Betterware de Mexico SAPI de CV (BWMX) 2024 Q2 法說會逐字稿

Thank you, and welcome to BeFra’s second quarter 2024 earnings conference call. Speaking on today's call are BeFra’s Executive Chairman, Luis Campos; Chief Executive Officer, Andres Campos, and Chief Financial Officer, Alejandro Ulloa.

謝謝，歡迎參加 BeFra 的 2024 年第二季財報電話會議。BeFra 執行主席 Luis Campos 在今天的電話會議上發言。執行長安德烈斯·坎波斯 (Andres Campos) 和財務長亞歷杭德羅·烏略亞 (Alejandro Ulloa)。

Before they begin their remarks, the company would like to remind you that today's 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 statements should be considered in conjunction with the cautionary statements and the Safe Harbor statement in the earnings release issued yesterday and risk factors discussed in reports filed with the SEC.

在他們開始發言之前，該公司想提醒您，今天的電話會議將包括前瞻性陳述，這些陳述受到各種風險和不確定性的影響，可能導致實際結果與預期有重大差異。任何此類聲明應與昨天發布的收益報告中的警告聲明和安全港聲明以及向 SEC 提交的報告中討論的風險因素結合考慮。

Betterware assumes no obligation to update any of these forward-looking statements or information. A reconciliation of other information regarding non-GAAP financial measures discussed on today's call can also be found in the earnings release as well as the Investors section of the company's website.

Betterware 不承擔更新任何這些前瞻性聲明或資訊的義務。今天電話會議上討論的有關非公認會計準則財務指標的其他資訊的核對也可以在收益報告以及公司網站的投資者部分找到。

Now I would like to turn the call over to the company's Chairman, Luis Campos. Please proceed, Mr. Campos.

現在我想將電話轉給公司董事長路易斯·坎波斯。請繼續，坎波斯先生。

Thank you, operator. Good morning, everyone, and thank you for joining us today. In the second quarter, BeFra maintained its growth momentum and the underlying fundamentals remain strong. We achieved 5.3% year-over-year revenue growth with Betterware Mexico marking its third consecutive quarter of growth. And Jafra US recording its first year over year revenue increase since the acquisition of Jafra in 2022.

謝謝你，接線生。大家早安，感謝您今天加入我們。第二季度，BeFra 保持成長勢頭，基本面依然強勁。我們的營收年增 5.3%，Betterware Mexico 已連續第三個季度實現成長。自 2022 年收購 Jafra 以來，Jafra US 營收首次較去年同期成長。

First half results show an 8% growth in net revenue while EBITDA increased 3%, primarily driven by Jafra Mexico, which has maintained a steady growth pace and a strong performance. Positive results in the period happened under ongoing global supply chain disruptions and temporary market volatility in Mexico experienced after the federal election process. Nevertheless, we remain confident in achieving our 2024 revenue and EBITDA targets as we will explain.

上半年業績顯示，淨收入成長 8%，EBITDA 成長 3%，這主要得益於 Jafra Mexico 維持穩定的成長速度和強勁的表現。在此期間，全球供應鏈持續中斷，墨西哥聯邦選舉過程後市場出現暫時波動，並取得了正面成果。儘管如此，我們仍然對實現 2024 年收入和 EBITDA 目標充滿信心，我們將對此進行解釋。

Looking ahead, we remain positive about the second half of the year. Our performance in the second quarter underscores BeFra's resilience and our ability to effectively navigate challenges. Additionally, we remain firmly committed to increasing shareholder value as evidenced by our 18 consecutive quarterly dividend payment, representing a yield of 10.7% at the end of the quarter.

展望未來，我們對下半年仍持樂觀態度。我們第二季的業績凸顯了 BeFra 的韌性和我們有效應對挑戰的能力。此外，我們仍然堅定地致力於增加股東價值，我們連續 18 個季度支付股息就證明了這一點，季度末的收益率為 10.7%。

Now I will pass the call to Andres to provide more details on BeFra's business unit performance in the second quarter of 2024.

