Betterware de México, S.A.B. de C.V. (NYSE:BWMX) Q4 2022 Earnings Conference Call February 24, 2023 9:00 AM ET Company Participants Luis Campos - Executive Chairman Andres Campos - CEO Alejandro Ulloa - CFO Conference Call Participants Eric Beder - SCC Research Cristina Fernandez - Telsey Advisory Group Operator Thank you and welcome to Betterware’s Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. With me on the call today are Betterware’s Executive Chairman, Luis Campos; Betterware’s Chief Exe ...

Betterware de México, S.A.B. de C.V. (NYSE:BWMX) Q3 2022 Earnings Conference Call October 28, 2022 9:00 AM ET Company Participants Luis Campos - Executive Chairman Andres Campos - CEO Alejandro Ulloa - CFO Conference Call Participants Cristina Fernandez - Telsey Group Eric Beder - SCC Research Andres Lomeli - LCA Capital Operator Thank you and welcome to BetterwareÂ's Third Quarter Fiscal Year 2022 Earnings Conference Call. With me on the call today are BetterwareÂ's Executive Chairman, Luis Campos; Chief E ...

Betterware de México, S.A.B. de C.V. (NYSE:BWMX) Q2 2022 Earnings Conference Call July 29, 2022 9:00 AM ET Company Participants Luis Campos – Executive Chairman Andres Campos – Chief Executive Officer Carlos Doormann – Corporate Chief Financial Officer Conference Call Participants Cristina Fernandez – Telsey Operator Thank you and welcome to BetterwareÂ's Second Quarter Fiscal Year 2022 Earnings Conference Call. With me on the call today are BetterwareÂ's Executive Chairman, Luis Campos; Chief Executive Off ...

Betterware de Mexico, S.A. de C.V. (NYSE:BWMX) Q1 2022 Earnings Conference Call April 29, 2022 9:00 AM ET Company Participants Luis Campos - Executive Chairman Andres Campos - Chief Executive Officer Carlos Doormann - Corporate Chief Financial Officer Conference Call Participants Cristina Fernandez - Telsey Operator Thank you and welcome to todayÂ's BetterwareÂ's First Quarter Fiscal Year 2022 Earnings Conference Call. With me on todayÂ's call for BetterwareÂ's Executive Chairman, Luis Campos; Chief Executi ...

PART I [Key Information](index=11&type=section&id=ITEM%203.%20KEY%20INFORMATION) Outlines significant investment risks, including business, Mexico-specific, and ownership factors, such as distributor dependence, supply chain issues, and internal control weaknesses [Risks Related to Betterware's Business](index=11&type=section&id=Risks%20Related%20to%20Betterware%27s%20Business) Business risks include heavy reliance on distributors, intense competition, supply chain disruptions from China, and internal control weaknesses - The company is highly dependent on its network of independent distributors and associates for product sales. As of December 31, 2021, this network consisted of approximately **1,063,720 active associates** and **50,972 distributors**[67](index=67&type=chunk)[71](index=71&type=chunk) - In 2021, products supplied by Chinese manufacturers accounted for approximately **94% of the company's revenues**, exposing it to significant supply chain risks, including political, regulatory, and logistical disruptions like those experienced in the second half of 2021[93](index=93&type=chunk)[96](index=96&type=chunk) - Management identified a **material weakness in internal control over financial reporting** as of December 31, 2021, related to insufficient policies for complex accounting matters and incomplete implementation of IT controls[105](index=105&type=chunk) - The controlling shareholder, Campalier, owned approximately **53.38% of outstanding common stock**, giving it significant influence over company actions, which may conflict with the interests of other shareholders[108](index=108&type=chunk) - The company faces challenges in integrating the recently acquired JAFRA business, including potential diversion of management attention, cultural differences, and assumption of unknown liabilities[112](index=112&type=chunk)[113](index=113&type=chunk) [Risks Related to Mexico](index=17&type=section&id=Risks%20Related%20to%20Mexico) Operations in Mexico expose the company to economic instability, currency fluctuations, political risks, and security issues - Nearly all operations and