Betterware de Mexico SAPI de CV (BWMX) Q2 2025 Earnings Call Highlights: Strong Revenue Growth ...
Betterware Mexico Revenue Growth: 4% quarter over quarter.
Associate Base Growth: Increased from 1.12 million to 1.13 million, a 0.5% QoQ growth.
Betterware Mexico EBITDA Margin: 19.9%.
Jafra Mexico Revenue Growth: 10.9% year on year.
Jafra Mexico EBITDA Margin: 21.2%.
Jafra US Revenue Change: Decreased 8.9% year on year, 15.6% rebound quarter over quarter.
Consolidated Gross Margin: 67.1%.
Betterware Mexico Gross Margin: 55.2%, down 127 basis points year over year.
Jafra Mexico Gross Margin: 75.3%, down 167 basis points year over year.
Jafra US Gross Margin: Improved to 76%.
Consolidated EBITDA: Increased 3.5% year over year to MXN679 million, margin of 19.1%.
Free Cash Flow: Rose to MXN592 million, 87% conversion for the second quarter.
Consolidated EPS Growth: 7.7% year over year.
Net Debt-to-EBITDA Ratio: 1.97 times, down from 2.08 times in Q1 2025.
Proposed Dividend: MXN200 million for Q2 2025.
Warning! GuruFocus has detected 6 Warning Signs with BWMX.
Release Date: July 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Betterware de Mexico SAPI de CV (NYSE:BWMX) reported a 5.1% year-over-year revenue growth and a 1.8% quarter-on-quarter increase, indicating a strong rebound from the previous quarter.
The company achieved a 3.3% growth in its associate base, marking the first net associate growth since Q1 2021, which is crucial for driving team activity and retention.
Jafra Mexico returned to profitability with a 10.9% year-on-year revenue increase and an EBITDA margin expansion to 21.2%, driven by successful rebranding efforts.
The company launched Betterware Ecuador, surpassing its second-quarter goal with 2,500 active associates, showcasing successful geographic expansion.
Free cash flow rose to MXN592 million, with a year-to-date conversion of 44.2% of EBITDA, indicating strong cash generation capabilities.
Negative Points
Betterware de Mexico SAPI de CV (NYSE:BWMX) experienced a 9.8% year-over-year revenue decline in Q1, highlighting previous challenges in the market.
Jafra US saw an 8.9% year-on-year revenue decrease in US dollars, despite a 15.6% quarter-over-quarter rebound, indicating ongoing challenges in the US market.
The company's gross margins were impacted by proactive pricing strategies, with Betterware Mexico's gross margin down 127 basis points year over year.
Debt leverage remains higher than the previous year, with a net debt-to-EBITDA ratio of 1.97 times, up from 1.8 times in Q2 2024, due to incremental short-term debt.
The macroeconomic environment remains uncertain, with potential challenges if the macro environment worsens, which could impact future growth projections.
Q & A Highlights
Q: How much of the sequential improvement in Q2 can be attributed to a better macro environment versus company-specific initiatives? A: Andres Campos, CEO, explained that while there was a slight stabilization or rebound in consumption, the improvement was primarily due to internal measures. The company focused on merchandising, pricing, and product strategies to make their portfolio more accessible, which significantly contributed to the strong Q2 results.
Q: What are the key drivers to achieve the full-year guidance of 6% to 9% revenue and EBITDA growth? A: Andres Campos stated that they expect stability in the macroeconomic environment and consumption trends. The growth in associates for Betterware Mexico and Jafra Mexico, as well as Jafra US, is a positive sign. The company believes that with a stable macro environment, they can achieve the projected growth.
Q: What efficiencies are being targeted to return Betterware to a 23% to 24% EBITDA margin? A: Andres Campos highlighted three factors: a strong peso against the dollar, lower freight costs, and an internal strategy to rely less on promotional activities that cut into margins. Additionally, continuous expense reduction and efficiency improvements are expected to drive EBITDA margin up.
Q: What opportunities are there in the Chinese market given shifts in US production? A: Andres Campos noted opportunities to work more closely with suppliers and factories to improve product design and cost efficiency. While there isn't a significant change opening up new opportunities, these efforts are helping improve product costs and innovation capabilities.
Q: How should inventory management be viewed for the rest of the year and into 2026? A: Rodrigo Munoz, CFO, stated that inventory levels are decreasing and are expected to continue declining. The strategy involves pushing existing inventory and reducing new purchases to return to normal inventory positions, improving productivity and efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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