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This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

Grupo Elektra Announces 13% EBITDA Growth to Ps.4,836 Million in 4Q18

February 19, 2019

—Operating profit increases 8% to Ps.3,968 million in the period—

—Continuous dynamism of the commercial and financial businesses translates into a 7% increase in consolidated revenues, to Ps.29,047 million—

—13% growth in consolidated deposits, to Ps.123,463 million,generates strong prospects for the financial business—

—The delinquency rate of Banco Azteca Mexico is reduced from 4.2% to 3.5%—

MEXICO CITY, Feb. 19, 2019 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America’s leading specialty retailer and financial services company and the largest non-bank provider of cash advance services in the United States, today announced fourth quarter 2018 and full year 2018 financial results.

Consolidated Fourth Quarter Results

Consolidated revenue was Ps.29,047 million in the period, 7% above the Ps.27,087 million for the same quarter of the previous year. Costs and operating expenses were Ps.24,210 million, from Ps.22,803 million for the same period of 2017.

As a result, Grupo Elektra reported EBITDA of Ps.4,836 million, 13% higher than the Ps.4,284 million of the previous year’s quarter; EBITDA margin was 17% for the period, one percentage point above the previous year.

Operating profit was Ps.3,968 million this quarter, 8% above the Ps.3,669 million in the same period of 2017.

The company reported net income of Ps.5,913 million, compared to net profit of Ps.902 million a year ago.

4Q 2017 4Q 2018 Change Ps. % -------------------- ------- ------- ------ --- Consolidated revenue $27,087 $29,047 $1,959 7% EBITDA $4,284 $4,836 $552 13% Operating profit $3,669 $3,968 $299 8% Net result $902 $5,913 $5,011 --- Net result per share $3.90 $25.99 $22.09 --- -------------------- ------- ------- ------ ---

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2017, Elektra* outstanding shares were 231.3 million and as of December 31, 2018, were 227.5 million.

Revenue

Consolidated revenue increased 7%, as a result of 9% and 5% growth in both financial revenue and commercial sales, respectively.

The increase in financial revenue — to Ps.17,362 million from Ps.15,968 million the previous year— mainly reflects revenue growth of 19% at Banco Azteca Mexico, in the context of strong growth in the gross portfolio and a notable dynamism in deposits.

The increase in commercial division sales —to Ps.11,685 million from Ps.11,119 million last year— mainly results from the dynamic performance of Italika motorcycles sales in the quarter; with models that optimally meet the need for efficient and safe transportation for thousands of users, as well as solid growth in electronic and computer lines that are marketed in the most competitive market conditions.

Recently, such strategies have gained additional momentum with the launch of a new store format with a larger exhibition space that includes an extensive merchandise and services selection to satisfy an increasing number of customers. Similarly, Grupo Elektra’s Omni-channel operations —through the online store www.elektra.com.mx, which offers thousands of products at unparalleled prices, from any device and at all times— has further strengthened the company’s commercial business performance.

Costs and Expenses

Consolidated costs for the quarter had a marginal decrease to Ps.11,915 million, from Ps.11,965 million in the previous year, as a result of a 6% decrease in financial costs —which reflects lower provisions requirements for credit risks, in line with solid increase in asset quality— and a 2% increase in commercial costs, congruent with growth in merchandise revenues.

Sales, administration, and promotion expenses increased 13% to Ps.12,295 million, as a result of: increases in personnel expenses, in the context of growing operations, both in the financial and commercial businesses, mainly related to digital banking and Omni-channel strategies; higher payment of rents, related to increases in both the number and size of Elektra stores; and an increase in advertising expenses, which translates in a superior position of Grupo Elektra in the market.

EBITDA and net result

EBITDA grew 13% to Ps.4,836 million this quarter. Operating income increased 8% to Ps.3,968 million, from Ps.3,669 million for the same quarter of 2017.

The most significant variation below EBITDA was a positive variation of Ps.7,480 million in other financial results —which reflects a 12% appreciation this quarter in the market value of the underlying assets of financial instruments held by the company, and does not imply cash flow— compared to a 15% decrease a year ago.

Congruent with the positive variation of other financial results, an increase of Ps.2,746 million in the provision of taxes was registered during the period.

Grupo Elektra reported net income of Ps.5,913 million, compared to a net profit of Ps.902 million a year ago.

