INVESTOR PRESENTATION - FEBRUARY, 2021 - AWS
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INVESTOR PRESENTATION
FEBRUARY, 2021
The information presented here may include statements regarding future events and / or projected financial results. The results obtained may differ from those projected in this presentation because they are subject to risks and uncertainty that may change based on various factors that are not under the control of the Company.
1 Revolutionizing How Consumers Shop For Household Products
2
Powerful Distribution Model
● Two-Tier Independent Distributors and Associates
● Compelling Primary or Secondary Income Opportunity
● Convenient Work from Home
● Technology Based Ordering and Delivering
Key Investment
Critical Mass with Significant White Space potential
Highlights
● 59.7K Distributors and 1.23M Associates
● 20% Household Penetration in Mexico
Outstanding Track Record of Sales and Earnings Growth
Asset light Business with High Free Cash Conversion
For more information, please go to
our Investor Relations website,
ri.betterware.com.mx Talented Management Team
3
Betterware At A Glance
Key Facts (as of 01/31/2021)
Stock Price $36.00 USD
Market Capitalization $1,317M USD
FY2021 Guidance
Net Revenue $10,100M - $11,100M
EBITDA $3,000M - $3,300M
EBITDA Margin 29.7%
CAPEX $460M
Notes: i ) Financial information in Mexican Pesos Source: Management
4
Powerful Distribution Network Model
Overview Two-Tier Distribution Network
59.7k Distributors Rewards for Distributors
▪ 82% of Distributors place orders every week
▪ Average weekly order ticket of ~US$390 (MXN$7.8K) • 12-16% discount on its
Associates’ sales
▪ High tenure 1 Distributor places • 20-40% of Betterware
orders to Betterware Points earned by its
Associates
1.23m Associates
Distributor
▪ Place orders to their assigned distributor and are either
final consumers or the selling point with other clients
Distributor sells to a pool of Associates
▪ Do not receive commissions and are not paid for recruiting 2
Recruited (19 on average)
Rewards for Associates
• 24% discount on product
Source: Management, as of December 31st, 2020 purchases
Note: Associates need to recruit 3 individuals and Associates Referred
purchase a minimum of US$125 in order to upgrade • 1 Betterware Point for
to Distributor level every MXN$1 of purchase
3 Associates purchase and sell products
Critical Mass with Significant White 5
Space Potential
Business is highly Strong distributor and Innovation supports Increased technology New marketing to
consistent and easily associate growth in continued expansion in support including web drive increased
replicated in new 2020 – paves the way existing and new platform upgrade and awareness
markets for continued double categories digital app to increased
digit sales gains sales
Source: Management
Unparalleled Business Intelligence Unit 6
Best-in-class Technological Tools
Clear Strategy Product Intelligence Tight Monitoring
Well-mapped distribution Extensive product analysis to Proprietary live performance
network location and track performance and tracking platform
penetration by socio- instant market reactions
economic region. • Weekly performance
• Strategy to create highly- monitoring against sales
• Locate areas within the competitive and innovative objectives
business model scope products • Detailed information of each
• Identify nearby distributors • Provide distribution network distributor number of orders,
• Contact distributor to trigger with top-quality products to average ticket, type of items,
the recruitment of associates attract new customers among others
or cover the identified zone • Big data analysis of client • Adjusting objectives based
behavior on live performance
Source: Management
Unparalleled Business Intelligence Unit 7
1 1
Circles represent a
Target areas by socio distributor. Color scales
economic segments indicate current week ’s
performance vs target
sales
2 2
Color scales represent Separated areas to assign
the segments’ responsibilities to
acquisition power Company’s development
managers
Source: Management
Demonstrated Performance in 8
New Markets
Growth Roadmap
Well-mapped execution Deployment of Detailed geographic Guatemala profitable Possible New Markets:
plan focused on new and distributors to cover mapping helps in less than a year Panama, Costa Rica,
underpenetrated new zones and spark distributors to grow their Colombia and Peru
neighborhoods associate recruitment productivity and avoid
cannibalization
(1) Coverage areas are considered where at least one transaction is
done during the year Source: Management9
Growth Opportunities