customers are located in Mexico, making the company's financial condition substantially dependent on Mexican economic conditions. For 2021, Mexico's GDP increased by **4.8%** after a decrease of 8.2% in 2020[119](index=119&type=chunk) - The company is exposed to currency exchange risk from the U.S. dollar/Mexican peso fluctuation. To mitigate this, it uses forward U.S. dollar–Mexican peso derivative contracts, which covered **100% of product needs until October 2022**[133](index=133&type=chunk) - High inflation in Mexico could adversely affect operations. The annual inflation rate was **7.4% in 2021**, compared to 3.2% in 2020 and 2.8% in 2019, impacting consumer spending and increasing cost pressures[148](index=148&type=chunk) - The company's direct sales model is subject to regulations intended to prevent fraudulent schemes. Changes in these laws in Mexico could negatively affect or prohibit direct sales efforts, harming revenue[153](index=153&type=chunk)[156](index=156&type=chunk) [Risks Related to Ownership of our Ordinary Shares](index=23&type=section&id=Risks%20Related%20to%20Ownership%20of%20our%20Ordinary%20Shares) Ownership risks include foreign private issuer status, potential delisting, and anti-takeover provisions that may limit shareholder rights - As a "foreign private issuer," Betterware is exempt from certain SEC rules, including proxy solicitation rules and Regulation FD, and can follow Mexican corporate governance practices, which may offer less shareholder protection than Nasdaq requirements for U.S. issuers[159](index=159&type=chunk)[160](index=160&type=chunk) - The company's bylaws contain anti-takeover provisions requiring prior board approval for any person or group to acquire **20% or more of the company's shares**, which could discourage transactions that might benefit shareholders[175](index=175&type=chunk)[176](index=176&type=chunk) - The company's Amended and Restated Charter establishes the federal courts in Mexico City as the exclusive jurisdiction for most shareholder disputes, which may limit a shareholder's ability to bring a claim in a favorable forum[172](index=172&type=chunk)[173](index=173&type=chunk) [Company Information](index=28&type=section&id=ITEM%204.%20COMPANY%20INFORMATION) Provides an overview of Betterware's history, direct-to-consumer business model, key assets, and sustainability initiatives [History and Development of the Company](index=28&type=section&id=A.%20HISTORY%20AND%20DEVELOPMENT%20OF%20THE%20COMPANY) Details Betterware's corporate history, including its public listing, strategic acquisitions, and major investments in infrastructure and sustainability bonds - In August 2019, the company began construction of a new distribution center, which was completed in Q1 2021 with a total investment of **Ps. 1.071 billion**[184](index=184&type=chunk) - On August 30, 2021, Betterware issued a two-tranche sustainability bond for a total of **Ps. 1.5 billion** to finance environmental and social initiatives[189](index=189&type=chunk) - On January 18, 2022, the company agreed to acquire **100% of JAFRA's operations** in Mexico and the U.S. The transaction was completed on April 7, 2022[190](index=190&type=chunk) [Business Overview](index=29&type=section&id=B.%20BUSINESS%20OVERVIEW) Describes Betterware's direct-to-consumer model, product innovation, efficient logistics, and growth strategies including the JAFRA acquisition - Operates a two-tier sales model with over **50,972 Distributors** and **1,063,720 Associates** as of December 31, 2021, serving approximately **24% of households in Mexico**[192](index=192&type=chunk)[202](index=202&type=chunk) - The company constantly innovates, introducing approximately **338 new products annually**, which represent **11%–18% of the products in a catalogue**[191](index=191&type=chunk)[210](index=210&type=chunk) - The business model features **zero last-mile delivery cost**, as distributors and associates deliver products directly to final consumers[194](index=194&type=chunk) - Following the JAFRA acquisition, Betterware plans to replicate its strategic pillars of product innovation, technology, and business intelligence to accelerate JAFRA's growth[196](index=196&type=chunk) [Property, Plant and Equipment](index=33&type=section&id=D.