Betterware De Mexico, S.A. De C.V ((BWMX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Betterware De Mexico, S.A. De C.V. painted a picture of robust financial performance, marked by significant EBITDA and free cash flow growth, successful international expansion, and a notable reduction in debt. However, the company is facing challenges, particularly with declining sales in Mexico and profitability issues in Jafra U.S. due to legal expenses.
EBITDA and Margin Growth
The company reported a 22% year-over-year growth in EBITDA, with margins expanding by 362 basis points to 21.4%. This growth underscores Betterware’s strong profitability and operational efficiency.
Successful International Expansion
Betterware’s international ventures are yielding positive results, with Betterware Ecuador surpassing expectations with a 20% month-over-month revenue growth, and Betterware Guatemala achieving a 32% year-over-year sales increase.
Debt Reduction
Betterware successfully reduced its total debt from MXN 6,700 million to MXN 5,200 million. This reduction improved the net debt-to-EBITDA ratio from 3.1x to 1.8x, reflecting the company’s commitment to strengthening its financial position.
Strong Free Cash Flow
The company maintained a strong free cash flow conversion at 77% of EBITDA, marking a 32.6% year-over-year increase. This highlights Betterware’s ability to generate cash and support its growth initiatives.
Jafra Mexico Growth
Jafra Mexico demonstrated solid performance with an 8% increase in revenue and a 31% growth in EBITDA, achieving a margin of 24%. This indicates a strong market presence and effective business strategies.
Betterware Sales Decline
Despite the overall positive performance, Betterware experienced a 5.3% decline in sales year-over-year, primarily due to softer demand in Mexico, highlighting a challenge in its home market.
Jafra U.S. Profitability Issues
Jafra U.S. faced profitability challenges due to extraordinary legal expenses, although it showed a promising 30% year-over-year revenue growth in September, indicating potential for recovery.
Softer Consumer Environment
The consumer environment in Mexico and the U.S. remained soft, affecting discretionary spending and overall demand, which poses a challenge for Betterware’s sales growth.
Forward-Looking Guidance
Looking ahead, Betterware plans to continue its strategic initiatives despite the softer consumer environment. The company aims to strengthen its leadership in the Mexican market, expand regionally in the U.S. and Latin America, and enhance digital person-to-person selling. It also plans to leverage its financial strength for potential acquisitions and regional growth, with the launch of Betterware in Colombia slated for early 2026.
In conclusion, Betterware De Mexico’s earnings call highlighted a strong financial performance with significant growth in EBITDA and free cash flow, alongside successful international expansion and debt reduction. However, challenges persist with declining sales in Mexico and profitability issues in Jafra U.S. The company’s forward-looking strategies and focus on regional expansion and digital innovation are poised to address these challenges and drive future growth.