Grupo Elektra Announces EBITDA of Ps.4,082 Million and Operating Profit of Ps.2,198 Million in 3Q19

Friday, 25. October 2019 03:12

—Consolidated revenue increases 17% to Ps.29,733 million
as a result of the firm dynamism in both commercial and financial revenues—

—21% growth in consolidated deposits to Ps.150,781 million,
generates solid perspectives for the financial division—

—Consolidated gross loan portfolio grows 17% to Ps.110,393 million—

—Consolidated delinquency rate is reduced from 4.9% to 4.3%—

MEXICO CITY, Oct. 24, 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 third quarter 2019 financial results.

Consolidated third quarter results

Consolidated revenue was Ps.29,733 million in the period, 17% above the Ps.25,490 million for the same quarter of the previous year. Costs and operating expenses were Ps.25,652 million, compared to Ps.21,217 million for the same period of 2018.

As a result, Grupo Elektra reported EBITDA of Ps.4,082 million, in comparison with Ps.4,273 million of the previous year’s quarter, with an EBITDA margin of 14% for the period.

Operating profit was of Ps.2,198 million this quarter, from Ps.3,501 million during the same period of 2018.

On a pro forma basis — without considering the application of IFRS 16 standard, which was adopted as of 2019, as previously detailed — in the third quarter of 2019 EBITDA for the period was Ps.3,115 million and operating profit was Ps.1,963 million.

The company reported net income of Ps.4,258 million, compared to net income of Ps.6,443 million a year ago.

 3Q 20183Q 2019Change
   Ps.%
     
Consolidated revenue$25,490$29,733$4,24317%
     
EBITDA$4,273$4,082$(192)-4%
      
Operating profit$3,501$2,198$(1,303)-37%
      
Net result $6,443$4,258$(2,184)-34%
     
Net result per share$28.38$18.64$(9.74)-34%
     
Figures in millions of pesos 
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2018, Elektra* outstanding shares were 227 million and as of September 30, 2019, were 228.4 million.

Revenues

Consolidated revenue increased 17%, as a result of a 22% growth in commercial sales and a 14% increase in financial revenues.

The increase in commercial division sales — to Ps.10,725 million, up from Ps.8,779 million last year — largely results from a solid increase in sales of Italika motorcycles — which provide a safe and fuel-efficient transportation alternative, and reduce travelling times for thousands of users — as well as notable dynamism in telephony and appliances, commercialized in the most competitive market conditions.

The commercial business sales have added 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, Omnichannel operations — with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices from any device and at any time — further strengthens the performance of the division.

The increase in financial revenue — to Ps.19,008 million, from Ps.16,711 million the previous year — mainly reflects revenue growth of 15% at Banco Azteca Mexico, in the context of a strong rise in the gross portfolio and a notable dynamism in deposits.

Costs and expenses

Consolidated costs for the quarter were Ps.12,806 million, from Ps.9,735 million in the previous year, as a result of a 38% increase in financial costs, which reflects the creation of reserves, as well as higher interest paid, in the context of solid growth in deposits. As well as a 27% increase in commercial costs, congruent with the increase in commercial income.

Sales, administration, and marketing expenses increased 12% to Ps.12,846 million as a result of increases in both personnel and operating expenses. The growth of expenses is related to the implementation of both marketing and customer service structures — which have added specialized personnel that focuses on substantially boosting bank deposits, as well as the credit portfolio, with strong quality standards, the development of institutional and governmental banking that increases and diversifies Banco Azteca’s top line, and an increasingly competitive structure in Afore Azteca, which allows to substantially grow the number of customers and assets under management.

Likewise, there is an impact on expenses coming from the development of systems to further strengthen the high standards of efficiency of digital banking — which currently has more than six million users and grow dynamically — the Omnichannel sales efforts, and the maintenance expenses of the company's infrastructure, which includes the new Elektra stores, as well as expenses related to a growing number of ATM’s that allow to optimally serve millions of users.

The company anticipates that the development of these initiatives will further boost the firm performance of the financial and commercial businesses in the future, with solid profitability.

EBITDA and net result

The EBITDA of the company decreased 4% to Ps.4,082 million this quarter. Operating income declined 37% to Ps.2,198 million, from Ps.3,501 million for the same quarter of 2018.

The most significant change below EBITDA was a negative variation of Ps.2,192 million in other financial results, which reflects an 11% appreciation this quarter in the market value of underlying assets of financial instruments held by the company, and does not imply cash flow, in comparison to a 58% increase a year ago.

Congruent with the negative variation of other financial results, a decrease of Ps.734 million in the provision of taxes line was registered during the period.