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) Details the company's primary asset, a new distribution center in Jalisco, completed in 2021 with a Ps. 1.071 billion investment - The company completed a new distribution center in Q1 2021 with a total investment of **Ps. 1.071 billion**. This project was financed partially by long-term loans, which were prepaid in 2021 with proceeds from a sustainability bond[216](index=216&type=chunk) [Sustainability](index=33&type=section&id=E.%20SUSTAINABILITY) Highlights Betterware's sustainability strategy, including a Ps. 1.5 billion bond, eco-friendly campus, and gender equality initiatives - In 2021, the company obtained **Ps. 1.5 billion** through a Sustainable Bond Program to finance projects with environmental and social impact[220](index=220&type=chunk) - The new "Campus Betterware" distribution center, an investment of **Ps. 1.071 billion**, was built with sustainable practices, using **~90% recyclable materials** and energy-efficient systems, earning a Fitwell certification[228](index=228&type=chunk)[230](index=230&type=chunk)[235](index=235&type=chunk)[241](index=241&type=chunk) - The company is committed to gender equality, with women representing **70% of the sales force** and **41% of the permanent workforce in 2021**. It aims to add **two women to the Board of Directors by 2025**[238](index=238&type=chunk)[240](index=240&type=chunk) [Operating and Financial Review and Prospects](index=36&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Analyzes financial performance, liquidity, and key trends, including revenue growth, expense increases, and the JAFRA acquisition [Operating Results](index=37&type=section&id=A.%20Operating%20Results) Details 2021 operating results, showing significant net revenue and net income growth, alongside increased administrative and selling expenses Financial Performance Comparison (2021 vs. 2020) | Financial Metric | 2021 (Ps. thousands) | 2020 (Ps. thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 10,039,668 | 7,260,408 | +38.3% | | Cost of Sales | 4,399,164 | 3,290,994 | +33.7% | | Gross Profit | 5,640,504 | 3,969,414 | +42.1% | | Administrative Expenses | 1,247,436 | 664,677 | +87.7% | | Selling Expenses | 1,264,581 | 853,355 | +48.2% | | Net Income | 1,800,884 | 338,361 | +432.2% | EBITDA Reconciliation (Non-IFRS) | In thousands of Mexican Pesos | Dec 31, 2021 | Jan 03, 2021 | Dec 31, 2019 | | :--- | :--- | :--- | :--- | | Net Income for the period | 1,800,884 | 338,361 | 472,142 | | Add: Total Income Taxes | 824,454 | 542,768 | 232,692 | | Add: Financing Cost, net | 39,370 | 1,239,230 | 107,411 | | Add: Depreciation and Amortization | 82,122 | 43,688 | 38,394 | | **EBITDA** | **2,746,830** | **2,164,047** | **850,639** | - The significant decrease in net financing cost from **Ps. 1.24 billion in 2020** to **Ps. 39.4 million in 2021** was primarily due to the absence of the **Ps. 851.5 million loss on warrant valuation** recorded in 2020[279](index=279&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=B.%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses liquidity, cash flow from operations, the Ps. 1.5 billion sustainability bond issuance, and impacts of supply chain disruptions - On August 30, 2021, Betterware issued a two-tranche sustainability bond for **Ps. 1.5 billion**, using the proceeds to prepay long-term debt with Banamex and BBVA[291](index=291&type=chunk)[297](index=297&type=chunk) Cash Flow Summary (2021 vs. 2020) | Cash Flow Activity (Ps. thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 1,465,597 | 1,822,256 | | Net Cash used in Investing Activities | (320,378) | (631,401) | | Net Cash used in Financing Activities | (619,841) | (754,732) | - The COVID-19 pandemic continued to affect the business in the second half of 2021, causing a higher-than-average churn rate for associates and supply chain disruptions, including increased sea and air freight costs[307](index=307&type=chunk)[308](index=308&type=chunk) - In 2021, the company paid total dividends of **Ps. 1.4 billion**, compared to **Ps. 830 million in 2020**[295](index=295&type=chunk) [Trend Information](index=45&type=section&id=D.