Unconsolidated Balance Sheet

A pro forma exercise of the balance sheet of Grupo Elektra is presented, to allow the visualization of the non-consolidated financial situation, excluding the net assets of the financial business, whose investment is valued under the equity method in this case.

This presentation shows the debt of the company, without considering the immediate and term deposits of Banco Azteca, which do not constitute debt with cost for Grupo Elektra. The pro forma balance sheet also does not include the bank’s gross loan portfolio.

This provides greater clarity regarding the businesses that make up the company and allows financial markets participants to make estimates of the value of the company, considering only the relevant debt for such calculations.

Corresponding with this, debt with cost was Ps.21,635 million as of December 31, 2018, compared to Ps.13,464 million from the previous year.

The growth in the debt balance is derived mainly from the issuance of Certificados Bursátiles for Ps.7,500 million in the second quarter of 2018 for capital investments related to the growth and improvement of the distribution infrastructure and the operations of the company. During 2018, 62 new Elektra stores were opened, and 55 existing stores were remodeled, a new Italika motorcycle assembly line was launched, and investments were made in systems development to optimize the operation of Banco Azteca and Tiendas Elektra.

The balance of cash and cash equivalents was Ps.31,052 million, from Ps.15,574 million from previous year. As a result, the net cash balance excluding the amount of debt with cost as of December 31, 2018, was favorable at Ps.9,417 million, compared to a positive figure of Ps.2,110 million a year ago.

The company’s equity increased 20% to Ps.84,572 million; while the ratio of stockholders’ equity to total liabilities was 1.6 times at the close of the quarter.

Change As of As of December December Ps. % 31, 2017 31, 2018 ----------------------------- -------- -------- -------- ---- Cash & marketable fin. instr. $15,574 $31,052 $15,478 99% Inventories $9,225 $9,375 $150 2% Other current assets $1,374 $3,905 $2,530 --- Financial instruments $17,819 $16,745 ($1,074) -6% Accounts receivable $26,693 $32,122 $5,429 20% Investment share $30,319 $33,338 $3,019 10% Fixed assets $5,189 $7,404 $2,215 43% Other assets $1,474 $2,105 $631 43% Total assets $107,669 $136,046 $28,377 26% ----------------------------- -------- -------- -------- ---- Short-term debt $3,217 $8,410 $5,194 161% Other short-term liabilities $18,156 $18,789 $633 3% Long-term debt $10,247 $13,225 $2,978 29% Other long-term debt $5,834 $11,050 $5,216 89% Total liabilities $37,452 $51,474 $14,022 37% ----------------------------- -------- -------- -------- ---- Stakeholder´s equity $70,217 $84,572 $14,355 20% Liabilities and equity $107,669 $136,046 $28,377 26% ----------------------------- -------- -------- -------- ---- Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Advance America, and Banco Azteca Latin America’s consolidated gross portfolio as of December 31, 2018 grew 4% to Ps.97,579 million, from Ps.93,659 million for the previous year. The consolidated delinquency rate was 4.1% at the end of the period, compared to 4.7% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 5% to Ps.80,346 million, from Ps.76,741 million a year ago.

The delinquency rate for the bank at the end of the quarter was 3.5%, from 4.2% for the previous year. The past-due loan portfolio is reserved 2.5 times, which reflects a past-due portfolio of Ps.2,825 million, in comparison to allowance for credit risks of Ps.7,011 million in the balance sheet, as of December 31, 2018.

The average term of the credit portfolio for principal credit lines —consumer, personal loans, and Tarjeta Azteca— was 63 weeks at the end of the fourth quarter.

Grupo Elektra consolidated deposits were Ps.123,463 million, 13% higher than the Ps.109,373 million a year ago. Deposits of Banco Azteca Mexico were Ps.122,182 million, 13% higher than the Ps.108,654 million a year ago.

As of December 31, 2018, the capitalization index of Banco Azteca Mexico was 18.19%.

Infrastructure

Grupo Elektra currently has 7,269 storefronts, compared to 7,139 units a year ago.

During 2018, 62 new Elektra stores were opened at strategic locations throughout Mexico, with greater exhibition area, which increases the offer of products and services and maximizes customer shopping experiences.

