Betterware de México, S.A.P.I. de C.V. Price & Performance (BWMX)

Compared to the same period last year. This growth was fueled by the exceptional results of Jafar Mexico which achieved remarkable 22.2% growth in the quarter. And despite the challenging operating environment, Better World Mexico demonstrated resilience and continued to grow for the fifth straight quarter, exceeding last year results by 1.5% in the quarter. This strong finish to the year for Pure differ to 8.4% revenue growth for the full year 2024 compared [indiscernible] Both just for Mexico and Betterware world Mexico contribute this success with Jaffa achieving a 13% increase and better water a 4.6% increase. While our consolidated revenue was in the middle of our 2024 guidance range, we faced unexpected and temporary external headwinds that hinder profitability. Despite EBITDA increasing 2% to $2,800,000,000 versus 2023 this was slightly below the low end of our guidance range. Which was $2,900,000,000 This is a slight shortfall was primarily due to the on spec challenges in Betel Orest Mexico's international supply chain. Where we suffered headwinds in the second semester from sharp Mexican peso depreciation. [indiscernible] price increase and availability of products. And growing product import duties. But was partially offset by a 15.4% increase in Jafran Mexico's EBITDA.

Changing gears, and looking ahead for 2025, I want to point out three relevant milestones that we will reach this year. Number one, Beto O'Rxico will celebrate its thirtieth anniversary. This milestone reflects the long story of outstanding growth. Over the past twenty three years, Betelburg, Mexico has achieved a remarkable KGR of 18% in revenue and 19% in EBITDA. And expanded its associate base from 5,000 to 675,000 reaching an estimate 8,000,000 Mexican households today. With an estimated 4% market share in the household product market we are ready to seize the significant opportunity to deepen our market penetration and drive additional growth in the years to come. Number two, It will be five years since our U. S. [indiscernible] Despite the difficulties these five years, have laid forward, this period has been marked by achieving accelerated growth for the group. In their IPO, FIFA has multiplied revenue by 4.6x which represents a 35.5% KGR. And EBITDA by 3.3 times a 26.7% KGR. At the same time, the value of beef assets has increased 2.4 times.

And the company has paid a total of 800,000,000.0 in dividends. All of this reflects our commitment and ability to consistently deliver strong results. Number three, it's been three years since the acquisition of Java. This strategic move brought a valuable brand increased category diversification and demonstrated our ability to execute on our M and A strategy. Under BIFA's leadership, Jafra has experienced a resurgence in growth and profitability. With sales multiplying by one point four point four times, Profitability by 1.6 times and EBITDA margins expanding from 13% to 20.7%. [indiscernible] While new acquisitions are part of our long term strategy, Jafra's success makes us confident on our underlying hypothesis of adding value to new brands through our operating model. With these shipments, as our foundation, we are poised to continue our legacy of excellence driving sustainable growth and unlocking new opportunities in the years ahead. Before I pass the call over to Alejandro and Andres, I would like to communicate that Andres has been appointed by the Board as President and CEO of VEN Bifram Group. After thirteen years of experience and great results, including [indiscernible] CEO since 2018 I have full confidence in his vision and our exceptional team.

The strong foundation of growth that we have built mainly a proven and resilient business model will continue to drive success. I am certain that 2025 will be a year of even more achievements. And help solidify our leadership in the industry. I will remain on board as non Executive Chairman of the BFRAS Board. And will support Andres and the whole team in making all the strategic decisions. With that, let me hand the call to Alejandro and I will return later with some closing remarks. Thank you, Luis, and good afternoon, everyone. As a reminder, all figures I will reference today are in Mexican pesos, our functional and reporting currency. Additional details are available in our earnings release published earlier. Before I begin my review, of our quarterly and full year results, I would like to briefly comment on two relevant accounting changes that we have made You're right. From our 2024 audit revision by PwC. Specifically and in compliance with IIS two and IAS eight, we are reclassifying labor and indirect manufacturing costs for ARS430 million in 2024 from operating expenses to cost of goods sold in our Jaffray Mexico piece, This measure affects Q2 twenty twenty two onwards but has no impact on net revenue EBITDA or net income.

