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BETTERWARE REPORTS FOURTH QUARTER AND FISCAL YEAR 2021 RESULTS
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PR Newswire
GUADALAJARA, Mexico, Feb. 10, 2022
GUADALAJARA, Mexico, Feb. 10, 2022 /PRNewswire/ -- Betterware de Mexico S.A.P.I. de C.V. (NASDAQ: BWMX), ("Betterware" or the "Company"), announced today its consolidated financial results for the fourth quarter and fiscal year 2021. The figures presented in this report are expressed in nominal Mexican Pesos (Ps.) unless otherwise noted, presented and approved by the Board of Directors, prepared in accordance with IFRS, and may include minor differences due to rounding. The Company notes that its financial year of 2021 consisted of 52 weeks while the financial year of 2020 consisted of 53 weeks. The additional week during the financial year of 2020 occurred during the fourth quarter. The Company will host a webcast presentation and conference call at 9:00 am (Eastern Time) on February 11, 2022, to discuss its results for the financial year of 2021. The slide presentation that will accompany management remarks can be reviewed at investors.betterware.com.mx.
Key Highlights of 2021
- Strengthened network of associates and distributors.
- Net Revenue +41% YoY growth and EBITDA +33% YoY growth vs. comparable weeks in 2020.
- Strong balance sheet and cash flow allow for continued dividend payments.
- Acquisition of JAFRA´s operations in Mexico and the United States.
Luis G. Campos, Executive Chairman of the Board, stated, "Betterware achieved extraordinary growth from 1Q 2020 to 1Q 2021, mainly driven by our increase in our average associates and distributors base of 183%. This translated into exceptional performance in net revenue and EBITDA. While it was quite a positive result, it turned comparisons with respect to 2020 challenging. Despite a much higher base, 2Q 2021 and 3Q 2021 showed strong YoY growth and traction in net revenues, of 81% and 4% respectively. As for 4Q 2021, on top of the harder comparison base, our business was impacted by a sluggish consumer in Mexico and by external factors related to supply chain disruptions prevailing globally, which resulted in a decline in net revenues and EBITDA for the quarter.
On an annual perspective, after undergoing a full year of consolidation of our sales network during 2021 and proactively dealing with external impacts, we are pleased with our performance, which led to a 41% growth in net revenue and a 33% growth in EBITDA vs. comparable weeks in 2020 and a 27.9% EBITDA margin.
We have proven once again our ability to adapt and capitalize on business opportunities as they emerge and transform them into consistent value generation for our shareholders. Going forward, we will continue executing our strategy based on our three business pillars: product innovation, business intelligence and technology. We start 2022 with a strengthened network of distributors and associates, confident of Betterware´s profitable growth in the years to come, which will lead us to reach our target of 40% household penetration in Mexico by 2025.
Aligned to our long-term agenda, the compelling acquisition of JAFRA, a world leading brand of Direct Selling in the Beauty and Personal Care (B&PC) products industry with a strong presence in Mexico and the United States, announced last month, will contribute towards product diversification, our international expansion strategy, acceleration of profit growth, and acceleration of our digital transformation, while maintaining a low leverage ratio. For Betterware the best is yet to come."
Luis G. Campos
Executive Chairman of the Board
FY 2021 Results
| Metric | Amount $ in million | Variation (Comparable number of Weeks) | Comment |
| Net Revenue | Ps. $10,039.7 | +41% vs. comparable 2020 +225% vs. 2019 | · Growth of average associates and distributors base. |
| Gross Margin | 56.2% | +151 bps vs. 2020 | · Margin expansion reflects efficient cost management despite freight cost pressures. |
| EBITDA | Ps. $2,798.5 | +33% vs. comparable 2020 +229% vs. 2019 | · Growth in net revenues. |
| EBITDA Margin | 27.9% | (193 bps) vs. 2020 | · Same as EBITDA. |
| Net Income | Ps. $1,826.8 | +440% vs. 2020 +287% vs. 2019 | · Net income in 2020 negatively impacted by non-cash expenses related to Warrants. |
| EPS | Ps. $49.41 | +398% vs. 2020 | · Same as Net Income |
Betterware´s main task for 2021 was to consolidate our distributors and associates' base, after achieving extraordinarily high triple digit growth in a short period of time, from 1Q 2020 to 1Q 2021.
