Betterware (BWMX) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated net revenue increased 5.3% year-over-year, with Betterware Mexico achieving its third consecutive quarter of growth and JAFRA US posting its first positive year-over-year revenue since acquisition.

• H1 2024 net revenue grew 8%, and EBITDA increased 2.9%, driven by JAFRA Mexico's strong performance and operational efficiencies.

• Q2 2024 EPS rose 16% year-over-year, mainly due to lower net financing costs and ongoing deleveraging.

• Maintained growth momentum despite global supply chain disruptions, higher costs, and temporary market volatility in Mexico following the federal election.

• Focused on expanding household penetration in Mexico and advancing international expansion into the US Hispanic market and Peru.

Financial highlights

• Q2 2024 net revenue: Ps. 3,389 million (+5.3% YoY); H1 2024: Ps. 6,992 million (+7.8% YoY).

• Q2 2024 EBITDA: Ps. 656 million (-8.5% YoY); H1 2024 EBITDA: Ps. 1,412 million (+2.9% YoY); EBITDA margin: 19.4% (-292 bps YoY).

• Q2 2024 gross margin: 72.2% (-103 bps YoY), impacted by higher import taxes, freight costs, and sales mix.

• Free cash flow in Q2 2024 decreased 39% YoY to Ps. 458 million, mainly due to higher CapEx and extended supplier payment periods.

• Free cash flow to EBITDA ratio remained at 70%, consistent with historical levels.

Outlook and guidance

• Affirmed full-year 2024 guidance: consolidated net revenue growth of 6.1%–10.7% and EBITDA growth of 6.6%–13.9%.

• Confident in achieving 2024 revenue and EBITDA targets, with margin recovery expected in H2 and sustained growth into 2025.

• Net Debt/EBITDA targeted to reach at least 1.5x by year-end 2024.

• Expecting to maintain historical gross margin average of 59% by year-end.

• Guidance may be revised upward if strong results continue.