%20TREND%20INFORMATION) Outlines key trends, including commercial strategies to mitigate COVID-19 impacts, sustainability focus, and the strategic JAFRA acquisition - Commercial strategies in 2021 included a **12% price increase**, increasing the number of catalogues from **9 to 12 per year**, and focusing on recruitment and retention of distributors[309](index=309&type=chunk) - The acquisition of JAFRA is a key strategic move to diversify by category (beauty) and geography (entering the U.S. market) and to accelerate JAFRA's digital transformation[314](index=314&type=chunk) - The issuance of a **Ps. 1.5 billion sustainability bond** reflects a long-term commitment to financing initiatives with positive environmental and social impacts[311](index=311&type=chunk) [Directors, Senior Management and Employees](index=46&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) Details leadership, compensation, board structure, and employee numbers, including the Audit and Corporate Practices Committee [Compensation](index=50&type=section&id=B.%20COMPENSATION) Covers executive compensation, totaling Ps. 42.2 million in 2021, and the share-based incentive plan for management - In 2021, aggregate compensation for top management was approximately **Ps. 38.6 million**, plus **Ps. 3.6 million in bonuses**, for a total of **Ps. 42.2 million**[337](index=337&type=chunk) - The company has a share-based incentive plan to reward executives and directors. As of December 31, 2021, **731,669 shares** had been delivered to Campalier under this plan[338](index=338&type=chunk) [Board Practices](index=50&type=section&id=C.%20BOARD%20PRACTICES) Describes the Audit and Corporate Practices Committee's structure, independence, and responsibilities in governance and oversight - The Audit and Corporate Practices Committee consists of **three independent members** and is responsible for corporate governance, audit oversight, and reviewing related-party transactions[339](index=339&type=chunk)[341](index=341&type=chunk)[347](index=347&type=chunk) [Employees](index=53&type=section&id=D.%20EMPLOYEES) Provides an overview of the company's employee base, primarily in operations, with total numbers for recent years Number of Employees by Year | | Dec 31, 2021 | Jan 03, 2021 | Dec 31, 2019 | | :--- | :--- | :--- | :--- | | Operations | 977 | 962 | 296 | | Sales and marketing | 167 | 148 | 263 | | Finance, admin, HR, IT | 128 | 184 | 115 | | **Total** | **1,272** | **1,294** | **674** | [Major Shareholders and Related Party Transactions](index=53&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Discloses the company's ownership structure, with Campalier S.A. de C.V. as the controlling shareholder Major Shareholders | Shareholder | Ordinary Shares Beneficially Owned | Percentage (%) | | :--- | :--- | :--- | | Campalier S.A. de C.V. | 19,919,793 | 53.38% | | Cede & Co. | 17,396,753 | 46.62% | [Financial Information](index=54&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) Confirms inclusion of financial statements, notes minor legal proceedings, and absence of a formal dividend policy - The company is involved in a legal proceeding with the Mexican Tax Administration Service (SAT) regarding its 2010 income tax filing. Management does not expect this to result in a **significant liability**[371](index=371&type=chunk) - The company has not implemented a formal dividend distribution policy as of the date of the report[372](index=372&type=chunk) [Additional Information](index=55&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) Provides details on corporate governance, including anti-takeover provisions, and U.S. federal income tax considerations for shareholders - The company's bylaws include anti-takeover protections requiring Board of Directors' approval for any change of control or transfer of **20% or more of the company's shares**. An approved transaction would trigger a tender offer for **100% of the shares**[406](index=406&type=chunk)[408](index=408&type=chunk) - The company believes it was not a Passive Foreign Investment Company (PFIC) for