -- Betterware de México S.A.P.I. de C.V. (NASDAQ: BWMX), ("Betterware" or the 'Company"), announced today its consolidated financial results for the fourth quarter and fiscal year 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 February 23, 2024, to discuss its results for the fourth quarter of fiscal year 2023.
Message from the Chairman
We are immensely proud of our performance throughout the last quarter of the year, which significantly contributed to our strong overall results for 2023. This includes achieving double-digit revenue growth and increased profitability. Moreover, our robust cashflow generation has enabled us to further strengthen our capital structure and bolster the resilience of our balance sheet as we enter 2024.
As a group, we have embarked upon a phase of renewed growth, driven in part by the notable stabilization of Mexico's home solutions market following the pandemic's disruptive impact. This, coupled with strong execution on commercial strategies based on our four key elements (Portfolio, Incentives, Ease of Doing Business, and Kinship) have fueled a resurgence in growth at Betterware Mexico, reflected in a 7% year over year increase in Q4 revenues. Further, Jafra Mexico continues to capture the tremendous opportunity in Latin America's second largest beauty market and the tenth largest globally. And we are well-positioned to grow Jafra US and to introduce Betterware to the US market in 2024.
Our Jafra acquisition has proven both successful and highly accretive; surpassing our expectations and delivering exceptional results. Prior to the acquisition, Jafra Mexico faced a declining trend in net revenue, which we successfully reversed to secure double-digit growth in 2023. Similarly, EBITDA and EBITDA margin have followed this positive trend. The initial implementation of our proven model's key pillars- product innovation, technology, and business intelligence- has propelled the company back into a growth phase while elevating profitability to new heights. We have also realized meaningful synergies resulting in cost savings across various areas including catalog printouts, cardboard, insurance, market research, software, technology resources, and organizational optimization. Jafra is poised for a strong trajectory within Mexico's large and growing beauty market, approximately 50% of which is served by the direct sales segment. 2023 has been a pivotal year in our pursuit of becoming the number one direct sales beauty company in Mexico, and we remain steadfast in our commitment to implementing all necessary transformations to achieve this goal.
We are currently ramping up our international operations. Despite 2023's challenging start at Jafra US, due to unforeseen decisions made by the prior newly installed management, we have successfully stabilized revenue and made important decisions to position the Company for future growth. A key milestone was almost reaching operational breakeven in the fourth quarter. This marks a crucial turning point for the Company, setting the stage for a new phase of financial stability and expansion opportunities. In parallel, Betterware US is ready for launch at the beginning of Q2, showcasing an enhanced direct selling model that we are confident will pave the way for success. Finally, we made continued progress to launch Betterware in Peru during the first half of 2025.
Looking ahead, we will continue to focus on successfully executing our commercial plans to expand top line growth with an eye towards cost efficiencies, building upon our strong results for continued positive EBITDA and cash flow generation.
Without minimizing the challenges we have faced, I am confident in our promising path ahead. Our Company's strong foundation of decades as an industry leader, coupled with our revitalized management, remains a winning formula for success. We are committed to setting ambitious goals and upholding the highest standards, enabling us to fulfill our mission of creating opportunities for more individuals to enhance their lives.
Luis G. Campos
Chairman of the Board
4Q23 and Fiscal 2023 Consolidated Selected Financial Information
4Q23 | 4Q22 | 2023 | 2022 | |||
Net Revenue | $3,401,692 | $3,232,460 | +5.2 % | $13,009,507 | $11,507,549 | +13.1 % |
Gross Margin | 70.0 % | 70.4 % | (48 bps) | 71.5 % | 68.9 % | +265 bps |
EBITDA | $819,483 | $599,342 | +36.7 % | $2,720,900 | $2,316,108 | +17.5 % |
EBITDA Margin | 24.1 % | 18.5 % | +556 bps | 20.9 % | 20.1 % | +79 bps |
Free Cash Flow | $652,555 | $992,440 | (34.2 %) | $2,255,981 | $1,256,140 | +79.6 % |
Net Income | $406,104 | $249,948 | +62.5 % | $1,049,461 | $872,557 | +20.3 % |
EPS | $10.9 | $6.7 | +62.5 % | $28.2 | $23.6 | +22.2 % |
Net Debt / TTM EBITDA | 1.8x | 2.5x | ||||
Interest Coverage ratio (TTM) | 2.9x | 3.7x |
*2022 Figures include Jafra´s operations since April 7th, 2022.
