27 slides from Betterware De Mexico, S.a.p.i. De C.v's SPAC merger presentation, Aug 5, 2019
Slide 1: Investor Presentation August 2019
Investor Presentation August 2019 ACQUISITION CORP. Strictly Confidential
Slide 2: Disclaimer
2 ACQUISITION CORP. 2 Disclaimer Disclaimers and Other Important Information This presentation (this “Presentation”) is for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential business combination between Betterwar
Slide 3: Today's Presenters
3 ACQUISITION CORP. 3 Today ’ s Presenters Luis Campos ACQUISITION CORP. Martin Werner ▪ Chairman of Betterware de Mexico ▪ Prior to Betterware , Luis Campos served as : ▪ Chairman of Tupperware Americas ( 1994 - 1999 ) ▪ Chairman of Sara Lee – House of Fuller Mexico ( 1991 - 1993 ) ▪ Chairman of Ha
Slide 4: Transaction Summary
4 ACQUISITION CORP. 4 Transaction Summary Experienced Teams Combined Transaction Overview ▪ DD 3 Acquisition Corp (Nasdaq : DDMX) raised ~US $ 55 . 7 mm through the IPO of a Special Purpose Acquisition Company (SPAC) in October 2018 ▪ DD 3 has entered into a definitive transaction agreement with Bet
Slide 5: Target Embodies DDMX's Investment Thesis and Meets Original Criteria
5 ACQUISITION CORP. 5 Target Embodies DDMX’s Investment Thesis and Meets Original Criteria Attractive Industry Clear Strategy Differentiation Outstanding Financial Performance Considerable Growth and Efficiency Opportunities Attractive Valuation and Transaction ▪ Mexico is the 7 th largest direct -
Slide 6: Betterware Executive Summary
6 ACQUISITION CORP. 6 Betterware Executive Summary <ĞLJ&ŝŶĂŶĐŝĂůDĞƚƌŝĐƐ;h^ΨDŝůůŝŽŶƐͿ Source: Management 1. Net Company Sales: Revenue after VAT, returns and discounts to Distributors and Associates 2. Free Cash Flow balance at Dec 2018 affected by 3 - week overstock to account for an earlier Chi
Slide 7: Key Investment Highlights
7 ACQUISITION CORP. ϳ Efficient sales model supports a growing customer base Constantly innovated and unique product portfolio Leading direct - to - consumer company in Mexico, with a clearly differentiated business model Best - in - class logistics and supply chain platform Business intelligence an
Slide 8: Attractive Direct-to-Consumer Selling Sector
8 amp;48,6,7,21&253 8 Attractive Direct - to - Consumer Selling Sector Retail Sales Growth & Consumer Confidence Index (% of Population, as of 2016) Socio - economic Segments in Mexico Source: Management, Euromonitor, estimations by the Mexican Direct Selling Association ( Asociación Mexicana de Ven
Slide 9: Unique and Innovative Product Portfolio
9 ACQUISITION CORP. 9 Unique and Innovative Product Portfolio Source: Management (% of Total Net Sales, as of 2018) ▪ Eight different categories are offered in the product portfolio, all focused in the home organization segment ▪ Pricing strategy that optimizes revenue and margins, and limits invent
Slide 10: Sales Force Model
ϭϬ ACQUISITION CORP. 10 Source: Management Note: Associates need to recruit 3 individuals and purchase a minimum of US$125 in order to upgrade to Distributor level Sales Force Model Two Tier Sales Model Overview ZĞĨĞƌƌĞĚ Recruited Distributor ▪ Betterware’s sales force is divided in two groups, Dist
Slide 11: Logistics and Supply Chain Platform
ϭϭ ACQUISITION CORP. 11 ƒ ĞƚƚĞƌǁĂƌĞƐŚŝƉƐƚŽĚŝƐƚƌŝďƵƚŽƌƐ ŽŶĐĞĂǁĞĞŬƚŚƌŽƵŐŚ ϭϮ ƚŚŝƌĚ Ͳ ƉĂƌƚLJ ĐŽŵƉĂŶŝĞƐǁŝƚŚǁŚŽŵƚŚĞ ŽŵƉĂŶLJŵĂŝŶƚĂŝŶƐƐƚƌŽŶŐǁŽƌŬŝŶŐ ƌĞůĂƚŝŽŶƐŚŝƉƐ ƒ dŚĞĚŝƐƚƌŝďƵƚŽƌƉĞƌƐŽŶĂůůLJĚĞůŝǀĞƌƐ ŽƌĚĞƌƐƚŽĞĂĐŚŽĨŝƚƐĂƐƐŽĐŝĂƚĞƐ͕ ǁŚŽŝŶƚƵƌŶĚĞůŝǀĞƌƚŽĨŝŶĂů ĐƵƐƚŽŵĞƌƐ͕ĞůŝŵŝŶĂƚŝŶŐ
Slide 12: Unequal Business Intelligence Unit
ϭϮ ACQUISITION CORP. 12 hŶĞƋƵĂůƵƐŝŶĞƐƐ/ŶƚĞůůŝŐĞŶĐĞhŶŝƚ Source: Management Tight Monitoring Product Intelligence Clear Strategy ^ĞƉĂƌĂƚĞĚ ĂƌĞĂƐ ƚŽ ĂƐƐŝŐŶ ƌĞƐƉŽŶƐŝďŝůŝƚŝĞƐ ƚŽ ŽŵƉĂŶLJ͛Ɛ Ě ĞǀĞůŽƉŵĞŶƚ ŵ ĂŶĂŐĞƌƐ Circles represent a distributor . Color scales indicate current week ’s pe
Slide 13: Current Penetration and Expansion Strategy
13 ACQUISITION CORP. 13 9.4% 11.1% 12.7% 16.2% 19.8% 22.4% 24.8% 26.8% 2015 2016 2017 2018 2019P 2020P 2021P 2022P Current Penetration and Expansion Strategy Source: Management 1. Management estimates as of year - end 2018 2. AGEB is a basic geostatistical area used to delimit neighborhoods in Mexic