Grupo Elektra reported net income of Ps.4,258 million, compared to a net income of Ps.6,443 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, a pro forma exercise of the balance sheet of Grupo Elektra is presented, 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 Banco Azteca’s immediate and term deposits, 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 proforma exercise provides greater clarity regarding the businesses that makes up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.

In line with the above, debt with cost was Ps.25,226 million as of September 30, 2019, compared to Ps.21,969 million in the previous year.

The growth in the debt balance is derived mainly from the issuance of Certificados Bursátiles for Ps.2,500 million in the previous quarter, which were issued in order to continue with stimulus to capital investments related to improvement and growth of the distribution infrastructure and operations of the company.

During the last twelve months, 66 new Elektra stores were opened, 35 existing stores were remodelled; in addition, the development of systems that optimize the operation of Banco Azteca and Tiendas Elektra were promoted.

The balance of cash and cash equivalents was Ps.18,120 million, from Ps.23,800 million from the previous year. As a result, net debt as of September 30, 2019, was Ps.7,106 million, while a year ago the net cash balance excluding the amount of debt with cost was favorable at Ps.1,831 million.

The company's equity increased 26% to Ps.97,203 million, while the ratio of stockholders' equity to total liabilities was 1.5 times at the close of the quarter.

 As of September
30, 2018
 
As of September
30, 2019
 
Change
 Ps.  %
       
       
Cash & marketable fin. instr.$23,800$18,120 $(5,680)-24%
Inventories$10,321$12,017$1,696 16%
Other current assets$2,030$3,882$1,852 91
Financial instruments$16,964$26,681$9,717 57%
Accounts receivable$27,725$48,870$21,145 76%
Investment share$32,834$34,860$2,026 6%
Fixed assets$6,623$8,183$1,560 24%
Right of use asset---$8,325$8,325 --- 
Other assets$1,372$2,050$678 49%
Total assets$121,668$162,987$41,319 34%
       
Short-term debt$8,827$3,912 $(4,914)-56%
Leasing---$465$465 --- 
Other short-term liabilities$15,383$18,412$3,029 20%
Long-term debt$13,142$21,314$8,173 62
Leasing---$8,036$8,036 --- 
Other long-term debt$7,395$13,644$6,249 85
Total liabilities$44,747$65,784$21,037 47%
Stakeholder´s equity$76,921$97,203$20,282 26%
Liabilities and equity$121,668$162,987$41,319 34%
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 September 30, 2019 grew 17% to Ps.110,393 million, from Ps.94,008 million for the previous year. The consolidated defaulting rate was 4.3% at the end of the period, compared to 4.9% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 20% to Ps.93,102 million, from Ps.77,465 million a year ago.

The defaulting rate for the bank at the end of the quarter was 3.7%, in comparison with 4.5% for the previous year. The past-due loan portfolio is reserved 2.26 times, which reflects a past-due portfolio of Ps.3,481 million, in comparison to allowance for credit risks of Ps.7,870 million in the balance sheet, as of September 30, 2019.

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 third quarter.

Grupo Elektra’s consolidated deposits were Ps.150,781 million, 21% higher than the Ps.124,229 million a year ago. Deposits of Banco Azteca Mexico were Ps.146,593 million, 21% higher than the Ps.120,828 million a year ago. 

As of September 30, 2019, the capitalization index of Banco Azteca Mexico was 16.27%.

Infrastructure

Grupo Elektra currently has 7,232 storefronts, compared to 7,200 units a year ago.

During the last twelve months, 66 new Elektra stores were opened at strategic locations throughout Mexico, with larger exhibition areas; which increase the offering of products and services and maximize customer shopping experiences.

The company has 4,689 storefronts in Mexico, 1,898 in the United States, and 645 in Central and South America. The extensive distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year grew 15% to Ps.85,533 million, from Ps.74,694 million for the same period of 2018, boosted by 16% and 13% growth in both commercial and financial businesses, respectively.

EBITDA was Ps.13,653 million, 3% higher than the Ps.13,256 million for the same period a year ago; the EBITDA margin in the first nine months of 2019 was 16%. Operating profit decreased 25% to Ps.8,360 million during the period.

The company reported net income of Ps.14,618 million, compared to net profit of Ps.8,829 million a year ago, mainly due to a more significant appreciation this period in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the year before.

 9M 20189M 2019  Change
   Ps.%
     
Consolidated revenue$74,694$85,533$10,83915%
     
EBITDA  $13,256$13,653$396  3%
      
Operating profit$11,130$8,360 $(2,770) -25%
      
Net result $8,829$14,618$5,78966%
     
Net result per share$38.89$64.00$25.1165%
     
Figures in millions of pesos 
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2018, Elektra* outstanding shares were 227 million and as of September 30, 2019, were 228.4 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, Panama and Peru.

