Betterware de Mexico SAPI de CV (BWMX) Q4 2024 Earnings Call Highlights: Strong Revenue Growth ...
Jafra Mexico Revenue Growth: 22.2% increase in Q4 2024.
Betterware Mexico Revenue Growth: 1.5% increase in Q4 2024.
Full Year 2024 Revenue Growth: 8.4% increase compared to 2023.
EBITDA: 2% increase to MXN 2.8 billion, slightly below guidance.
Jafra Mexico EBITDA Growth: 15.4% increase.
Gross Margin Q4 2024: Improved by 116 basis points to 67.3%.
Full Year 2024 Gross Margin: Expanded by 70 basis points to 67.9%.
Adjusted EBITDA Decline: 5.8% with a 367-basis points margin contraction.
Cash Flow Decline: 21.6% decrease for the year.
Adjusted Earnings Per Share Growth: 10.5% in Q4 and 17.3% for the full year.
Net Debt to EBITDA Ratio: 1.76 times, with a target of 1.5 times for 2025.
Proposed Dividend for Q4: MXN 250 million pesos.
Warning! GuruFocus has detected 5 Warning Signs with BWMX.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Betterware de Mexico SAPI de CV (NYSE:BWMX) achieved double-digit revenue growth of 11.1% in Q4 2024, driven by a 22.2% increase in Jafra Mexico's performance.
The company demonstrated resilience with Betterware Mexico growing for the fifth consecutive quarter, exceeding last year's results by 1.5%.
Jafra Mexico's EBITDA increased by 15.4%, contributing to the overall financial strength of the company.
Betterware de Mexico SAPI de CV (NYSE:BWMX) has a strong historical CAGR of 18% in revenue and 19% in EBITDA over the past 23 years.
The company is strategically positioned for future growth with plans for international expansion into Latin America and a focus on sustainability and innovation.
Consolidated EBITDA was slightly below the low end of the guidance range due to unexpected challenges in Mexico's international supply chain.
The company faced headwinds from sharp Mexican peso depreciation, increased trade prices, and growing product import duties.
Jafra US experienced a 17.6% revenue decrease in US dollars, mainly due to adoption difficulties with Shopify Plus.
Consolidated adjusted EBITDA declined by 5.8% with a 367-basis points margin contraction, primarily due to Japan Mexico's EBITDA decline.
Cash flow declined by 21.6% for the year, driven by an extraordinary cash inflow in 2023 that was not repeated in 2024.
Q: Inventories year over year rose. How much of that was the desire to have more product, and what should be the normalized inventory levels going forward? A: Hi Eric. This is Andres. In the first half of the year, we experienced inventory shortages due to growth and anticipated supply chain disruptions. We built up inventory in the second semester. Alejandro will provide the expected normalized inventory levels. A: We would expect instead of the MXN 2,500 million pesos that we have by the end of 2024, it should have been around MXN 2000 million pesos in 2024.
Q: Can you elaborate on the strategic focus for Betterware Mexico and Jafra Mexico in 2025? A: For Betterware Mexico, we aim to expand our reach and increase market share by refining our business model, enhancing operational efficiency, and exploring new sales channels. For Jafra Mexico, we plan to capture more of the beauty market by refreshing our brand, innovating products, and implementing a refined pricing strategy.
Q: What are the plans for international expansion, particularly in the US and Latin America? A: We are positioning our brands in the US market, with Betterware US showing promising growth signs. In Latin America, we are transitioning from Peru to Ecuador as our first market, with plans to launch operations in Ecuador by June 2025 and expand to Peru and Colombia in the future.
Q: How does the company plan to manage potential political disruptions in the US? A: We are aware of potential disruptions, such as increased product import duties and effects on Hispanic market consumption. We are taking necessary countermeasures to mitigate these effects and continue our expansion in the US.
Q: What is the focus of the company's inorganic growth strategy? A: Leveraging our success with Jafra, we are exploring companies that offer opportunities to develop new product lines, present new business categories, or accelerate our entrance into international markets.
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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