—Net Sales increased 15% to Ps.3,253 million in the quarter—
—Solid expansion in Net Income to Ps.276 million—
—94% advance in the construction of the largest fiber optic network in Latin America—
MEXICO CITY, July 24, 2014 (GLOBE NEWSWIRE) -- TV Azteca, S.A.B. de C.V. (BMV:AZTECA) (Latibex:XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the second quarter of 2014.
Second quarter results
"Successful programming grids throughout the entire day generated strong demand for advertising space on Azteca, which was complemented this quarter with solid ad campaigns related to the World Cup soccer tournament in Brazil," commented Mario San Roman, CEO of Azteca. "Advertiser preferences resulted in a significant expansion in revenue, and determined a steady increase in EBITDA and higher growth in net income for the period."
Net sales for the quarter were Ps.3,253 million, 15% above the Ps.2,820 million for the same quarter of last year. Total costs and expenses were Ps.2,341 million, compared to Ps.1,973 million from the same period last year.
As a result, Azteca reported EBITDA of Ps.912 million, 8% higher than the Ps.847 million from last year; EBITDA margin for the quarter was 28%. The company registered a net profit of Ps.276 million, compared to a net loss of Ps.85 million for the same quarter of 2013.
| 2Q 2013 | 2Q 2014 | Change | ||
| Ps. | % | |||
| Net Sales | $2,820 | $3,253 | $433 | 15% |
| EBITDA | $847 | $912 | $65 | 8% |
| Net result | $(85) | $276 | $361 | -- |
| Net result per CPO | $(0.03) | $0.09 | $0.12 | -- |
| Figures in millions of pesos. | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| The number of CPOs outstanding as of June 30, 2013 was 2,984 million and as of June 30, 2014 was 2,986 million. | ||||
Net sales
Domestic ad sales were Ps.2,965 million in the quarter, 14% above the Ps.2,601 million for the same period of the previous year, in the context of superior preference of advertisers to reach their targeted market segments, both through the successful daily programming of Azteca, and the related broadcasting of the World Cup soccer tournament, with a professional sports analysis and vibrant content around the event, that attracted large audiences.
In addition, the company registered sales from Azteca America—the company's wholly-owned broadcast television network focused on the U.S. Hispanic market—of Ps.199 million this quarter, a 15% increase compared to Ps.173 million a year ago.
Content sales to other countries were Ps.68 million in the quarter, from Ps.46 million from the previous year. The revenue was directly related to the export of popular programs for global audiences, including Corazón en Condominio and Prohibido Amar to Asia, and Siempre Tuya Acapulco to Europe.
Costs and expenses
Costs and expenses increased 19% during the period, as a result of a 22% growth in production, programming and transmission costs —to Ps.1,947 million, from Ps.1,599 million in the same period a year ago— and a 5% increase in selling and administrative expenses —to Ps.394 million, compared to Ps.374 million in the same quarter of 2013.
The growth in costs mainly derives from exhibition rights and production and broadcasting costs related to the World Cup in Brazil, as well as the consolidation of the Atlas soccer team in the results of Azteca, and the strengthening of its player rooster. As was previously announced, the soccer team was acquired by the company on December 2013. The acquisition will give Azteca an important presence in one of Mexico's largest soccer markets.
The increase in costs also reflects the consolidation of Azteca Comunicaciones Colombia in the results of the company. Azteca anticipates that the commercialization of telecommunications services in Colombia will generate solid yields in the future.
The smaller increase in expenses compared to revenue is the result of strategies that generate additional operating efficiencies.
EBITDA and net result
EBITDA was Ps.912 million, 8% higher compared to Ps.847 million in the same period of the prior year.
The most significant change below EBITDA was a Ps.299 million improvement in the comprehensive financing result, mainly derived from a foreign exchange gain for the period compared to a loss in the same quarter a year ago.
The company registered net income of Ps.276 million for the quarter, compared to a net loss of Ps.85 million for the same period a year ago
Debt
As of June 30, 2014, Azteca's outstanding debt —excluding Ps.1,190 million debt due in 2069—was Ps.10,143 million. The cash balance of the company was Ps.5,792 million. As a result, net debt was Ps.4,351 million at the end of the quarter.
