How are energy investors positioned?
Betterware De Mexico SA de CV reported strong financial results for Q2 2025, significantly surpassing earnings forecasts. The company posted an earnings per share (EPS) of 8.79, dramatically exceeding the projected 0.4, marking a surprise of 2097.5%. This remarkable performance led to an 8.84% increase in stock price during market hours, closing at 10.96. According to InvestingPro analysis, the company maintains a "GREAT" Financial Health Score of 3.05 out of 4, and current analysis suggests the stock is undervalued. The company reported a consolidated revenue of 3.56 billion pesos, reflecting its robust market position.
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Key Takeaways
- Betterware De Mexico’s EPS of 8.79 far exceeded the forecast of 0.4.
- The company’s stock surged by 8.84% following the earnings announcement.
- Consolidated revenue grew to 3.56 billion pesos, highlighting strong market demand.
- The company maintained its leadership in the direct selling market.
- Strategic innovations and product launches contributed to performance improvements.
Company Performance
Betterware De Mexico demonstrated resilience and strategic prowess in Q2 2025, with key financial metrics showing significant improvement. The company’s consolidated revenue increased by 5.1% year-over-year, reaching 679 million pesos. This growth was supported by a 3.5% rise in consolidated EBITDA, stabilizing the EBITDA margin at 19.1%. The company’s free cash flow also rose to 592 million pesos, reflecting effective financial management.
Financial Highlights
- Revenue: 3.56 billion pesos, a significant year-over-year increase.
- Earnings per share: 8.79, surpassing the forecast of 0.4.
- EBITDA margin: Stabilized at 19.1%.
- Free cash flow: Increased to 592 million pesos.
Earnings vs. Forecast
Betterware De Mexico’s EPS of 8.79 represented a substantial surprise compared to the forecasted 0.4, reflecting a 2097.5% beat. This performance is notably higher than previous quarters, indicating strong operational execution and market positioning.
Market Reaction
Following the earnings announcement, Betterware De Mexico’s stock price increased by 8.84%, closing at 10.96. This movement reflects positive investor sentiment and confidence in the company’s strategic direction. The stock has demonstrated strong momentum with a 25.71% year-to-date return, according to InvestingPro data. Despite a slight dip in aftermarket trading, the stock remains close to its 52-week high of 14.46, underscoring market optimism.
Outlook & Guidance
The company maintains its full-year guidance of 6-9% revenue and EBITDA growth. It expects stability in consumption trends and is targeting a return to a 23-24% EBITDA margin for its Better Work segment. Strategic initiatives include expanding product lines and exploring new market opportunities in Central and South America.
Executive Commentary
CEO Andres Campos highlighted the company’s growth trajectory, stating, "With a stable consumption trend, we can really deliver growth." He also emphasized financial discipline, saying, "We remain a highly financially disciplined group." Campos attributed the improved performance to internal strategies rather than macroeconomic factors.
Risks and Challenges
- Economic uncertainty in Mexico and the US could affect consumer spending.
- Potential supply chain disruptions may impact product availability.
- Market saturation in existing regions could limit growth opportunities.
- Currency fluctuations pose a risk to financial stability.
- Expansion into new markets, such as Colombia, carries inherent risks.
Q&A
During the earnings call, analysts inquired about inventory management and reduction strategies. The company discussed exploring sourcing opportunities in the Chinese market and leveraging its 30-year anniversary to build customer trust. These discussions highlighted the company’s proactive approach to managing operational challenges and enhancing market presence.
Full transcript - Betterware De Mexico SA de CV (BWMX) Q2 2025:
Conference Call Operator: Thank you. Welcome to BEFRA’s Second Quarter twenty twenty five Earnings Conference Call. Speaking on today’s call are BEFRA’s President and Chief Executive Officer Andres Campos and Chief Financial Officer Rodrigo Munoz. Before we begin, the company would like to remind participants that this call may contain forward looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially than expectations. Please consider these statements alongside the cautionary language and safe harbor statement in today’s earnings release, as well as the risk factors outlined in BEFRA’s SEC filings.
BEFRA undertakes no obligation to update any forward looking statement. A reconciliation of and other information regarding non GAAP financial measures discussed on the call can also be found in the earnings release as well as in the Investor Relations section of the company’s website. I will now turn the call over to BEPHRA’s President and CEO, Andres Campos. Please proceed, Mr. Campos.