Finally, as we laid out in our earnings release document, we are presenting adjusted EBITDA and earnings per share for 2024, eliminating the accounting and non cash loss derived from the sale of non strategic land that Jafra owned which accounted for a total of COP $696,000,000.

That's it. Returning to our most recent financial results, consolidated net revenue grew 11.1% in the fourth quarter of twenty twenty four, compared to the same period 2023, [indiscernible] by the strong performance of Jafar Mexico and relatively stable results from Betterware Mexico, partially offset by Jaffa U. S. Results.

YAFSA Mexico's revenue surged 22.2% fueled by commercial strategies that successfully revitalized the brand and strengthened its market presence. A clear testament to its growth potential and competitive position. Despite external headwinds, Better World Mexico achieved 1.5% net revenue growth in the quarter, Thanks to diverse effective commercial strategies, but was tempered by rising product import duties and freight costs that impacted our ability to be more competitive. And by a slight decline in associate engagement and activity following the second quarter stock outs of key products. Net revenue at Jafar U. S. Decreased 17.6% in U. S. Dollars mainly due to lost momentum related to the in the second half of the year where we experienced adoption difficulties with some associates. This came after we had successfully stabilized this business earlier in the year following years of decline. The revenue decreased was partially offset by the depreciation of the Mexican peso.

With revenues decreasing 6% in pesos. For the full year, our group delivered an 8.4% increase in net earnings primarily due to Number one, better where Mexico grew 4.6% and was supported by strong performance in the first half of the year and continued growth in the second half. Number two, [indiscernible] which achieved an outstanding 13% net revenue increase, marking its second consecutive year of double digit growth since the acquisition. And number three, Jafra U. S. Only slightly below last year's results, with a decrease of 2.7% in U. S. Dollars and decreasing only 0.3% in Mexican pesos.

Our consolidated gross margin improved slightly rising 116 basis points to 67.3% in Q4. This was largely due by a six seventy five basis points expansion in Better World Mexico's gross margin. Which derived from better promotional performance despite FX volatility higher freight costs and product import duties increases However, this was partially offset by a four sixty nine basis point contraction in JAPRA EEXICO's gross margin due to prior year synergies, and cost reduction that positively impacted Q4 of twenty twenty three. And are now distributed throughout the whole year 2024.

Adjusting for the our Q4 twenty twenty four gross margin was in line with the previous year. For the full year 2024, our gross margin expanded by 70 basis points to 67.9%. Driven by Jaffa Mexico's strong 131 basis points increase to 76.3% surpassing expectations due to a more favorable product mix. Differentiated pricing strategy and continued efficiency benefits from scale. [indiscernible] maintained a stable margin despite external cost pressures. Supported by strategic pricing and optimization of certain costs. Despite significant external challenges, Betterware World Mexico demonstrated strong resilience and effective risk management throughout the year.

While our pricing strategy had a moderate impact on sales, the company successfully navigated market volatility in supply chain costs, maintaining full year profitability nearly in line with the prior year. In Q4, consolidated adjusted EBITDA Due to JAPRA Mexico's EBITDA declining 17.3%. Also derived from prior year synergies, and cost optimization benefits that were reflected Q4 twenty twenty three, creating an unfavorable year over year comparison. However, decline was partially offset by better work Mexico's strong performance. Where EBITDA surged 31.8% with a five zero eight basis point margin expansion, derived from better performance of promotional initiatives and expense control in Q4 twenty twenty four. That created in this case a favorable year over year comparison. For the full year, adjusted EBITDA increased 2% This was mainly due to a 9.6% decline in Betterware Mexico's EBITDA bringing its margin down three forty one basis points to 21.6%, partially offset by a 15.4% increase in Gaspar Mexico's EBITDA and margin expansion of 42 basis points to 20.7%. Better Words margin contraction was the right from higher operating expenses linked to supply chain disruptions. As well as other administrative expenses, all of which we will reduce during 2025. On the other hand, JAPRA U. S. Experienced an immediate loss of $458,000 for the full year but it is important to note that this was mainly due to one time expenses of approximately $1,000,000 related to legal settlements.

