Betterware de México, S.A.P.I. de C.V. (BWMX) Earnings

Management highlights

- Introduced new CFO Raul Del Villar with over 30 years of senior finance experience in multinational consumer companies. - Delivered slight revenue growth and significant EBITDA growth, with EBITDA margin expanding. Net income and free cash flow remained strong. - Continued to diversify revenue mix in brands and geographies, expecting Tupperware transaction approval to accelerate this trend. - Highlighted BetterWars' early success in Equalor and Guatemala. - Noted BetterWear's growth due to geographic expansion and Jafra US' improving trends but Jafra Mexico's lower sales. - Mentioned the impact of targeted initiatives on the associate base and Jafra Mexico's shift to attraction and retention initiatives. - EVTA performance showed improved profitability with margin expanding 211 basis points, and net income nearly doubling. - Free cash flow normalized, converting 58% of DBTA into cash, and the board proposed a dividend. - Total debt fell, net debt to EBITDA improved, and asset - light model remained resilient with ROTA and ROIC increasing. - Advanced five strategic pillars: strengthening Mexico market leadership, regional expansion, developing/acquiring new brands/categories, digital transformation, and financial discipline. - Outlined progress on 2026 strategic initiatives for Better Work Mexico, Jafra Mexico, and regional expansion. - Discussed digital transformation across three main pillars and financial discipline as the backbone.

Guidance

- Maintained revenue growth guidance for the year at 4% - 8%. - Expected Tupperware transaction approval in Q2, with the new brand immediately earnings accretive. - Anticipated Better Work Mexico's growth to strengthen, Jafra US to continue strong performance, and Jafra Mexico to show an inflection point in Q2 and then grow stronger.

Segment performance

BEFRA achieved a slight year - over - year revenue growth of 0.3% and EBITDA growth of 14%, expanding EBITDA margin from 15.3% to 17.4%. BetterWear grew 2.6% despite one less week in the quarter, benefiting from geographic expansion. Jafra US showed improving trends while Jafra Mexico had lower sales. BetterWars expanded into Equalor and had improving performance in Guatemala, with its contribution increasing from 0.1% to 0.7% of total revenue over the past year. The acquisition of Tupperware transaction is expected to be approved in Q2, and the new brand will be immediately earnings accretive, contributing an estimated 40% to earnings per share.

Risks & headwinds

- Potential impact of oil price volatility on freight costs and supply chain. - Uncertainty regarding regulatory approval of the Tupperware transaction.

Analyst Q&A

• Q: Can we talk a little bit about the state of Mexican consumer? I know that Q1 last year was a bit of a shock to them and kind of how are you seeing and what are they kind of looking out for right now in terms of their purchase going forward?

  A: Yeah. We are seeing a slight rebound in consumption in the first quarter. Consumption growth has been decreasing for the past three or four years, hit the lowest growth last year with about a 1.1% growth in consumption, and this year the expectation is 1.6%. There's a slight rebound in private consumption up to January and February, which helps to change the trajectory.

• Q: You did a great job with inventory down a significant level, clearly higher than the revenue change. When do you start to anniversary that, and what will be the goal after you kind of get there? Do you mean in inventory?

  A: Yeah, as we mentioned before, in inventory, we have already lowered it up to the fourth quarter of last year. It remained pretty stable in those levels at the end of this quarter. We do expect a slight decrease throughout the year. We were talking about 100 million pesos more of a decrease. But we don't see inventory declining much further after that. We think that we've reached nearly our optimal levels and think it can remain stable going there.

• Q: You announced the acquisition of Tupperware Latin America. I know in the last few months you've met with a lot of people at that company. Are you more excited, less excited? How are you feeling about this acquisition now that it's been announced and you've gone out and kind of gone to the field to talk to people? And kind of how do you look at the near and longer term opportunities here?

  A: Yeah, thank you, Rick. We are very excited about this acquisition. We're still pending on approval from the antitrust agency in Mexico, which we expect to happen during this second quarter. But we are excited about this acquisition. Tupperware is a very well - positioned brand in customers' minds in all of Latin America. There's a lot to do in terms of product innovation, replicating Befra's model in Tupperware in terms of merchandising, innovation, and many things that we can really leverage on such a great brand. We are very excited to tap into LATAM's biggest market, Brazil, with a strong foothold when we start. It's already an almost $100 million revenue company there.

• Q: When you look at the performance this past quarter and also started to see a little bit of a slowdown the quarter before. How much of that you think is a slowdown in the broader beauty market or is it just specific to Jafra Mexico and some of the points you talked about as it relates to the consultant recruiting and the innovation?

  A: Yeah, thank you. And hi, Cristina. And yeah, so we definitely think it's more internal than external. We see the beauty market continue to grow, continue to expand in Mexico. The internal factors that impacted the fourth quarter and the first quarter were mainly two factors. One is that last year we focused more on line renovations than on real innovation. Now, this year, we are focusing again on real innovation. The second part is that while we were trying to incentivize more productivity from our associate base, we think that that affected a little bit of bringing in new associates and also keeping our small unproductive associate base active. We've already detected everything there, reversed it, starting in March and more so in April. And pretty much in April, we're back to where we need to be. So we do expect a rebound throughout the year, and we do expect that rebound to start in the second quarter to get an inflection point and then strengthen growth again throughout the year.

• Q: You kept your revenue growth guidance for the year 4% to 8%, even though the first quarter came in a little bit lower. So if I'm understanding what you're saying, you expect the second quarter to be better from a growth perspective than the first quarter, and then the back half to be the strongest of the year. Is that correct?

  A: Yes, definitely. We expect Better Work Mexico's growth to strengthen. We started the year at 2.6%. On a same week basis, it was 3.3%, but we expect that growth of Better Work to keep strengthening. You know, Better Work Mexico started rebounding last year in the second half of last year started rebounding and now we're seeing its incremental revenue versus previous year then at the same time we expect all of the latam expansion of better work to continue contributing to growth and we also we expect jaffra us to continue delivering great results as you saw we grew 8.6% in dollars, and we expect that to continue strengthening. And then with this inflection of Jaffa Mexico, we think as a group, we're going to start seeing a growing, a strengthening in growth.

• Q: You did a really good job with managing expenses this quarter. Are you seeing any pressure? So you expect any pressure as the year progresses, either in freight, meaning like supply chain or transportation costs as a result of the kind of volatility in oil prices? Or are you, you know, contracted out for the year at, you know, at stable rates?

  A: Yeah. Thank you, Christina. So definitely the volatility that has been happening in oil prices from the whole situation with the Hormuz Strait and all of that is definitely something we're not only having an eye on, but we are taking actions. We have seen some slight increases, temporary increases, in freight costs from China because of the petroleum. But at the moment, we have not received too much pressure from our suppliers in terms of raw material costs. We are vigilant to what happens if this becomes a temporary thing or a more sustained issue. And we are preparing tactics and strategies as we've done before. When things like this happen, we are preparing strategies and tactics to counter these effects. We feel confident that we can react to any sustained pressures from this.