Andres Campos, President and Chief Executive Officer, BEFRA: Thank you, operator, and good afternoon, everyone. I’m pleased to share our results for the second quarter of twenty twenty five, a quarter that highlights the resilience and agility of our business. Following a challenging first quarter, we returned to top line and EBITDA growth, along with a strong quarter over quarter rebound and a positive free cash flow generation. These results are a clear signal of our ability to effectively navigate economic uncertainty, respond with agility, and build momentum across our businesses towards our long term goals. PEPRA’s consolidated revenue grew 5.1% year over year and 1.8% quarter on quarter, driven by all of our business units.
Importantly, we expanded our associate base from 1,120,000 at the end of Q1 twenty twenty five to 1,130,000 by the end of Q2 twenty twenty five, a 0.5% Q on Q growth, also driven by growth across all business units. BetterWare Mexico returned to sequential growth with revenue up 4% quarter over quarter, a strong recovery from the 9.8% year over year decline in Q1, narrowing that gap to a negative 1.1% versus last year in the quarter. The sequential improvement was not simply due to a modest consumption rebound in Mexico, but rather the result of aggressive pricing strategies and product investments that achieved the following in the quarter. First, affordability and accessibility. We revised the pricing of our line products, the core of our average orders, making them more competitive without relying heavily on promotions that caught into margins.
These made our most popular items more attractive, boosting seller engagement, as well as sales. We also simplified some products as another way to increase affordability. Second, a return to associate based growth. As a result of a new incentive program launched at the beginning of the year, we achieved net associate growth for the first time since Q1 twenty twenty one, expanding from 649,000 to 670,000 associates, 3.3% growth quarter on quarter. Our distributor base also grew, increasing 3.5%.
This is important as distributors are key drivers of team activity, retention, and growth. A more attractive points program also attracted more associates to Better Work during the quarter. In addition, we have rolled out a new personal tagging system, enabling more targeted sales support and initiatives that help increase associate productivity, retention, and ticket size. Third, innovation. New product launches in our home solutions and kitchen categories led Betterware sales grow this quarter with seasonality concepts such as heat, insect, and rain control outperforming the previous year.
And fourth, technology. We improved the functionality of our sales app, improving the back order process and making digital payments much easier. Betterware Mexico also achieved a strong profitability with an EBITDA margin of 19.9 and contributed to generating strong cash flow for the quarter. Now, turning to our Beauty and Personal Care business, Jafra Mexico started delivering double digit growth again and returned to profitability with its revenue up 10.9% year on year and its EBITDA margin expanding to 21.2%. Three key drivers behind this performance were first, category strength.
Our main source of category growth this quarter came from our rebranding efforts, which are the highlight of 2025. Fragrance rebranding led growth, boosted by the success of Navigo and Double Nature, while skincare was also positively impacted with the revitalization of Royal Jelly, our main franchise in that category. The branding efforts gave these products a modern look and also incorporated new sizes to make them more attractive to the consumer. Looking forward, we are particularly excited about the rebranding of our Royal Body brand in the third quarter, as well as the upcoming launch of a new spot remover under our higher end BioLabs skincare brand. Second, Salesforce productivity.
Jafra’s associate base increased 2.3%, while the average monthly ticket rose more than 9%. This was driven by a revamped leadership program, compelling incentives, and a refreshing brand identity that is resonating strongly with our seller community. And third, margin investments. Like Betterware, we also adjusted pricing to drive volume and increase competitiveness. While these slightly impacted margins in the short term, we expect the mid to long term benefits to include higher household penetration and an improved sales mix comprising more higher margin products.
Now turning into JAFRA US, while revenue decreased 8.9% year on year in US dollars, we delivered a 15.6% rebound quarter over quarter versus the first quarter of twenty twenty five. At the same time, the associate base grew 8.5% sequentially, while engagement improved significantly. We are excited about this progress and look forward to more sequential growth going forward. Given the enormous opportunity of the American market for JAFRA US, and after some years of understanding the business and the market, we have undergone deep transformation activities aimed to achieve constant growth. This includes, first, a compensation plan revamp.
In April and May, we rolled out our new incentives plan, which fosters growth and activity and includes a new loyalty program as well. We believe this new compensation plan will be key for growth in the coming quarters and years. Second, U. S. Market specific innovations.
We will begin launching innovations targeting The U. S. Market. Starting in Q3 twenty twenty five, namely our around the world fragrance collection. We continue working with our innovation team to bring newness that caters for US market niches more directly.
