GUADALAJARA, Mexico, April 25, 2024 /PRNewswire/ -- Betterware de México, S.A.P.I. de C.V. (NASDAQ:BWMX) ("BeFra" or the "Company"), announced today its consolidated financial results for the first quarter 2024. 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 April 26, 2024, to discuss its results for the first quarter of 2024. Message from the Chairman We are very proud of our performance during the first quarter of 2024, which is a year of transformation for our company as multiple growth and efficiency initiatives gain additional traction. BeFra's resurgent growth accelerated during the quarter, sustained by a strong back-to-back growth trend at Betterware Mexico, driven by product innovation and effective marketing strategies, and by the ongoing successful expansion of Jafra Mexico, which has proven to be a highly accretive acquisition. What's more, there is still ample room to substantially grow the latter business even further.  During the quarter, we made substantial changes to Jafra US's commercial strategy and are now seeing early and encouraging signs of a recovery. In addition to the success of our many growth initiatives, we have been further reducing BeFra's cost structure to build in additional operating leverage, while also improving working capital management to increase our capital efficiency. Betterware Mexico has identified a clear path to growth, recording a 12.0% year-over-year increase in net revenue compared to Q123. This marked its highest net revenue since Q222. April marks the two-year anniversary of acquiring Jafra, so the first quarter results of Jafra Mexico are particularly gratifying. This business maintained its impressive growth trajectory with an 11.3% year-over-year increase in net revenue and a 38.0% surge in EBITDA. Since the acquisition, Jafra Mexico's net revenue has grown 46%, its EBITDA margin has expanded 800 bps to 20.7%, and the cash conversion cycle fell from 223 days to 110 days.  We are exceedingly proud that Jafra remains Mexico's leading fragrance company, both in terms of sales and volume. Achieving this market position is a source of motivation to become the top beauty company in Mexico, as we further develop and introduce new product categories. In our international operations, significant effort has been devoted to substantially improving the performance of Jafra US, where we have succeeded in optimizing direct and operating expenses. Our primary focus has been and will continue to be on stabilizing net revenues, establishing a solid foundation for growth that we expect to resume in the second half of the year. Higher efficiency levels coupled with comprehensive improvements to the commercial strategy are expected to drive additional momentum as the year proceeds. International expansion is one of the cornerstones of our growth strategy. On April 16th we officially launched Betterware US, locating the headquarters in Dallas, Texas and going live with a website. Our initial focus remains the U.S.'s large and rapidly growing Hispanic market, starting with Texas. It is important to note that we are entering the U.S. home solutions market with an entirely new business model, one that targets the ecommerce as well as direct selling verticals. This model was designed from the customer up and enables Betterware to take a customer-first, digitally connected approach to the U.S. market. Meanwhile, our preparations for launching Betterware operations in Peru are proceeding well, with a launch targeted for the first quarter of 2025. We recognize that significant challenges remain at BeFra, but we are still confident in our ability to continue effectively addressing these head-on to reestablish a firm profitable growth trajectory across the company and further deleverage its balance sheet. Significant progress in reducing costs as well as inventory levels are behind our confidence, along with the significant traction that our growth strategies continue gaining. A more solid foundation to grow upon, combined with the addition of new and dynamic leaders, positions us well for renewed success. As always, we have set ambitious goals but remain committed to maintaining high standards that further our mission of creating more opportunities for many to enhance their lives. Luis G. CamposChairman of the Board Q124 Select Consolidated Financial Information Q124 Q123 Net Revenue $3,602,503 $3,264,211 +10.4 % Gross Margin 73.6 % 72.8 % +79 bps EBITDA $755,390 $654,560 +15.4 % EBITDA Margin 21.0 % 20.1 % +92 bps Free Cash Flow $359,655 $549,312 -34.5 % Net Income $294,146 $187,997 +56.5 % EPS $7.90 $5.05 +56.5 % Net Debt / EBITDA 1.8x 2.2x Interest Coverage 3.2x 2.8x   Q124 Q123 Associates and Consultants Avg. Base 1,215,441 1,230,958 -1.3 % EOP Base 1,205,869 1,220,053 -1.2 % Distributors and Leaders Avg. Base 63,541 60,138 +5.7 % EOP Base 65,315 61,042 +7.0 %   Highlights Sustained revenue growth:  Consolidated Net revenue increased by 10.4% year-on-year (YoY), primarily due to growth of the Betterware and Jafra brands in Mexico. Solid EBITDA growth:  EBITDA increased by 15.4% with a 92 bps YoY EBITDA margin increase, to 21.0%. This was despite a 7.3% decrease in Betterware Mexico EBITDA from a temporary increase in distribution costs at this business with lower Net Revenue and