its 2021 taxable year and does not expect to be one in the foreseeable future, but this status is determined annually[434](index=434&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=64&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20REGARDING%20MARKET%20RISK) Discusses market risks, primarily foreign exchange and interest rate fluctuations, and the use of derivatives to manage these exposures - The company's primary market risks are exchange rate risk (MXN vs. USD) and interest rate risk. It uses derivative instruments like foreign exchange forward contracts to manage these exposures[447](index=447&type=chunk)[449](index=449&type=chunk) Net U.S. Dollar Position (in thousands) | | Dec 31, 2021 | Jan 03, 2021 | Dec 31, 2019 | | :--- | :--- | :--- | :--- | | Financial assets | US$ 10,686 | US$ 29,559 | US$ 1,331 | | Financial liabilities | US$ (35,148) | US$ (49,570) | US$ (16,095) | | **Net position** | **US$ (24,462)** | **US$ (20,011)** | **US$ (14,764)** | - A sensitivity analysis indicates that a **10% strengthening of the Mexican Peso** against the U.S. Dollar would result in an increase in net income of **Ps. 50.19 million** for 2021[454](index=454&type=chunk)[455](index=455&type=chunk) - Credit risk is considered low as no single customer represents more than **10% of sales**, and the customer base is large and geographically diverse[466](index=466&type=chunk) PART II [Controls and Procedures](index=71&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Discloses ineffective disclosure controls and material weaknesses in internal control over financial reporting, with remediation efforts underway - Management concluded that the company's disclosure controls and procedures were **not effective** as of December 31, 2021, due to material weaknesses in internal control over financial reporting[486](index=486&type=chunk) - The independent registered public accounting firm (Deloitte) issued an **adverse opinion** on the company's internal control over financial reporting as of December 31, 2021[498](index=498&type=chunk)[500](index=500&type=chunk) - The identified material weaknesses include: (i) ineffective control activities to review, analyze, record and disclose financial information, including complex accounting matters, and (ii) certain IT general and application controls were not fully implemented or did not operate effectively for a sufficient period[495](index=495&type=chunk)[506](index=506&type=chunk) - Remediation efforts have begun, including the design and implementation of an Internal Control over Financial Reporting (ICFR) program aligned with the COSO framework[509](index=509&type=chunk) [Principal Accountant Fees and Services](index=75&type=section&id=ITEM%2016C.PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Details fees paid to Deloitte for audit and other services, and the Audit Committee's pre-approval policy Fees Paid to Principal Accountant (in thousands of MX$) | Fee Type | For the Year Ended Dec 31, 2021 | For the Year Ended Jan 03, 2021 | | :--- | :--- | :--- | | Audit fees | 6,945 | 8,975 | | Audit related fees | 2,258 | 3,811 | | Other fees | 2,064 | 1,642 | | **Total** | **11,267** | **14,428** | - The Audit Committee is responsible for pre-approving all audit and permissible non-audit services provided by the independent auditors[519](index=519&type=chunk) PART III [Financial Statements](index=77&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) Presents audited financial statements, auditor's opinions, and key notes on debt, equity, and the JAFRA acquisition [Report of Independent Registered Accounting Firm](index=81&type=section&id=Report%20of%20Independent%20Registered%20Accounting%20Firm) Auditor issued an unqualified opinion on financial statements but an adverse opinion on internal controls, highlighting critical audit matters - The auditor issued an **unqualified opinion** on the consolidated and combined financial statements[540](index=540&type=chunk) - The auditor issued an **adverse opinion** on the Group's internal control over financial reporting as of December 31, 2021, because of material weaknesses[540](index=540&type=chunk) - Critical Audit