And third, a new catalog design, which we will launch in September. Turning briefly to geographic expansion, one of BEFRA’s growth pillars, we are pleased to announce that we successfully launched Better Work Ecuador in May, surpassing our second Q goal by reaching 2,500 active associates. This early success stems from replicating our proven Mexico playbook. At Better World Guatemala, our new management team is already showing better results with Q2 sales returning to positive growth. These developments reinforce our conviction on Central America and the Andean region of Latin America as important markets, which should add growth to the group in the mid term.
They represent a total addressable market equal to Mexico’s. Accordingly, we are currently assessing the Colombian market for entry in 2026. With that, I’ll turn it over to Rodrigo to go over the financials in more detail.
Rodrigo Munoz, Chief Financial Officer, BEFRA: Thank you, Andres, and good afternoon everyone. I will now get into some of other key figures of the quarter. Please have in mind that all figures that I’ll be referencing are in Mexican pesos, our functional and reporting currency. And that all period comparisons are year over year unless otherwise stated. Additional details are available in our earnings release published earlier on our Investor Relations website.
Our consolidated gross margin was 67.1%, mainly in line with last year’s results and reflecting our commercial investments in proactive pricing strategies at BetterWell and Jazamexico. BetterWell Mexico gross margin was 55.2%, down 127 basis points year over year. Due to proactive pricing strategies that Andres explained before. But we expect to see a continuation of the shift in consumer purchases towards a higher mix of line items and fewer promotional ones, which is projected to further improve margins in the second half of the year. Jafra’s Mexico gross margin was 75.3%, down 167 basis points versus last year quarter.
Due to pricing changes made to support underweighted categories such as skincare and cosmetics, which were not priced competitive before. It is important to mention that last year’s gross margin showed non recurring effects and the level achieved in the 2025 are in line with our expectations and above historical gross margin. The US gross margin improved to 76% supported by a more favorable mix of higher margin products and procurement savings. Consolidated EBITDA increased 3.5% year over year to $679,000,000 pesos, with a margin of 19.1% experiencing a strong quarter over quarter rebound after temporary effects seen in Q1 twenty twenty five and returning to our normal profitability levels of 19%. Better World Mexico EBITDA margin remained healthy.
Despite the gross margin commercial investment, thanks to higher SG and A efficiencies and improved supply chain management. Africa’s Mexico EBITDA increased 14.2% year over year, driven by revenue growth and disciplined expense control. While the EBITDA loss of The U. S. Businesses narrowed.
A continued improvement in the top line paired with disciplined cost controls is expected to bring to the breakeven point by year end. Free cash flow rose to MXN592 million in this quarter, bringing year to date conversion to 44.2% of EBITDA and 87% conversion for the second quarter. After a challenging first quarter, we expect this trend to continue aiming to reach our historical conversion level of around 60% of EBITDA to free cash flow in total year 2025. Consolidated EPS grew 7.7% year over year supported by the increases in revenue and EBITDA. Lower financial costs in Mexico and a 45,000,000 decrease in income tax as a result of a positive adjustment related to the tax audit report of 2024.
Debt leverage improved with our net debt to EBITDA ratio at 1.97 times, down from 2.08 times in Q1 twenty twenty five. But still higher than the level reported in Q2 twenty twenty four of 1.8 times. Increase was mainly due to undertaking incremental short term debt in Q1 in response to lower operating cash flow from non recurring events explained before. In light of the quarter’s free cash flow and considering current and expected market conditions, our Board of Directors is proposing a 200,000,000 peso dividend for Q2 twenty twenty five. Subject to ratification at the ordinary general shareholders meeting on July 31.
This would mark our twenty second consecutive dividend since our IPO in 2024. Underscoring our unwavering commitment to delivering sustainable long term shareholder value. We remain committed and are maintaining our full year guidance for 2025. As always, we will continue to closely monitor our approach. I will now pass the call to the operator for any questions you may have.
Thank you.
Conference Call Operator: Thank you. We will now begin the question and answer session. To ask a question, dial in by phone, then press star then one on your telephone keypad. Make sure your mute function is turned off. And if you are using a speakerphone, please pick up the handset before pressing the keys.
To withdraw your question, press then 2. Our first question is from Christina Fernandez with Telsey Advisory Group. Please proceed.