Which we would have risen above the breakeven point with EBITDA of around $500,000 Free cash flow declined by 21.6% for the year primarily driven by an extraordinary cash inflow in 2023, derived from increasing supplier payment terms in Jaffray, Mexico, which resulted in an extraordinary 87% increase in free cash flow to EBITDA ratio for 2023. Despite this, our 2024 cash flow represented 67% free cash flow conversion On EBITDA, which is within our normal historical range, Adjusted earnings per share grew by 10.5% in Q4 and seventeen point three percent for the full year. Driven by lower interest expense and gain from The U. S. Instruments. During the year, we remain focused on strengthening our financial position reducing total net debt and closing the year with a net debt to EBITDA ratio of 1.76x. Slightly lower in the end of twenty twenty three. Our target for 2025 is to lower our net debt to EBITDA ratio to 1.5x or below. Maintaining a balance sheet healthy and strategically positioned to support future growth. Given its confidence in our growth trajectory, our Board of Directors has proposed a dividend of MXN250 million for Q4. Subject to ratification of the ordinary general shareholders meeting on March 7.

This would mark our twentieth consecutive dividend since our 2020 IPO underscoring our unwavering commitment to delivering sustainable long term shareholder value with a total dividend paid in 2024 of almost MXN 1,000 million. Looking ahead, to 2025, we expect mid to high single digit growth for both. Net revenues and EBITDA. In the range of 6% to 9%. We remain excited about our ability to capitalize on new growth opportunities. While generating robust cash flow and maximizing shareholder value. Our focus continues to be on delivering long term sustainable success ensuring we maintain strong consistent performance for years to come. Let me now pass the call to Andres who will review our strategies to achieve these goals. Thank you, Alejandro, and good afternoon, everyone. As Luis mentioned earlier, 2025 is a year of celebrations. But more importantly, the consolidation of strategic focus and transformation. While we honor our past, we remain firmly committed to the future. Embracing innovation operational excellence and new opportunities for sustainable growth. EPRA centralizes our renewed vision encompassing a portfolio of successful brands under a unified strategic framework while preserving the unique qualities and characteristics of each. The foundation of our confidence in the future lies in the strength of our business model built upon two core elements: great brands and One Essence.

First, our brands. We are not merely competing in the direct selling market. They are standing alongside the giants of the consumer goods industry. By focusing on innovation, quality, competitive pricing and creative marketing we are confident in our ability to compete in broader high potential markets. The opportunity is vast. Not just in our current categories, but also in others we intend to explore Number two, our agents. It is the unique channel which we commercialize our brands. Providing unique opportunity for millions of people cooperate within the vast and growing gig economy. We are not just offering flexibility and income We are redefining what it means to participate in this space. The appeal of our model stands generations. Ensuring its relevance and growth in the years to come. Looking ahead, the transformational path for VEFRA is built upon five priority [indiscernible] The first one conquer Mexico. We intend to consolidate our Mexican operations where both brands have significant opportunities. For betterwear Mexico, our focus is on expanding our reach to more homes. And increasing our share of wallet. We currently have 25% phone penetration in Mexico, and an estimated 4% market share overall representing a significant growth opportunity.

To achieve this, we will continue refining our proven business model to enhance operational efficiency and scalability. On our consumer focused vertical, agile production innovation and revenue growth management strategy to maximize sales volume and profitability. Developing exciting new products and niche categories that offer compelling value propositions to surprise and delight customers. We will also actively be pursuing communication sales channels including modern digital ones to reach and engage customers. We will also be developing agile attractive and creative communication strategies to enhance brand awareness and drive consumer engagement. On the sales force vertical, we will be simplifying and enhancing the attractiveness of our sales incentive program. We will also be implementing upgrades to our [indiscernible] To better connect and interact with our sales force. Finally, we will also launch a new online training program for our sales force with a renewed learning management system tool. For JAPRA Mexico, we will continue replicating our model to capture the opportunity in Mexico's beauty market. And expand our 4% market share to become the number one direct sales beauty brand in Mexico. On its consumer vertical, we will do brand refreshments of our core lines. Making them more modern and vibrant.