Gross Margin at Jafra US. Gross margin expanded by 79 bps, primarily driven by margin improvements at Jafra Mexico: 89 bps from reduced material costs due to successful supplier negotiations, 33 bps from decreased obsolescence costs, and 27 bps from a favorable exchange rate effect. Conversely, an unfavorable sales mix of low-margin SKUs adversely impacted at Betterware Mexico Gross Margin by 70 bps. Jafra Mexico EBITDA increased 38.0%, contributing 51% to the group's EBITDA, a reflection of consistently profitable growth since its acquisition in April 2022. Strong demand in Mexico's home solutions and beauty markets, robust consumer demand, and BeFra's growth strategies and financial discipline are expected to drive sustained Net revenue and EBITDA growth. Continued deleveraging trend: Net-Debt-to-EBITDA ratio decreased to 1.78x in Q124 from 1.83x in Q423 with an increased Interest Coverage ratio, to 3.2x. Strong EPS growth: Outperformance across most key metrics resulted in a 56.5% YoY increase in earnings per share. Q224 Priorities Revenue growth: Continued effective execution of 2024 commercial plan across businesses. Cost control: Maintain GM at an optimal level between 69% and 70% in 2024 through continued cost improvement and efficiency strategies. These include currency hedges, continued raw materials and product cost negotiations with suppliers, and implementing design-to-cost engineering throughout the Company's operations. Betterware US launch: Betterware began formal operations in the U.S. in April 2024, with an initial focus on the Hispanic population in Texas. The projected investment in 2024 remains approximately USD$ 6 million. Betterware Peru preparations. BeFra's Peru operations general manager is building a management team to lead the 2025 launch of Betterware Peru. This entails full buildout of the Company's operations within this market and developing the infrastructure necessary to ensure the rapid and successful penetration of the country's home solutions market. Q124 Financial Results by Business Betterware MexicoKey Financial and Operating Metrics Q124 Q123 Net Revenue $1,555,027 $1,388,983 +12.0 % Gross Margin 60.0 % 61.1 % -117 bps EBITDA $382,107 $412,356 -7.3 % EBITDA Margin 24.6 % 29.7 % -512 bps   Q124 Q123 Associates Avg. Base 716,645 752,577 -4.8 % EOP Base 724,707 764,024 -5.1 % Monthly Activity Rate 67.70 % 68.10 % -40 bps Avg. Monthly Order $2,052 $1,767 +16.1 % Distributors Avg. Base 42,886 39,028 +9.9 % EOP Base 44,482 39,991 +11.2 % Monthly Activity Rate 98.50 % 98.50 % +2 bps Avg. Monthly Order $23,582 $23,562 +0.1 %   Highlights Sustained Net Revenue strength. A second consecutive quarter of positive YoY performance, with accelerated Net revenue growth (+12.0% YoY). Expansion in Associates' average monthly order size by 16%, primarily due to the effective implementation of diverse marketing and sales strategies. Successful execution of commercial plan: Successful launch of new food container brand, "Gurmy", revitalizing the category and achieving a month-on-month revenue increase. Also strengthened Betterware's "hydration" subcategory with the introduction of successful new products. Enhanced merchandising strategy: recalibrating prices and promotions across all concepts to drive market success. Introduced new B+ app functionality to improve operational use for salesforce. Launched new "segmented" Associate and Distributor promotions, contributing to the lowest historical decrease in "Holy Week" revenue, which in 2024 occurred in March (this holiday usually occurs in April). Strengthened "personal companionship method" with our Field Managers, improving the salesforce's impact in the field. Strong increase in Distributor base. Achieved a nearly 10% increase in Betterware's Distributor base with maintained activity and average order levels. This typically precedes an Associate base increase, as Distributors are key "group builders."  Improved cash conversion cycle. A decrease in the cash conversion cycle to 40 days, with a 13 days turnaround, from 53 days in Q123. This considerable improvement resulted primarily from improved inventory turnover, decreasing to 143 days in Q124 from 185 days in Q123. Slight decrease in Associates headcount. The number of Associates decreased slightly Q124, in both average and end-of-period metrics. Despite steady activity and recruitment rates, the churn rate remains high. This is expected to improve in the remainder of the year, contributing to a net YoY increase in the Associates base. Increased Associate productivity represents an important foundation for the Company's further expansion. Slight Gross margin contraction. Gross Margin was primarily impacted by an increased mix of promotional products in total sales, which rose to 39% in Q124 from 33% in Q123. Decrease in EBITDA and EBITDA Margin. EBITDA declined 7.3% year on year, primarily due to increased promotion and distribution expenses. This increase is expected to normalize for the remainder of the year, the Company's full year 2024 EBITDA target therefore remains unchanged. Decreased excess inventory: Excess inventory decreased by 17% year on year and is expected to continue for the remainder of the year. Q224 Priorities Solid promotion and innovation plan: The plan's primary goal is to maintain strong average monthly orders and adequate average activity rates to decrease the Associate churn rate. Reduce inventories: Control excess inventory generation decreasing a minimum of 80% of current levels, targeting approximately Ps. 200 million to Ps. 220 million in reductions. Increase Associates base: Focus on both increased recruitment and retention of Associates through strengthened productivity, improved incentives, and enhanced ease of doing business with BeFra. This reduces churn in the base while fostering strong relationships with new members.  