Christina Fernandez, Analyst, Telsey Advisory Group: Hi, Andres, Rodrigo, everyone. I have a couple of questions. First, I wanted to see if taking a step back and looking at the quarter, the sequential improvement versus 1Q, how much should you attribute to a better macro and consumer environment versus the company specific initiatives that you discussed
Rodrigo Munoz, Chief Financial Officer, BEFRA: on the call?
Andres Campos, President and Chief Executive Officer, BEFRA: Hi, Christina. This is Andres. How are you? So, I think that we have seen in general a drop in consumption, I would say in the fourth quarter of last year a little bit and more so in the first quarter of this year. And we saw slight stabilization or slight rebound in consumption in the second quarter.
So that’s a reality. But it was just a slight stabilization or recovery. So, we believe that while this helped, we also took internal measures, which is what weighs more in our result. We have always said that with a stable consumption trend, we can really deliver growth as we have done before and outperform the markets. So we do attribute more to our internal strategies.
As we spoke in both Jafra and Better World Mexico, we work very hard on our merchandising techniques, on our pricing techniques, promotion techniques, and even on our product techniques to make our portfolio more accessible to the consumer and to perfect some of our strategies in terms of pricing products, all our commercial strategies. And we think that this really kicked in and helped to deliver such a strong result for Q2.
Christina Fernandez, Analyst, Telsey Advisory Group: Thanks. And following up on that commentary, you kept your guidance for the year 6% to 9% revenues in EBITDA growth. It implies an acceleration from what you saw in the first half. So, what I guess, what are the key drivers to get to that number for the full year?
Andres Campos, President and Chief Executive Officer, BEFRA: Yeah. Andres, again. I think that in the macroeconomic environment and consumption, we do expect stability, not necessarily a rebound in consumption, but we do predict stability in consumption trends. And then second, we were able to see in the second quarter that with this stability, we can really achieve growth in our revenues. It is very important to state that Q2 was the first Q since 2021 that we grew in associates in Better World Mexico.
We also grew in associates for Jafra Mexico. We also grew in associates at Jafra U. S. Versus Q1. So seeing this ability to not only grow our revenue, but also grow our associate base is a positive sign of what we can achieve in the coming quarters.
I want to state that obviously there’s still some uncertainty in the macro environment. Obviously there’s still some room of uncertainty. And if the macro environment gets worse, that will not help and it will be more challenging. But stating again, a stable macro environment, we can achieve this growth going forward.
Christina Fernandez, Analyst, Telsey Advisory Group: Thanks. The Yeah, last question understood. The last question I had was on the Better Work segment on the letter you talked about finding efficiencies to return to a 23% to 24% EBITDA margin. What areas are there more efficiencies to get back to those figures?
Andres Campos, President and Chief Executive Officer, BEFRA: Yeah. So, the first part where we expect an improvement is in the gross margin. There’s two well, there’s actually three factors behind us expecting this. The first factor is a strong peso against the dollar that you have seen. I think today it was close to $18.50.
The second one is lower freight costs. Freight costs have come down. Even now in peak season, they are at low rates and we expect this to continue at lower and more stable rates at that point. And the third point is that our internal strategy of making our line items more accessible and relying less on promotional activity that cuts into our margin is going to help us to in the mix of our revenue have a higher margin mix and those help margins. So with these three things in mind, the first thing that we are expecting is for a margin improvement.
Now, the second thing that we’re working on is also expense reduction and expense efficiencies. This is something that we do continuously. And obviously it’s not like we’re seeing a big factor or a special factor. It’s just a matter of constantly looking into productivity in our expenses, into efficiency in our expenses. And we think we can continue to find these different efficiencies.
So together with both, we believe we can drive our EBITDA margin up and have a strong EBITDA margin in the second half of this year.
Christina Fernandez, Analyst, Telsey Advisory Group: Thanks so much, Andres.
Andres Campos, President and Chief Executive Officer, BEFRA: Thank you, Christina.
Conference Call Operator: Our next question is from Eric Beder with Small Cap Consumer Research. Please proceed.
Eric Beder, Analyst, Small Cap Consumer Research: Hey, Andres. How are you?
Andres Campos, President and Chief Executive Officer, BEFRA: Hi, Eric.
Eric Beder, Analyst, Small Cap Consumer Research: Let’s talk a little bit about some of these other things. Obviously, you’re still a major player in the Chinese market in terms of getting your product. What opportunities are you seeing there given some of the shifts in The U. S. In terms of how they’re production from China and other pieces in terms of you being able to kind of fill some of those gaps maybe and get better economic terms?