4Q23 | 4Q22 | 2023 | 2022 | |||
Associates and Consultants | ||||||
Avg. Base | 1,249,230 | 1,299,717 | (3.9 %) | 1,225,595 | 1,322,840 | (7.4 %) |
EOP Base | 1,240,023 | 1,268,945 | (2.3 %) | 1,240,023 | 1,271,036 | (2.4 %) |
Distributors and Leaders | ||||||
Avg. Base | 62,727 | 62,679 | +0.1 % | 61,833 | 66,300 | (6.7 %) |
EOP Base | 62,337 | 60,798 | +2.5 % | 62,337 | 60,798 | +2.5 % |
Highlights
2024 Priorities
4Q23 and Fiscal 2023 Financial Results by Business
Betterware Mexico
Key Operating and Financial Metrics
4Q23 | 4Q22 | 2023 | 2022 | |||
Net Revenue | $1,472,480 | $1,376,625 | +7.0 % | $5,726,608 | $6,343,344 | (9.7 %) |
Gross Margin | 50. % | 57.7 % | (730 bps) | 57.3 % | 59.4 % | (205 bps) |
EBITDA | $250,342 | $212,923 | +17.6 % | $1,434,501 | $1,480,855 | (3.1 %) |
EBITDA Margin | 17.0 % | 15.5 % | +153 bps | 25.0 % | 23.3 % | +170 bps |
4Q23 | 4Q22 | 2023 | 2022 | |||
Associates | ||||||
Avg. Base | 756,250 | 819,790 | (7.8 %) | 757,653 | 897,989 | (15.6 %) |
EOP Base | 741,170 | 778,845 | (4.8 %) | 741,170 | 778,845 | (4.8 %) |
Monthly Activity Rate | 66.0 % | 64.7 % | +132 bps | 66.5 % | 67.7 % | (115 bps) |
Avg. Monthly Order | $1,959 | $1,711 | +14.5 % | $1,856 | $1,733 | +7.1 % |
Distributors | ||||||
Avg. Base | 42,369 | 41,109 | +3.1 % | 41,193 | 44,084 | (6.6 %) |
EOP Base | 41,825 | 39,413 | +6.1 % | 41,825 | 39,413 | +6.1 % |
Monthly Activity Rate | 98.1 % | 98.2 % | (11 bps) | 98.2 % | 98.3 % | (10 bps) |
Avg. Monthly Order | $23,518 | $22,421 | +4.9 % | $23,104 | $24,281 | (4.8 %) |
Highlights
2024 Priorities
Jafra Mexico
Key Operating and Financial Metrics
4Q23 | 4Q22 | 2023 | 2022 | |||
Net Revenue | $1,668,956 | $1,522,363 | +9.6 % | $6,354,952 | $4,198,120 | +51.4 % |
Gross Margin | 86.5 % | 80.7 % | +581 bps | 83.7 % | 81.9 % | +185 bps |
EBITDA | $532,780 | $366,790 | +45.3 % | $1,287,036 | $854,250 | +50.7 % |
EBITDA Margin | 31.9 % | 24.1 % | +783 bps | 20.3 % | 20.3 % | (10 bps) |
*2022 Figures include Jafra´s operations since April 7th, 2022.