Jafra Mexico Key Financial and Operating Metrics Q124 Q123 Net Revenue $1,849,996 $1,662,405 +11.3 % Gross Margin 85.0 % 82.0 % +293 bps EBITDA $383,120 $277,547 +38.0 % EBITDA Margin 20.7 % 16.7 % +401 bps   Q124 Q123 Consultants Avg. Base 469,290 448,982 +4.5 % EOP Base 451,692 427,280 +5.7 % Monthly Activity Rate 53.8 % 51.7 % +211 bps Avg. Monthly Order $2,362 $2,063 +14.5 % Leaders Avg. Base 18,927 19,030 -0.5 % EOP Base 19,159 18,952 +1.1 % Monthly Activity Rate 95.0 % 94.3 % +65 bps Avg. Monthly Order $2,698 $2,259 +19.4 %   HighlightsHighly accretive and successful acquisition: improvements in all key Jafra Mexico performance metrics within the first two years subsequent to its acquisition, most importantly revenue, EBITDA and cash conversion:           Q1 2022    Q1 2023    Q1 2024    ∆% 22 vs 24  Net Revenues 1,266 1,662 1,850 +46 % EBITDA 161 278 383 +138 % EBITDA Margin 12.70 % 16.70 % 20.70 % +800 bps Cash Conversion Cycle 223 135 110 -113     Sustained Net Revenue growth. Jafra Mexico's Net revenue increased 11.3% compared to Q123, driven primarily by reinforcing the BeFra business model focused on expanding the Consultant base with important product innovation, which accounted for 18% of its total Net revenues. Jafra Mexico's new catalog concept featuring a monthly special edition with an attractive layout and simplified navigation drove further growth during the quarter, complemented by robust digital marketing efforts and strong innovation. It is important to note a higher-than-expected cut-off effect in March; excluding this effect, Q124 Net revenue would have increased by 18.9%. The cut-off effect will positively impact Q224 results. Fragrances and color categories saw notable growth. These categories contributed significantly to revenue and EBITDA growth during the quarter. Consultant base responding to the ongoing strategy. Jafra Mexico's Consultant base expanded 4.5% YoY and 1.6% sequentially, benefitting from strategic promotional activities initiated in early 2024 aimed at reactivation and retention. Although the Leaders base has not yet reached Q123 levels, this has shown continued progress over the last two quarters. This uptick is a direct result of the 2023 strategy to promote more Consultants to Leaders and enhance recruitment through appealing incentives. Solid increase in average monthly orders. 9.6% YoY growth due to a 2.4 SKU increase in average order size, primarily driven by Fragrance category innovations. This was also supported by a 211 bps increase in the Consultants' activity rate, year on year. Gross Margin improvement. Jafra Mexico Gross Margin improved by 293 bps YoY: 54 bps from a favorable exchange rate impact, 175 bps from reduced material costs due to successful supplier negotiations, and a 64 bps gain from decreased obsolescence costs. EBITDA and EBITDA margin increased substantially. EBITDA increased 38.0% YoY while the corresponding margin expanded 401 bps, driven by higher Net revenue, a higher gross margin, and greater efficiency in administrative expenses (decreasing 13.4% in the quarter on an annual basis). These improvements reflect enhanced synergies and optimization strategies implemented in 2022 and 2023. Strong cash flow.  Jafra Mexico generated substantial operational cash flow of Ps. 253 million; a 20.4% increase compared to Q123, contributing to a strong balance sheet at the end of the quarter. The Company has remained focused on extending Days Payables since early 2022, offering invoice factoring to suppliers and renegotiating terms and conditions when appropriate. This initiative was completed at the end of 2023, with the full positive impact expected in 2024 reflected in increased margins and enhanced availability of cash, while the cash conversion cycle improved, extending DPO to 82 days. Q224 Priorities Sustained revenue momentum. Continued growth strategy execution to drive double-digit growth in 2024. Improve Skin Care performance. While the Skin Care category has grown compared to last year, this has not met expectations due to competitive pricing and a core portfolio refresh. The introduction of the new Jafra Skin Care Line, aimed at attracting younger consumers, will be supported by an extensive category plan. This strategy includes a mix of traditional and digital marketing, sample programs, special events, virtual consultations, and sales force training to boost category performance. Expense improvement. Continued cost control with further streamlining of overall operational expenses.   Jafra US Key Financial and Operating Metrics Q124 Q123 Net Revenue $197,480 $212,823 -7.2 % Gross Margin 74.0 % 76.5 % -250 bps EBITDA -$9,838 -$35,344 +259.3 % EBITDA Margin -5.0 % -16.6 % +1,163 bps