Andres Campos, President and Chief Executive Officer, BEFRA: Yes, I think that we are seeing opportunities to work more profoundly with our suppliers, work more profoundly with the factories that we work with to improve design of the products or find ways to make our products more efficient. I think we are not seeing yet like I think the right word is like a cataclysmic change that opens up a very relevant opportunity, but we are seeing opportunities and this is helping us to improve our products, to improve our costs. And I think that’s something that is helping both from the cost side of the products and also from our innovation capabilities that we’re being able to innovate faster and better every day.
Eric Beder, Analyst, Small Cap Consumer Research: Great. And when you look at inventory, I saw that you’ve made material progress and you mentioned it in the remarks on the piece. How should we think about the opportunities here in terms of turns and other pieces for the inventory? And where should it be going for the rest of the year, let’s say, and going into 2026 in terms of productivity and be able to improve the productivity on the inventories?
Rodrigo Munoz, Chief Financial Officer, BEFRA: Hi, Arlene. This is Rodrigo. So again, we’re looking at very good assumptions for the inventory. If you see actually quarter to quarter this year we’re actually getting down again to the same rates that we had on 2024. As you may remember we had an up on inventory on the last quarters of year 2024.
But that’s already coming down as we speak. Right now are about $200,000,000 lower than we started the year. And it will continue to decline. Part of our strategy is to still push the products that we have on inventory and try to reduce on our purchases so we get back to normal position in inventories.
Eric Beder, Analyst, Small Cap Consumer Research: Okay. The better work catalog. So, we’ve seen in the last few months that you started to really ramp up on this thirtieth anniversary celebration. How should we be thinking about that as a potential nice driver here? It seems to be a new section and lets you kind of expand out in terms of some of the products.
How should we be thinking about that going forward as an opportunity?
Andres Campos, President and Chief Executive Officer, BEFRA: Yeah, Eric, this is Andres again. I think that the main drivers for revenue growth this year are the ones we spoke about in the earnings release and talking about our price strategies, our promotion strategies,
Andres Campos, President and Chief Executive Officer, BEFRA: everything. Hello?
Rodrigo Munoz, Chief Financial Officer, BEFRA: Hello?
Andres Campos, President and Chief Executive Officer, BEFRA: I’m kind of hearing some voices there. Don’t know if okay. There you go. Sorry, Eric. I just heard some voices
As I was saying, pricing strategies, product strategies, our incentive program strategy are the main drivers behind it. But we definitely think that celebrating our thirty year anniversary has given us the chance to reinforce trust and certainty with our sales force, with our associates, with our distributors. And it brings a lot of confidence and trusting to them to continue working with us and to have a more solid trust and only in the past, but on the future of the company, which builds upon all these strategies to help with growth. So we are taking advantage of this being such an important anniversary that reinforces the trust in our associates and distributors going forward.
Eric Beder, Analyst, Small Cap Consumer Research: Congrats on the quarter and good luck for the rest of the year. Thank you.
Andres Campos, President and Chief Executive Officer, BEFRA: Thank you, Eric. There
Conference Call Operator: are no further questions at this time. I would like to turn the floor back over to management for closing remarks.
Andres Campos, President and Chief Executive Officer, BEFRA: Thank you, operator. While the external environment, particularly in Mexico and in The U. S. Remains challenging, I want to emphasize that this is not a reflection of PEPFAR’s fundamentals. On the contrary, we remain a highly financial discipline group and our 2Q results demonstrate a strong rebound against the first quarter, showing the resilience and flexibility of our commercial model.
Our revenue is growing, our sales force is expanding, our profitability recovered strongly and remain robust. Our international footprint is growing. We’re generating cash and our brands continue to build consumer trust. Strong fundamentals along with a solid foundation supported by PEPRA strategic pillars, give us a good starting point to achieve a positive second half of the year. We would also like to invite you to explore our new corporate presentation now available on our Investor Relations website, where we provide further detail on our business model, our strategy and the key levers that drive our performance.
Thank you again for your trust and continued support. We look forward to updating you on the next quarter. Have a great evening everyone.
Conference Call Operator: Ladies and gentlemen, this concludes BEPHRA’s second quarter twenty twenty five earnings conference call. We would like to thank you again for your participation. You may now disconnect.
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