BWMX - Earnings call 3 2023 | Betterware de México, S.A.P.I. de C.V.

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Operator

Thank you, and welcome to Betterware's Third Quarter Fiscal 2023 Earnings Conference Call.With me on the call today are Betterware's Executive Chairman, Luis Campos; Betterware's Chief Executive Officer, Andres Campos; and Corporate Chief Financial Officer, Alejandro Ulloa.Before we get started, I would like to remind you that the call will include forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Any such statement should be considered in conjunction with the cautionary statements and the safe harbor statement in the earnings release and risk factors discussed in reports filed with the SEC.Betterware assumes no obligation to update any of these forward-looking statements or information. A reconciliation and other information regarding non-GAAP financial measures discussed on the call can be found in the earnings release issued yesterday as well as in the Investors section of the company's website.Now I would like to turn the call over to the company's Executive Chairman, Luis Campos. Please proceed.

Luis Campos Orozco

Thank you, operator. everyone. morning, good And proud our very quarter to am third present results. I

Thanks consistent group, representing a EBITDA which generation. is profitability stability we have that a flow, year, MXN [Technical revenue working strong the the capital and for have flow brings.During regain As cash this to X,XXX the experienced stability million XX% Difficulty] operating strengthened of us has cash period. we the to generated allowed of

this strengthen cash XXX remaining ongoing this is XXX than is balances focus, equity to always are while granted. used our strategically MXN it a debt, which preparations the stockholders' of growth.As of our paid down with accumulating continuing taken a important million for slight have level pivotal stability dividends, we for to cash proposing profitable execution year to the growth must talk The higher and were payment of is expansion been international at our million We about to quarter, revenue relates it XXXX. in not stabilize support cash this from the to total All has be consistent growth.Betterware's revenue pay important what at that dividends MXN out and XX% that revenue it strategies to and hold paid said, main note and our year.

XXXX as revenue In downturn. fact, to X% post-pandemic quarter point XXXX, normal grew our X the inflection which the from despite impacts, seasonal XQ compared was

same in Mexico to XX% revenue to market quarter has replicate market. the the the within we confidence compared technology.Product share third quarter to going drive ability represented our home We profitability the right place and products continues growth Jafra XXXX gain growth. X continue steps business have innovation, and year, out our innovation X% in the more net continue strategies intelligence revenue to of in and pillars: we to to of our last first excel on have year. internal laid strategies to This stabilized for forward.The

I we Betterware to the than that deliver we And extremely Peru existing transformation transformation. Andres, catalog and U.S. early business We and he are though achieve growth.Lastly, for guidance Betterware first reassured and as knowledge. and committed together we on possibilities team results. XX road been pass of easier. execute the consultants management growth long-term lowering are can year, of to Jafra to we changes have medium begun in I done leaders a And to XXXX. with EBITDA XXXX on based and develop strong launched have am more would revenue execution undergoing make results. proud years.Now word like Betterware international launch so drive successful continued profound for business an paving our are to have are U.S. intelligence for to a we their operations our is Jafra under ability slightly Betterware's and a This further the even on of to early family's to these ability version app design for of have the our

Andres Chevallier

everyone. morning Thank to you, good Luis, and

we're reinforced, pivotal and the X% growth third year-on-year growth starting The regain to of I assumption we As Betterware quarter, growth underlying especially of versus first compared to year-on-year own back-to-school only as and at fourth we reiterate bump around in stated on, we quarter home X-K year sales quarter potential quarter and has last XXXX. regain year.From forward.Now said, in that our is for activities.And having X% of exception, growth, and historically also Betterware pandemic market a with stabilized and in has internal confirm solutions stability XXXX After want With quarter XX% as force that our growth growth Mexico. around quarter expect Jafra. to third of from represented around our the of forward. be a That capture seasonal going the only expecting both reached consistent distortions, point fourth and continue published home our distortions, was the the our which market we can night kids proud no future XXXX was households. all this a expecting report X% going because Luis this and distracted we revenue are we we believe of strategies, growth aims to to to pandemic

the without that and operations.Our profitability intelligence cash product growth technology. namely X compromising transformation valid, remains pillars always All of our of business and have flow this innovation, strong distinguished and

coming to Peru will Director and Managing disruptive to be new have pilot preparations in develop to Jafra the ready begin glad Mexico's time, hired on growth an like will XXXX quarter further source share We our Luis Betterware executing additional in the Peru plans following in to in to in XXXX. These U.S. call.At I'd of to to first early years.Now prospects. the the important XXXX are the pass we of avenues and be the same start launch future of call growth back operations

Luis Campos Orozco

Thank you, Andres.

