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

Welcome to BEFRA's second quarter 2026 earnings conference call. Before BEFRA management begins their prepared remarks, please note the disclaimer regarding looking forward statements on slide two. 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 from expectations. Please consider these statements alongside the Cautionary Language and Safe Harbor Statement in today's earning release, as well as the risk factors outlined in BEFRA's SEC filings. BEFRA undertakes no obligations to update any forward-looking statements. A reconciliation of and other information regarding non-GAAP financial measures discussed on this call can also be found in the earnings release published earlier today as well as the investors section of the company's website. Present on today's call are BEFRA's President and Chief Executive Officer Andres Campos and Chief Financial Officer Raul Del Villar. I will now turn the call over to Mr. Campos. Please begin.

Thank you, operator, and good afternoon, everyone. Thank you for joining our call today. I am delighted to let you know that I am speaking to you from Sao Paulo, Brazil, where our top of our team is making great progress on our commercial and innovation strategies to revamp growth. I've been visiting and talking to our associates and distributors here and can feel a strong sense of trust in the brand's future with Befra. Turning to talk about our results, I am also delighted to share that we delivered a strong second quarter, closing the first half of 2026 with improved performance across all of our brands. This quarter also represents a defining milestone in BEFRA's history with the successful incorporation of Tupperware's Latin America operations, which with only one month of results in our books, immediately contributed to our revenue and profitability. Let's move to slide four and dive into the highlights of these results. Before we begin, let me clarify that throughout this presentation, we will refer to organic growth. This refers to Betterware and Jaffa only, excluding Tupperware, to provide a like-for-like comparison with prior periods. We delivered strong organic growth during the quarter, with revenue increasing 4.1% compared to the second quarter of last year, and 5.7% compared to the first quarter of this year. The growing momentum of our commercial strategies in Better World Mexico, our continued success in our Better World LATAM expansion, and a sharp rebound to growth in Jaffa, Mexico, as we anticipated last quarter, all contribute to an increasing momentum of growth in BEFRA's organic results which is seen in this quarter's growth of 4.1% compared to last quarter's growth of 0.3%. Including Tupperware's first month of results, total revenue increased 16.8% in the quarter. We'll review in detail in a few slides. But having this contribution from the Tupperware acquisition, While our pro forma net debt to trading 12 months EBITDA remains at 1.6 times as it was pre-acquisition, makes us confident that this acquisition is very valuable right off the bat. Topperware has gained more momentum than we expected as the months go by in the year. We are also pleased to see our organic stencil base return to growth during the quarter, an important indicator that reinforces the health of our commercial platform. At the same time, Tupperware expands our network by adding more than 300,000 independent sellers, significantly strengthening Befra's commercial reach and providing a solid foundation for future growth. On the next slide, we can see how our revenue mix continues to evolve as BEFRA becomes a more diversified consumer products platform, with Tupperware already contributing 10.8% of the quarter's revenue, while we expect it to contribute almost a third going forward. In that same note, The incorporation of Tupperware expands our geographic footprint to an immediate presence in Brazil, increasing Latin America's contribution to consolidated revenue and decreasing our sole exposure to the Mexican market. Now I'll hand the call over to Raul so he can explain BEFRA's key financials in detail.