現在我將致電 Andres，提供有關 BeFra 業務部門 2024 年第二季業績的更多詳細資訊。

Thank you, Luis, and good morning, everyone. As Luis noted, our second quarter results demonstrate our ability to navigate volatile market dynamics. Mexico's recent presidential election introduced temporary volatility during the second quarter, with the peso depreciating 7.5% in June alone.

謝謝你，路易斯，大家早安。正如路易斯指出的那樣，我們第二季度的業績證明了我們應對波動的市場動態的能力。墨西哥最近的總統選舉在第二季帶來了暫時的波動，光是 6 月比索就貶值了 7.5%。

Existing global supply chain disruptions were further exacerbated by geopolitical tensions in the Middle East and by an increasing demand for shipping containers traveling from China to Mexico, causing container prices to surge 11.6% on average during the second quarter. Despite these challenges, BeFra achieved a 5.3% increase in net revenues for the quarter, contributing to a 7.8% growth for the first half of 2024.

中東地緣政治緊張局勢以及從中國到墨西哥的貨櫃需求不斷增加，進一步加劇了現有的全球供應鏈中斷，導致第二季貨櫃價格平均飆升11.6%。儘管面臨這些挑戰，BeFra 本季淨收入仍實現了 5.3% 的成長，為 2024 年上半年貢獻了 7.8% 的成長。

Over the past 25 years, BeFra has delivered outstanding performance, boasting a net revenue CAGR of 23% and 24.5% for EBITDA of 2023. These remarkable growth rates underscore our status as a highly profitable growth company. Looking ahead, we are confident on our ability to sustain and build upon our impressive track record.

在過去的 25 年裡，BeFra 表現出色，淨收入複合年增長率為 23%，2023 年 EBITDA 為 24.5%。這些顯著的成長率凸顯了我們作為一家高利潤成長型公司的地位。展望未來，我們對維持和鞏固我們令人印象深刻的業績記錄的能力充滿信心。

Turning to Betterware Mexico, net revenue increased 2.2% year-over-year in the quarter, achieving 7% growth for the first half of 2024. Growth was achieved despite the following factors. Number one, key product sell-outs impacted order fulfillment and salesforce activity levels primarily due to cautious demand estimations. However, these sellouts underscore our ability to develop innovative offerings that resonate with consumers and we expect the growth trend to continue.

至於 Betterware Mexico，本季淨收入年增 2.2%，2024 年上半年實現 7% 的成長。儘管存在以下因素，但仍實現了成長。第一，主要產品的售空影響了訂單履行和銷售人員活動水平，這主要是由於謹慎的需求估計。然而，這些銷售突顯了我們開發與消費者產生共鳴的創新產品的能力，我們預計這種成長趨勢將持續下去。

Number two, import taxes on 116 SKUs averaging a 17% increase pressure profitability. However, our margins remain within historical averages. Additionally, we're strategically increasing some prices to be aligned to the market.

第二，116 個 SKU 的進口稅平均上漲 17%，對獲利能力造成壓力。然而，我們的利潤率仍保持在歷史平均水平內。此外，我們也策略性地提高了一些價格，以適應市場。

And number three, the associate base experienced a slight decline, prompting target incentives for recruitment and retention. Offsetting this, we saw an 8% increase in average order size for associate, reflecting higher productivity and continued market share gains.

第三，員工數量略有下降，促使對招募和留任進行目標激勵。抵銷這一影響的是，我們發現員工的平均訂單規模增加了 8%，反映出生產力的提高和市場佔有率的持續成長。

Looking ahead, we are focused on product innovation and enhancing demand forecasting to prevent future sellouts. Improve pricing structures will also be implemented to bolster market share and sustain momentum.

展望未來，我們將專注於產品創新和加強需求預測，以防止未來的銷售。還將實施改進定價結構，以擴大市場份額並保持成長勢頭。

Jafra Mexico capitalized on favorable trends in the beauty market, achieving 8.7% revenue growth in the quarter. This growth was driven by robust performance across all categories. For the first half of 2024, Jafra Mexico posted at 10.1% year-over-year revenue increase, underscoring our effective product strategies and market positioning. We anticipate sustaining double-digit growth at Jafra over the medium and long term.

