Key Takeaways
Betterware de México, S.A.P.I. de C.V. (BWMX) reported first-quarter revenue of $8.6 billion MXN, a 0.3% year-over-year increase, while nearly doubling its net income amid significant margin expansion.
"Betterware de México today stands as a stronger, more diversified, and well-positioned group, with a clear roadmap for long-term value creation," CEO Andres Campos said on the earnings call.
The slight revenue growth was supported by a 2.6% increase in the core BetterWork brand, while profitability improved across all business units. The company's net debt to EBITDA ratio improved to 1.5 times, down from 2.4 times at the end of 2022.
The company expects its acquisition of Tupperware to close in the second quarter, a move projected to be immediately accretive and add an estimated 40% to earnings per share while providing entry into Brazil's $100 million revenue market.
Betterware's earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 14% year-over-year, with the corresponding margin expanding to 17.4% from 15.3% a year earlier. Excluding one-time expenses related to the pending Tupperware transaction, the company said the EBITDA margin would have been approximately 18.4%.
The performance reflects the company's focus on financial discipline, which helped drive stronger capital efficiency. Return on total assets improved to 22.7%, and return on invested capital increased to 27%. Strong free cash flow, which converted to 58% of EBITDA, supported a board proposal for a MXN $200 million dividend, its twenty-fifth consecutive quarterly payout.
The company's core BetterWork brand delivered revenue growth of 2.6% despite having one less week in the quarter. On a comparable basis, management said growth would have been 3.3%. The brand's associate base returned to growth, and its international operations in the Andean region and Central America now represent 1.7% of its revenue.
In contrast, revenue at Jafra Mexico declined following a strategic shift to focus on consultant productivity rather than base expansion. Management said it has implemented initiatives to rebalance this focus and expects to see a rebound starting in the second quarter. Despite the sales dip, Jafra Mexico's EBITDA margin rose 165 basis points to 17%.
Jafra's U.S. business showed significant progress, with net revenue increasing 8.6% in U.S. dollars, supported by a 3.4% expansion of its associate base.
Looking ahead, management reaffirmed its full-year revenue growth guidance of 4% to 8%, anticipating sequential strengthening across all business units. The primary catalyst is the Tupperware acquisition, which is awaiting regulatory approval expected in the second quarter.
The company is also pushing forward with its digital transformation, with a new Salesforce CRM system going live in Q2 and a new payment system rolling out in the second half of the year. While CEO Andres Campos noted "slight, temporary increases in freight costs from China," he expressed confidence in the company's ability to manage potential cost pressures through strategic negotiations and redesigns.
The results show the company's focus on financial discipline is paying off, strengthening the balance sheet ahead of the major Tupperware integration. Investors will be watching for the successful closing of the Tupperware deal in the second quarter and a rebound in Jafra Mexico's associate base to confirm the growth trajectory.
This article is for informational purposes only and does not constitute investment advice.
