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

Thank you and welcome to today's BetterWares first quarter fiscal year 2022 earnings conference call. With me on today's call for BetterWares Executive Chairman, Louis Campos, Chief Executive Officer, Andres Campos, and Corporate Chief Financial Officer, Carlos Dorman. Before we get started, I would like to remind you that this call includes forward-looking statements which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Any such statement should be considered in conjunction with the cautionary statements and the safe harbor statement in the earnings release and risk factors discussed in the reports filed with the SEC. BetterWear assumes no obligations to update any of these forward-looking statements or information. A reconciliation and other information regarding non-GAAP financial measures discussed on the call can be found in the earnings release issued yesterday, as well as investor sections of the company's website. Now I would like to turn the call over to the company executive, Chairman Luis Campos. Please proceed.

Thank you, operator. Good morning, everyone, and thank you for joining us today. I would like to begin my remarks by highlighting the strength and resiliency of our company and its asset-light and agile business model, which has allowed us to successfully navigate through an uncertain environment both locally and globally, of high inflation, supply chain disruptions, and changing consumer trends, and to recover our profitability levels after the extraordinary expenses experienced during the fourth quarter of last year. Compared to the preceding quarter, our gross and EBITDA margins expanded 993 and 1,003 basis points respectively, which demonstrates the flexibility of our business to adapt promptly to different market conditions. While we are operating in a dynamic and challenging environment, we remain focused on our long-term growth strategy and the opportunities ahead. as we have in the last 20 years. And we are confident that we have the right strategies in place to seize these opportunities to achieve a 40% household penetration in Mexico by the end of 2025. Later in the call, Andrés will discuss some of these strategies in detail. which are based on our three strategic pillars of product innovation, technology, and business intelligence, and will pave the way for future growth. Carlos will discuss our quarterly financial results, our expectations for the rest of the year, and the financial strength of our business. Before turning the call to Andres, I would like to take the opportunity to welcome again all Jafra employees, leaders, and consultants to our company. As announced on April 7, we are very pleased to complete the acquisition of Jafra's operations in Mexico and in the US, along with Jafra's trademark rights worldwide, funded primarily by debt. taking advantage of our current low leverage ratio. As previously mentioned, each company's management team will operate as an independent subsidiary, remaining fully focused on its operations and growth strategies. and we will replicate BetterWorks' three strategic pillars across Jafra's operations to accelerate its future growth. This acquisition expands our category and geographic reach, as Jafra's know-how and presence in the U.S. market of over 65 years will pave the way for us to enter the attractive U.S. market by the end of 2023. We will discuss in detail the strategy during our next conference call when we have properly assessed potential synergies and its accretive impact to our results. I will now turn the call to Andres to discuss our business strategies.

Thank you, Luis, and good morning to everyone. Thank you for joining us today. The COVID period from 2020 to 2022 brought about an abnormal expansion of the market with the consequent very positive impacts on our revenues, which have now adjusted to back to normal conditions. Despite the adjustment, the secular trends on which we act continue to be valid and growing. Namely, number one, people's living spaces are getting smaller and smaller. Number two, people have more stuff every day. Number three, people's lives are more and more hectic, so they need practical solutions for everything. Number four, people are more and more in need of an extra income. opening a huge space for the gig economy. Therefore, we remain confident in our ability to return to year-on-year growth, and we have the commercial strategies in place to achieve this. First, we must remember our two main avenues of growth. Number one, household penetration, and number two, share of wallet expansion. In terms of household penetration, we have different studies that show there is still room for growth. The latest study of May 2021 showed that with 1.2 million associates, we reached almost 24% of Mexican households on a regular basis, where approximately 7 million households had purchased Better World products in their prior 12 months. We are confident in our ability to reach 40% household penetration by 2025. In terms of share of wallet expansion, there are two things to stand out. First, as we have mentioned before, we have deconstructed our complete product portfolio, reorganizing our product categories by functionality rather than by areas of the home. elevating, thus, our innovation capabilities. Within these functional categories, we have identified more than 200 product concepts that we offer to the consumer, which will allow us to increase our growth opportunity going forward. With that in hand, we are in progress of making a thorough market analysis that will be concluded by the end of the second quarter 22. This will be a groundbreaking information to drive concept and category growth. We plan to share information regarding this study in the second quarter of 2022 earnings release. Now, to see these growth drivers, we are working within our three strategic pillars. On the innovation front, we've developed six main initiatives. First, we will strengthen our marketing effort, having recently hired a new chief marketing officer, Gerardo Meriteran, who formerly led strategic Clorox brands for LATAM. Gerardo brings a strong experience of 15 years in category management, pricing, and promotion development. Second, we are adjusting our strategy of doubling innovation to focus on smarter innovation by concepts. As I mentioned before, we have segmented our portfolio into more than 200 concepts. We will develop these concepts thoroughly, making sure we are strong players in each one. Third, we are also strengthening our market research analysis and innovation process to make sure we have more assertiveness in all innovation initiatives. Fourth, we have created a category development team that is completely focused on new product category development. We are exploring different categories, such as smart home and home restoration, among others. At the same time, we have revised our pricing and promotion strategies. making sure we position each product in the right price and carry out creative promotions to spark demand. And sixth, we have integrated an engineering and manufacturing department to make sure all designs are optimized in terms of costs. As for our technology pillar, we are pleased to announce the launch of our new Better Work Plus app on May 2022. This third version of our proprietary Salesforce app will help us to enhance support, training, and motivation of our distributors and associates. At the same time, we will roll out the first version of our natural language processing technology within our service bot during the second quarter of 22. We have also developed an intelligent outbound messaging system, which reminds all distributors and associates of specific actions they should take to continue growing. Additionally, we are also working on strengthening our digital catalog design so it can become a more productive tool for all associates and distributors. Finally, regarding the business intelligence pillar, We have overhauled our rewards programs to continue motivating market penetration and sales force growth. We are also making progress on researching the associates' behaviors and motivations to cater better programs and service to all of them, which we are sure will contribute to increased attraction and retention of associates starting on May 2022 and going forward. Lastly, we are developing a stronger understanding of our geographic expansion and the local actions we need to take to make sure every city grows according to its potential. This entire set of initiatives is key to achieving a turning point between second quarter and third quarter of 22. which will help us return to year over year growth going forward. Overall, as we mentioned before, we see COVID and post-COVID period, meaning 2020 through 2022, as an abnormal period within our long-term focus on market penetration. We believe that there are still strong secular trends on which we can act to continue growing in the years to come, as we have done for the past 20 years before COVID. We continue deepening our understanding of the market and the most effective actions to seize existing opportunities. Thus, we are fully confident of our long-term target of reaching 40% market penetration remains valid. I will now turn the call to Carlos, who will discuss our financial results for the quarter.