Betterware de México, S.A.B. de C.V. (BWMX) Q4 2022 Earnings Call Transcript

Betterware de México, S.A.B. de C.V. (NASDAQ:BWMX) Q4 2022 Earnings Conference Call February 24, 2023 9:00 AM ET

Company Participants

Luis Campos - Executive Chairman

Andres Campos - CEO

Alejandro Ulloa - CFO

Conference Call Participants

Eric Beder - SCC Research

Cristina Fernandez - Telsey Advisory Group

Operator

Thank you and invited to Betterware’s Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. With maine connected nan telephone coming are Betterware’s Executive Chairman, Luis Campos; Betterware’s Chief Executive Officer, Andres Campos; and Corporate Chief Financial Officer, Alejandro Ulloa.

Before we get started, I would for illustration to punctual you that this telephone will see forward-looking statements, which are taxable to various risks and uncertainties that could origin existent results to disagree materially from expectations.

Any specified connection should beryllium considered successful conjunction pinch nan cautionary statements and nan Safe Harbor connection successful nan net merchandise and consequence factors discussed successful a reports revenge pinch nan SEC. Betterware assumes nary responsibility to update immoderate of these forward-looking statements aliases information.

A reconciliation and different accusation regarding non-GAAP financial measures discussed connected nan telephone tin beryllium recovered successful nan net merchandise issued yesterday, arsenic good arsenic nan investor conception of nan company’s website.

Now, I would for illustration to move nan telephone complete to nan company’s Executive Chairman, Luis Campos. Please spell up sir.

Luis Campos

Thank you, operator. Good greeting everyone and convey you for joining america today. I would for illustration to statesman my remarks by providing a little recap of 2022, a twelvemonth pinch important challenges, but besides pinch important accomplishments.

Including nan completion of nan JAFRA acquisition. The advancement we person made truthful acold successful position of reigniting its maturation and expanding its profitability and nan plans we person for nan year.

Then Andres will talk Betterware's results for nan year and nan cardinal strategies and expectations for 2023 to return to growth. And finally, Alejandro Ulloa, our Corporate CFO, will talk our quarterly and afloat twelvemonth consolidated financial results, our expectations for 2023, and our superior allocation strategy going forward.

As we mentioned successful our net merchandise published yesterday, 2022 was a transformational twelvemonth for our company. During nan year, we successfully completed nan acquisition of JAFRA's operations successful Mexico and nan US, on pinch its trademark authorities worldwide.

This acquisition has made america a much resilient institution pinch a much diversified portfolio and position unsocial merchandise segments that let america participate nan charismatic beauty and individual attraction markets successful Mexico and nan US.

It has allowed america to leverage JAFRA's beardown and well-positioned world marque giving america entree to millions of households done its thousands of consultants and leaders.

In nan short play since nan acquisition, we person made awesome advancement towards expanding JAFRA's profitability and reaccelerating its growth.

Starting 2023, we judge our institution is successful viable position to seizure growth, and adhd worth to our stakeholders, which among others see our income distribution web some astatine JAFRA and Betterware, our collaborators, and our shareholders.

First, I will stock penetration into JAFRA Mexico. During 4Q 2022 and successful general, during nan year, outstanding results were achieved compared to 2021, which surpassed our expectations for nan year.

This was driven by nan successful implementation of various business strategies aimed chiefly astatine recovering and sustaining our guidelines of leaders and consultants and powering them pinch devices that summation their activity and productivity.

The strategies that resulted successful a topline reacceleration see among others. Number one, resuming nan face-to-face move pinch our consultants and leaders, expanding training and events arsenic group person astir return to their normal activities.

Number two, improving our catalog pinch accrued merchandise innovation, adapting to existent section and world trends successful a faster measurement arsenic we reduced our time-to-market from 18 to only 8 months.

And number three, enhancing our inducement programme and strategical promotional campaigns.

In position of costs and expenses, subject and power stands out, coupled pinch savings, efficiencies, and synergies from nan incorporation of JAFRA to nan Betterware Group, resulting successful amended than expected EBITDA and EBITDA separator for nan 4th and for nan year.

For 2023, nan institution will proceed to put successful innovation, considering world trends successful depletion habits, formulas and exclusive and value ingredients to summation marque equity and support activity successful some income and units successful nan Fragrance class and summation its information successful nan segments of Skincare and Color.