Jafra Mexico 利用美容市場的有利趨勢，本季實現了 8.7% 的收入成長。這一成長是由所有類別的強勁表現所推動的。2024 年上半年，Jafra Mexico 的營收年增 10.1%，凸顯了我們有效的產品策略和市場定位。我們預計 Jafra 在中長期內將維持兩位數成長。

In October, we will launch a completely redesigned catalogue featuring a cleaner, more emotionally engaging designed to boost purchases. Additionally, a more effective merchandising plan would enhance pricing and promotional strategies will further strengthen our market position in Mexico's growing good markets.

十月份，我們將推出完全重新設計的目錄，其內容更加簡潔、更具情感吸引力，旨在促進購買。此外，更有效的銷售計劃將提高定價和促銷策略，將進一步加強我們在墨西哥不斷增長的良好市場中的市場地位。

Now, Jafra US achieved year-over-year growth for the first time since the acquisition with revenue increasing by 1.2% in Mexican pesos and by 4.4% in US Dollars and a 3.7% expansion in the associate base. We expect the expanding associate base to be the primary growth driver given our current low penetration levels in the US market.

現在，Jafra US 自收購以來首次實現了同比增長，以墨西哥比索計算的收入增長了 1.2%，以美元計算的收入增長了 4.4%，員工人數增長了 3.7%。鑑於我們目前在美國市場的滲透率較低，我們預計不斷擴大的員工基礎將成為主要成長動力。

The positive momentum at Jafra US reflects successful market penetration strategies and effective implementation of our business model under a new leadership. This includes a newly designed catalog launched this month expected to drive additional growth momentum and positively impact the second half of the year.

Jafra US 的積極勢頭反映了新領導層成功的市場滲透策略以及我們業務模式的有效實施。其中包括本月推出的新設計目錄，預計將推動額外的成長動力並對下半年產生正面影響。

The rollout of Shopify plus platform in August will also bolster -- bolster Jafra's digital presence in the US. Additionally, we are revamping our field strategy to empower and equip our sales force with better training and greater motivation. The strategic acquisition of Jafra has been instrumental in diversifying our product portfolio and providing BeFra with exposure to a rapidly growing market. This move not only mitigates temporary challenges, but also enhances the group's resilience to market disruptions, thereby bolstering our ability to sustain growth and making BeFra a more economically resilient company.

8 月推出的 Shopify plus 平台也將增強 Jafra 在美國的數位業務。此外，我們正在修改我們的現場策略，以便為我們的銷售人員提供更好的培訓和更大的動力。對 Jafra 的策略性收購有助於豐富我們的產品組合，並使 BeFra 能夠接觸到快速成長的市場。此舉不僅緩解了暫時的挑戰，還增強了集團應對市場幹擾的能力，從而增強了我們維持成長的能力，並使 BeFra 成為一家更具經濟彈性的公司。

Our various strategic initiatives underline our commitment to adapting and thriving in dynamic market environment. We remain confident in achieving our full year guidance. I look forward to leveraging these initiatives to drive sustained growth and profitability.

我們的各種策略舉措強調了我們在動態市場環境中適應和繁榮的承諾。我們對實現全年指導仍有信心。我期待利用這些措施來推動持續成長和獲利。

I will now hand over to Alejandro to provide the detailed review of our financial results.

我現在將交給亞歷杭德羅（Alejandro）對我們的財務表現進行詳細審查。

Thank you, Andres, and good morning, everyone. My remarks will focus on BeFra's second quarter, profitability and cash flow. Please note that all figures and projections that we are discussing today are in Mexican pesos, our functional currency. Additional details can be found in yesterday's earnings press release.