Organic Inorganic
Room to grow: M&A:
● Low household penetration (20%). ● Replicate our business model to accelerate growth in
● Low Share of Wallet (20%). other Direct-to-Consumer companies
● Expand our category offering within the household
through acquisitions
Market
potencial
Geographic Expansion:
• Identify the right partners to replicate our business
model:
• Colombia and Peru
(2/3 of Mexican market size)10
Category Expansion
+300 New Products
Overview per Year
• Six different categories are offered in the
product portfolio, all focused on the
home organization segment
• Pricing strategy that optimizes revenue
and margins, and limits inventory left-
overs
• Continuous product innovation and
development, backed by a data analytics
unit focused on revitalizing the
catalogue content, to attract repeated
purchasesCategory Expansion 11
Net Company Sales by Category
Kitchen Home Commuting
35% 20% 11%
Laundry & Cleaning Bathroom Bedroom
11% 12% 11%
Source: ManagementNew Corporate Headquarter Campus Allows for Increased Efficiencies 12
Optimized process
Manufacturing Warehousing Distribution
▪ Betterware has a warehouse facility
▪ Betterware ships to distributors once a
where it receives all products imported
▪Betterware’s products are designed and week through third-party companies
from China (that arrive at the Manzanillo
branded by the Company but with whom the Company maintains
port)
manufactured by third party factories strong working relationships
certified under Betterware’s quality ▪ The products are then shipped to the ▪ The distributor personally delivers orders
standards. Company’s distribution center in to each of its associates, whom in turn
Guadalajara deliver to final customers, eliminating last
▪Approximately 90% of its products are ▪ In the distribution center, the Company’s mile costs for the Company
manufactured in China and 10% assembly line sets up packages to be ▪ The distribution center also stores and
domestically sent to distributors by region on a weekly ships reward products to the distribution
basis network
▪Our office in Ningbo (China) is in charge of ▪ Key metrics
▪ Key Metrics
factory certification, product quality
▪ 99.97% service level ▪ 98.5% on-time delivery
assurance and product innovation
▪ 80-day service level inventory ▪ 24-48hrs. delivery time
▪ 1.4% excess inventory ▪ Long-haul distribution costs
▪ 0.58% defective claims account for ̴4% of net sales
Accelerated growth in 2020 impacted service levels, but the company was able to adapt and
reach historic service levels by the end of 3Q20. Source: ManagementCloser Connection to Consumers 13
Current Status and Main Objectives
▪On December 8th, Betterware launched its B2C web app platform
nationwide
▪E-commerce platform is an additional selling channel and
important tool which will:
✓ Attract new customers and enter untapped market segments
✓ Increase Big Data analytics and client behavior understanding
✓ Selling process automatization and efficiency in operations
▪ The Distribution Network will receive the same compensation for
the sales through the app as sales done through direct-selling
catalogues
▪ Payment flexibility by credit card or cash to DistributorCloser Connection to Consumers 14
How it Works
1 Customer makes 2 App locates
3 Betterware delivers 4 Customer receives
purchase order the products to the products from
through the app closest Distributor Distributor
Distributor
Distributor
Distributor Customer
Distributors and Associates are also able to share a Personal Link with their customers, so their purchases
are automatically assigned to the distributor or associate, who gets the benefits of that sale.15
Technology and Marketing
Marketing Business Service
Sales
Intelligence
BetterNet Pipeline
Orders Generation of ideas Data mining Servicing
Awards Commercial evaluations Online reporting Delivery
Notifications Quotes and samples Forecasting WMS
Monitoring Report of Status Machine
Benefits Learning16
Talented Management Team
LUIS CAMPOS ANDRES CAMPOS DIANA JONES MAURICIO ÁLVAREZ LUIS LOZADA
EXECUTIVE CHAIRMAN CHIEF EXECUTIVE OFFICER (CEO) CHIEF FINANCIAL OFFICER (CFO) CHIEF INFORMATION OFFICER CHIEF STRATEGY OFFICER (CSO)
(CIO)
Mr. Campos has been in the direct- Mr. Campos has been CEO of Diana Karina Jones Villalpando has Luis Lozada joined Betterware in
to-consumer sales business for Betterware de Mexico since 2018. served as Betterware CFO since Mauricio Alvarez Morphy joined the January 2021, as Chief Strategy
almost 25 years. He has been Prior to becoming CEO, within the 2020. Mrs. Jones previously company as CIO in August 2020 Officer. Prior to Betterware, Mr.