We are successful nan process of rebranding galore of JAFRA's brands to make them much current, charismatic and profitable. We will besides proceed pinch nan integer update successful accordance pinch business priorities, which includes nan motorboat of Jafranet 2, our app for consultants.

And nan improvement of a chatbot that allows contiguous and imperishable relationship pinch nan section and should consequence successful accrued their enrollment of leaders and consultants.

And finally, we proceed to beryllium successful nan process of identifying and implementing synergies and champion practices arsenic a group, which we expect to consequence successful economies of standard and accrued productivity. All nan supra is focused connected strengthening nan brand, expanding our marketplace stock successful each of our merchandise lines, while expanding our profitability.

As for JAFRA USA, successful 2022, we saw antagonistic results coming from strategical changes made successful 2021 nether nan erstwhile management, which led to little productivity and activity by their consultants, which resulted successful little than expected nett revenue.

In Q4, 2022 to combat nan inclination of declining gross productivity, activity, and sponsoring, we implemented an fierce online promotional strategy and extended storage waste and a very lucrative sponsoring incentive. These initiatives helped span a information of nan spread successful gross and advisor numbers, but was not a semipermanent sustainable strategy.

In 2023, JAFRA USA is focused connected a business turnaround. We will beryllium making a notable effort to amended nan customer and advisor opportunity and bring stableness to nan business.

We person identified respective cardinal areas of focus. Number one, marque identity. According to nan [Indiscernible] Group, a user investigation company, JAFRA has a marque emotion people of 37%, main competitors are supra 50%. Neutrality towards JAFRA is nan main driver of nan little percentage. To amended marque love, JAFRA has initiated each marque pinch workplace clutter [ph] to redefine our marque style guide.

Number two, merchandise innovation. We are extending our merchandise categories to see wellness, which according to nan nonstop trading relation accrued its nonstop trading manufacture revenues from $12.4 cardinal successful 2016 to $15.4 cardinal successful 2021.

We are besides focused connected improving our existent merchandise offering by first addressing problematic areas that are cardinal talking points successful nan US ingredients and packaging sustainability. Animal testing and value free certification. And nan JAFRA formulation stands aliases ingredients we opportunity not do it.

Second, by creating a JAFRA tegument attraction class that opens nan doorway to a caller demographic, nan younger user that does not shop a strategy but compiles their perfect civilization skincare regular based connected individual needs and marketplace trends. And third, by minimizing cardinal gaps successful our colour portfolio.

Number three, marketing, our trading area will beryllium partnering pinch IT and package enhancements that will make america much competitory successful nan abstraction while gathering nan needs of our consultants and consumers. In addition, a integer attraction will beryllium to build our customer guidelines independent of our existent advisor guidelines to summation nonstop relationship pinch nan last client.

Number four, business improvement wrong nan JAFRA program, location are barriers to introduction and barriers to advancing successful rank. We simplified introduction arsenic a advisor pinch a 1 page registration. We person simplified nan speech for nan advisor by integrating nan start-up kit and nan advisor battalion into 1 starter kit option, allowing them to subordinate pinch a commissionable kit that bombs them to nan 50% Personal Commission peer.

We besides adjusted aliases removed committee pieces that were motivating nan incorrect behaviour aliases were a obstruction to advancing successful front. Commissions will proceed to beryllium a attraction successful 2023 arsenic we activity to simplify nan committee building and person an connection rank for those who waste done societal platforms.

In position of technology, we are moving pinch nonstop trading package leaders to supply our consultants pinch a broad virtual agency experience, which would see a committee dashboard pinch penetration into wherever nan advisor presently stands regarding committee aliases rank and a instrumentality that prompts further behaviors that thrust those metrics.

A nickname dashboard that shows institution and individual standings creating patient title astatine nan field, an individual level and a hospice programme that allows consultants to set- up statement links, assigned a hostess, clients by payments and awards behaviors.

We are assured that arsenic we proceed to instrumentality nan 2023 commercialized strategy, we will spot slow, but dependable growth. However, initially, we do expect a diminution arsenic consultants readjust to nan caller JAFRA environment. In fact, during January 2023, we person knowledgeable immoderate antagonistic effect owed to these changes. But months coming successful February, we are already seeing a affirmative displacement allowing america to judge that we are moving successful nan correct direction.