謝謝你，安德烈斯，大家早安。我的發言將重點放在 BeFra 第二季度的獲利能力和現金流。請注意，我們今天討論的所有數據和預測均以我們的功能貨幣墨西哥比索為單位。更多詳細資訊可以在昨天的收益新聞稿中找到。

BeFra's consolidated gross margin contracted by 103 basis points due to Betterware's less favorable product mix, higher freight costs, new import taxes and the pesos depreciation experienced in June. It is important to note that periodic volatility in BeFra's quarterly performance is normal in our business. Over the past 10 years, we have consistently maintained an average gross margin of 59%. We anticipate that our performance during the remainder of the year will compensate for this quarter's results and maintain our historical average by year end.

由於 Betterware 的產品組合較差、貨運成本上升、新的進口稅以及 6 月經歷的比索貶值，BeFra 的綜合毛利率收縮了 103 個基點。值得注意的是，BeFra 季度業績的周期性波動在我們的業務中是正常的。過去10年，我們始終維持59%的平均毛利率。我們預計今年剩餘時間的業績將彌補本季的業績，並在年底前維持歷史平均水準。

Free cash flow, defined as operating cash flow minus CapEx decreased by 39% during the quarter due to a 30% year-over-year reduction in operating cash flow, resulting from an unrealized gain in the valuation of the financial hedging instruments and an extended supplier payment period for Jafra Mexico in 2023.

自由現金流量（定義為營運現金流量減去資本支出）在本季度下降了 39%，原因是金融對沖工具估值未實現收益和長期擴張導致營運現金流量同比減少 30%。期為2023 年。

Higher capital expenditures for the new Jafra office in Mexico City and software developments also impacted cash flow. Despite the decrease, the free cash flow to EBITDA ratio remained consistent with BeFra’s historical levels at 70%. The completed sale of the former Jafra Mexico offices in Mexico City for MXN385.7 million will result in additional MXN34.1 million in cash flow for the third quarter of 2024 with MXN350 million to be collected over the next three years as follows.

墨西哥城新 Jafra 辦公室和軟體開發的資本支出增加也影響了現金流。儘管有所下降，自由現金流與 EBITDA 的比率仍與 BeFra 70% 的歷史水準一致。以 3.857 億墨西哥比索的價格完成出售位於墨西哥城的前 Jafra Mexico 辦事處後，2024 年第三季將產生額外 3,410 萬墨西哥比索的現金流，並在未來三年內收回 3.5 億墨西哥比索，具體如下。

MXN140 million, the first year, MXN125 million, the second year and MXN50 million the third year. We also plan to sell another property in Mexico City, previously used as an employee parking lot valued between MXN40 million and MXN50 million. All proceeds from these property sales will be allocated to servicing BeFra’s outstanding debt.

第一年 1.4 億墨西哥比索，第二年 1.25 億墨西哥比索，第三年 5,000 萬墨西哥比索。我們還計劃出售墨西哥城的另一處房產，該房產之前用作員工停車場，價值在 4,000 萬墨西哥比索到 5,000 萬墨西哥比索之間。這些房產銷售的所有收益將用於償還 BeFra 的未償債務。

Our financial position continued to strengthen with a 2.1% reduction in total net debt compared to the second quarter of 2023. We closed the quarter with a net debt to EBITDA ratio of 1.8 times, down from two times a year ago, and we are targeting a ratio of at least 1.5 times by year end, reflecting our financial strength and growth prospects, BeFra’s Board of Directors approved a quarterly dividend payment of MXN250 million, marking our 18 consecutive quarterly dividend since our IPO in March 2020.

我們的財務狀況持續增強，淨債務總額較 2023 年第二季減少 2.1%。BeFra's 表示，本季末，我們的淨負債與EBITDA 的比率為1.8 倍，低於一年前的兩倍，我們的目標是到年底該比率至少達到1.5 倍，這反映了我們的財務實力和成長前景。

We affirm our full year 2024 guidance, expecting consolidated net revenue growth between 6.1% and 10.7% and EBITDA growth between 6.6% and 13.9%. We remain confident in our ability to capitalize on growth opportunities, generate robust cash flows and enhance shareholder value over the long term.

