Grupo Elektra Announces 27% EBITDA Growth to Ps.5,578 Million in 1Q19


—Solid performance of the commercial and financial businesses
 translates into a 13% increase in consolidated revenues, to Ps.27,062 million

—19% growth in consolidated deposits, to Ps.133,500 million,
generates firm prospects for the financial business—

—The consolidated gross portfolio increases 14%, to Ps.103,236 million—

—Consolidated delinquency rate is reduced from 4.8% to 3.4%—

MEXICO CITY, April 30, 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 first quarter 2019 financial results.

Consolidated First Quarter Results

As of this quarter, in accordance with the accounting regulations applicable to public issuers in Mexico, Grupo Elektra adopted the new lease standard (IFRS 16), which implies recognizing in the balance sheet "Right of use asset" and "Leasing" in liabilities.

Meanwhile, in the income statement, the payment for leases, which was previously presented in "Sales, administration and promotion expenses" is now recognized through "Depreciation right of use asset", plus the expense for interest, both below EBITDA.

Under the new standard, applied to the figures for the first quarter of 2019, consolidated revenues were Ps.27,062 million in the period, 13% higher than Ps.24,007 million in the same quarter of the previous year. Costs and operating expenses were Ps.21,484 million, from Ps.19,610 million in the same period of 2018.

As a result, Grupo Elektra reported EBITDA of Ps.5,578 million, 27% higher than the Ps.4,397 million of the previous year’s quarter. EBITDA margin was 21% for the period, three percentage points above the previous year. 

Operating profit was Ps.3,914 million this quarter, 5% above the Ps.3,720 million in the same period of 2018.

On a pro forma basis, without considering the application of the IFRS 16 standard in the first quarter of 2019, EBITDA for the period was Ps.4,747 million, 8% above the previous year. Meanwhile, pro forma operating income was Ps.3,781 million, 2% higher than the previous year.

The company reported net income of Ps.4,663 million, compared to net loss of Ps.1,291 million a year ago.

    1Q 2018   1Q 2019
  Change
   Ps.%
     
Consolidated revenue$24,007 $27,062$3,05513%
     
EBITDA  $4,397 $5,578$1,181 27%
     
Operating profit$3,720 $3,914$1945%
          
Net result  $(1,291) $4,663 $5,955 --- 
          
Net result per share$(5.67)$20.40$26.07--- 
     

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of March 31, 2018, Elektra* outstanding shares were 227.7 million and as of March 31, 2019, were 228.6 million.

Revenue

Consolidated revenue increased 13%, as a result of growth of this magnitude in both financial income and commercial sales.

The increase in financial revenue —to Ps.17,712 million, from Ps.15,698 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.9,350 million from Ps.8,310 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 a growing number of users, as well as solid increase in telephone 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, the 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.

Costs and Expenses

Consolidated costs for the quarter were Ps.9,976 million, from Ps.8,936 million in the previous year, as a result of a 16% increase in financial costs —which mainly reflects higher interest paid, in the context of solid growth in deposits— and a 9% increase in commercial costs, congruent with growth in merchandise revenues.

Sales, administration, and promotion expenses increased 8% to Ps.11,508 million, as a result of increases in personnel expenses —in the context of growing operations, both in the financial and commercial businesses— and increases in both operating and fee expenses.

EBITDA and net result

The EBITDA of the company grew 27% to Ps.5,578 million this quarter. Operating income increased 5% to Ps.3,914 million, from Ps.3,720 million for the same quarter of 2018.

The most significant change below EBITDA was a positive variation of Ps.7,346 million in other financial results —which reflects a 10% appreciation this quarter in the market value of underlying assets of financial instruments held by the company and does not imply cash flow— compared to a 27% decrease a year ago.

Congruent with the positive variation of other financial results, an increase of Ps.2,057 million in the provision of taxes was registered during the period.

Grupo Elektra reported net income of Ps.4,663 million, compared to a net loss of Ps.1,291 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 market 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.22,936 million as of March 31, 2019, compared to Ps.13,393 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 the last twelve months, 62 new Elektra stores were opened, 55 existing stores were remodeled, a new Italika motorcycle distribution centre was opened, 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.28,854 million, from Ps.14,795 million from previous year. As a result, the net cash balance excluding the amount of debt with cost as of March 31, 2019, was favorable at Ps.5,918 million, compared to a positive figure of Ps.1,402 million a year ago.

The company's equity increased 36% to Ps.88,555 million; while the ratio of stockholders' equity to total liabilities was 1.5 times at the close of the quarter.