I will now move nan telephone to Andres to talk Betterware capacity for nan 4th and nan year, and our business strategies to return to growth.

Andres Campos

Thank you, Luis, and bully greeting to everyone. Thank you for joining america today. As Luis mentioned, 2022 was a transformational play for our institution successful wide and for Betterware Mexico successful particular. We judge past twelvemonth was nan conclusion of an highly abnormal period, which came pinch bonzer challenges and singular achievements.

We are proud of our results. And aft a normalization period, wherever group person mostly returned to normality, we proceed to person a web of associates and distributors of doubly nan size it was successful 2019, having captured nan tremendous maturation opportunity that nan COVID pandemic brought pinch it.

As you whitethorn remember, our maturation rates exploded during nan first 4th of 2020 and continued done first 4th of 2021 owed to lockdowns, resulting successful accrued request for our family products and nan accrued request from group to make an other income erstwhile employment and economically progressive organization sharply declined, which derived successful a crisp summation successful our subordinate supplier base.

Then since 2Q 2021, and done 4Q 2022, nan normalization shape took place. We underestimated nan effect that nan return to normality would person successful our income web churn, owed to nan crisp alteration successful request for family products and truthful successful our revenues.

Having said that during nan 2nd half of 2022, we were capable to amended nan complaint of diminution successful our distribution web making america assured that, we are adjacent to its stabilization and return to growth. It is applicable to mention that during this period, nan location solutions marketplace contracted much than our revenues.

Therefore, we were capable to summation our marketplace stock from 4% successful 2019 to 8% successful 2022, while reaching astir 70% of marketplace stock wrong their nonstop trading transmission successful our categories.

During this period, we restructured our operating expenses to align them to nan existent levels of sales. Reducing fixed expenses and improving our distribution expenses arsenic a percent of nett revenue, which proves our operational elasticity and will let america to regain our profitability margins going forward.

We besides redefined nan commercialized strategy starting successful nan 2nd 4th of 2022. In bid to accommodate it to nan caller reality of nan marketplace which already had a affirmative effect successful our 3rd 4th of 2022, and mostly successful our 4th fourth of 2022 results, reducing our gross complaint of diminution arsenic mentioned successful our net merchandise yesterday.

We judge that nan restructuring of spending and nan caller commercialized strategies person allowed america to commencement astatine an capable level successful 2023, which we tin corroborate pinch nan results obtained successful nan first 8 weeks of nan twelvemonth successful position of profit margins and mean play sales, pinch nan latter, increasing 3.3% compared to what was registered connected mean during nan 4th fourth of 2022.

If March continues this trend, 4th 1 of 20 23 will beryllium nan first 4th for -- successful nan past 7 that we will stabilize income aliases moreover maturation compared to nan erstwhile quarter. This gives america assurance that, we person nan correct initiatives successful spot to move nan business guardant positively.

Let maine stock these initiatives pinch you. First, successful position of product, during nan pandemic stage, nan merchandise portfolio was modified to meet nan needs of nan market, partially removing nan attraction from our halfway products. The redefinition of our commercialized strategy is taking america backmost to concentrating our efforts connected nan halfway and expanding nan number of SKUs.

During nan 2nd 4th of 2023, we will screen 100% of our mainline, recovering almost 26 halfway concepts that we dream will make incremental income of $150 cardinal to $200 cardinal per quarter.

In February, we returned to 340 SKUs per catalog. And successful April, we expect to scope almost 370. This will grow our catalog by 8 pages starting successful April. We are besides fresh to present nan caller categories of 2023 which will beryllium launched on this year, including Wellness, Wipe is for Cleaning, Baby and Kids category, Bedding, Hydration 2.0, Pets and Concentrated Clinical Products. With them, we expect an incremental waste of MXN200 cardinal to MXN300 cardinal per quarter.

Second, our catalog redesigns. We launched a caller creation of nan beingness and integer catalog successful January of 2023, achieving amended vulnerability of our products, our prices, our offers, which should lead to greater excitement and superior navigability to amended income conversion rates.

Third, income strategies. We are strengthening our income strategy pinch nan pursuing 3 initiatives. First, an inducement programme focused connected attracting caller associates successful this attributors to execute amended commencement up compensation arsenic good arsenic an attack to support them buying from their first catalogs successful bid to execute charismatic bonuses since nan start.