Slide 14: Multiple Additional Growth Sources
14 ACQUISITION CORP. 14 Multiple Additional Growth Sources Strategic Acquisitions International Expansion E F ▪ Central America, Colombia and Peru Target Similar Markets : ▪ Disposable income ▪ Consumer needs ▪ Mindset for other income sources Accretive Targets : ▪ Plug in Betterware’s business mode
Slide 15: Key Executives & Directors
15 ACQUISITION CORP. 15 Key Executives & Directors ▪ Luis Campos – Chairman of Betterware de Mexico ▪ Prior to Betterware , Luis Campos served as : Chairman of Tupperware Americas ( 1994 - 1999 ) ; Chairman of Sara Lee – House of Fuller Mexico ( 1991 - 1993 ) ; Chairman of Hasbro Mexico ( 1984 - 199
Slide 16: Financial Overview
16 ACQUISITION CORP. 16 Financial Overview
Slide 17: Financial Overview
17 ACQUISITION CORP. 17 Retail Sales Growth 17 20 1H18 1H19 8 10 12 18 23 29 34 38 105 152 201 325 420 500 572 646 2015 2016 2017 2018 2019P 2020P 2021P 2022P Distributors Associates 48 57 78 125 161 196 231 264 2015 2016 2017 2018 2019P 2020P 2021P 2022P Net Company Sales Retail Sales EBITDA Evolut
Slide 18: Financial Overview (Cont'd): Strong Balance Sheet and Cash Generation
18 ACQUISITION CORP. 18 $5.9 $2.2 - $2.7 $0.8 $3.7 $3.4 $3.1 $2.6 12.1% 3.9% - 3.5% 0.6% 2.3% 1.7% 1.3% 1.0% 2015 2016 2017 2018 2019P 2020P 2021P 2022P WoCa WoCa as % of net revenue Working Capital 1 & Cash Conversion Financial Overview (Cont’d) (US$ in millions) Adjusted Levered Free Cash Flow (US
Slide 19: Attractive Free Cash Flow Generation
19 ACQUISITION CORP. 19 Adj. Levered FCF as % of EBITDA 44.5% 51.4% 61.8% Adj. Levered FCF Yield NA 6.1% 9.0% Dividend Yield NA 3.4% 4.3% 2018 2019P 2020P Net Company Sales $125 $161 $196 ( - ) Costs and SG&A (93) (118) (144) EBITDA 32 43 52 ( - ) Other Expense (1) (2) (2) ( - ) Tax (9) (10) (13) (
Slide 20: Historical Financial Statements Summary
20 ACQUISITION CORP. 20 Historical Financial Statements Summary Income Statement Source: Management Notes: i ) Financial information under Mexican GAAP basis; ii) Avg MXN/USD FX Rates: 2016 – 18.68, 2017 – 18.92, 2018 – 19.23, 1H2018 – 19.23, 1H2019 – 20.0 Summary Balance Sheet Iii) EOP MXN/USD FX R
Slide 21: Transaction Summary
21 ACQUISITION CORP. 21 Transaction Summary
Slide 22: Transaction Summary
22 ACQUISITION CORP. 22 Transaction Summary Transaction highlights Key Terms Governance Other Details ▪ Enterprise value of ~US $ 367 mm (transaction implied multiple of 8 . 6 x and 7 . 0 x 2019 P and 2020 P EBITDA, respectively) ▪ Current Betterware shareholders expected to remain ~ 80 % owners of
Slide 23: Key Transaction Metrics
23 ACQUISITION CORP. 23 Key Transaction Metrics Key Transaction Terms Sources Uses Ownership DDMX Cash in Trust 2 $56.2 Payment to Seller $30.0 Target Rollover Equity $287.0 Target Rollover Equity $287.0 Cash to Target $22.2 Est . Fees & Expenses $4.0 Total Sources $343.2 Total Uses $343.2 Shares Pr
Slide 24: Comparables – EV/EBITDA Multiples
24 ACQUISITION CORP. 24 8.6x 15.4x 11.6x 9.7x 9.6x 7.4x 6.2x 4.6x 14.4x 12.3x 12.1x 6.1x 14.3x 11.5x 11.4x 7.3x 6.7x 7.0x 13.3x 11.3x 8.5x 8.6x 6.3x 6.0x 4.7x 13.7x 11.0x 11.7x 6.3x 13.1x 11.4x 9.3x 6.7x 6.6x Comparables – EV/EBITDA Multiples EV/2019P EBITDA & EV/2020P EBITDA Source: Capital IQ, Tho
Slide 25: Comparables – Key Metrics
25 ACQUISITION CORP. 25 0% 5% 10% 15% 20% 25% 30% 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x Comparables – Key Metrics EV/2019P EBITDA vs ‘18 - ’21P EBITDA Growth EV/2019P EBITDA vs 2019P EBITDA Margin -5% 0% 5% 10% 15% 20% 25% 30% 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x Source: Capital IQ, Thomson Eikon
Slide 26: DD3 Management and Directors
26 ACQUISITION CORP. 26 Martin Werner CEO and Chairman of DD 3 . Prior to founding DD 3 Capital Partners Martin Werner worked at Goldman Sachs for over 16 years acting as a Partner ( 2006 - 2016 ) and as Managing Director in the Investment Banking Division ( 2000 - 2006 ) . B efore Goldman Sachs, Mr
Slide 27: For further information
27 ACQUISITION CORP. 27 For further information, please reach and access: contact@dd3.mx http://ir.dd3.mx/