4Q23 | 4Q22 | 2023 | 2022 | |||
Consultants | ||||||
Avg. Base | 461,712 | 445,535 | +3.6 % | 438,238 | 389,680 | +12.46 % |
EOP Base | 467,736 | 455,969 | +2.6 % | 467,736 | 455,969 | +2.6 % |
Monthly Activity Rate | 52.9 % | 53.8 % | (93 bps) | 52.0 % | 53.6 % | (160 bps) |
Avg. Monthly Order | $2,181 | $2,006 | +8.7 % | $2,107 | $1,989 | +5.9 % |
Leaders | ||||||
Avg. Base | 18,576 | 19,387 | (4.2 %) | 18,753 | 20,107 | (6.7 %) |
EOP Base | 18,719 | 19,290 | (3.0 %) | 18,719 | 19,290 | (3.0 %) |
Monthly Activity Rate | 95.0 % | 93.3 % | +170 bps | 94.3 % | 92.3 % | +200 bps |
Avg. Monthly Order | $2,624 | $2,295 | +14.4 % | $2,396 | $2,310 | +3.7 % |
Highlights
2024 Priorities
Jafra USA
Key Operating and Financial Metrics
4Q23 | 4Q22 | 2023 | 2022 | |||
Net Revenue | $260,256 | $333,472 | (22.0 %) | $927,947 | $966,085 | (3.9 %) |
Gross Margin | 74.4 % | 76.1 % | (165 bps) | 75.7 % | 74.9 % | +82 bps |
EBITDA | $36,361 | $19,629 | +85.2 % | $(638) | $(18,997) | +96.6 % |
EBITDA Margin | 14.0 % | 5.9 % | +808 bps | -0.1 % | -2.0 % | +190 bps |
*2022 Figures include Jafra´s operations since April 7th, 2022.
4Q23 | 4Q22 | 2023 | 2022 | |||
Consultants | ||||||
Avg. Base | 31,268 | 34,393 | (9.1 %) | 29,704 | 35,171 | (15.5 %) |
EOP Base | 31,117 | 34,131 | (8.8 %) | 31,117 | 36,222 | (14.1 %) |
Monthly Activity Rate | 43.8 % | 46.8 % | (300 bps) | 42.8 % | 50.6 % | (780 bps) |
Avg. Monthly Order (USD) | $231 | $245 | (5.8 %) | $232 | $244 | (4.9 %) |
Leaders | ||||||
Avg. Base | 1,782 | 2,183 | (18.4 %) | 1,886 | 2,109 | (10.6 %) |
EOP Base | 1,793 | 2,095 | (14.4 %) | 1,793 | 2,095 | (14.4 %) |
Monthly Activity Rate | 90.2 % | 90.0 % | +20 bps | 86.4 % | 91.6 % | (520 bps) |
Avg. Monthly Order (USD) | $215 | $236 | (8.7 %) | $218 | $206 | +5.8 % |
Highlights
2024 Priorities
Capital Allocation
Directed cash flow primarily towards debt repayment during the year, successfully achieving targeted leverage ratio decrease to below 2.0x by the end of 2023, ending the year with a 1.8x Net Debt / EBITDA leverage ratio from 2.5x in December 2022. Remain focused on further decreasing leverage ratio to approximately 1.5x by year end 2024.
Additionally, we remain committed to returning value to our shareholders through quarterly dividends, particularly in light of the Group's strong 2023 performance. The Group returned Ps. 650M in dividends during 2023; for a total dividend yield of 7.17% when considering a USD $12.29 average share price, and 6.32% based on a USD $13.94 share price as of December 31, 2023. The Group has therefore proposed a Ps. 250M dividend payment for the fourth quarter 2023, subject to approval at the Group's Ordinary General Shareholders' Meeting to be held on March 6th, 2024. We remain committed to returning value through dividends to our shareholders over the long term.
2024 Outlook and Financial Guidance
2024 | 2023 | Var % | |
Net Revenue | $ 13,800 ? 14,400 | $ 13,010 | 6.1% - 10.7% |
EBITDA | $ 2,900 ? 3,100 | $ 2,721 | 6.6% - 13.9% |
*Figures in millions Ps.
We remain confident in the Company's long-term growth prospects in Mexico and the United States, with continued growth in the home solutions and beauty markets through the direct sales channel in Mexico.
As we navigate the evolving business landscapes, our strategic focus includes stabilizing and strengthening our U.S. presence with continued growth within the dynamic Mexican market. This comprehensive approach positions the Group to capitalize on diverse opportunities, ensuring financial resilience in current changing environments.