Second, our caller Betterware+ app, which generates a amended acquisition and functionality for our income force. Such arsenic easy registering different distributors and monitoring their performance. It is important to mention that nan full income unit is wholly migrated by nan extremity of February of 2023.

And third, our caller income unit strategy pinch much than 80 caller section managers who will activity look to look pinch our distributors to motivate and train them connected nan section truthful they tin go much successful.

Fourth, operations, we person astir MXN300 cardinal of excess inventory, which we will gradually trim during 2023 and 2024, because we're prioritizing nan vulnerability of champion seller products successful main categories and caller categories. We are besides moving connected nan diversification of products manufactured successful China.

We are actively looking for integrative textile, metallic mechanical, electrical and physics manufacturing options successful different countries specified arsenic India, Turkey, Southeast Asia, Central and South America, and particularly Mexico. We judge that by 2024, we tin beryllium manufacturing much than 30% of our gross extracurricular of China. We are assured that these strategies will get america backmost connected way and let america to return to maturation successful 2023 and proceed to profitably turn going forward.

Now, I will move nan telephone to our firm CFO to talk our 2022 financial results and expectations for 2023.

Alejandro Ulloa

Thank you, Andrés, and bully morning, everyone. I would for illustration to reappraisal our 4th fourth and fiscal twelvemonth 2022 results. Please support successful mind that nan rate I will mention to erstwhile reviewing our results and guidance is nan Mexican peso, which is our functional and reporting currency.

Additional specifications tin beryllium reviewed successful our net merchandise published yesterday. I will past stock perspectives connected really we are approaching 2023 and talk our superior allocation strategy going forward.

As mentioned by Andres, successful nan lawsuit of Betterware nan effects of nan return to normality person been tougher than we anticipated and amplified by a softer discretionary depletion situation successful 2022 owed to surging inflation.

In nan lawsuit of JAFRA Mexico, we person been experiencing affirmative results successful nan acquisition. And arsenic for JAFRA USA, its numbers are rather mini comparative to nan complete group. Yet, we are presently going done a turnaround process to alteration erstwhile twelvemonth antagonistic trend.

Given these factors, our consolidated results for nan 4th are nan following. Consolidated nett revenues accrued 48% compared to 4th fourth 2021, explained exclusively by nan inclusion of JAFRA results, which was partially offset by nan diminution of nett revenues successful Betterware.

Comparable nett gross declined 37.1% owed to a little level of associates and distributors coupled pinch a little subordinate activity rate. Consolidated gross separator expanded 1,605 ground points to 69.7% compared to 53.7% successful nan 4th fourth of 20 21, explained chiefly by JAFRA’s higher gross separator floor plan and a 233 ground points separator description successful Betterware, chiefly owed to value increases, little input costs and nan normalization of proviso chains globally.

Consolidated EBITDA for nan 4th was MXN566.3 million, 53.6% higher than successful 4th fourth of 2021. JAFRA Mexico and JAFRA USA positively contributed to EBITDA, representing 59% and 3% of consolidated figures respectively.

EBITDA separator expanded 64 ground points to 17.5% comparable EBITDA decreased 42.2% and comparable EBITDA separator contracted 138 ground points successful statement pinch little nett gross and nonaccomplishment successful operating leverage.

Consolidated nett income was MXN209.3 million, 9.1% higher than successful 4th fourth of 2021, mostly explained by inclusion of JAFRA to our results and partially offset by nan higher liking disbursal owed to nan indebtedness obtained to money this acquisition.

Earnings per stock for nan play were MXN5.62 and free rate travel for nan 4th defined arsenic rate travel from operations minus CapEx was beardown pinch an summation of much than 300% attributed to some Betterware and JAFRA’s rate travel generation, little CapEx and businesslike moving superior management.

For nan year, including JAFRA’s results from April 7, 2022, consolidated nett gross accrued 14.5% compared to 2021 explained by nan inclusion of nan JAFRA results and partially offset by nan diminution of nett gross successful Betterware.

Comparable nett gross declined 36.9% chiefly explained by a little level of subordinate and distributors. Consolidated gross separator expanded 1,198 ground points to 68.2% compared to 56.2% successful 20 21, explained by JAFRA’s higher gross separator and to a lesser grade a 186 ground points separator description successful Betterware, chiefly owed to value increases nan normalization of supplying chains, including nan diminution successful freight costs.