The company has 4,630 storefronts in Mexico, 2,000 in the United States, and 639 in Central and South America. The extensive distribution network allows the company to maintain close contact with customers, granting superior market positioning in the countries where it operates.

Twelve Month Results

Total consolidated revenue in 2018 grew 9% to Ps.103,522 million, from Ps.94,979 million for 2017, boosted by 10% and 7% growth in both financial and commercial businesses, respectively.

EBITDA was Ps.18,150 million, 8% higher than the Ps.16,754 million for the same period a year ago; the EBITDA margin for 2018 was 18%. Operating profit grew 5% to Ps.15,116 million.

The company reported net income of Ps.14,742 million, compared to Ps.15,398 million a year ago. The change mainly results from a lesser appreciation this period in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year

2017 2018 Change Ps. % -------------------- ------- -------- ------- --- Consolidated revenue $94,979 $103,522 $8,543 9% EBITDA $16,754 $18,150 $1,396 8% Operating profit $14,429 $15,116 $687 5% Net result $15,398 $14,742 $(656) -4% Net result per share $66.57 $64.80 $(1.77) -3% -------------------- ------- -------- ------- ---

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2017, Elektra* outstanding shares were 231.3 million and as of December 31, 2018, were 227.5 million.

Company Profile:

Grupo Elektra is Latin America’s leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States. The group operates more than 7,000 points of contact in Mexico, the United States, Guatemala, Honduras, Peru, Panama and El Salvador.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating economic value through market innovation and goods and services that improve standards of living; social value to improve community wellbeing; and environmental value by reducing the negative impact of its business activities. Created by Mexican entrepreneur Ricardo B. Salinas (www.ricardosalinas.com), Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. These companies include: TV Azteca (www.TVazteca.com; www.irtvazteca.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Advance America (www.advanceamerica.net), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (www.totalplay.com.mx) and Totalplay Empresarial (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spains’ Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Except for historical information, the matters discussed in this press release are concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect TV Azteca and its subsidiaries are presented in documents sent to the securities authorities.

Investor Relations:

Bruno Rangel Rolando Villarreal Grupo Salinas Grupo Elektra, S.A.B. de C.V. Tel. +52 (55) 1720-9167 Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mx rvillarreal@gruposalinas.com.mx

Press Relations:Luciano PascoeTel. +52 (55) 1720 1313 ext. 36553 lpascoe@gruposalinas.com.mx

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS MILLIONS OF MEXICAN PESOS 4Q17 4Q18 Change ------------- ------------- ------------- Financial income 15,968 59% 17,362 60% 1,394 9% Commercial income 11,119 41% 11,685 40% 566 5% ------ - ---- ------ - ---- ------ - ---- Income 27,087 100% 29,047 100% 1,959 7% Financial cost 4,293 16% 4,054 14% (239 ) -6% Commercial cost 7,671 28% 7,861 27% 190 2% ------ - ---- ------ - ---- ------ - ---- Costs 11,965 44% 11,915 41% (49 ) 0% Gross income 15,123 56% 17,131 59% 2,009 13% ------ - ---- ------ - ---- ------ - ---- Sales, administration and promotion expenses 10,838 40% 12,295 42% 1,457 13% ------ - ---- ------ - ---- ------ - ---- EBITDA 4,284 16% 4,836 17% 552 13% Depreciation and amortization 626 2% 847 3% 221 35% Other expense (income), net (10 ) 0% 21 0% 32 ---- Operating income 3,669 14% 3,968 14% 299 8% ------ - ---- ------ - ---- ------ - ---- Comprehensive financial result: Interest income 300 1% 361 1% 60 20% Interest expense (352 ) -1% (610 ) -2% (258 ) -73% Foreign exchange (loss) gain, net 896 3% 376 1% (520 ) -58% Other financial results, net (2,555 ) -9% 4,925 17% 7,480 ---- ------ - ---- ------ - ---- ------ - ---- (1,710 ) -6% 5,052 17% 6,762 ---- Participation in the net income of CASA and other associated companies (506 ) -2% (22 ) 0% 484 ---- ---- Income before income tax 1,453 5% 8,998 31% 7,545 ---- ------ - ---- ------ - ---- ------ - ---- Income tax (203 ) -1% (2,949 ) -10% (2,746 ) ---- ---- Income before discontinued operations 1,250 5% 6,049 21% 4,799 384% ------ - ---- ------ - ---- ------ - ---- Result from discontinued operations (105 ) 0% (60 ) 0% 46 43% Impairment of intangible assets (243 ) -1% (76 ) 0% 167 ---- Consolidated net income 902 3% 5,913 20% 5,011 ---- ------ - ---- ------ - ---- ------ - ----