Matters identified were: 1) Impairment of Goodwill and Brand Intangible Asset, due to significant management estimates in the discounted cash flow model, and 2) Assessment of the allowance for credit losses (ECL) on accounts receivable, due to significant judgment required in estimating recovery[546](index=546&type=chunk)[549](index=549&type=chunk) [Consolidated and Combined Statements of Financial Position](index=84&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Financial%20Position) Presents the financial position, showing growth in total assets, liabilities, and stockholders' equity driven by debt issuance and net income Statement of Financial Position Highlights (in thousands of Mexican pesos) | Account | As of Dec 31, 2021 | As of Jan 03, 2021 | | :--- | :--- | :--- | | **Total Assets** | **5,304,541** | **4,413,760** | | Total Current Assets | 3,472,059 | 2,906,570 | | Total Non-current Assets | 1,832,482 | 1,507,190 | | **Total Liabilities** | **3,997,542** | **3,491,867** | | Total Current Liabilities | 2,420,503 | 2,867,397 | | Total Non-current Liabilities | 1,577,039 | 624,470 | | **Total Stockholders' Equity** | **1,306,999** | **921,893** | [Consolidated and Combined Statements of Profit or Loss](index=86&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Profit%20or%20Loss) Details the income statement, showing significant increases in net revenue, gross profit, operating income, and net income for 2021 Income Statement Summary (in thousands of Mexican pesos) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net revenue | 10,039,668 | 7,260,408 | 3,084,662 | | Gross profit | 5,640,504 | 3,969,414 | 1,803,833 | | Operating income | 2,664,708 | 2,120,359 | 812,245 | | Net income for the year | 1,800,884 | 338,361 | 472,142 | | Basic earnings per share (pesos) | 48.81 | 9.93 | 15.63 | [Notes to the Financial Statements](index=90&type=section&id=Notes%20to%20the%20Financial%20Statements) Provides detailed explanations of financial statements, including accounting policies, debt structure, equity changes, and the JAFRA acquisition - The company issued a two-tranche sustainability bond for a total of **Ps. 1.5 billion** on August 30, 2021, with maturities of 4 and 7 years. Proceeds were used to prepay existing long-term debt with Banamex and BBVA (Note 15)[778](index=778&type=chunk)[780](index=780&type=chunk)[782](index=782&type=chunk) - In 2021, the company declared and paid four separate dividends totaling **Ps. 1.4 billion** from retained earnings (Note 21)[887](index=887&type=chunk)[888](index=888&type=chunk)[889](index=889&type=chunk)[891](index=891&type=chunk) - Subsequent to year-end, on January 18, 2022, Betterware agreed to acquire **100% of JAFRA's operations for US$255 million**. The acquisition was consummated on April 7, 2022, financed by a **US$225 million syndicated loan** and **US$30 million in operating cash** (Note 28)[927](index=927&type=chunk) - As of January 3, 2021, all outstanding warrants from the DD3 merger had been redeemed, resulting in a recognized loss of **Ps. 851.5 million** in 2020 from the change in fair value (Note 18.2)[833](index=833&type=chunk)

Betterware de Mexico, S.A.B. de C.V. (NYSE:BWMX) Q4 2021 Earnings Conference Call February 11, 2022 9:00 AM ET Company Participants Luis Campos - Executive Chairman Andres Campos - Chief Executive Officer Carlos Doormann - Corporate Chief Financial Officer Conference Call Participants Joe Feldman - Telsey Advisory Group Eric Beder - SCC Research Luis Yance - Compass Group Jonathan Shafter - Clear Harbor Operator Thank you and welcome to Betterware's Fourth Quarter and Fiscal Year 2021 Earnings Conference Ca ...

Béttèrware® 4Q & FY 2021 Earnings Release investors.betterware.com.mx BETTERWARE REPORTS FOURTH QUARTER AND FISCAL YEAR 2021 RESULTS: Guadalajara, Jalisco, Mexico, February 10, 2022. - Betterware de Mexico S.A.P.I. de C.V. (NASDAQ: BWMX), ("Betterware" or the "Company"), announced today its consolidated financial results for the fourth quarter and fiscal year 2021. The figures presented in this report are expressed in nominal Mexican Pesos (Ps.) unless otherwise noted, presented and approved by the Board of ...