Consolidated EBITDA for 2022 was MXN2,230 million, 19.4% little than successful 2021 and EBITDA separator contracted 812 ground points to 19.2% owed to nan diminution successful Betterware's nett gross and nonaccomplishment successful operating leverage.

Comparable EBITDA decreased 48.6% and comparable EBITDA separator contracted 509 ground points to 22.3%. It is worthy noting that we were capable to trim our operating expenses specifically our fixed costs successful absolute terms, though not capable to offset nan nonaccomplishment successful operating leverage.

Consolidated nett income declined 59.3% to MXN735.1 million, mostly explained by a little operating leverage successful Betterware and a 617% percent summation successful our liking disbursal owed to JAFRA acquisition.

Earnings per stock for nan twelvemonth were MXN19.73. On a affirmative note, free rate travel procreation accrued 3.4% attributed to JAFRA rate travel procreation and little CapEx investments.

As for our equilibrium sheet, nan company's financial position remains beardown moreover aft nan acquisition of JAFRA which resulted successful a important summation successful our full debt. Our full nett to trailing 12 months EBITDA ratio closed 2022 astatine 2.6 times. This fig only considers nan JAFRA cognition since nan acquisition was closed successful April 2022 and our liking sum ratio besides considering past 12 months' figures is 3.4 times.

We will utilize astir of our operating rate flows and further rate travel from divestments of unproductive assets to trim our indebtedness load and further fortify our equilibrium sheet. Betterware and JAFRA precocious rate travel procreation quality will let america to gradually deleverage going forward, reducing our nett indebtedness to EBITDA ratio to beneath 2 times.

Regarding our 2023 afloat twelvemonth expectations, we are cautiously optimistic and assured successful our existent trends contempt an uncertain economical outer environment. We expect our consolidated nett gross to beryllium successful nan scope of MXN13,200 cardinal to MXN14,200 cardinal and our consolidated EBITDA to beryllium successful nan scope of MXN2,600 cardinal to MXN2,800 million.

In position of dividend payments, our Board of Directors has projected a dividend costs of MXN100 cardinal for nan quarter, which is taxable to nan support astatine nan Ordinary General Shareholders Meeting to beryllium held connected March 8, 2023.

For nan pursuing periods, we could salary increasing quarterly dividends if nan group's results are arsenic expected. In conclusion, aft nan acquisition of JAFRA, we are now a larger and much recycling group pinch 2 companies that diversify our business.

Over nan longer term, we stay assured successful our expertise to prehend maturation opportunities, which will let america to make beardown rate flows and proceed to maximize shareholders value.

I will now move nan telephone complete to nan operator, and we'll return immoderate questions you whitethorn have. Thank you.

Question-and-Answer Session

Operator

Thank you. We will now beryllium conducting a question-and-answer session. [Operator Instructions] Thank you. And our first mobility is from Eric Beder pinch SCC Research. Please proceed pinch your question.

Eric Beder

Good morning. Congratulations connected 4th and twelvemonth of tons of positive, tons of changes. And convey you for nan further colour you're providing successful nan property releases you're putting retired now. My mobility is astir logistics. I cognize that, location person been issues pinch merchandise flows and different pieces. Where are we seeing now successful position of your expertise to beryllium capable to scheme and to beryllium much fierce successful position of knowing that nan merchandise is location and making judge it's successful banal and nan expertise to root it cheaper?

Andres Campos

Hello, Eric. This is Andres. So, successful position of logistics of bringing nan merchandise from our manufacturing successful China, we are not seeing immoderate disruptions. In fact, we are seeing a diminution starting this twelvemonth steep diminution successful instrumentality prices and availability. So, we deliberation that, this twelvemonth it's going to benefits our profit margins from this steep driblet successful nan instrumentality prices.

And we person besides obtained a alteration successful value of going nan costs of products owed to nan alteration successful earthy worldly prices that are being seen successful wide astir nan world and successful China arsenic well. So, I don't cognize if this answers your question.

Eric Beder

No, I deliberation – that's bully to hear. In position of a follow-up, you person – you reiterated nan imaginable synergies from JAFRA. As you're getting much progressive successful nan company, do you judge that MXN200 cardinal to MXN300 cardinal synergy is conservative? And really should we beryllium reasoning astir nan expertise to leverage nan mill arsenic JAFRA continues to expand? Thank you.