Debt to last twelve months (LTM) EBITDA ratio was 2.5 times, and net debt to LTM EBITDA was 1.1 times.
Fiber optics network in Colombia
During the quarter, Azteca made solid progress in the construction of the largest fiber optic network in Latin America. At the end of June, there were 17,940 kilometers already built across the Colombian territory, equivalent to 94% of the 19,000 kilometers of the project. The network currently covers 667 of the 753 municipalities planned.
As previously announced, Azteca is building a fiber optic network that will cover almost 80% of Colombia, and will commercialize telecommunications services in the country. The offer of telecommunications services will diversify and strengthen Azteca revenue sources, adding its operation to the existing broadcast television business.
Six months results
Net sales for the first six months of 2014 were Ps.5,793 million, 11% higher than the Ps.5,236 million for the same period of 2013. Total costs and expenses were Ps.4,354 million, from Ps.3,776 million for the same period of the previous year. The increase in costs mainly derives from exhibition rights and production and broadcasting costs related to the World Cup in Brazil, as well as the consolidation of Azteca Comunicaciones Colombia and the Atlas soccer team in the results of Azteca.
Azteca reported EBITDA of Ps.1,439 million, compared to Ps.1,460 million from the first half a year ago; EBITDA margin was 25% for the six-month period. The company recorded net income of Ps.99 million, compared to Ps.67 million for the same period of 2013.
| 6M 2013 | 6M 2014 | Change | ||
| Ps. | % | |||
| Net sales | $5,236 | $5,793 | $557 | 11% |
| EBITDA | $1,460 | $1,439 | $(21) | -1% |
| Net result | $67 | $99 | $32 | 48% |
| Net result per CPO | $0.02 | $0.03 | $0.01 | 48% |
| Figures in millions of pesos. | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| The number of CPOs outstanding as of June 30, 2013 was 2,984 million and as of June 30, 2014 was 2,986 million. | ||||
Company Profile
Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. Azteca affiliates include Azteca America Network, a broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers.
Azteca is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast-growing, and technologically advanced companies focused on creating shareholder value, contributing to build the middle class of the countries in which they operate, and improving society through excellence. 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. The companies include: Azteca (www.irtvazteca.com), Azteca America (www.aztecaamerica.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) and Grupo Iusacell (www.iusacell.com). Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. However, member companies share 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 forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Other risks that may affect Azteca and its subsidiaries are identified in documents sent to securities authorities.
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED RESULTS OF OPERATIONS | ||||||
| (Millions of Mexican pesos of June 30 of 2013 and 2014) | ||||||
| Second Quarter of : | ||||||
| 2013 | 2014 | |||||
| Change | ||||||
| Net revenue | Ps 2,820 | 100% | Ps 3,253 | 100% | Ps 433 | 15% |
| Programming, production and transmission costs | 1,599 | 57% | 1,947 | 60% | 348 | 22% |
| Selling and administrative expenses | 374 | 13% | 394 | 12% | 20 | 5% |
| Total costs and expenses | 1,973 | 70% | 2,341 | 72% | 368 | 19% |
| EBITDA | 847 | 30% | 912 | 28% | 65 | 8% |
| Depreciation and amortization | 144 | 177 | 33 | |||
| Other expense -Net | 150 | 111 | (39) | |||
| Operating profit | 553 | 20% | 624 | 19% | 71 | 13% |