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS MILLIONS OF MEXICAN PESOS 2017 2018 Change ------------- -------------- ------------- Financial income 59,366 63% 65,533 63% 6,167 10% Commercial income 35,614 37% 37,989 37% 2,376 7% ------ - ---- ------- - ---- ------ - ---- Income 94,979 100% 103,522 100% 8,543 9% Financial cost 13,254 14% 15,021 15% 1,767 13% Commercial cost 23,989 25% 24,762 24% 773 3% ------ - ---- ------- - ---- ------ - ---- Costs 37,243 39% 39,783 38% 2,540 7% Gross income 57,737 61% 63,739 62% 6,003 10% ------ - ---- ------- - ---- ------ - ---- Sales, administration and promotion expenses 40,982 43% 45,589 44% 4,607 11% ------ - ---- ------- - ---- ------ - ---- EBITDA 16,754 18% 18,150 18% 1,396 8% Depreciation and amortization 2,270 2% 3,023 3% 754 33% Other expense, net 56 0% 11 0% (44 ) -80% Operating Income 14,429 15% 15,116 15% 687 5% ------ - ---- ------- - ---- ------ - ---- Comprehensive financial result: Interest income 731 1% 876 1% 145 20% Interest expense (1,493 ) -2% (2,023 ) -2% (530 ) -35% Foreign exchange (loss) gain, net (317 ) 0% (76 ) 0% 242 76% Other financial results, net 9,297 10% 7,770 8% (1,527 ) -16% ------ - ---- ------- - ---- ------ - ---- 8,217 9% 6,547 6% (1,670 ) -20% Participation in the net income of CASA and other associated companies (526 ) -1% (188 ) 0% 338 64% ---- Income before income tax 22,119 23% 21,474 21% (645 ) -3% ------ - ---- ------- - ---- ------ - ---- Income tax (6,161 ) -6% (6,591 ) -6% (429 ) -7% ---- Income before discontinued operations 15,958 17% 14,884 14% (1,074 ) -7% ------ - ---- ------- - ---- ------ - ---- Result from discontinued operations (309 ) 0% (65 ) 0% 244 79% Impairment of intangible assets (251 ) 0% (76 ) 0% 175 70% Consolidated net income 15,398 16% 14,742 14% (656 ) -4% ------ - ---- ------- - ---- ------ - ----