Luis Campos

Eric, this is Luis. We are still moving and we will support moving each this twelvemonth connected uncovering retired much synergies and leverage of our activities. Then we don't cognize precisely really this is going to extremity up. But I deliberation we are still plentifulness of opportunities, okay? Then some companies are moving aliases uncovering caller synergies and besides champion practices to speech betwixt Betterware and JAFRA. And we'll support you posted quarter-after-quarter astir nan magnitude we are uncovering successful position of synergies past we are going to update each 4th regarding that. But we are very assured astir nan possibilities there.

Eric Beder

Great. Good luck successful nan remainder of -- bully luck successful 2023. Thank you.

Operator

[Operator Instructions]

Our adjacent mobility comes from nan statement of Cristina Fernandez pinch Telsey Advisory Group. Please proceed pinch your question.

Cristina Fernandez

Hi, bully greeting and congratulations connected nan advancement you're making. I had a mates of questions. I wanted to spot if you could supply much colour if you deliberation astir nan consolidated outlook for nan institution for 2023, immoderate much colour you tin stock – aliases immoderate colour you tin stock astir nan what you person embedded arsenic acold arsenic nan capacity betwixt Betterware and JAFRA for nan afloat year?

Luis Campos

Christina, could you specify what benignant of -- what colour you're looking for is much – much successful position of gross aliases successful wide arsenic a company?

Cristina Fernandez

Yes, I would opportunity revenues, truthful you gave an outlook for revenues and EBITDA for nan consolidated company. Any specifications that you tin stock astir what's embedded for Betterware versus JAFRA wrong that consolidated outlook arsenic acold arsenic for illustration whether you're expecting Betterware gross maturation and EBITDA description ? Or I conscionable wanted to understand benignant of what's wrong that outlook?

Luis Campos

Yes. As a group, this is Luis, Cristina. Good morning. As a Group, we -- arsenic you tin see, we tin expect nan maturation for this year, some successful revenues and EBITDA and result besides successful position of income unit growth. In nan lawsuit of Betterware, arsenic you remember, nan curve is for this twelvemonth is fundamentally nary maturation successful nan first and 2nd quarter, and we will statesman increasing successful nan 3rd and 4th fourth successful position of revenues. In position of EBITDA, I deliberation we person beardown EBITDA margins since we will person reductions from nan first quarter. And will stay fundamentally nan aforesaid each complete nan year.

In -- talking astir JAFRA, we are already increasing our guidelines of consultants and we tin expect maturation arsenic compared to past twelvemonth successful each quarter, okay, opening successful nan first 4th past this is successful nan lawsuit of JAFRA Mexico.

In nan lawsuit of JAFRA US, arsenic we are reporting, it would return a small spot much time. What we expect successful nan lawsuit of JAFRA USA is simply a breakeven business successful position of EBITDA for this twelvemonth and a slow some progressive maturation opening connected Q3. I deliberation for Q1, we will spot a diminution successful revenues arsenic good arsenic successful Q2. But successful Q3, and Q4, we tin expect immoderate slow maturation successful JAFRA US. This is fundamentally nan measurement we spot it and nan measurement we person outlook for nan year.

Cristina Fernandez

Okay. Yes. No, that's very helpful, Luis. And arsenic a follow-up, you gave a beautiful wide range, peculiarly connected nan gross guideline for nan year, nan $13.2 cardinal to $14.2 cardinal successful revenues. I guess, what are nan factors if you deliberation astir getting to nan debased extremity versus nan precocious end, really overmuch is it conscionable uncertainty astir nan situation versus institution circumstantial initiatives for illustration possibly really you're reasoning astir that framework?

Alejandro Ulloa

Hi, Cristina. This is Alejandro. Well, we are expecting arsenic we mentioned immoderate opportunity maturation during nan year. And nan scope is simply a small spot wider than expected, because we person seen connected erstwhile years immoderate risks and we are not -- we are looking astatine nan aforesaid risks successful this year. We person been proceeding that nan US is going to commencement possibly a recession. Mexico, we person still immoderate precocious inflation. Inflation reported connected Monday, it was a small spot little than expected, but still is high.

