Betterware Announces First Quarter Fiscal Year 2021 Financial Results

Rhea-AI Summary

Betterware de Mexico S.A.B. de C.V. (NASDAQ: BWMX) reported remarkable Q1 2021 results, achieving revenue of Ps. $2,901.7 million, a surge of 205% year-over-year. EBITDA rose to Ps. $923.1 million, reflecting a 287% increase, while net income reached Ps. $638.5 million, marking a 339% growth. The company introduced 50 new products and expanded its distributor network to 66.4 thousand, a 158% increase. Future guidance suggests net revenue between Ps. $10,100M to $11,100M for FY 2021, driven by strategic market penetration and geographic expansion.

Positive

• Revenue increased to Ps. $2,901.7 million, a 205% rise compared to Q1 2020.
• EBITDA reached Ps. $923.1 million, up 287% year-over-year.
• Net income rose by 339% to Ps. $638.5 million.
• Introduced 50 new products in Q1 2021.
• Expanded distributor network to 66.4 thousand, a 158% increase.
• Cash and cash equivalents at Ps. $565.4 million.

Negative

• None.

Betterware de Mexico S.A.B. de C.V. (NASDAQ: BWMX), has released its financial results for the first quarter fiscal 2021 ended March 31, 2021, and posted a letter to its shareholders on its investor relations website at https://ri.betterware.com.mx.

Executive Summary

Q1 2021 vs. Prior-Year Quarter ($ in Pesos)
Q1 2021 Revenue	Ps. $2,901.7 million	205% increase over Q1 2020
Q1 2021 EBITDA	Ps. $923.1 million or up 679 basis points to 31.8% of Revenue	287% increase over Q1 2020
Q1 2021 Net income	$638.5 million	339% increase over Q1 2020
Q1 2021 Adj. Net income	$505.8 million	578% increase over Q1 2020
Q1 2021 EPS	$17.45	273% increase over Q1 2020
Q1 2021 Distributors	66.4 thousand	158% increase over Q1 2020
Q1 2021 Associates	1.25 million	161% increase over Q1 2020

Luis G. Campos, Executive Chairman of the Board, stated, “We began the year strongly, reporting outstanding first quarter results reflecting the power of our business model that has led to predictable, dependable and consistent growth for nearly two-decades. The first quarter was highlighted by triple-digit increases in revenue, EBITDA and Net income; robust cash flow and significant accomplishments toward our strategy. We attribute our ongoing strength to the advantages of our business model, the disciplined execution and successful implementation of our commercial strategies, our technological expertise combined with compelling product innovation. Our first quarter revenue increase was driven by our organic core business with our core organic sales expected to lead our performance for the next several years. We continue to elevate and expand our business to leverage our strengths and maximize our long term potential. To this end, the first quarter saw our largest marketing campaign, the launch of a new web platform that seamlessly and efficiently allows consumers to purchase our products online, acceleration in revenue and margin in our pilot expansion to Guatemala and the acquisition of 60% of GurúComm, a Mobile Virtual Network Operator and Software Developer – giving us the ability to expand our reach to mobile product and service sales longer term. We remain excited about our business prospects as we enter the second quarter and expect our positive performance to continue in fiscal 2021 and beyond. Overall, we expect our strategy to allow Betterware to eventually become a preeminent leader in solutions for the home.”

Additional First Quarter Highlights, Betterware:

• Introduces 50 new products in the two catalogues launched during the period;
• Ends the quarter with Ps. $565.4 million in cash and cash equivalents;
• Shows strong results with its pilot test in Guatemala, which demonstrates the Company’s ability to successfully expand its geographical reach beyond Mexico;

Q1 2021 Year-Over-Year Operating Results ($ in Pesos)
Q1 2021 Revenue	Ps. $2,901.7 million	205% increase over Q1 2020
Q1 2021 Gross Profit	Ps. $1,668.4 million	212% increase over Q1 2020
Q1 2021 Gross Margin	57.5%	138 bps increase over Q1 2020
Q1 2021 Selling Expenses	Ps. $295.3 million	119% increase over Q1 2020
Q1 2021 Operating Margin	31.3%	721 bps increase over Q1 2020
Q1 2021 Interest Income	Ps. $3.4 million	25% increase over Q1 2020
Q1 2021 Income Tax Rate	31.0%	Flat with Q1 2020
Q1 2021 EPS	$17.45 pesos	273% increase over Q1 2020

Balance Sheet Highlights

The Company maintained a strong balance sheet. As of March 31, 2021, the Company had Ps. $565.4 million in cash and cash equivalents. Accounts payable days were 123, consistent with previous quarters. Inventory growth at quarter end reflected the significant triple digit growth in revenue as well as unusually low inventory in the first quarter of 2020 reflecting the initial surge in demand for home products driven by COVID-19 and the timing of its factory holiday period due to Chinese New Year. The Company remains pleased with the level and composition of its inventory as it begins the second quarter. The Company’s cash conversion cycle remained strong at -27 days in the first quarter of 2021.