Betterware de México, S.A.P.I. de C.V. Consolidated Statements of Financial Position As of December 31, 2023, and 2022 (In Thousands of Mexican Pesos) | ||
Dec 2023 | Dec 2022 | |
Assets | ||
Cash and cash equivalents | 549,730 | 815,644 |
Trade accounts receivable, net | 1,072,455 | 971,063 |
Accounts receivable from related parties | 104 | 61 |
Inventories | 2,030,533 | 2,122,670 |
Prepaid expenses | 79,115 | 52,562 |
Income tax recoverable | 29,462 | 204,860 |
Other assets | 230,688 | 188,266 |
Total current assets | 3,992,087 | 4,355,126 |
Property, plant and equipment, net | 2,910,353 | 2,973,374 |
Right of use assets, net | 358,704 | 293,565 |
Deferred income tax | 523,568 | 319,157 |
Investment in subsidiaries | - | 1,236 |
Intangible assets, net | 1,649,953 | 1,743,882 |
Goodwill | 1,599,718 | 1,599,718 |
Other assets | 53,757 | 46,675 |
Total non-current assets | 7,096,053 | 6,977,607 |
Total assets | 11,088,140 | 11,332,733 |
Liabilities and Stockholders' Equity | ||
Short term debt and borrowings | 508,731 | 230,419 |
Accounts payable to suppliers | 1,790,026 | 1,371,778 |
Accrued expenses | 306,997 | 305,588 |
Provisions | 804,748 | 793,412 |
Value added tax payable | 117,864 | 89,142 |
Trade accounts payable to related parties | - | 96,859 |
Statutory employee profit sharing | 132,855 | 135,298 |
Lease liability | 117,094 | 85,399 |
Derivative financial instruments | 47,920 | 15,329 |
Total current liabilities | 3,826,235 | 3,123,224 |
Employee benefits | 127,150 | 153,907 |
Deferred income tax | 783,169 | 833,557 |
Lease liability | 255,882 | 206,509 |
Long term debt and borrowings | 4,622,691 | 5,918,256 |
Total non-current liabilities | 5,788,892 | 7,112,229 |
Total Liabilities | 9,615,127 | 10,235,453 |
Stockholders' Equity | 1,474,646 | 1,096,097 |
Non-controlling interest | (1,633) | 1,183 |
Total Stockholders' Equity | 1,473,013 | 1,097,280 |
Total Liabilities and Stockholders' Equity | 11,088,140 | 11,332,733 |
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 December 31, 2023, and 2022 (In Thousands of Mexican Pesos) | |||
Q4 2023 | Q4 2022 | ?% | |
Net revenue | 3,401,692 | 3,232,460 | 5.2 % |
Cost of sales | 1,021,872 | 955,398 | 7.0 % |
Gross profit | 2,379,820 | 2,277,062 | 4.7 % |
Administrative expenses | 601,510 | 799,416 | (24.8 %) |
Selling expenses | 908,624 | 910,236 | (0.2 %) |
Distribution expenses | 147,719 | 89,332 | 65.4 % |
Total expenses | 1,657,853 | 1,798,984 | (7.8 %) |
Share of results of subsidiaries | - | (5,251) | (100.0 %) |
Operating income | 721,967 | 472,827 | 52.7 % |
Interest expense | (195,432) | (197,869) | (1.2 %) |
Interest income | 5,719 | 5,906 | (3.2 %) |
Unrealized gain in valuation of financial derivative instruments | (22,641) | 14,597 | (255.1 %) |
Foreign exchange loss, net | (7,657) | (32,817) | (76.7 %) |
Financing cost, net | (220,011) | (210,183) | 4.7 % |
Income before income taxes | 501,956 | 262,644 | 91.1 % |
Income taxes | 95,545 | 13,090 | 629.9 % |
Net income including minority interest | 406,411 | 249,554 | 62.9 % |
Non-controlling interest (loss) gain | (307) | 394 | (177.9 %) |
Net income | 406,104 | 249,948 | 62.5 % |
EBITDA breakdown (Ps. 819 million) | |||
Concept | Q4 2023 | Q4 2022 | ?% |
Net income including minority interest | 406,411 | 249,554 | 62.9 % |
(+) Income taxes | 95,545 | 13,090 | 629.9 % |