Chairman of Betterware de Mexico Company, Mr. Campos served as performed as Betterware's responsible for information Lozada was an Associate Partner
since he bought the Company in Commercial Director (2014 – 2018) technology spanning applications,
Director of Comptroller (2018-2019) with Bain & Company, where he
2001. Prior to Betterware, Mr.
and Strategy and New Businesses data, cybersecurity and
Campos served as Chairman of and Director of Finance Planning infrastructure, all a vital part of nearly
worked for almost fifteen years
Tupperware Americas (1994 – 1999), Director (2012 – 2014). Prior to (2019-2020). Prior joining the (2006 – 2020) advising senior
every aspect of our customer and
Chairman of Sara Lee — House of Betterware, Mr. Campos worked in Company, she worked as Director service experience. Mauricio joined executives of multi national
Fuller Mexico (1991 – 1993), and the Corporate Banking area of of External Audit in KPMG Betterware from multinational companies on a variety of
Chairman of Hasbro Mexico (1984 – Grupo Financiero Banamex (2005 Cardenas Dosal, S.C., (2003-2018), management topics. Mr. Lozada’s
customer experience company
1990). Mr. Campos is an active – 2010) and in KPMG as an Auditor including a term at New York City Atento where he was Chief area of expertise resides on
member of the advisory board of
(2004 – 2005). Mr. Campos holds a from 2008 to 2010. Mrs. Jones Information Officer for the US, business strategy and
Grupo Financiero Banamex and he
was an active member of the Direct bachelor’s degree in Business holds a degree in Public Mexico and Central America. performance improvement, with
Selling Association, the Latin Administration from Monterrey Accounting and Finance from the Previous to Atento, Mauricio co- retail and consumer-goods
America Regional Managers’ Club, Institute of Technology and Monterrey Institute of Technology founded Flip Technologies, a SaaS companies Mr. Lozada holds a
the Conference Board and the Higher Education (Instituto and Higher Education (ITESM), as provider for non profit organizations bachelors degree in Chemical
Communications Council. Tecnologico y de Estudios well as an MBA with specialty in and held various IT & Innovation Engineering from Monterrey
Additionally, he has performed as leadership roles of increasing
Superiores de Monterrey – Finance from Tecmilenio Institute of Technology and Higher
board member of the Economic responsibility at The Coca-Cola
Development Commission of Mid “ITESM”) and an MBA from Cornell University. She is also a Certified Education (Instituto Tecnologico y
Company globally. Mauricio holds a
Florida, Casa Alianza-Covenant University. Public Accountant on behalf of de Estudios Superiores de
bachelor’s degree in Computer
House, the Metro Orlando the Mexican Institute of Public Monterrey – “ITESM”) and an MBA
Systems from the Universidad
International Affairs Commission, Accountants. from Cornell University.
Iberoamericana in Mexico City.
SunTrust Bank and Casa de Mexico
de la Florida Central, Inc.17
Powerful Distribution Model
● Two-Tier Independent Distributors and Associates
● Compelling Primary or Secondary Income Opportunity
● Convenient Work from Home
● Technology Based Ordering and Delivering
Key Investment
Critical Mass with Significant White Space potential
Highlights
● 59.7K Distributors and 1.23M Associates
● 20% Household Penetration in Mexico
Outstanding Track Record of Sales and Earnings Growth
Asset light Business with High Free Cash Conversion
For more information, please go to
our Investor Relations website,
ri.betterware.com.mx Talented Management Team18 Financial Overview
Q420 Results Demonstrates Business 19
Resiliency Amid COVID-19
Announced Record Fourth Quarter Fiscal Year 2020 Financial Results
Q4 2020 vs. Prior-Year Quarter ($ in Pesos)
229% increase over Q4 2019
Q4 2020 Net Revenue $2,601 million
Includes additional week in Q4 2020
Q4 2020 Comparable Net
$2,441 million 209% increase over Q4 2019
Revenue
$807 million or up 220
254% increase over Q4 2019
Q4 2020 EBITDA basis points to 31.0% of
Includes additional week in Q4 2020
Revenue
Q4 2020 Comparable EBITDA $744 million 226% increase over Q4 2019
Q4 2020 EPS $1.49 Includes non-cash expenses.
Q4 2020 Adjusted EPS $18.64 448% increase over Q4 2019
Q4 2020 Distributors 59.7 thousand 187% increase over Q4 2019
Q4 2020 Associates 1.23 million 195% increase over Q4 2019Results for FY2020 Demonstrate 20
Business Resiliency Amid COVID-19
FY 2020:
• Net revenues increased 135% to Ps. $7,260 million driven by
an increase in distributors and associates, which led to a
147% increase in volume to 133.7 million units. Comparable
Net Revenue increased 130% to Ps. $7,100 million.
• Gross margin was 54.7%, compared to 58.5% in 2019 mainly
due to the increase in air freight incurred to meet demand,
and to a lesser extent due to a depreciation of the Mexican
peso compared to the US Dollar.
• EBITDA increased by 154% EBITDA margin was 29.8%.
Comparable EBITDA increased by 147%.