XX% can we U.S., Jafra the one, dynamics X% the X only as the opportunities business care total our the going our this the million of want results it the Mexico. the call, talented shown for management Jafra is we point growing XXX,XXX losses year, innovation, Mexico mentioned accounts our X-pillar-based us this showing happy it a beauty the XX.X mind, by can must for growth MXN strategy I with of ] And confident selling makes million today.And we also, revenue. sustain forward.As growth will forward.We product the in X.X loss of that we out X confident model, third Jafra for pace, at growth to lay quarter turnaround With XXXX are in ahead replication imagine and estimate Mexico, a XXXX. of for are continue share from intelligence replicate all total a that X XX.X% to team, initial the in decreased that market and evolution, has X.X% to with technologies. [ to the of I MXN pillars: This market B-brand things. of gain We million market strategies share model and With personal future that group As market has generations. have strong going worth to in Number on is this remember initial present we for only together XX% able quarter MXN accounts market. on brand. we after has direct of the beginning very the within be

ready to to We can worked the huge, further so financial to and efficient growing we products. are very close Number our is the commercial and the key proud revenue processes are although specific so seen group. this U.S. this We we XXXX.We XXX-degree to we pass working within results. are is in a beauty to more are are temporary believe decline, on vibrant market Mexican cosmetics we have metrics of as the for have hard and and I two, must make call represents, turnaround that achieving to he and develop would the strategy team's of very done have Alejandro, team this market.Now seize the happen goal, a remember breakeven the make on that operations the opportunity like that relevant and

Alejandro Ulloa

months almost with quarter the net and associates reflecting to Thank the the revenue net XXXX which U.S., you, Consolidated for that cash in has X than cost guidance higher XX reviewing third in quarter MXN months margin of XX.X% registered EBITDA relative X of the Jafra XXXX, Mexican XXXX million, the compared first margin was than lower XXXX million, entire XX.X% during gross distributor lower margin XX.X% Year-to-date, would quarter input in of the offset first by the due a to improving. points higher in EBITDA consolidated costs income group.As basis in period.Year-to-date, year-to-date pre-acquisition to was published the compared compared X lower EBITDA gross XXXX, to from that practically and million financial and explained quarter for position Xx of chain EBITDA points year, Jafra inclusion the XXXX, gross X% quarter first currency.Additional consolidated the previous to XXXX, the base.Year-to-date, XX.X%, basis for like for for XXX entire XXXX. by peso, Jafra X and average XX.X% the mind normalizations.Year-to-date, positively debt in in Betterware's. the with inclusion positively positive months debt-to-EBITDA results. balance we MXN third basis results XX.X% revenue due XX% million, the boosted in CapEx, months increased X.Xx profile. margin the cash of I MXN quarter in XXX.X compared free Jafra's explained for quarter line third at yesterday. quarters X can MXN in refer as XXXX, quarter our other Please which XX.X% EBITDA Company's operations third Consolidated remains as of to results third and keep explained EBITDA the higher quarter inclusion inclusion Betterware's almost last XXXX, decreased of generated of Luis, Mexico, months per to Jafra's our in lower not is to to XX.X% mainly by input million third ratio far XXXX, X reporting consolidated in the and impacted the same explained Consolidated to the period explained months from that were compared XX.X% and margin XXXX, for improvements increased consolidated functional our supply XXXX.Consolidated strong share currency with to quarter costs margin MXN of minus morning, the due to was to will to performance mainly attributed the EBITDA provisions results reversal Betterware in MXN net to of first CapEx was period line points the contracted first review cash conditions, XXXX impacted XXX.X a And higher XXXX, first Jafra in by XX.XX. period.Earnings for of when compared by the net year is by Mexico's release and MXN consolidated third third Jafra's months but coupled the flow at third expanded flow XXX mostly in X,XXX.X for of X free for revenues Betterware year, earnings first to lower freight mainly of of of by lower the by months to defined XXXX. quarter Jafra's results, X.X% of million.Consequently, third XXXX and details net in the In good expanded in XXXX. margin of the be in gross our the closing our company lower I third X,XXX.X reviewed results and flow, the XXX.X X of to everyone. for our to sheet, net X,XXX.X than improved XXXX, Consolidated stood Betterware of quarter entire as X for

a indicated, to allocate to lessen debt primary is portion sheet previously obligation, our process. flow significant our As cash in of the reinforcing free our our balance strategy