Thank you, Andres. Good afternoon, everyone. Turning to slide six. Profitability remains strong. Organic EBITDA and net income decreased during the quarter, mainly due to a deliberate gross margin investment in Jarrah, Mexico, and non-recurring expenses associated with the Tupperware transaction. Without these items, organic EBITDA margin would have been approximately 19.3%, and organic net income would have been broadly in line with last year. We expect gross margin to normalize between Q3 and Q4. Our overall organic profitability continues to strengthen as the year progresses, with first half EFDA margin expanding to 17.5% compared to 17.2% in the first half of last year. On this same note, organic net income remains strong. Thank you very much. and net income growing 20.6% in the quarter. Turning to slide seven. Cash generation remains strong during the quarter. We converted more than 70% EBTA into free cash flow during the quarter and nearly 90% on a last month basis. Highlighting the strength of our business model and our discipline financial management. Turning to dividends. Our board remains committed to delivering value to shareholders. Accordingly, we are increasing the quarterly dividend to 250 million pesos, reflecting the additional shares issued as part of the Tupperware acquisition, while further enhancing the value returned to shareholders. This will mark our 26th consecutive quarter of dividend payments since IPO. Turning to slide eight, The successful acquisition of Tupperware proves the strength of BEFRA's financial position. Following the transaction, net debt to trailing 12-month EBTA stands at 2.6 times, despite consolidating only one month of Tupperware's EBTA while assuming the full acquisition debt. We are also presenting a pro forma net debt to trailing 12-month EBTA ratio of 1.6 times, which comprises Tupperware's trailing common CBDA. Important to point out that pre-acquisition we delivered by more than 500 million pesos during the quarter, reducing our total debt to 4 billion pesos. This illustrates the strong financial position at which we stand post-acquisition While we have added almost one-third of EBDA without significantly changing our pre-acquisition leverage position. Note that the Tupperware acquisition was financed through $35 million of newly issued shares and $213 million of long-term debt. Working capital remained well managed during the quarter. with a shorter cash conversion cycle reflecting continued operation efficiency. Inventory levels increased modestly following strategic inventory purchases to strengthen supply chain resilience due to possible supply chain destruction resulting from the Middle East conflict. It is also important to note that we are actively working on expanding payment terms with Tupperware suppliers. From almost zero days to BEFRA's standard 120 days. We expect this to make a strong one-time contribution to cash flow in the coming quarters. Beyond leverage, our asset-light business model continues to support attractive returns, with ROTA increasing to 23.3% and ROIC reaching 32.3% further demonstrating our ability to generate value from the capital we deploy. I will now pass the call back to Andres who will provide an update on strategic pillars.

Thank you, Raul. Turning to slide nine, our strategy continues to be guided by the same five pillars that have successfully driven BFRS transformation and long-term growth. First, Strengthen our leadership in Mexico across BetterWear, Jafra, and now Tupperware. This quarter marked another period of solid commercial execution for Befra with revenue growth across all our brands in Mexico. Second, regional expansion, expanding our footprint to Brazil, the largest direct selling market in Latin America, While sustaining strong growth across the Andean region and Guatemala and continuing to build momentum at Jafra U.S. Third, continue developing, strengthening, and expanding our portfolio of brands and product categories as we are now doing with Tupperware. Fourth, digital transformation. Further enhancing our person-to-person business model through the successful Our Salesforce CRM across BetterWear and Jafra Mexico, and the Jafra Plus app scheduled to launch in the second half of the year. And finally, Financial Discipline, the foundation supporting every strategic decision we make, underpinned by disciplined capital allocation, strong cash generation, and a healthy leverage profile. These pillars remain the framework guiding our strategic decisions and capital allocation going forward. With that framework in mind, we will now turn to our third pillar, new brands or categories. Turning to slide 10, the successful incorporation of Tupperware marks an important milestone in our strategy of developing and strengthening our portfolio through complementary brands and product categories. The strong initial performance of the business reinforces our confidence in the acquisition and validates our disciplined approach to capital allocation. More importantly, it demonstrates our ability to successfully integrate iconic brands and unlock long-term value for our shareholders. Turning to slide 11, Topper will deliver a strong first month as part of BEFRA. Last year, Tupperware Mexico recorded extraordinary sales outside the direct selling channel. Excluding these sales, Tupperware's consolidated direct selling revenue across Mexico and Brazil grew nearly 30% year over year, underscoring the renewed confidence among our associates following the acquisition and the strength of the brand's commercial fundamentals. On the same note, Tupperware Brazil decreased less than 7% in June versus last year, while the last two years have been marked by 10% to 15% declines quarter on quarter, signaling a rebound to growth. Including Tupperware's performance net income, Trailing 12 months earnings per share is more than 36% higher than organic 12 months earnings per share, demonstrating the accretive nature of the acquisition. Turning to our final slide, today's results reinforce the strength of BEFRA's strategy and the opportunities that lie ahead. The successful incorporation of Topperwork further demonstrates our ability to execute strategic acquisitions while maintaining disciplined capital allocation. Following the transaction, we continue to maintain a healthy leverage profile, reinforcing the resilience of our balance sheets and our confidence in executing our disciplined deleveraging strategy. At the same time, our core business continues to deliver solid organic growth across revenue, EBITDA, and net income. While Topperware made an immediate positive contribution to the group's results. Together, these achievements reinforce our confidence in Vefra's ability to continue delivering sustainable and profitable long-term growth. Vefra today is a larger, more diversified, and financially stronger company than ever before. We are excited about the opportunities ahead as we continue executing our strategy and creating long-term value for our shareholders. With that, operator, we would be happy to take any questions.