So, these risks are having immoderate effects successful our estimates. And what you tin spot successful nan guidance is that nan separator -- nan EBITDA separator is successful statement pinch little and higher range. So, we are expecting evidently to spell to nan higher portion of nan guidance. However, we will beryllium managing these opportunities during nan twelvemonth according to what we are experiencing pinch mitigating these risks on nan year.

Luis Campos

I would adhd Cristina that pursuing what Alejandro conscionable said, that we don't want to beryllium excessively optimistic for this year. We are doing everything to everything is thing successful our hands successful bid to extremity up successful nan precocious level. However, we person to beryllium cautious because of nan outer risks that are still retired there.

Cristina Fernandez

Thank you. Then different mobility I had and possibly this is much for Andres. On nan Betterware side, you commented astir seeing immoderate sequential maturation astir 3% 4th to-date versus nan 4th quarter. What's different now successful nan past fewer weeks and months versus backmost successful nan 4th fourth that gives you assurance that successful truth nan 4th fourth was nan bottommost and we'd spot sequential maturation from here. I deliberation there's been a mates of quarters wherever we felt it was nan bottommost and it wasn't. So possibly anything, I guess, greenish shoots aliases immoderate signs that possibly things are yet bottoming?

Andres Campos

Yes. So, I would put it successful 2 buckets. One is nan outer factors and nan different 1 is internal. The outer factor, if you remember, nan steep diminution started successful December of 2021 and particularly successful nan first 4th of 2022, because nan Mexican organization was afloat vaccinated and nan return to normality erstwhile fallout starting successful December of 2021. So, 2022, we took a immense deed from that, because everything really returned to normality during 2022.

Now that it's been a afloat twelvemonth of return to normality. We are seeing January and February akin successful position of user trends to what they were 1 twelvemonth ago. So now we tin turn from there.

Now nan soul factors, which I deliberation are moreover much important is that past year, we had to remake our strategy to cogwheel towards this caller normality. So, these strategies don't -- we cannot instrumentality them from 1 time to another. It took a while to some fig them retired and commencement implementing. So, I deliberation that we are seeing successful nan first 4th moreover done nan 4th fourth of past year, we're seeing that nan implementation is helping.

Fourth 4th of past twelvemonth of 2022, pinch decrease, nan diminution that we were seeing and I deliberation that successful nan first 4th of this year, we're seeing these strategies consolidate. Some of them, conscionable to sanction immoderate are, we redesigned our catalog some beingness and integer and that started -- nan caller creation started successful January of this year. Product innovation, we person to rebuild nan halfway and we person to commencement launching caller categories and that is taking relationship this twelvemonth arsenic well.

Another 1 is that we designed our income staff, which is our in-person strategy to beryllium face-to-face pinch distributors and that's started by nan extremity of January of this year. So that's conscionable to sanction a few. I deliberation we've named astir of them successful nan report. But these strategies are really hitting nan crushed now. And I deliberation that gives america a batch of assurance connected what we tin get this year.

Cristina Fernandez

Thank you for that. And 1 past one. Where are nan things staying connected nan waste of nan JAFRA office successful Mexico City, and is getting to nan 2 times nett indebtedness to EBITDA conditional connected having nan proceeds from that sale?

Luis Campos

Yes. We are -- Christina, this is Luis, we are already moving connected trading nan onshore that belonged to JAFRA. We are moving nan office successful nan adjacent fewer months to a caller rented facility. We are leasing a building for our JAFRA headquarters. And we expect to waste nan onshore sometime this year. This is successful an fantabulous location successful Mexico City. However, we will waste nan onshore arsenic agelong arsenic they salary what we want for it, okay? If we don't get what we want, we will hold for america trading nan land. In lawsuit we waste it, we will usage 100% of those resources to prepay nan semipermanent indebtedness we have, which will use our leverage for nan year, okay? Then we will support you posted successful nan adjacent fewer quarters.

Cristina Fernandez

Okay. Thank you.

Operator

[Operator Instructions] As location are nary further questions astatine this time, I would for illustration to move nan level backmost complete to Mr. Luis Campos for closing remarks.

Luis Campos

Thank you. Thank you everyone for joining america today. We look guardant to speaking pinch you erstwhile we study our adjacent 4th results, and decidedly gathering pinch galore of you astatine upcoming investor conferences. Thank you. Have a bully time and spot you adjacent time.

Operator

This concludes today's teleconference. You whitethorn disconnect your lines astatine this time. Thank you for your participation.