       
  As of March
As of March
Change 
   31, 2018 31, 2019Ps.% 
       
 Cash & marketable fin. instr.$14,795$28,854$14,05995% 
 Inventories$9,760$9,731 $(29)0% 
 Other current assets$1,385$4,118$2,733 ---  
 Financial instruments$16,558$16,611$540% 
 Accounts receivable$19,489$36,557$17,06888% 
 Investment share$31,473$35,114$3,64112% 
 Fixed assets$5,357$7,485$2,12840% 
 Right of use asset  ---$7,932$7,932 ---  
 Other assets$761$1,386$62582% 
 Total assets$99,580$147,789$48,21048% 
       
 Short-term debt$8,741$4,182 $(4,559)-52% 
 Leasing  ---$979$979 ---  
 Other short-term liabilities$16,590$18,267$1,67710% 
 Long-term debt$4,652$18,754$14,102 ---  
 Leasing  ---$7,061$7,061 ---  
 Other long-term debt$4,616$9,991$5,375 ---  
 Total liabilities$34,599$59,234$24,63571% 
 Stakeholder´s equity$64,981$88,555$23,57436% 
 Liabilities and equity$99,580$147,789$48,21048% 
       
 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 March 31, 2019 grew 14% to Ps.103,236 million, from Ps.90,582 million for the previous year. The consolidated delinquency rate was 3.4% at the end of the period, compared to 4.8% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 18% to Ps.88,063 million, from Ps.74,875 million a year ago.

The delinquency rate for the bank at the end of the quarter was 2.9%, down from 4.6% for the previous year.  Despite the solid increase of the gross loan portfolio, the balance of the past due loans decreased to Ps.2,571 million, from Ps.3,457 million a year ago, as a result of firm strategies to further strengthen asset quality.

The past-due loan portfolio is reserved 2.7 times, which reflects a past-due portfolio of Ps.2,571 million, in comparison to allowance for credit risks of Ps.6,935 million in the balance sheet, as of March 31, 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 first quarter.

Grupo Elektra consolidated deposits were Ps.133,500 million, 19% higher than the Ps.112,658 million a year ago. Deposits of Banco Azteca Mexico were Ps.131,410 million, 19% higher than the Ps.110,397 million a year ago. 

As of March 31, 2019, the capitalization index of Banco Azteca Mexico was 16.89%.

Infrastructure

Grupo Elektra currently has 7,256 storefronts, compared to 7,344 units a year ago.

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

The company has 4,642 storefronts in Mexico, 1,965 in the United States, and 649 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.

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
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
            
            
   1Q18 1Q19 Change 
            
  Financial income  15,698 65%   17,712 65%   2,014 13% 
  Commercial income  8,310 35%   9,350 35%   1,040 13% 
  Income  24,007  100%   27,062  100%   3,055 13% 
            
  Financial cost  3,473 14%   4,015 15%   542 16% 
  Commercial cost  5,463 23%   5,961 22%   498 9% 
  Costs  8,936  37%   9,976  37%   1,040 12% 
            
  Gross income  15,071  63%   17,086  63%   2,015 13% 
            
  Sales, administration and promotion expenses  10,674  44%   11,508  43%   834 8% 
            
  EBITDA   4,397  18%   5,578  21%   1,181 27% 
            
  Depreciation and amortization  667 3%   962 4%   295 44% 
            
  Depreciation right of use asset  -  0%   698 3%   698 ---- 
            
  Other expense, net  11 0%   4 0%   (7)-64% 
            
  Operating income  3,720  15%   3,914  14%   194 5% 
            
  Comprehensive financial result:         
    Interest income  128 1%   308 1%   180 141% 
    Interest expense  (346)-1%   (838)-3%   (492)-100% 
    Foreign exchange loss, net  (834)-3%   (108)0%   727 87% 
    Other financial results, net  (4,357)-18%   2,990 11%   7,346 ---- 
     (5,409)-23%   2,351  9%   7,760 ---- 
            
  Participation  in  the  net  income of         
  CASA and other associated companies  (26)0%   26 0%   52 ---- 
            
  (Loss) income before income tax  (1,716)-7%   6,291  23%   8,007 ---- 
            
  Income tax  429 2%   (1,627)-6%   (2,057)---- 
            
  (Loss) income before discontinued operations  (1,286)-5%   4,664  17%   5,950 ---- 
            
  Result from discontinued operations   (5)0%   (1)0%   4 83% 
            
  Impairment of intangible assets  -  0%   -  0%   - ---- 
            
  Consolidated net (loss) income   (1,291)-5%   4,663  17%   5,955 ---- 
            

 

            
  GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES  
  CONSOLIDATED BALANCE SHEET
MILLIONS OF MEXICAN PESOS
  
   
           
          
       
  Commercial
Business
Financial
Business
Grupo
Elektra
 
 Commercial
Business
Financial
Business
Grupo
Elektra
 
   
      
    Change
            
  At March 31, 2018 At March 31, 2019  
            
 Cash and cash equivalents  5,075  17,678  22,753   5,497  19,624  25,120   2,368 10%
            
 Marketable financial instruments  9,720  52,291  62,012   23,357  64,595  87,952   25,940 42%
            