我們確認 2024 年全年指引，預計綜合淨收入成長在 6.1% 至 10.7% 之間，EBITDA 成長在 6.6% 至 13.9% 之間。我們對利用成長機會、產生強勁現金流和長期提高股東價值的能力充滿信心。

I will now turn the call back to the operator for any questions. Thank you.

如果有任何問題，我現在會將電話轉回給接線生。謝謝。

Thank you. We will now begin the question and answer session. (Operator Instructions)

謝謝。我們現在開始問答環節。（操作員說明）

Cristina Fernández, Telsey Advisory.

克里斯蒂娜‧費爾南德斯 (Cristina Fernández)，特爾西顧問公司。

Hi, good morning. I wanted to ask about the product availability at Betterware. Have you been able to catch up with those products as you move through the third quarter? And how long do you think it will take to get back on track with having the inventory to meet the demand?

早安.我想詢問 Betterware 的產品可用性。在第三季度，您是否能夠趕上這些產品？您認為需要多長時間才能回到正軌並擁有滿足需求的庫存？

Hi, Christina, this is Andres. How are you? So we -- the temporary sellout was a temporary thing during the second quarter, we launched some innovations that were beyond our expectations. And so in the second quarter, we had the -- we were unable to fulfill the demand as we had it. But this is all okay for the rest of the year. It's something that it hasn't impacted us before in any quarter in history and we arrange everything so that it doesn't impact us from the third quarter on. So we don't expect this to continue going forward.

嗨，克里斯蒂娜，我是安德烈斯。你好嗎？所以我們——第二季的暫時售空是暫時的，我們推出了一些超出我們預期的創新。因此，在第二季度，我們無法滿足現有的需求。但這在今年剩下的時間都沒有問題。這是歷史上任何一個季度都沒有對我們產生過影響的事情，我們安排了一切，以便它不會從第三季開始影響我們。因此，我們預計這種情況不會持續下去。

Okay, thanks. That's good to hear. And then also on Betterware on the profitability side, it seems like the ocean -- the higher ocean fleet costs and the import taxes will recur in the back half, if that's correct? So what -- what gives you confidence that the growth -- the EBITDA margin for Betterware can increase to 26% in the second half versus what you did in the first half?

好的謝謝。聽起來還不錯。然後，在 Betterware 的盈利能力方面，似乎是海洋——更高的海洋船隊成本和進口稅將在後半段再次出現，如果這是正確的？那麼，是什麼讓您相信，與上半年相比，下半年 Betterware 的 EBITDA 利潤率可以成長至 26%？

Yeah, it's a very good question because on that, we do expect for the tariffs, on the import tariffs and the freight cost to continue during the second semester. So we did basically three things, I would say, to compensate for those higher import taxes and freight cost.

是的，這是一個非常好的問題，因為在這一點上，我們確實預計關稅、進口關稅和貨運成本將在第二學期繼續下去。因此，我想說，我們基本上做了三件事來彌補較高的進口稅和運費。

Number one is that we negotiated with all of our factories and our suppliers to compensate in price for what is happening. China in general -- in general has experienced lower demand, and so we were able to negotiate better costs with our suppliers.

第一是我們與所有工廠和供應商進行了談判，以價格補償所發生的情況。整體而言，中國的需求較低，因此我們能夠與供應商協商更好的成本。

Additional to that, we also impacted prices in some of the items that we see that, in which we can impact prices. So we did impact prices starting in July and a little bit more in August in order to also compensate for this. And it's a -- we believe that this type of volatility in the past either from freight costs or from exchange rates, et cetera. So we -- it's not, it's something that we have lived before and we know the elasticity of demand of the products. So we were able to detect which products could have the price increases.

