Betterware de Mexico SAPI de CV Q4 FY2024 earnings call

• 2024 was a year of important achievements with double-digit revenue growth in Q4 2024. Jafra Mexico had 22.2% Q4 growth and 13% full-year growth. Betterware Mexico grew 1.5% in Q4 and 4.6% full-year. • Milestones for 2025 include Betterware Mexico's 30th anniversary, 5 years since U.S. IPO, and 3 years since Jafra acquisition. • Accounting changes: reclassifying labor and indirect manufacturing costs in Jafra Mexico and adjusting EBITDA and EPS for non-cash losses. • Q4 2024 gross margin improved slightly but was impacted by Jafra Mexico's margin contraction. Full-year gross margin expanded due to Jafra Mexico's strong performance. • Adjusted EBITDA increased 2% in 2024 but was below guidance. Free cash flow declined, but net debt to EBITDA ratio was 1.76 times.

In Q4 2024, BeFra's consolidated revenue grew 11.1% compared to the same period last year. Jafra Mexico achieved a remarkable 22.2% growth in Q4, contributing to an 13% full-year net revenue increase. Betterware Mexico demonstrated resilience with 1.5% growth in Q4 and 4.6% full-year growth. Jafra U.S. saw a 17.6% decrease in net revenue in USD in Q4 and a 2.7% full-year decrease in USD. In terms of revenue contribution, Jafra Mexico had a 13% increase and Betterware Mexico a 4.6% increase for the full year 2024.

• Expect mid to high single digit growth for net revenues and EBITDA in 2025, range of 6% to 9%. • Target to lower net debt to EBITDA ratio to 1.5 times or below in 2025. • Board proposed a dividend of MXN250 million for Q4, marking 20th consecutive dividend since 2020 IPO.

• Unexpected external headwinds in Mexico's international supply chain including peso depreciation, rate price increases, product import duties. • U.S. political disruptions could affect operations, such as possible increase in product import duties and effects on Hispanic market consumption. • Jafra U.S. faced adoption difficulties with Shopify Plus implementation leading to revenue decline.

Q: How much of the year-over-year rise in inventories was due to the desire to have more product and what should be the normalized inventory levels going forward?

A: For Betterware Mexico, inventory was built up in the second semester due to growth, inventory shortages in the first half, and supply chain disruptions. Normal inventories should be around MXN2,000 million instead of the MXN2,500 million at the end of 2024.