• Adjusted EPS increased to Ps. $43.36, compared to Ps. $14.31
of 2019.Historical Financial Overview 21
Distributors and Associates Net Company Sales
(In ‘000s) (Ps. Millions)
1,290 +46% vs 2020
1,290
1,231
438 1,230
438
10,600
343
417
7,260
213 2,601
417
162 325
201 3,085
152 2,317
1,063 1,450 791
12 18 21 60 60
10 21
2016 2017 2018 2019 2020 4Q19 4Q20 2016 2017 2018 2019 2020 2021E
4Q19 4Q20
Net Company Sales 2021 calculated with the mid-point of the Guidance
Source: Management
1. Net Company Sales: Revenue after VAT, returns and discounts to Distributors and Associates
Notes: i) Financial information under Mexican GAAP basisHistorical Financial Overview 22
Gross Margin and EBITDA Margin2 EBITDA Evolution
(Ps. Millions) +46% vs 2020
3,150
62.1%
59.8% 59.6% 58.5% 57.0% 2,164
54.7% 807
1,140
851
408
29.8% 29.7% 578
27.6%
23.6% 24.5% 24.9% 228
355
251
2016 2017 2018 2019 2020 2021E 4Q19 4Q20
2016 2017 2018 2019 2020 2021E
EBITDA and EBITDA Margin calculated with the mid-point of the Guidance
Source: Management
1. Net Company Sales: Revenue after VAT, returns and discounts to Distributors and Associates
2. Over Net Company Sales
Notes: i) Financial information under Mexican GAAP basisHistorical Financial Overview (Cont’d) 23
Strong Balance Sheet and Cash Generation
▪ Capex requirements are low, estimated CAPEX of Ps. $460M for 2021.
1,140
▪ Minimal working capital needs with suppliers fully financing the inventory and
receivables cycle.
408
▪ Betterware has a solid balance sheet with a healthy net leverage ratio (Net
Debt / EBITDA) of -0.01x, as of December 2020
Source: Management
1. Net Company Sales: Revenue after VAT, returns and discounts to Distributors and Associates
2. Over Net Company Sales
Notes: Financial information under Mexican GAAP basis
Notes: i) Financial information under Mexican GAAP basisHistorical Financial Overview (Cont’d) 24
Adjusted Levered Free Cash Flow1 Working Capital2 & Cash Conversion
(Ps. Millions) (Ps. Millions) Days of Cash Conversion Cycle
1400
1200
65% 69
69 12
12 -8
-8 -20
-24 -30
1 -8
7
1000
59% 59%
54% 54% 4.4% 6.2% -2.6% -3.7% -7.0% -6.0%
1,140
44%
800
-1000.0%
2,050 -3000.0%
$46.4 $91.7
600
-5000.0%
1,266 408 -$50.0
-7000.0%
400
-$61.7 -$504 -$670.0 -9000.0%
457
-11000.0%
200
273
-13000.0%
135 228 -15000.0%
0
2016 2017 2018 2019 2020 2021E
2016 2017 2018 2019 2020 2021E
Source: Management
1. Adj. Levered FCF as % of EBITDA
2.Working Capital as % of Net Revenue
Notes: Financial information under Mexican GAAP basis
Notes: i) Financial information under Mexican GAAP basis25
SPAC Total Return for Completed Business Combination in Q1 2020
Total return calculated from closing of SPAC merger through
December 31, 2020
Of the 65 SPACS that
350% completed business
297% combinations in 2020, trading
300%
on US exchanges, BWMX was
250% the highest performing SPAC
200% with a 297% increase
150% 110%
100%
45%
50%
5%
0%
BWMX Betterrware de México
-2% -5% VVNT Vivint Smart Home,Inc.
-50% -18% -30% VRT Vertlv HoldIngs Co.
-100% -60% GDYN Grid Dynamics Holdings
IGIC International General Insurance HoldIngs
-91% ALTG Alta Equipment Group, Inc.
-150% PAE PAE Inconrporated
BWMX VVNT VRT GDYN IGIC ALTG PAE ATCX GSMG METX ATCX Atlas Technical Consultants, Inc.
GSMG Glory Star New Media Group HoldIngs Ltd.
03/12/20 01/17/20 02/07/20 03/05/20 03/17/20 02/14/20 02/10/20 02/14/20 02/15/20 03/30/20 METX Meten EdtechX Education Group LTd
Source: Bloomberg26 Thank you for your attention! Our commitment is to keep you informed. INVESTOR RELATIONS ir@better.com.mx +52 (33) 3836-0500 https://ri.betterware.com.mx/
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