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

Press Relations:
Luciano Pascoe
Tel. +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
          
          
 3Q18 3Q19 Change 
          
Financial income16,711 66% 19,008 64% 2,297 14% 
Commercial income8,779 34% 10,725 36% 1,946 22% 
Income25,490 100% 29,733 100% 4,243 17% 
          
Financial cost3,980 16% 5,506 19% 1,526 38% 
Commercial cost5,755 23% 7,300 25% 1,545 27% 
Costs9,735 38% 12,806 43% 3,071 32% 
          
Gross income15,755 62% 16,927 57% 1,172 7% 
          
Sales, administration and promotion expenses11,482 45% 12,846 43% 1,364 12% 
          
EBITDA 4,273 17% 4,082 14% (192)-4% 
          
Depreciation and amortization790 3% 1,120 4% 330 42% 
          
Depreciation right of use asset- 0% 732 2% 732    ---- 
          
Other income, net(18)0% 31 0% 49    ---- 
          
Operating income3,501 14% 2,198 7% (1,303)-37% 
          
Comprehensive financial result:         
  Interest income199 1% 357 1% 158 79% 
  Interest expense(577)-2% (923)-3% (346)-60% 
  Foreign exchange gain (loss), net(600)-2% 186 1% 786    ---- 
  Other financial results, net6,587 26% 4,396 15% (2,192)-33% 
 5,610 22% 4,016 14% (1,594)-28% 
          
Participation in the net income of         
CASA and other associated companies78 0% 57 0% (21)27% 
          
Income before income tax9,189 36% 6,270 21% (2,919)-32% 
          
Income tax(2,744)-11% (2,010)-7% 734 27% 
          
Income before discontinued operations6,445 25% 4,261 14% (2,185)-34% 
          
Result from discontinued operations(3)0% (2)0% 0 13% 
          
Impairment of intangible assets- 0% - 0% -    ---- 
          
Consolidated net income 6,443 25% 4,258 14% (2,184)-34% 
          



          
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
          
          
 9M18 9M19 Change 
          
Financial income48,059 64% 54,514 64% 6,455 13% 
Commercial income26,635 36% 31,019 36% 4,384 16% 
Income74,694 100% 85,533 100% 10,839 15% 
          
Financial cost11,225 15% 14,262 17% 3,037 27% 
Commercial cost17,232 23% 20,641 24% 3,409 20% 
Costs28,457 38% 34,903 41% 6,446 23% 
          
Gross income46,237 62% 50,630 59% 4,392 9% 
          
Sales, administration and promotion expenses32,981 44% 36,977 43% 3,996 12% 
          
EBITDA 13,256 18% 13,653 16% 396 3% 
          
Depreciation and amortization2,158 3% 3,106 4% 948 44% 
          
Depreciation right of use asset- 0% 2,158 3% 2,158    ---- 
          
Other income, net(32)0% 29 0% 61    ---- 
          
Operating Income11,130 15% 8,360 10% (2,770)-25% 
          
Comprehensive financial result:         
  Interest income515 1% 988 1% 473 92% 
  Interest expense(1,414)-2% (2,683)-3% (1,270)-90% 
  Foreign exchange gain (loss), net(452)-1% (10)0% 442 98% 
  Other financial results, net2,845 4% 13,802 16% 10,957    ---- 
 1,495 2% 12,097 14% 10,603    ---- 
          
Participation in the net income of         
CASA and other associated companies(167)0% (2)0% 165 99% 
          
Income before income tax12,458 17% 20,456 24% 7,998 64% 
          
Income tax(3,629)-5% (6,000)-7% (2,370)-65% 
          
Income before discontinued operations8,829 12% 14,456 17% 5,628 64% 
          
Result from discontinued operations1 0% 162 0% 161    ---- 
          
Impairment of intangible assets- 0% - 0% -    ---- 
          
Consolidated net income 8,829 12% 14,618 17% 5,789 66% 
          



 GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES 
  CONSOLIDATED BALANCE SHEET 
  MILLIONS OF MEXICAN PESOS 
   
   
  Commercial BusinessFinancial BusinessGrupo Elektra  Commercial BusinessFinancial BusinessGrupo Elektra  Change 
             