(+) Financing cost, net | 220,011 | 210,183 | 4.7 % |
(+) Depreciation and amortization | 97,517 | 126,515 | (22.9 %) |
EBITDA | 819,484 | 599,342 | 36.7 % |
EBITDA margin | 24.1 % | 18.5 % | 5.5 % |
Betterware de México, S.A.P.I. de C.V. Consolidated Statements of Profit or Loss and Other Comprehensive Income For the twelve-months ended on December 31, 2023, and 2022 (In Thousands of Mexican Pesos) | |||
Dec 2023 | Dec 2022 | ?% | |
Net revenue | 13,009,507 | 11,507,549 | 13.1 % |
Cost of sales | 3,701,255 | 3,579,093 | 3.4 % |
Gross profit | 9,308,252 | 7,928,456 | 17.4 % |
Administrative expenses | 2,908,945 | 2,596,642 | 12.0 % |
Selling expenses | 3,460,367 | 2,808,030 | 23.2 % |
Distribution expenses | 593,174 | 473,516 | 25.3 % |
Total expenses | 6,962,486 | 5,878,188 | 18.4 % |
Share of results of subsidiaries | - | (21,862) | (100.0 %) |
Operating income | 2,345,766 | 2,028,406 | 15.6 % |
Interest expense | (820,262) | (543,321) | 51.0 % |
Interest income | 45,056 | 28,689 | 57.0 % |
Unrealized loss in valuation of financial derivative instruments | (32,591) | (43,522) | (25.1 %) |
Foreign exchange loss, net | (106,847) | (83,368) | 28.2 % |
Financing cost, net | (914,644) | (641,522) | 42.6 % |
Income before income taxes | 1,431,122 | 1,386,884 | 3.2 % |
Income taxes | 384,384 | 516,920 | (25.6 %) |
Net income including minority interest | 1,046,738 | 869,964 | 20.3 % |
Non-controlling interest gain | 2,723 | 2,593 | 5.0 % |
Net income | 1,049,461 | 872,557 | 20.3 % |
EBITDA breakdown (Ps. 2,721 million) | |||
Concept | Dec 2023 | Dec 2022 | ?% |
Net income including minority interest | 1,046,738 | 869,964 | 20.3 % |
(+) Income taxes | 384,384 | 516,920 | (25.6 %) |
(+) Financing cost, net | 914,644 | 641,522 | 42.6 % |
(+) Depreciation and amortization | 375,134 | 287,702 | 30.4 % |
EBITDA | 2,720,900 | 2,316,108 | 17.5 % |
EBITDA margin | 20.9 % | 20.1 % | 0.8 % |
Betterware de México, S.A.P.I. de C.V. Consolidated Statements of Cash Flows For the twelve-months ended on December 31, 2023, and 2022 (In Thousands of Mexican Pesos) | ||
Dec 2023 | Dec 2022 | |
Cash flows from operating activities: | ||
Profit for the period | 1,046,738 | 869,964 |
Adjustments for: | ||
Income tax expense recognized in profit of the year | 384,384 | 516,920 |
Depreciation and amortization of non-current assets | 375,134 | 287,702 |
Interest income recognized in profit or loss | (45,056) | (28,689) |
Interest expense recognized in profit or loss | 820,262 | 543,321 |
Gain of property, plant, equipment sale | (1,460) | 4,758 |
Unrealized loss in valuation of financial derivative instruments | 32,591 | 43,522 |
Share-based payment expense | (3,699) | 5,991 |
Currency translation effect | (4,349) | (8,653) |
Movements in not- controlling interest | (93) | 10,983 |
Others | 1,236 | - |
Movements in working capital: | ||
Trade accounts receivable | (101,393) | 266,640 |
Trade accounts receivable from related parties | (43) | 30,246 |
Inventory, net | 92,136 | 171,260 |
Prepaid expenses and other assets | (86,062) | (48,383) |
Accounts payable to suppliers and accrued expenses | 423,104 | (940,039) |
Provisions | 11,476 | (24,640) |
Value added tax payable | 28,722 | 110,231 |
Statutory employee profit sharing | (2,443) | 22,798 |
Trade accounts payable to related parties | (96,859) | 97,029 |
Income taxes paid | (474,941) | (542,527) |