Progress on 2021 Strategic Pillars

1. Market Penetration
   • Increased its household penetration due to its increase in distributors and associates network.
   • The Company continues to target doubling its market share in Mexico from 20% by the end of 2020 to 40% household penetration in the next five years.
2. Geographic Expansion
   • Continued its successful expansion in Guatemala, which saw sales growth of 382% compared to the first quarter of fiscal 2020 and EBITDA margin rise significantly to 24.6%, proving that the company can replicate its business model in other geographies.
   • The Company continues to target its international expansion to Colombia and Peru over the next two to three years.
3. Category Expansion
   • In the two catalogues launched during the quarter, Betterware introduced 50 new products.
   • Continues to target launch of new categories by the second quarter of 2021.
   • Acquisition of 60% of GurúComm, a Mobile Virtual Network Operator and Communications Software developer giving the company the ability to expand its product reach to technology solutions for the home.
4. Business Intelligence and Technology Investments
   • Early positive reaction to the new e-commerce platform, www.betterware.com.mx, which launched in December 2020. The platform is expected to begin to add to the Company’s growth in the second half of fiscal 2021 and become increasingly material to the business over the next three to four years. The transactional site allows greater accessibility and ease of purchase to consumers by connecting them directly with Betterware distributors and associates.
   • Successful implementation of new software, Power BI, to monitor day to day operations.
   • Continues to target the launch of its improved App for distributors and associates, Betternet 3.0.

Full-Year 2021 Outlook
	FY 2021
Net Revenue	Ps. $10,100M to $11,100M
EBITDA:	Ps. $3,000M to $3,300M
EBITDA Margin:	29.7%

After a strong start to 1Q21, the Company believes it is positioned to achieve results closer to the high end of its annual guidance range for both net revenue and EBITDA.

The Company continues to expect CAPEX in 2021 to be Ps. 460M, which includes additional equipment for its new campus, technology and other investments. The new campus and extraordinary technology investments will represent approximately 81% of CAPEX in 2021, which is down from 92% in 2020 and 88% in 2019.

Andres Campos, Chief Executive Officer, stated, “During the first quarter, we made progress on many fronts operationally and our team continued to execute against our four key strategic priorities of market penetration, category expansion, business intelligence, technology investments, and geographic expansion. We are pleased to deliver against these strategies while also making disciplined investments across the business and return value to our shareholders through our ongoing quarterly dividend. We believe the positive momentum of our core organic business, our advantageous business model and the strength of our strategic initiatives has us well positioned to achieve our annual outlook.”

Gurúcomm
As previously announced on March 22, 2021, the Company acquired 60% of GurúComm, a Mobile Virtual Network Operator ("MVNO") and Communications Software developer, with an Enterprise Value of $75M pesos (approximately $3.5 million USD). The purchase price was $45 million pesos and the investment was paid out of existing cash on the Company's balance sheet. The Company does not expect the acquisition to be material to fiscal year 2021.

Quarterly Dividend
As previously announced, the Company announced that its Board of Directors has proposed the payment of a cash dividend in the amount of Ps. 1,400 million to shareholders during 2021, to be paid to investors in four instalments of Ps. 350 million per quarter. The second quarterly dividend is subject to approval on the next Ordinary General Shareholders’ Meeting to be held on May, 12, 2021.

Conference Call and Webcast Information
The Betterware management team will host a conference call with the investment community on May 7, 2021, at 9 a.m. (ET). The U.S. toll free dial-in for the conference call is 1-877-451-6152 and the international dial-in number is 1-201-389-0879. Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company's website at https://ri.betterware.com.mx/financiera/reportes-trimestrales. A replay of the webcast will be available at the same URL August 7, 2021.

Please visit the Betterware investor relations website at https://ri.betterware.com.mx/financiera/reportes-trimestrales to view the financial results included in the letter to shareholders. The Company intends to continue to make future announcements of material financial and other information through its investor relations website. The Company will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls, or webcasts, as required by applicable law.

About Betterware de Mexico S.A.B. de C.V.
Founded in 1995, Betterware de Mexico is a leading direct-to-consumer selling company in Mexico. The Company has delivered consistent revenue growth as evidenced by its compound annual growth rate (“CAGR”) of 25% from 2003-2020 with even stronger revenue growth in the last 5 years, which has accelerated to a CAGR of 57%. Focused on the home organization and solutions segment, Betterware’s wide product portfolio includes home organization, kitchen, commuting, laundry and cleaning, as well as other categories.

Supported by its top-class business intelligence and data analytics units, which provides daily monitoring of key metrics and product intelligence, Betterware has been able to achieve sustainable double-digit growth rates by successfully expanding its market penetration driven by its almost 66,500 distributors and 1.25 million associates network.

Its state-of-the-art infrastructure allows it to safely and timely deliver its products to every part of the country, backed by the strategic location of its distribution center.

Forward-Looking Statements
This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “should”, “would”, “plan”, “predict”, “potential”, “seem”, “seek,” “future,” “outlook”, and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The reader should understand that the results obtained may differ from the projections contained in this document, as past results in no way offer any guarantee of future performance. For this reason, the Company assumes no responsibility for any indirect factors or elements beyond its control that might occur inside Mexico or abroad and which might affect the outcome of these projections

View source version on businesswire.com: https://www.businesswire.com/news/home/20210506006064/en/

FAQ

What were Betterware's Q1 2021 financial results?

In Q1 2021, Betterware reported revenues of Ps. $2,901.7 million, EBITDA of Ps. $923.1 million, and net income of Ps. $638.5 million.

How much did Betterware's net income increase in Q1 2021?

Betterware's net income increased by 339% to Ps. $638.5 million in Q1 2021 compared to the same quarter in 2020.

What is Betterware's outlook for FY 2021?

Betterware expects FY 2021 net revenue between Ps. $10,100M to $11,100M, based on strong Q1 results and strategic initiatives.

How many distributors did Betterware have in Q1 2021?

As of Q1 2021, Betterware had 66.4 thousand distributors, a 158% increase from Q1 2020.

What new products did Betterware introduce in Q1 2021?

Betterware introduced 50 new products during the two catalog launches in Q1 2021.