| Equity in income from affiliates | 1 | (3) | (4) | |||
| Comprehensive financing result: | ||||||
| Interest expense | (224) | (243) | (18) | |||
| Other financing expense | (49) | (17) | 32 | |||
| Interest income | 45 | 46 | 1 | |||
| Exchange loss -Net | (227) | 58 | 286 | |||
| (455) | (155) | 299 | ||||
| Income before the following provision | 99 | 4% | 466 | 14% | 367 | 370% |
| Provision for income tax | (188) | (193) | (6) | |||
| Net income | Ps (89) | Ps 273 | Ps 361 | |||
| Non-controlling share in net profit | Ps (4) | Ps (4) | Ps (0) | |||
| Controlling share in net profit | Ps (85) | -3% | Ps 276 | 8% | Ps 361 | 425% |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED RESULTS OF OPERATIONS | ||||||
| (Millions of Mexican pesos of June 30 of 2013 and 2014) | ||||||
| Period ended June 30, | ||||||
| 2013 | 2014 | |||||
| Change | ||||||
| Net revenue | Ps 5,236 | 100% | Ps 5,793 | 100% | Ps 557 | 11% |
| Programming, production and transmission costs | 3,022 | 58% | 3,569 | 62% | 547 | 18% |
| Selling and administrative expenses | 754 | 14% | 785 | 14% | 31 | 4% |
| Total costs and expenses | 3,776 | 72% | 4,354 | 75% | 578 | 15% |
| EBITDA | 1,460 | 28% | 1,439 | 25% | (21) | -1% |
| Depreciation and amortization | 292 | 347 | 55 | |||
| Other expense -Net | 209 | 172 | (37) | |||
| Operating profit | 959 | 18% | 920 | 16% | (39) | -4% |
| Equity in income from affiliates | (9) | 9 | 18 | |||
| Comprehensive financing result: | ||||||
| Interest expense | (464) | (496) | (32) | |||
| Other financing expense | (60) | (39) | 22 | |||
| Interest income | 87 | 82 | (5) | |||
| Exchange Gain -Net | (20) | 54 | 74 | |||
| (459) | (399) | 60 | ||||
| Income before the following provision | 491 | 9% | 530 | 9% | 39 | 8% |
| Provision for income tax | (432) | (439) | (7) | |||
| Net income | Ps 59 | Ps 91 | Ps 32 | |||
| Non-controlling share in net profit | Ps (7) | Ps (8) | Ps (1) | |||
| Controlling share in net profit | Ps 67 | 1% | Ps 99 | 2% | Ps 32 | 48% |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||
| CONSOLIDATED BALANCE SHEETS | ||||
| (Millions of Mexican pesos of June 30 of 2013 and 2014) | ||||
| At June 30 | ||||
| 2013 | 2014 | |||
| Change | ||||
| Current assets: | ||||
| Cash and cash equivalents | Ps 6,010 | Ps 5,792 | Ps (218) | |
| Accounts receivable | 5,856 | 6,164 | 309 | |
| Other current assets | 2,990 | 3,329 | 339 | |
| Total current assets | 14,856 | 15,285 | 430 | 3% |
| Accounts receivable | 491 | 136 | (356) | |
| Exhibition rights | 2,328 | 2,268 | (60) | |
| Property, plant and equipment-Net | 3,411 | 3,582 | 171 | |
| Television concessions-Net | 7,721 | 7,763 | 42 | |
| Other assets | 1,885 | 4,045 | 2,160 | |
| Deferred income tax asset | 4,672 | 3,372 | (1,300) | |
| Total long term assets | 20,508 | 21,166 | 657 | 3% |
| Total assets | Ps 35,364 | Ps 36,451 | Ps 1,087 | 3% |
| Current liabilities: | ||||
| Short-term debt | Ps 667 | Ps -- | Ps (667) | |
| Other current liabilities | 2,638 | 3,968 | 1,330 | |
| Total current liabilities | 3,305 | 3,968 | 663 | 20% |
| Long-term debt: | ||||
| Structured Securities Certificates | 4,278 | -- | (4,278) | |
| Long-term debt | 3,836 | 10,143 | 6,307 | |
| Total long-term debt | 8,114 | 10,143 | 2,029 | |
| Other long term liabilities: | ||||
| Advertising advances | 6,951 | 7,187 | 236 | |
| American Tower Corporation (due 2069) | 1,560 | 1,190 | (370) | |
| Deferred income tax asset | 3,463 | 1,741 | (1,722) | |
| Total other long-term liabilities | 11,974 | 10,118 | (1,856) | -16% |
| Total liabilities | 23,393 | 24,229 | 836 | 4% |
| Total stockholders' equity | 11,971 | 12,222 | 251 | 2% |
| Total liabilities and equity | Ps 35,364 | Ps 36,451 | Ps 1,087 | 3% |