除此之外，我們也影響了一些我們可以影響價格的商品的價格。因此，我們確實從 7 月開始影響價格，並在 8 月稍微影響價格，以彌補這一點。我們認為，過去的這種波動要么來自運費，要么來自匯率等。所以我們——不是的，這是我們以前經歷過的事情，我們知道產品的需求彈性。因此我們能夠檢測哪些產品可能會漲價。

At the same time, and final but not least, is that we are working on optimizing our expense structure in general as a company so as to compensate also and maintain our strong EBITDA margin that we have at Betterware.

同時，最後但並非最不重要的一點是，作為一家公司，我們正在努力優化我們的整體費用結構，以補償和維持我們在 Betterware 擁有的強勁 EBITDA 利潤率。

Thanks. That's very helpful color. Last question is on Jafra, I guess, Jafra, Mexico in particular. Can you talk in more detail about the innovation pipeline for the back half in any specific product categories that will benefit more than others? I know skincare has been an area of focus, but anything else that you can share from a product perspective?

謝謝。這是非常有用的顏色。最後一個問題是關於賈夫拉的，我想，特別是墨西哥的賈夫拉。您能否更詳細地談談任何特定產品類別中後半部分的創新管道，這些產品類別將比其他產品類別受益更多？我知道保養品一直是人們關注的焦點，但從產品角度來看，您還有什麼可以分享的嗎？

Yeah, sure. So we have a very strong pipeline for the second semester across all the categories. Obviously, as we do. Some of them are out already today in the July, and now in the August catalog. We have a very strong skincare prospect that we just launched. It's called Jafra Biolab. This is a dermo cosmetics line in skincare that we think will be pretty impactful both in Mexico and US market.

好，當然。因此，我們在第二學期的所有類別上都有非常強大的管道。顯然，正如我們所做的那樣。其中一些已經在七月的今天發布，現在已經在八月的目錄中。我們剛推出的保養品前景非常好。它的名字叫 Jafra Biolab。這是一個皮膚護理領域的真皮化妝品系列，我們認為它在墨西哥和美國市場都將產生相當大的影響。

And the only thing about skincare is that skincare is a category where it takes a little bit more time normally for consumers to adopt it. But I think that these launches such as Biolab, we'll strengthen that category going forward. And apart from that, we are continuing to launch in all categories, fragrances, color and body care.

而保養品唯一的問題是，保養品是一個消費者通常需要多一點時間才能接受的品類。但我認為，像 Biolab 這樣的產品，我們將在未來加強這個類別。除此之外，我們還將繼續推出所有類別的產品，包括香水、彩妝和身體護理產品。

Thank you.

謝謝。

(Operator Instructions) Thank you. That concludes the question cand answer portion of today's conference call. I would like to turn it back over to management for closing remarks.

（操作員說明）謝謝。今天電話會議的問答部分到此結束。我想將其轉回管理層以供結束語。

Thank you, operator, and thank you once again to everyone for joining today's call. We are thrilled with the ongoing growth of Betterware and Jafra Mexico and excited to see Jafra US entering a growth phase. With a robust commercial strategy, we have implemented for the second half of the year. We are confident in achieving our full year guidance set at the beginning of the year. This positions us well to continue our trend of growth and profitability into 2025.

謝謝接線員，再次感謝大家參加今天的電話會議。我們對 Betterware 和 Jafra Mexico 的持續成長感到興奮，並很高興看到 Jafra US 進入成長階段。憑藉穩健的商業策略，我們已在下半年實施。我們有信心實現年初設定的全年指引。這使我們能夠在 2025 年繼續保持成長和獲利的趨勢。

We look forward to seeing you on our next earnings call and to meeting you at upcoming investor engagements. Have a great day, everyone. Thank you.

我們期待在下一次財報電話會議上見到您，並在即將到來的投資者活動中見到您。祝大家有個美好的一天。謝謝。

Ladies and gentlemen, this concludes BeFra’s second quarter 2024 earnings conference call. We would like to thank you again for your participation. You may now disconnect.

女士們、先生們，BeFra 的 2024 年第二季財報電話會議到此結束。我們再次感謝您的參與。您現在可以斷開連線。