During the second half of 2021, people initiated the return to their normal lifestyles, leaving behind the worst months of the pandemic. As a result, some of the people that had joined our network during 2020, went back to their customary activities and decided not to continue with Betterware, thus resulting on a higher-than-average churn rate for associates peaking at 4.6% a week (vs historical average churn rate of 2.8% a week) and a consequent mild decline in our average network of associates and distributors.
In addition to keeping most of the sales network added, we managed to improve its KPIs by maintaining weekly activity at ~34% for associates and ~80% for distributors through 2020 and 2021. Furthermore, following 2020's extraordinary growth, tenure increased versus preceding years, strengthening to our sales network via an adequate mix of seniors and newcomers.
4Q 2021 Results
During 4Q 2021 our business was negatively impacted by the following factors:
- Consumption softened compared to 1H2021, which led to increased promotions
- Worldwide supply chain disruptions:
- Shortage of sea freight containers led us to increase air freight expenses
- Stricter than expected energy restrains in China impacted our fulfillment capacity
- Sea freights costs continued at abnormally high levels
These impacts led to lower-than-expected total net revenue and EBITDA for the fourth quarter and for 2021.
| Metric | Amount $ in million | Variation (Comparable number of Weeks) | Comment |
| Net Revenue | Ps. $2,182.1 | (11%) vs. comparable 4Q 2020 +176% vs. 4Q 2019 | · Slightly lower average associates and distributor base vs. 4Q 2020 |
| Gross Margin | 53.7% | (220 bps) vs. 4Q 2020 | · Increased use of airfreights. |
| EBITDA | Ps. $420.8 | (43%) vs. comparable 4Q 2020 +85% vs. 4Q 2019 | · Partially impacted by one-time air freight expenses |
| EBITDA Margin | 19.3% | (1,173 bps) vs. 4Q 2020 | · Lower operating leverage due to lower volumes |
| Net Income | Ps. $214.0 | +322% vs. 4Q 2020 +131% vs. 4Q 2019 | · Net income in 4Q 2020 negatively impacted by non-cash expenses related to Warrants. |
| EPS | Ps. $5.74 | +309% vs. 4Q 2020 | · Same as Net Income |
Strong Balance Sheet
After 4Q 2021, Betterware's balance sheet reflects a strong financial position:
- Conservative Net Debt to EBITDA ratio
- Low Total Debt to Total Assets and
- Negative cash conversion cycle
The main strengths of the Balance Sheet reflect the company's differentiated Business Model, which allow the company to have a high cash conversion rate and low liquidity requirements. Betterware´s cost structure allows for relevant operational flexibility to adapt its operation as demand increases or decreases.
Long-term Growth Expectations
Since Q3 2021 to date, we have confirmed that:
- As people went back to their in-person activities, we realized that the "new normal", which we previously thought would remain, will not last forever.
- Supply chain disruptions and cost pressures would have a higher impact in our revenues and costs than previously expected.
In response to the above, the company started adjusting its commercial strategies with the objective of increasing its net revenue, EBITDA and free cash flow. These adjustments include, among others:
| Commercial Actions | |||||
| Pricing Actions | Price Mix | Catalogue Frequency | Hybrid Model | Product Innovation | Incentives Program |
| General price increase of 12% to offset cost pressures | Increasing the share of lower-price items in our catalogues | Increased from 9 to 12 per year, providing enhanced flexibility to adapt | Increased in-person interaction with distributors and associates Werbung Mehr Nachrichten zur Betterware de México Aktie kostenlos abonnieren
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