November a under be the Directors We to of the of General are approval debt-to-EBITDA of year. MXN of the payment ratio net which Shareholders' quarter, year.In Xx XXX to proposed dividend payments, of targeting X dividend subject on this end Meeting of of our is a held Board million the terms for by ordinary has the

in results expected.Finally, the to the XX,XXX group's rest X,XXX of to we year, Going continue prospects extended stems of full growing XX,XXX sales to Betterware for and guidance adjusting remains forward, dividends, range of consolidated This for the are paying range continue revenue slightly steady performance, to year our to million largely improve quarterly the the to million. which million we our the modifying previous net intend the anticipated X,XXX as EBITDA without the consolidated million MXN MXN MXN adjustment in MXN a period. growth assuming

will the consolidated with operator our However, you initial will aligns may EBITDA improvements now to of guidance Thank the and with have. estimate.I any questions closely our and take you. margins, turn we the in lower over gross our end EBITDA call

Operator

Research. question Eric [Operator with Beder from comes Instructions] Our SCC first

Eric Beder

Congratulations a also a talk on the about -- Betterware. about stabilization. little little Could you bit bit

little potential that? And be mentioned release thinking in items discounting the your went more that aggressive the that in distribution to you I been has when You XXX What of response network -- terms more going to forward? to to and distributors the catalog. bit can the in how know to translate expanded catalog. expand Betterware? a about for is should we going SKUs the amount into of you associates more How

Andres Chevallier

is this Eric, Andres. Hi,

one the you impact September, start for this. yielding our So did, results. results, in the we XQ reasons reacting consumers of the main the results. didn't But September our quarter of is decrease of we confident are this part, saw time in takes as third upcoming because of and first it prices XQ to didn't we It that why are good until to

So up, to good for that to demand both on to happen to for for Betterware has and up, remain we that.And are to be selling. obviously be first consumption with is second come the growing seeing to sales people question your thing force, Betterware reaction the a about

to we these growth. XQ, So are in for September prices expect in changes and we and force start that both in in that positive revenue sales confident in the and about impacting made

Eric Beder

second the that's question of Okay. pretty is -- saw I driving be What you guess, to aside distributors for distributors know what Jafra, I if and people in is increases the constant. don't and categories more amount expanding been adding categories. at best Jafra? piece look Jafra? that level And the do What kind for of the I talked is guess new, for you about you for as the improving the

Luis Campos Orozco

is this been innovation, Jafra almost And sorry, an XX% this is where representing extraordinary product has sales. is Hi, innovation XX% pushed of Luis. having by year. basically total -- Eric, product our

product the not product launching color been aggressive, We both we very during in products categories. categories. especially very exciting been have have and this year, And in skincare

pushed think I this this year. sales really has growth well our

The because us. consultants. today catalog, our X.X more third is have thing, and to what a used is in make doing leaders consumers. the years is and the more much among progressive attractive, come very, join been ago.We growth exciting quarter. other fact, catalog, benefit catalog going fortunately, still -- money but Then happen the app than enticing attractive product more app, do, be And have have. it thing and breaking I that more join And a This it very a catalog, leaders for a product also is to come voice the and more third product the us the than okay? improvement Then used helping as to lot and business, a improving they our records of had the keep you more many force. nice is trying and we catalog and think, new to basic we I our is a year we making in when are more attractive product used income sales are this they for the consultants in they are and people to more average money.Our spread the mean, people portfolio of In this we

Eric Beder

Great.

question. more one Just

going year-over-year inventories continue in in great Or productivity had opportunities inventory? versus inventory there should be You introduction to we forward? a sales. about improve thinking to levels the the What are

Luis Campos Orozco

and having USA, So the in Betterware. in Jafra we Jafra both continue Mexico improvements inventory,

have As very improvement. we you good can see,

the fourth expect and We beyond. in to quarter it improve

Operator

with comes from Telsey Group. Cristina Our Fernandez next question

Cristina Fernandez

about to wanted guidance. ask in the the change I

are environment in the gaining not what that's details into lower view. Any ago a today or months traction you as can share to you versus guidance? Betterware, ahead seeing better you're softer been change different few is some would initiatives expected? that as consumer it's color a understanding the the mentioned of or more more there far much be the You but If it more is

Luis Campos Orozco

Luis. This basically say is would reasons. I Cristina, X

third year is back-to-school in challenge the basically is The and as know, school vacations seasonality because time. a the there that, first every quarter one the certainly you of

portfolio. to reasons reason, is But we then probably than X it. to in third because time, quarters better and the in the okay? the the lower this quarter. better. But -- And second beyond.And from quarter it are than impact the would The by I reasons, Betterware second the in would -- ladies they forward the why commercial that's the -- to spend more of is main vacations in impacted expect the come. is third that normal Betterware. Andres in the sorry, higher-than-expected at especially spending busy is second our normally business children a Then one, or diminished have impact back-to-school products school in strategy, bit we Betterware. in reason first to order because in terms and Normally, and our more revenues quarter took sales home.And strategy in the that took, it during the the you product end of of are both have the reason the from like quarter that because recover because Jafra this the expected in because for we it's third realign longer one mainly explain say, the these Betterware, But a the X fact and going the completed has with got the impact of it are to kind this products, of quarter little discretionary already cases, -- it back-to-school.And These can the taken negative sure that first and in

Cristina Fernandez

business, for margin up was the that quarter. seasonality, on -- the home XX% itself, the That's EBITDA And this so Betterware helpful. following then

have to you back half, XX%. First gotten

So going this we led that the is and it should to sequential XX% return expect factors other quarter this like forward? that Or just quarter that a seasonality there were to decline?