Thank you.

Thank you.

We will now begin the question and answer session. To ask a question, dial in by phone and press star. Then 1 on your telephone keypad. Make sure your mute function is turned off, and if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.

At this time, we will pause momentarily to assemble our roster. Our first question comes from Doug Lane.

With Water Tower Research, please proceed with your question.

Yes, thank you. Good afternoon, everybody. Staying on slide 11 here, you mentioned the EPS accretion from the Tupperware was 36.6%, and that's pro forma trailing 12 months. So, that doesn't really include any benefits from integration, right?

So, arguably, that number should go up from here. Hi, Doug.

This is Andres. So I will turn that question over to Raul so he can answer to you.

Thank you.

Hi, Doug. Good afternoon. Good question. Thank you. You're correct. You're right. We are just using... The historical numbers that Tupperware had over the last 12 months. So that does not include any synergies that we might get in the future.

Got it. And also, on slide 11, you pointed out the non-direct selling channel sales that Tupperware does. And that's been part of their strategy all along here. So I guess, Andres, the question for you is, are you going to focus purely on the direct selling channel going forward with Tupperware?

Hi, Doug. Yes, the answer is we're going to focus solely on the direct selling channel. As we have mentioned in all of our brands, we're focusing on the direct selling channel. By evolving that channel, through everything we've mentioned of digital transformation and the different things we've mentioned. So we are totally abandoning those other revenue that Topol had. That, by the way, was basically all done between the second and third quarters. So we used to rely a little bit heavier between June and August, but the rest of the year, it's not as heavy as it seems here. So in the year around, it wasn't too relevant.

Okay, that's helpful. I noticed in your release, you also mentioned Brazil improving to down 7% from down double digits, despite the discontinuation of sales to Argentina. Can you explain what's going on with Argentina? That was not Mexico or Brazil, but it's still a fairly sizable market. So that is one of the markets that you're operating in, isn't it?

Yeah, so the past owners of Tupperware, the party holdings, the one that sold us Tupperware Latam, they have given out A distribution license to a third party in Argentina that would end this September of 2026. So we have noticed then that that will not continue. And we are still assessing what we will do or more we are assessing when is the right time to go into Argentina. I think right now our main focus is to grow Mexico and grow Brazil. I think that's what we should think about in the short term. Brazil and Mexico are their largest markets. We have a lot of opportunity there, and that's where most likely our focus is going to be. And we are assessing what we do in Argentina and when we do it. Right, fair enough.

No, that makes sense. Then there's plenty of opportunity in Mexico and Brazil, as you pointed out. Along with those two markets also have manufacturing capacity. Can you update us on what you found out here now that Tupperware has been part of BEFRA for a month on manufacturing? What are the opportunities to move some manufacturing into those plants and absorb some excess capacity?

Yeah, well, as we mentioned before, the Mexican plant is at around 60% of use, and the Brazilian plant is less than that. It's about 40% of use. So the first focus is to grow Tupperware in these two markets, and that the Tupperware growth will start ramping up The usage of the capacity. As we mentioned, better, sorry, Tupperware Mexico is growing through 30% in June. So as we continue to accelerate the growth, and then we revamp the growth in Brazil, this is... The first focus to revamp the capacity or the use of capacity in the plants. Now, at the same time that that's the first focus, we are just starting to assess the possibility of manufacturing some better world products in those plants. Still early to say. I would not like to really say anything because we are really assessing What it means for the volume of the plant, if it's strategically the best thing to do, so still early to tell.

Okay, makes sense. Thanks, Andres. Thank you, Doug. Thank you, and nice talking to you.

