Betterware de México(US:BWMX)2026-02-26 23:32Financial Data and Key Metrics Changes - Fourth quarter revenue grew 1.2% year-over-year, with an EBITDA margin of 19%, slightly below last year due to temporary gross margin impacts [3][4] - Full year revenue also increased by 1.2%, with an EBITDA margin closing at 18.7%, primarily affected by an abnormal contraction in Q1 [4][24] - Free cash flow more than doubled year-over-year, with over 83% of EBITDA converted into free cash flow, and total debt reduced by MXN 700 million, decreasing leverage from 1.75x to 1.56x [4][25] Business Line Data and Key Metrics Changes - Jafra Mexico continued to grow, while Betterware Mexico narrowed its sales decline, with Jafra US achieving its first growth quarter in Q4 [3][4] - Betterware's fourth quarter EBITDA margin was impacted by temporary FX-related effects, but would have been approximately 22% without these effects [8] - Jafra Mexico achieved record high sales in Q4 despite a challenging consumption environment, with adjusted EBITDA recovering significantly from the weak first quarter [11][12] Market Data and Key Metrics Changes - The Mexican consumer experienced a slight contraction last year, but is expected to stabilize in 2026 due to decreasing interest rates and stable inflation [35][48] - The beauty market remains resilient, with Jafra positioned to benefit from this trend despite challenges in overall consumption [51] Company Strategy and Development Direction - The company aims to strengthen its leadership in Mexico, expand regionally, develop new brands, activate a digital P2P model, and maintain strict financial discipline [7][8] - The acquisition of Tupperware's Latin American business for $250 million is expected to enhance revenue and profitability through innovation and operational synergies [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a more stable consumer environment in 2026, with expectations of returning to growth levels of 4%-8% [48] - The company plans to focus on innovation and technology to drive growth in both Betterware and Jafra brands [49] Other Important Information - The company has maintained a 32% trailing twelve-month dividend to EBITDA ratio, with a strong balance sheet and liquidity position [25] - The digital transformation strategy aims to enhance operations and leverage data for improved productivity and scalability [22][23] Q&A Session Summary Question: How should we be thinking about the Mexican consumer? - Management noted a slight contraction last year but expects stability in 2026 due to positive economic factors [35][36] Question: How should we be thinking about inventory growth in 2026? - Management indicated that inventory levels are close to optimal, with minimal further reductions expected [36] Question: Is Q4 a blip for Jafra, or should we expect continued growth? - Management expects continued growth for Jafra, with a focus on innovation and product redesigns [42][43] Question: What gives confidence in the 4%-8% growth outlook for 2026? - Management cited stable consumption and internal strategies as key factors for returning to previous growth levels [48][49] Question: Can you discuss the challenges in the beauty market? - Management believes the beauty market has more tailwinds compared to other categories and remains optimistic about its growth [51] Question: Any color on EBITDA guidance by segment? - Management expects a balanced EBITDA margin around 19% or above, with various factors influencing this [53]