Luis Campos Orozco

Look, Cristina, I'm are margins, in normal slightly the because of normal EBITDA seasonality case specifically, case in if is at This look the Betterware margin. of margin. EBITDA, above our margin, of talking we year-to-date, you our the gross the about In okay?

our -- can going we are EBITDA the remember okay, okay? year, normal the will okay? in our margin not XX%, above basically see to margins, EBITDA In by of of guidance. the level above as our normal there report, you we the as say -- are you as our EBITDA okay?As -- see, margin, margins. for historically in I think that at the the slightly normal margins, of in the normal do, we going the case However, level is are to compared variance year-end, Slightly the to be our of no case

Cristina Fernandez

look But was back the it. you if because EBITDA margin Got XXXX, Betterware XX%, normal business, margin. the at on EBITDA your XX% I do what consider just business doing

more normal that a So it's to XX%, color able is a there better maybe more or be [indiscernible] to just business. that of margin normal more -- like margin

Luis Campos Orozco

our is, is XX% XX.X% EBITDA would margin. Yes, between I normal and anything say,

Cristina Fernandez

attract Okay. much already cetera? marketing -- I That's the guess, on helpful. And on consumer, plans you revitalize et on of the the more how -- then side, is are the this a What younger the couple it and over last refresh details is to next brand, the What provide underway? Jafra. quarters question can brand

Luis Campos Orozco

Jafra okay? can tell and say welcome overwhelm going more working you this for will quarter they name. could force.Now to are Yes. good. very, even It's sales really contemporary, of really easily possibilities they a very complete by sales our new -- our young has Then okay? force. the fourth really, X, begin will take to I tell excited. welcome you. we this represents it has Yes, And working attractive in the our been to this X branding is that more on this I brand is be in and what that's brand. -- rebranding new brand mean, unlimited architecture, an brand I it the a are But is us, This by And it's what quarters architecture new welcome

Operator

from question next Our with comes Andres LCA Capital. Lomeli

Andres Lomeli

such metrics to know color removing behind quarterly wanted key the reasoning years? What translate report? from this questions. new upcoming the projects market force is And forward, very that, I these and is the the associate second and X helpful. the question provide If how will going it some regarding as sales the you investments would to expected new for could expansions, on be the CapEx base

Luis Campos Orozco

Yes. This Luis. is

report we If trying you and concise our make are notice, objective. to more

was We there more you in concise There's report. mean, Then the issue okay? key from okay, have a key issues they and detail, long I issue the business. the each sometimes we miss is of trying grow keep make recommendation -- now it between objective churn relevant I recruiting to think in sales to but a several combination issues report.And and okay? too key chapter, lot in mean, basically because the a on, too are sales And used in objective this growing loop a this from business I is force, in much investors to the rate, our is there's to the are always the detail. of the we okay? much force, how was our

Andres Lomeli

second question. regards Perfect. And the to with

Andres Chevallier

question, second the please? Repeat

Andres Lomeli

for years Yes. the and expansions upcoming all forward. It CapEx going expected with was new regarding these projects

Luis Campos Orozco

Yes.

have are that. We going to

of in of out November, beginning will We December. find the month

levels, new the City, will And in We be Peru. of going CapEx, we next Board CapEx our our think U.S. additional headquarters you next we I are Mexico is invest at our in CapEx the in to okay? be expansion will are for we In other we Mexico speaking, the committee in okay?But But speaking, have on money generally normal to will year. case and next only CFO. year of The Directors normal our in more that working Jafra our going hand, investing okay? our light basically to investments expansion to give of some corporate our with the Then will that of we in Betterware, on generally are on begin our report, working

Operator

are to call management this closing At time, questions. the I further Thank to for would you. there no back turn like comments.

Luis Campos Orozco

for like a all year our good Well, attending and Thank day. I conference quarter XXXX you one you in see when our you to report this to look of results. fourth I call. have next would we forward and thank

Operator

teleconference. does Thank you. conclude today's This

You your may Thank time. this day. at a lines and your disconnect for you have participation great

Betterware de México, S.A.P.I. de C.V. (BWMX) 27 Oct 232023 Q3 Earnings call transcript