Employee benefits | (32,606) | 21,268 |
Net cash generated by operating activities | 2,366,779 | 1,409,702 |
Cash flows from investing activities: | ||
Payment of business acquisition net of cash acquired | - | (4,698,463) |
Other investment in subsidiaries | - | (1,886) |
Payments for property, plant and equipment, net | (131,066) | (175,653) |
Proceeds from disposal of property, plant and equipment, net | 20,682 | 22,091 |
Interest received | 45,056 | 28,689 |
Net cash used in investing activities | (65,328) | (4,825,222) |
Cash flows from financing activities: | ||
Repayment of borrowings | (7,633,715) | (1,120,025) |
Proceeds from borrowings | 6,498,994 | 5,818,705 |
Interest paid | (652,313) | (502,847) |
Costs of emission | (8,355) | (88,722) |
Lease payment | (123,241) | (76,214) |
Share repurchases | - | (25,321) |
Dividends paid | (648,735) | (949,610) |
Net cash (used in) generated by financing activities | (2,567,365) | 3,055,966 |
Net decrease in cash and cash equivalents | (265,914) | (359,554) |
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 | 549,730 | 815,644 |
Key Operating Metrics
Betterware
1Q23 | 2Q23 | 3Q23 | 4Q23 | 2023 | 2022 | |
Associates | ||||||
Avg. Base | 752,577 | 753,743 | 768,042 | 756,250 | 757,653 | 897,989 |
EOP Base | 764,024 | 756,637 | 759,310 | 741,170 | 741,170 | 778,845 |
Monthly Activity Rate | 68.1 % | 66.7 % | 65.2 % | 66.0 % | 66.5 % | 67.7 % |
Avg. Monthly Order | $1,767 | $1,877 | $1,823 | $1,959 | $1,856 | $1,733 |
Monthly Growth Rate | 15.0 % | 15.2 % | 15.7 % | 14.9 % | 15.2 % | 12.6 % |
Monthly Churn Rate | 15.6 % | 15.5 % | 15.6 % | 15.7 % | 15.6 % | 15.2 % |
Distributors | ||||||
Avg. Base | 39,028 | 40,825 | 42,551 | 42,369 | 41,193 | 44,084 |
EOP Base | 39,991 | 41,981 | 41,932 | 41,825 | 41,825 | 39,413 |
Monthly Activity Rate | 98.5 % | 98.1 % | 97.9 % | 98.1 % | 98.2 % | 98.3 % |
Avg. Monthly Order | $23,562 | $23,440 | $21,944 | $23,518 | $23,104 | $24,281 |
Monthly Growth Rate | 9.1 % | 10.7 % | 10.4 % | 10.0 % | 10.1 % | 6.5 % |
Monthly Churn Rate | 8.6 % | 9.1 % | 10.4 % | 10.1 % | 9.6 % | 8.7 % |
Jafra Mexico
1Q23 | 2Q23 | 3Q23 | 4Q23 | 2023 | 2022 | |
Consultants | ||||||
Avg. Base | 448,982 | 427,289 | 414,968 | 461,712 | 438,238 | 389,680 |
EOP Base | 427,280 | 424,435 | 422,956 | 467,736 | 467,736 | 455,969 |
Monthly Activity Rate | 51.7 % | 51.2 % | 52.2 % | 52.9 % | 52.0 % | 53.60 % |
Avg. Monthly Order | $2,063 | $2,091 | $2,088 | $2,181 | $2,107 | $1,989 |
Monthly Growth Rate | 9.2 % | 8.9 % | 10.5 % | 11.5 % | 10.1 % | 11.50 % |
Monthly Churn Rate | 11.3 % | 9.1 % | 10.6 % | 8.3 % | 9.8 % | 20.10 % |
Leaders | ||||||
Avg. Base | 19,030 | 18,978 | 18,553 | 18,576 | 18,753 | 20,107 |
EOP Base | 18,952 | 18,875 | 18,555 | 18,719 | 18,719 | 19,290 |
Monthly Activity Rate | 94.3 % | 93.9 % | 94.0 % | 95.0 % | 94.3 % | 92.30 % |
Avg. Monthly Order | $2,259 | $2,463 | $2,236 | $2,624 | $2,396 | $2,310 |
Monthly Growth Rate | 1.0 % | 1.0 % | 1.1 % | 1.4 % | 1.1 % | 0.80 % |
Monthly Churn Rate | 1.6 % | 1.4 % | 1.4 % | 1.1 % | 1.4 % | 1.50 % |
Jafra USA
1Q23 | 2Q23 | 3Q23 | 4Q23 | 2023 | 2022 | |
Consultants | ||||||
Avg. Base | 29,399 | 28,541 | 29,608 | 31,268 | 29,704 | 35,171 |
EOP Base | 28,749 | 29,921 | 30,489 | 31,117 | 31,117 | 36,222 |
Monthly Activity Rate | 37.7 % | 44.4 % | 45.1 % | 43.8 % | 42.8 % | 50.60 % |
