BWMX — Betterware de Mexico, S.A.P.I. de C.V.

Summary of BeFra's Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue Growth: Total revenue increased by 16.8% year-over-year, driven by the incorporation of Tupperware's operations, which contributed 10.8% of the quarter's revenue. Organic revenue growth (excluding Tupperware) was 4.1% compared to Q2 2025 and 5.7% compared to Q1 2026.
• Profitability: Organic EBITDA margin decreased due to strategic investments in Jafra and nonrecurring expenses related to the Tupperware acquisition. Without these, the organic EBITDA margin would have been approximately 19.3%. Total EBITDA grew by 15%, and net income increased by 20.6% in the quarter.
• Cash Flow: Over 70% of EBITDA was converted into free cash flow during the quarter, with nearly 90% on a trailing 12-month basis.
• Debt Metrics: Post-acquisition, net debt to trailing 12-month EBITDA stands at 2.6x, with a pro forma ratio of 1.6x, reflecting strong financial management and a reduction in total debt to MXN 4 billion.

2. Strategic Updates and Business Highlights

• Tupperware Acquisition: The successful integration of Tupperware is seen as a milestone, expanding BeFra's commercial reach with over 300,000 new independent sellers and enhancing the brand portfolio.
• Regional Expansion: Focus on strengthening leadership in Mexico and expanding into Brazil, the largest direct selling market in Latin America.
• Digital Transformation: Continued rollout of Salesforce CRM and the upcoming Jafra Plus app to enhance the direct selling model.
• Brand Performance: Jafra returned to growth after a period of tactical adjustments, while Betterware showed consistent growth momentum.

3. Forward Guidance and Outlook

• Growth Expectations: Management expressed confidence in sustained organic growth across all brands, with Jafra and Betterware positioned for continued positive performance.
• Margin Recovery: Gross margins are expected to normalize in the second half of 2026, returning to historical levels of 73.5% to 74.5%.
• Strategic Focus: Continued emphasis on direct selling channels and leveraging Tupperware's brand strength for future growth.

4. Bad News, Challenges, or Points of Concern

• Margin Pressures: Jafra's gross margin was impacted by promotional activities, leading to a temporary decline, although management expects recovery.
• Market Risks: The discontinuation of sales to Argentina due to licensing issues could pose challenges, with management focusing on Mexico and Brazil for the near term.
• Supply Chain Concerns: Inventory levels increased slightly due to strategic purchases aimed at mitigating potential supply chain disruptions related to geopolitical tensions.

5. Notable Q&A Insights

• EPS Accretion: Analysts noted that the 36.6% EPS accretion from Tupperware does not yet include potential synergies from integration, suggesting future improvements.
• Direct Selling Focus: Management confirmed a strategic shift to focus solely on the direct selling channel for Tupperware, discontinuing reliance on non-direct sales.
• Manufacturing Capacity: Opportunities to utilize excess manufacturing capacity in Mexico and Brazil were discussed, with management assessing the potential for integrating production of Betterware products.

Overall, BeFra reported a strong quarter with significant growth driven by the Tupperware acquisition, while maintaining a focus on strategic initiatives and addressing challenges in margin management and market expansion.