  At September 30, 2018 At September 30, 2019   
             
 Cash and cash equivalents4,93717,51222,450 5,42721,86127,288 4,838 22% 
             
 Marketable financial instruments18,86366,66285,525 12,69378,47691,169 5,644 7% 
             
 Performing loan portfolio-59,42959,429 -71,58971,589 12,160 20% 
 Total past-due loans-4,3324,332 -4,1924,192 (139)-3% 
 Gross loan portfolio-63,76163,761 -75,78275,782 12,021 19% 
             
 Allowance for credit risks-8,5648,564 -8,5038,503 (61)-1% 
             
 Loan portfolio, net-55,19755,197 -67,27967,279 12,082 22% 
             
 Inventories10,382-10,382 12,017-12,017 1,635 16% 
             
 Other current assets8,8508,77717,627 12,60612,58425,190 7,564 43% 
             
 Total current assets43,031148,148191,179 42,743180,200222,942 31,763 17% 
             
 Financial instruments16,96426217,226 26,68128226,964 9,738 57% 
             
 Performing loan portfolio-29,97229,972 -34,05634,056 4,084 14% 
 Total past-due loans-274274 -555555 280 102% 
 Gross loan portfolio-30,24730,247 -34,61134,611 4,364 14% 
             
 Allowance for credit risks-694694 -1,3191,319 625 90% 
             
 Loan portfolio-29,55329,553 -33,29233,292 3,739 13% 
             
 Other non-current assets8,8336589,491 27,52518927,714 18,223 192% 
 Investment in shares1,909-1,909 1,779-1,779 (130)-7% 
 Property, furniture, equipment and           
   investment in stores, net6,6234,07510,698 8,1836,14414,326 3,628 34% 
 Intangible assets6226,3646,986 6956,8717,566 580 8% 
 Right of use asset--- 8,3251,97310,298 10,298 ---- 
 Other assets7503221,071 1,3555801,935 863 81% 
 TOTAL ASSETS78,732189,382268,114 117,286229,530346,816 78,702 29% 
             
             
 Demand and term deposits-124,229124,229 -150,781150,781 26,552 21% 
 Creditors from repurchase agreements-7,1037,103 -18,17918,179 11,076 156% 
 Short-term debt8,8275089,335 3,7971623,959 (5,376)-58% 
 Leasing--- 4658841,350 1,350  ---- 
 Short-term liabilities with cost8,827131,840140,666 4,262170,006174,268 33,602 24% 
             
 Suppliers and other short-term liabilities14,89211,47526,367 17,34811,01828,366 2,000 8% 
 Short-term liabilities without cost14,89211,47526,367 17,34811,01828,366 2,000 8% 
             
 Total short-term liabilities23,719143,314167,033 21,610181,024202,634 35,601 21% 
             
 Long-term debt12,3412,12814,469 19,2912,27621,567 7,098 49% 
 Leasing--- 8,0361,0639,098 9,098  ---- 
 Long-term liabilities with cost12,3412,12814,469 27,3273,33830,665 16,196 112% 
             
 Long-term liabilities without cost7,3952,2959,691 13,6442,66916,313 6,623 68% 
             
 Total long-term liabilities19,7364,42324,159 40,9716,00846,978 22,819 94% 
             
 TOTAL LIABILITIES43,455147,738191,193 62,581187,032249,612 58,420 31% 
             
 TOTAL STOCKHOLDERS' EQUITY35,27741,64476,921 54,70542,49897,203 20,282 26% 
             
             
 LIABILITIES + EQUITY78,732189,382268,114 117,286229,530346,816 78,702 29% 
             



  INFRASTRUCTURE    
           
  3Q18 3Q19 Change 
           
 Points of sale in Mexico         
 Elektra1,07315% 1,12416% 51 5% 
 Salinas y Rocha451% 381% (7)-16% 
 Banco Azteca1,77125% 1,81925% 48 3% 
 Freestanding branches1,65423% 1,70824% 54 3% 
 Total4,54363% 4,68965% 146 3% 
           
 Points of sale in Central and South America         
 Elektra1672% 1702% 3 2% 
 Banco Azteca3815% 3815% - 0% 
 Freestanding branches921% 941% 2 2% 
 Total6409% 6459% 5 1% 
           
 Points of sale in North America         
 Advance America2,01728% 1,89826% (119)-6% 
 Total2,01728% 1,89826% (119)-6% 
           
 TOTAL7,200100% 7,232100% 32 0% 
           
           
           
           
 Floor space (m²)1,635100% 1,740100% 105 6% 
           
           
           
 Employees         
 Mexico61,39281% 74,10283% 12,710 21% 
 Central and South America8,33711% 9,39811% 1,061 13% 
 North America5,6768% 5,2786% (398)-7% 
 Total employees75,405100% 88,778100% 13,373 18% 

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