Avg. Monthly Order (USD) | $232 | $236 | $229 | $231 | $232 | $244 |
Monthly Growth Rate | 9.7 % | 12.9 % | 14.5 % | 12.5 % | 12.4 % | 11.00 % |
Monthly Churn Rate | 15.0 % | 11.5 % | 13.8 % | 11.5 % | 13.0 % | 10.80 % |
Leaders | ||||||
Avg. Base | 2,080 | 2,041 | 1,642 | 1,782 | 1,886 | 2,109 |
EOP Base | 2,099 | 1,760 | 1,645 | 1,793 | 1,793 | 2,095 |
Monthly Activity Rate | 81.1 % | 83.8 % | 90.4 % | 90.2 % | 86.4 % | 91.60 % |
Avg. Monthly Order (USD) | $219 | $220 | $217 | $215 | $218 | $206 |
Monthly Growth Rate | 1.9 % | 2.6 % | 6.3 % | 7.9 % | 4.7 % | 4.40 % |
Monthly Churn Rate | 1.8 % | 7.6 % | 8.4 % | 5.0 % | 5.7 % | 4.80 % |
Disclosure
We hereby disclose certain figures pertaining to the net revenues generated by our Jafra Mexico entity in select quarters of 2022 and 2023. These figures should be regarded as understated yet inaccurate due to timing issues in sales recognition, specifically related to the fulfillment of orders placed by our sales force, and in accordance with IFRS 15 we should have not recognized them until delivered.
Annual net revenues were presented fairly in all material respects as of December 31st, 2022, and 2023, and for the years then ended. Cut-off adjustments represent a decrease in net revenues and EBITDA in some quarters as follows (Consolidated figures):
Same figures | ||||||
6/30/2022 | 9/30/2022 | 12/31/2022 | 3/31/2023 | 6/30/2023 | 9/30/2023 | |
Net Revenues | 3,071,360 | 3,115,894 | 3,232,460 | 3,074,500 | 3,223,935 | 3,049,230 |
Cost of sales | 941,688 | 968,678 | 955,398 | 839,161 | 862,241 | 912,001 |
Gross Margin | 2,129,672 | 2,147,216 | 2,277,062 | 2,235,339 | 2,361,695 | 2,137,229 |
SG&A expenses | 1,644,064 | 1,714,400 | 1,677,720 | 1,749,584 | 1,737,655 | 1,689,972 |
EBITDA | 485,608 | 432,816 | 599,342 | 485,755 | 624,040 | 447,257 |
This is due to timely issues because a higher portion of Jafra's monthly sales is made in the last week of the month, and orders to consultants take a few days to deliver. Annual cut off for the year ended December 31st, 2023, represented just Ps. 15M, which is not significant and is properly presented.
A mere 0.2% of the value of orders placed at the end of each quarter does not materialize as sales, due to damages incurred by the products during their delivery process or returns made by our consultants for receiving a product different from what they ordered.
The Company, since the close of 2023, has initiated a strategy to minimize cutoff adjustments each quarter, aligning commercial efforts to advance orders to the third week of the month and adjusting the logistics of shipments and deliveries to ensure that the majority of these are completed before the end of the period.
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
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
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.
4Q2023 & FY2023 Conference Call
Management will hold a conference call with investors on February 23, 2024, at 8:00 am Central Standard Time (CST)/ 9:00am Eastern Time (EST). For anyone who wishes to join live, the dial-in information is:
Toll Free: 1-877-451-6152
Toll/International: 1-201-389-0879
Conference ID: 13744249
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: 13744249
Contacts.
SOURCE Betterware de México, S.A.P.I. de C.V.
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