Betterware de México(BWMX) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2024, the company achieved a 5.3% year-over-year revenue growth, with an 8% growth in net revenue for the first half of the year and a 3% increase in EBITDA [2][6][19] - The consolidated gross margin contracted by 103 basis points due to a less favorable product mix, higher freight costs, new import taxes, and peso depreciation [15][19] - Free cash flow decreased by 39% during the quarter, attributed to a 30% year-over-year reduction in operating cash flow [16][19] Business Line Data and Key Metrics Changes - Betterware Mexico experienced a 2.2% year-over-year revenue increase in Q2, achieving 7% growth for the first half of 2024 [29] - Jafra Mexico posted a 10.1% year-over-year revenue increase, indicating effective product strategies and market positioning [31] - Jafra US recorded its first year-over-year revenue growth since its acquisition, with a 1.2% increase in Mexican pesos and a 4.4% increase in US dollars [32] Market Data and Key Metrics Changes - The peso depreciated by 7.5% in June, contributing to market volatility [27] - Container prices surged by 11.6% on average during Q2 due to increased demand for shipping from China to Mexico [7] Company Strategy and Development Direction - The company is focused on product innovation and enhancing demand forecasting to prevent future sellouts, with plans to implement improved pricing structures [10][12] - A redesigned catalog and a more effective merchandising plan are set to launch in October to boost market position [11] - The strategic acquisition of Jafra is seen as instrumental in diversifying the product portfolio and enhancing market resilience [12][13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2024 revenue and EBITDA targets, highlighting the company's resilience in navigating challenges [3][19] - The company anticipates sustaining double-digit growth at Jafra over the medium and long term [31] - Management is optimistic about the second half of the year, expecting to leverage strategic initiatives for sustained growth and profitability [34] Other Important Information - The company plans to sell a property in Mexico City valued between MXN40 million and MXN50 million to service outstanding debt [17] - The board approved a quarterly dividend payment of MXN250 million, marking the 18th consecutive quarterly dividend since the IPO [37] Q&A Session Summary Question: Product availability and inventory management - Management acknowledged temporary sellouts in Q2 but expressed confidence in meeting demand for the rest of the year [20] Question: Impact of import tariffs and freight costs on profitability - Management indicated that they have negotiated better costs with suppliers and implemented price increases to offset higher import taxes and freight costs [21][47] Question: Innovation pipeline for Jafra - Management confirmed a strong innovation pipeline for the second half, particularly highlighting the launch of the Jafra Biolab skincare line [23][49]