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MILLIONS OF MEXICAN PESOS Commercial Financial Grupo Commercial Financial Grupo Change Business Business Elektra Business Business Elektra ---------- --------- ------- ---------- --------- ------- -------- At December 31, 2017 At December 31, 2018 Cash and cash equivalents 4,174 21,433 25,607 8,407 17,776 26,183 577 2% Marketable financial instruments 11,400 44,282 55,682 22,645 56,382 79,027 23,345 42% Performing loan portfolio - 61,734 61,734 - 63,229 63,229 1,495 2% Total past-due loans - 4,133 4,133 - 3,694 3,694 (439 ) -11% ---------- --------- ------- ---------- --------- ------- ------ - ---- Gross loan portfolio - 65,867 65,867 - 66,923 66,923 1,056 2% Allowance for credit risks - 8,250 8,250 - 8,025 8,025 (225 ) -3% ---------- --------- ------- ---------- --------- ------- ------ - ---- Loan portfolio, net - 57,617 57,617 - 58,898 58,898 1,281 2% Inventories 9,257 - 9,257 9,375 - 9,375 118 1% Other current assets 7,523 9,657 17,180 20,462 10,240 30,703 13,523 79% Total current assets 32,354 132,988 165,342 60,890 143,296 204,186 38,844 23% Financial instruments 17,819 324 18,144 16,745 282 17,027 (1,117 ) -6% Performing loan portfolio - 27,513 27,513 - 30,397 30,397 2,884 10% Total past-due loans - 279 279 - 259 259 (20 ) -7% ---------- --------- ------- ---------- --------- ------- ------ - ---- Gross loan portfolio - 27,792 27,792 - 30,656 30,656 2,864 10% Allowance for credit risks - 734 734 - 760 760 26 4% ---------- --------- ------- ---------- --------- ------- ------ - ---- Loan portfolio - 27,058 27,058 - 29,896 29,896 2,838 10% Other non-current assets 5,099 656 5,755 2,836 188 3,023 (2,732 ) -47% Investment in shares 2,125 - 2,125 1,933 - 1,933 (192 ) -9% Property, furniture, equipment and investment in stores, net 5,258 3,165 8,423 7,404 4,918 12,323 3,900 46% Intangible assets 661 6,700 7,361 633 6,694 7,327 (34 ) 0% Other assets 813 385 1,198 1,472 301 1,773 575 48% TOTAL ASSETS 64,130 171,277 235,407 91,913 185,575 277,489 42,082 18% ---------- --------- ------- ---------- --------- ------- ------ - ---- Demand and term deposits - 109,373 109,373 - 123,463 123,463 14,090 13% Creditors from repurchase - 7,122 7,122 - 6,237 6,237 (885 ) -12% agreements Short-term debt 3,217 534 3,751 8,410 63 8,473 4,722 126% ------ - ---- Short-term liabilities with cost 3,217 117,029 120,246 8,410 129,763 138,174 17,928 15% Suppliers and other short-term 15,382 9,562 24,944 15,589 10,204 25,793 849 3% liabilities ---------- --------- ---------- --------- ------ - ---- Short-term liabilities without cost 15,382 9,562 24,944 15,589 10,204 25,793 849 3% Total short-term liabilities 18,598 126,591 145,190 23,999 139,967 163,966 18,776 13% Long-term debt 9,659 1,105 10,765 12,478 2,586 15,065 4,300 40% ---------- --------- ------- ---------- --------- ------- ------ - ---- Long-term liabilities with cost 9,659 1,105 10,765 12,478 2,586 15,065 4,300 40% ------ - ---- Long-term liabilities without cost 5,827 3,408 9,235 11,049 2,836 13,886 4,650 50% Total long-term liabilities 15,487 4,513 20,000 23,528 5,423 28,950 8,950 45% TOTAL LIABILITIES 34,085 131,105 165,190 47,527 145,390 192,917 27,727 17% ---------- --------- ------- ---------- --------- ------- ------ - ---- TOTAL STOCKHOLDERS’ EQUITY 30,045 40,172 70,217 44,387 40,185 84,572 14,355 20% ---------- --------- ------- ---------- --------- ------- ------ - ---- LIABILITIES + EQUITY 64,130 171,277 235,407 91,913 185,575 277,489 42,082 18% ---------- --------- ------- ---------- --------- ------- ------ - ----

INFRASTRUCTURE 4Q17 4Q18 Change ----------- ----------- ------------ Points of sale in Mexico Elektra 1,051 15% 1,113 15% 62 6% Salinas y Rocha 47 1% 44 1% (3 ) -6% Banco Azteca 1,282 18% 1,304 18% 22 2% Freestanding branches 2,060 29% 2,169 30% 109 5% ------ ---- ------ ---- ------ - --- Total 4,440 62% 4,630 64% 190 4% Points of sale in Central and South America Elektra 165 2% 171 2% 6 4% Banco Azteca 165 2% 171 2% 6 4% Freestanding branches 321 4% 297 4% (24 ) -7% ------ ---- ------ ---- ------ - --- Total 651 9% 639 9% (12 ) -2% Points of sale in North America Advance America 2,048 29% 2,000 28% (48 ) -2% ------ ---- ------ ---- ------ - --- Total 2,048 29% 2,000 28% (48 ) -2% ------ - TOTAL 7,139 100% 7,269 100% 130 2% ------------------------------------------- ------ ---- ------ ---- ------ - --- Floor space (m²) 1,592 100% 1,703 100% 110 7% ------------------------------------------- ------ ---- ------ ---- ------ - --- Employees Mexico 57,445 80% 67,567 82% 10,122 18% Central and South America 8,928 12% 9,416 11% 488 5% North America 5,714 8% 5,685 7% (29 ) -1% ------ ---- ------ ---- ------ - --- Total employees 72,087 100% 82,668 100% 10,581 15%