Thank you. Our next question comes from Eric Better.

with SCC Research. As a reminder, we would like for you to limit to one question, please. Thank you. Eric, you may begin.

Good afternoon. Congratulations on completing the acquisition. I want to talk about the core businesses. Another positive quarter for BetterWear and another positive quarter, return to positive quarter for Jopra. When you look at the back half and beyond, where do you see the changes that you're making in Jaffa having more impact going forward? And in terms of better where you're seeing momentum in both distributors and the associate pool expanding, how should we be thinking about that and the ability for those to both drive continued positive growth through 26 and beyond? Thank you.

Yeah, hi, Eric. This is Andres. So, yeah, we think in the first hand, it's been a very positive and transformative quarter. Obviously, from the copperware acquisition happening, and not only the fact that it was concluded, but the fact that only with one month of contribution to our results, it's already... Proving to be a very accretive and very valuable asset. Now, in terms of Jafra and BetterWear, so Jafra, as we mentioned before, the reality was more that Q4 of last year and Q1 of this year were slightly affected by some tactical moves that we have made. We corrected those moves and now Q2 is back on the track of growth of where we were before. So it's really a correction of that. But beyond that correction, we're still doing a lot of things at Jafra to achieve the potential that it has. We continue to improve the innovation. We're rolling out the new technology. We're about to roll out The new Jafra Plus app, which as you remember, it's the better word, plus technology, but taken to Jafra. Among other things that we're doing strategically with Jafra such that it reaches its potential. As we mentioned, when we acquired Jafra four years ago, it was the number 14 brand, beauty brand in Mexico, Now we're around, we closed last year at around number seven or six. And we plan, so there's still a good room to grow to make it obviously a top five or top three brand in Mexico and the U.S. as well. And in terms of Betterwear, you know, Betterwear had grown so much in the past 10 years. It had grown... I mean, if you look at it, it has grown 6X or a little bit more than 6X in the last 10 years. And we were, you know, better we had to find this next wave of growth by innovating on some things. And we have started to find which innovations we needed to make to take better work into that next wave of growth. I mean, I'm not going to dive into the details, but there's different things that we have mentioned that imply this new way of growth for BetterWear. And fortunately, if you see the trend of BetterWear Mexico, this is the third quarter that we're on a trend growing. So it's starting just not to be a one quarter coincidence, but starting to be a sequence of growth. We are very happy about that, and we think that this puts all three brands into growth mode again together, and we expect that to continue going forward.

Thank you.

As a reminder, if you have a question, please press star, then 1. If you have an additional question, you can rejoin the queue by also pressing star and then one. Our next question is from Joe Feldman with Pelsey Advisory Group. Please proceed with your question.

Yeah, thank you. Hi, Andres. Congrats on the good quarter. Wanted to ask about the Jafra gross margin. You guys talked about a little bit of pressure related, I think, to price investments, and I'm wondering If you could share a little more color on that, if that's going to continue in the second half of this year, or the price investment's done at this point, and how much you think that may have contributed to the sales improvement that you saw.

Thanks. Yeah, thanks, Joe. No, we normally invest in promotional activities. It was not a thorough price adjustment. It was more promotional activities that we carry out. And normally we have a bandwidth for margin. This quarter, it ended up, I mean, the promotions were successful. It ended up slightly lower than we anticipated and than our historical levels. It was a A one percentage point drop of a 73.5 or 74% margin typically. So it was a slight correction this month because of deliberate actions that we took promotionally, but the corrections that we made were other things that That don't have to do with the margin. So we expect going forward to come back to our typical margins of between 73.5% and 74.5%. More or less, we should be there in the coming quarters.

So that's what we should expect.

Thank you.

That concludes our question and answer portion of today's conference call. I would like to turn it back over to management for closing remarks.

Well, thank you again to all for joining us today. We are very glad to report this strong quarter where all of our brands are coming back to growth, and we are adding this new Tupperware brand, which we're sure will be another transformative era for BEFRA. Thank you again, and look forward to talking to you soon again. Thank you.

Ladies and gentlemen, this concludes BEFRA's second quarter 2026 earnings conference call. We would like to thank you again for your participation. You may now disconnect.