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

Thank you and welcome to BetterWear's third quarter fiscal 2023 earnings conference call. With me on the call today are BetterWear's executive chairman, Luis Campos, BetterWear's chief executive officer, Andres Campos, and corporate chief financial officer, Alejandro Ulloa. Before we get started, I would like to remind you that the call will include 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 reports filed with the SEC. BetterWare assumes no obligation 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 the investor section of the company's website. Now, I would like to turn the call over to the company's executive chairman, Luis Campos. Please proceed.

Thank you, operator, and good morning, everyone. I am very proud to present our third quarter results. As a group, we have experienced consistent revenue stability which has allowed us to regain a strong cash flow generation, thanks to the strengthened profitability and working capital EC that this stability brings. During the year, we have generated 1,635 million pesos of operating cash flow, representing 86% of the EBITDA for the period. We have strategically used this cash to pay down debit, strengthen our stockholders' equity, fund our international expansion preparations, and, with the remaining cash, pay dividends while continuing to hold cash balances in support of our ongoing growth. As it relates to dividends, it is important to note that we are proposing a payment of 200 million pesos for the quarter, accumulating a total of 650 million pesos paid out this year. All that said, it is important to talk about what has always been our main focus, which is consistent and profitable revenue growth. Better world revenue stability and slight growth must not be taken for granted. The strategies and execution this year were pivotal to stabilize revenue at the level of 89% higher than 2019. In fact, Despite the normal seasonal impacts, three-quarter 2023 revenue grew 3% as compared to 4Q 2022, which was our inflection point from the post-pandemic downturn. We have confidence in our ability to continue to drive growth going forward. The home products market has stabilized and we have the right internal strategies in place to continue to gain more share of the market. Jafra Mexico continues to excel in revenue and profitability growth. This year we laid out the first steps to replicate our strategies within our three pillars, innovation, business intelligence, and technology. Product innovation represented 14% of net revenue for the third quarter 2023, compared to 7% on the same quarter last year. We have begun to make changes to catalog design based on our business intelligence knowledge. And we have launched a first version of an app for consultants and leaders to execute their business easier. This, together with execution ability of the existing Jafra management team, continues to yield strong growth. Lastly, our international operations are under transformation. Jafra US is undergoing a profound transformation. and we are paving the road for a successful launch of Better Work U.S. early 2024 and Better Work Peru in early 2025. I am extremely proud of the Better Work family's ability to drive these results. And even though we are slightly lowering our revenue and EBITDA guidance for the year, medium, and long-term growth possibilities have been reassured, and we are committed to deliver on that as we have done for more than 20 years. Now, I would like to pass the word to Andres so he can further develop on better results. Thank you, Luis, and good morning to everyone.

As we stated in our 6K report published last night, and as Luis reinforced, We are proud to confirm our revenue stability and especially regain of growth compared to our pivotal quarter, which was the fourth quarter of 2022. Discarding pandemic distortions, third quarter has historically represented a seasonal bump because Salesforce is distracted from having the kids at home and back to school activities. And this year was no exception both in Better World and Jafra. That said, we expect fourth quarter 2023 to be our first quarter with year-on-year growth, expecting around a 6% growth year-on-year, and we're also expecting a 3% growth versus the third quarter of this year. From that point on, I want to reiterate the underlying assumption for future growth in Better World Mexico. After pandemic distortions, the home solutions market has stabilized and aims to regain consistent growth going forward. Now, we only own around 4% of that market as of 2022, and we only reach around 25% of potential households. With all our internal strategies, we believe we can continue to capture growth going forward. All of this without compromising the strong profitability and cash flow that have always distinguished our operations. Our three pillars of growth and transformation remain valid, namely product innovation, business intelligence, and technology. We will be glad to share our 2024 disruptive plans in the following call. At the same time, we are ready to begin pilot operations of BetterWear US in the first quarter of 2024 and have hired the new Peru Managing Director to start executing preparations to launch in Peru in early 2025. These avenues will be an additional and important source of growth in the coming years. Now, I'd like to pass the call back to Luis to further develop on Jafra Mexico's future growth prospects.