We will also continue with product innovation that builds upon our most successful lines. And or captures new niches in which we do not participate today [indiscernible] buying pricing strategy that will maintain a balance between competitiveness and profitability. We will continue building brand awareness with our customers, and finally for our catalog we will reach content through additional pages together with higher number of catalogs per associate to increase reach. On its sales for vertical, we will enhance our effectiveness by raising digital transformation with the integration of JAKRA plus to increase and improve our Salesforce digital capabilities. We will recalibrate our promotional plan to improve productivity and retention. We will invest in a segmented loyalty program with differentiated incentives for our sales force And finally, we will also provide communication promotions, events and training sessions to our entry level distributors to improve their productivity and engagement. Our second is international expansion. We will continue positioning our brands in The U. S. Market through our model. Better World U. S. Remains in its early stages of penetration. It's already seeing promising scientific growth. Such as growing recruitment and the beginning of brand awareness. In the case of Jafar U. S, we have successfully stabilized sales and our sales force enabling us to capture growth again.

It is important to state though that recent political disruptions in The United States could affect our U. S. Operations in the short term. Specifically derived from possible increase of product import duties from Mexican and Chinese manufacturing products. As well as the effects on Hispanic market consumption in The U. S. Market. That said, we are taking all necessary countermeasures to mitigate these effects and continue our expansion. Additionally, we are expanding into Latin America, where we are transitioning We are prepared to launch our operation in Ecuador in June 2025. And should be expanding to Peru and Colombia in the years to come. Our third is inorganic growth. Leveraging our success with Jafran, we will continue pursuing additional inorganic growth by actively exploring companies that offer the opportunity to develop new product lines that complement our existing brands or that present new business categories or that could accelerate our entrance into international markets. Our forefront is a solid and centralized services that create operational and cost synergies. We continue transforming our support areas. Namely [indiscernible] technology talent, business intelligence and operations into modern advisors with centralized processes. Fostering synergies between different business areas, Well, always keeping the consumer and our sales force at the center.

And our fifth and last prompt sustainability and impact. We will continue to strengthen our mission to create opportunities for people to build better lives. Incorporating sustainability strategies under the model of our three Ps, which are [indiscernible] We will upload a detailed presentation on each of these strategies onto our new Investor Relations website. So you can review the details of each of these three piece. Within BEFRA's core, and along the five priority fronts, we are building a company that is not only future ready, but future defining. Through the strength of our brands, the resilience of our model, and the power of innovation we are confident in our ability to generate lasting value for our investors partners and customers. I will now turn the call over to the operator for any questions. And afterwards, Luis will return with some closing remarks. Thank you. Great. Thank you. First question is from Eric Bader from SCC Research. Good afternoon. Congratulations on a strong end to the year. A few questions here. First, let's talk about inventories. So the inventories year over year rose. How much of that was a desire to have more product And then what should be the normalized inventory levels going forward?

Hi, Eric. Sure. This is Andres. So for Betterware mix As you remember that we mentioned that in the first half of the year, we experienced some inventory shortages due to the growth. And we also saw a difficult situation for the second semester because of rising freight costs and possibilities of supply chain disruptions. So we during the second semester, we built up inventory in Betterware, no? And I will let you know in a second what normal inventories should look like [indiscernible] If you can just give me a second. Okay. Why don't we just do another question? Yes. That will Yes. Thank you. So I'll come back with the answer [indiscernible] Okay. Once again, if you'd like to ask the question, it is And if there are no further questions, I'd like to turn the floor back to management for any closing comments.

So just to before the closing remarks, just to answer, we would expect instead of the MXN2500 million, that we have by the end of twenty twenty four, it should have been around thousand million. In 2024. With that, I will pass over to Luis for closing remarks. Thank you, operator, and thank you again, everyone. For joining us today. As we look ahead with our 2025 strategy and onwards, this marks the beginning of an exciting new chapter of our company. One of the transformation extensive expansion and renew growth. Over the past year, we have taken deliberate steps to strengthen our foundations, ensuring that we are well positioned to capitalize on new opportunities. Our strategic initiatives operational improvements and disciplined put us on a clear path to sustainable long term success. I have no doubt that now more than ever, the best is yet to come. Have a great evening, everyone, and goodbye. This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.