Betterware de Mexico, S.A.B. de C.V. (NYSE:BWMX) Q3 2021 Earnings Conference Call October 29, 2021 9:00 AM ET Company Participants Luis Campos - Executive Chairman Andres Campos - Chief Executive Officer Diana Jones - Chief Financial Officer Conference Call Participants Cristina Fernandez - Telsey Advisory Group Eric Beder - SCC Research Alvaro Garcia - BTG Operator Thank you and welcome to Betterware's Third Quarter 2021 Earnings Conference Call. With me on the call today are Betterware's Executive Chairma ...

| --- | --- | --- | --- | --- | |-----------|-------|-------|-----------------------|-------------| | | | | | | | | | | INVESTOR PRESENTATION | | | . . ● ● ● | | | AUGUST 2021 | | | ● ● | | | | Betterware® | The information presented here may include statements regarding future events and / or projected financial results. The results obtained may differ from those projected in this presentation because they are subject to risks and uncertainty that may change based on various factors that are not under the ...

Financial Data and Key Metrics Changes - Revenue growth of 81% year-on-year in Q2 2021 and 130% for the first half of 2021 compared to the same period in 2020 [4][20] - EBITDA increased by 92% in Q2 2021 and 166% for the first half of 2021 year-on-year [4][21] - Gross profit margin expanded by 512 basis points to 56.8% in Q2 2021 and by 373 basis points to 57.1% for the first half of 2021 [20][21] - Operating cash flow was MXN 435 million in Q2 2021, representing 58% of EBITDA, and free cash flow was MXN 345 million [21] Business Line Data and Key Metrics Changes - The company retained the majority of its distributors and associates, with average distributor growth of 109% and average associates increasing by 110% over Q2 2020 [6] - The consolidation of the sales force was completed, leading to expected sequential growth in the sales force [6] Market Data and Key Metrics Changes - Household penetration increased to approximately 24% as of May 2021, up from an estimated 20% at the end of fiscal 2020 [17] - The company aims to reach 40% household penetration by 2025 [6][17] Company Strategy and Development Direction - The company focuses on three strategic pillars: Product Innovation, Technology, and Business Intelligence [11][12] - Plans to increase the number of catalogs from 9 to 12 per year to enhance product exposure and purchase frequency [12] - Expansion of e-commerce platform to capitalize on low penetration in the home solutions category, which is less than 1% of the total market [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in business prospects for the second half of the year, supported by a strong balance sheet and cash flow generation [9] - The company is positioned to capitalize on M&A and international expansion opportunities [9] - Management raised revenue guidance for 2021 to a range of MXN 10,800 million to MXN 11,300 million, implying growth of 49% to 56% [25] Other Important Information - The company plans to propose an annual dividend of MXN 1,400 million, with the third installment of MXN 9.38 per share subject to approval [8] - The company has a low leverage ratio of 0.02 times net debt to EBITDA, indicating strong financial health [24] Q&A Session Summary Question: Inventory levels and changes - Inventory increased by MXN 48 million from 2020 to 2021, reflecting low inventory levels in Q2 2020 due to unexpected demand [27] Question: Impact of currency fluctuations and shipping costs - The stronger peso this year compared to last year has been hedged, and shipping costs are expected to remain stable due to contracts with shipping companies [28] Question: Product innovation and new categories - The increase to 12 catalogs will lead to more products and innovation within existing functional categories [31] Question: Delivery times with new distribution center - Current delivery times of 48 to 72 hours in Central and South Mexico will be reduced by 24 hours with the new distribution center [33] Question: Input cost inflation and pricing strategies - The company has mitigated raw material and freight cost increases through higher volumes and favorable contracts, expecting to maintain margins [37][38] Question: Household penetration target and category expansion - The 40% household penetration target focuses on increasing the sales force and distributor base without needing to expand product categories [46]