 Performing loan portfolio  -   58,428  58,428   -   69,411  69,411   10,983 19%
 Total past-due loans  -   4,097  4,097   -   3,284  3,284   (814)-20%
 Gross loan portfolio  -   62,526  62,526   -   72,694  72,694   10,169 16%
            
 Allowance for credit risks  -   8,235  8,235   -   7,551  7,551   (683)-8%
            
 Loan portfolio, net  -   54,291  54,291   -   65,143  65,143   10,852 20%
            
 Inventories  9,802  -  9,802   9,731  -  9,731   (71)-1%
            
 Other current assets   7,148  7,880  15,028   24,354  9,086  33,439   18,412 123%
            
 Total current assets  31,745   132,139   163,884    62,938   158,447   221,385    57,501 35%
            
 Financial instruments  16,558  295  16,852   16,611  261  16,872   20 0%
            
 Performing loan portfolio  -   27,790  27,790   -   30,293  30,293   2,503 9%
 Total past-due loans  -   266  266   -   248  248   (17)-6%
 Gross loan portfolio  -   28,056  28,056   -   30,542  30,542   2,486 9%
            
 Allowance for credit risks  -   757  757   -   1,019  1,019   262 35%
            
 Loan portfolio  -   27,299  27,299   -   29,523  29,523   2,224 8%
            
 Other non-current assets   1,729  656  2,385   3,859  188  4,047   1,662 70%
 Investment in shares  1,982  -   1,982   2,076  -   2,076   94 5%
 Property, furniture, equipment and          
   investment in stores, net  5,357  3,211  8,568   7,485  5,040  12,525   3,957 46%
 Intangible assets  694  6,228  6,922   617  6,639  7,256   335 5%
 Right of use asset  -   -   -    7,932  2,245  10,177   10,177 ----
 Other assets  761  283  1,044   1,386  455  1,841   797 76%
 TOTAL ASSETS  58,826   170,111   228,937    102,905   202,799   305,704    76,766 34%
            
            
 Demand and term deposits  -  112,658  112,658   -  133,500  133,500   20,842 19%
 Creditors from repurchase agreements  -  6,319  6,319   -  10,410  10,410   4,091 65%
 Short-term debt  8,741  58  8,799   4,182  143  4,325   (4,475)-51%
 Leasing  -  -   -    979  751  1,730   1,730 ----
 Short-term liabilities with cost  8,741  119,035  127,776   5,160  144,803  149,964   22,188 17%
            
 Suppliers and other short-term liabilities  14,477  9,529  24,006   15,886  10,626  26,512   2,506 10%
 Short-term liabilities without cost  14,477  9,529  24,006   15,886  10,626  26,512   2,506 10%
            
 Total short-term liabilities  23,218   128,564   151,782    21,046   155,429   176,475    24,693 16%
            
 Long-term debt  4,065  945  5,010   16,615  2,504  19,119   14,110 282%
 Leasing  -  -   -    7,061  1,458  8,519   8,519 ----
 Long-term liabilities with cost  4,065  945  5,010   23,676  3,962  27,638   22,629 452%
            
 Long-term liabilities without cost  4,616  2,549  7,165   9,991  3,044  13,035   5,870 82%
            
 Total long-term liabilities  8,681   3,494   12,175    33,667   7,006   40,673    28,499 234%
            
 TOTAL LIABILITIES  31,899   132,058   163,956    54,714   162,435   217,149    53,192 32%
            
 TOTAL STOCKHOLDERS' EQUITY  26,927   38,053   64,981    48,191   40,364   88,555    23,574 36%
            
            
 LIABILITIES + EQUITY  58,826   170,111   228,937    102,905   202,799   305,704    76,766 34%
            


  


        
  INFRASTRUCTURE   
          
  1Q18 1Q19 Change
          
 Points of sale in Mexico        
 Elektra   1,05614%   1,11815%   62 6%
 Salinas y Rocha   471%   441%   (3)-6%
 Banco Azteca  1,28718%   1,30918%   22 2%
 Freestanding branches  2,28231%   2,17130%   (111)-5%
 Total  4,672 64%   4,642 64%   (30)-1%
          
 Points of sale in Central and South America        
 Elektra   1642%   1702%   6 4%
 Banco Azteca  1642%   1702%   6 4%
 Freestanding branches  3164%   3094%   (7)-2%
 Total  644 9%   649 9%   5 1%
          
 Points of sale in North America        
 Advance America  2,02828%   1,96527%   (63)-3%
 Total  2,028 28%   1,965 27%   (63)-3%
          
 TOTAL  7,344 100%   7,256 100%   (88)-1%
          
          
          
          
 Floor space (m²)  1,597 100%   1,716 100%   119 7%
          
          
          
 Employees        
 Mexico  58,32980%   74,36683%   16,037 27%
 Central and South America  8,78912%   9,63111%   842 10%
 North America  5,6778%   5,5836%   (94)-2%
 Total employees  72,795 100%   89,580 100%   16,785 23%