—Emphasis on the production of competitive content in prime time
will translate into superior positioning in the Mexican advertising market—
—2015 was a year of great challenges; TV Azteca faces them
with a renewed administration, strong leadership and creativity—
MEXICO CITY, Feb. 24, 2016 (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 fourth quarter and full year 2015.
Fourth quarter results
"We are determined to focus on the generation of prime-time content that will captivate audiences and advertisers to successfully compete with better positioning in the Mexican media market," said Benjamin Salinas, CEO of TV Azteca. "During the quarter, we began developing innovative programming grids that surprise the extensive market of broadcast television, which together with alternatives for maximum production efficiency, will translate into solid generation of cash and a gradual improvement of our debt levels.”
Net sales for the quarter were Ps.4,148 million, 8% above to Ps.3,850 million for the same quarter of last year. Total costs and expenses were Ps.2,926 million, from Ps.2,551 million for the same period last year.
As a result, TV Azteca reported EBITDA of Ps.1,222 million, compared to Ps.1,299 million from last year; EBITDA margin for the quarter was 29%. The company registered a net loss of Ps.511 million, compared to a net profit of Ps.170 million for the same quarter of 2014.
| 4Q 2014 | 4Q 2015 | Change | ||||||||||
| Ps. | % | |||||||||||
| Net sales | $ | 3,850 | $ | 4,148 | $ | 297 | 8 | % | ||||
| EBITDA | $ | 1,299 | $ | 1,222 | $ | (78 | ) | -6 | % | |||
| Net result | $ | 170 | $ | (511 | ) | $ | (682 | ) | ---- | |||
| Net result per CPO | $ | 0.06 | $ | (0.17 | ) | $ | (0.23 | ) | ---- | |||
| Figures in millions of pesos. | ||||||||||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||||||||||
| The number of CPOs outstanding as of December 31, 2014 was 2,985 million and as of December 31, 2015 was 2,989 million. | ||||||||||||
Net sales
Domestic ad sales were Ps.3,279 million, compared to Ps.3,442 million from the previous year.
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.290 million this quarter, an 18% increase compared to the Ps.245 million a year ago.
Content sales to other countries were Ps.58 million in the quarter, from Ps.27 million for the previous year. The revenue was directly related to the export of the programs Caminos de Guanajuato, Tanto Amor and Lo Que Callamos las Mujeres in South America, as well as from the sale of TV Azteca’s pay TV channels to the rest of the world.
Revenue from Azteca Guatemala and Azteca Honduras was Ps.37 million, compared to Ps.20 million from the previous year.
Sales from Azteca Comunicaciones Colombia –derived from telecommunications revenues through the fiber-optic network operating in that country– were Ps.294 million, from Ps.116 million a year ago. Growth this period is largely related to the Colombian government reimbursements for payments made by the company for the construction of the last mile infrastructure.
Azteca Comunicaciones Peru —subsidiary of TV Azteca that is building the Red Dorsal Nacional de Fibra Óptica fiber optic network in that country— had revenue of Ps.190 million in reimbursements from the Peruvian government for payments made by the company for the construction of the network. As previously announced, the government provides the funds for both the construction and operation of the network through a 20-year concession and TV Azteca will commercialize the telecommunications services in 339 locations. The construction started in December 2014 and has an estimated 18-month construction period.
Costs and expenses
Costs and expenses increased 15% as a result of a 19% growth in production, programming, transmission and telecommunication service costs —to Ps.2,510 million, from Ps.2,105 million in the same period a year ago— partially compensated by a 7% reduction in selling and administrative expenses —to Ps.416 million, compared to Ps.446 million for the same quarter of 2014.
The increase in costs in the period largely reflects the effect of the exchange rate depreciation in the exhibition rights acquired from third-party content —US dollar-denominated— as well as the telecommunications operations of the company in Colombia.
Costs related to the operations in Colombia were Ps.338 million in the quarter, compared to Ps.189 million for the previous year. The increase during the period is largely due to the installation of last mile infrastructure, as previously agreed with the Colombian government.
Costs related to Azteca Comunicaciones Peru were Ps.58 million in the quarter, mainly related to the construction of the fiber-optic network in that country.
The reduction in selling and administrative expenses reflect lesser expenses in operation and services this quarter, as a result of strategies that strengthen the operative efficiency of the company.
"During the period we carried a firm control of expenses, and developed a strict cost budgeting in content generation that will maximize the contribution of each program to the results of the company," said Esteban Galíndez, CFO of TV Azteca. "This will strengthen the profitability and cash generation, and will result in an increasingly robust capital structure in TV Azteca."
EBITDA and net results
EBITDA was Ps.1,222 million, in comparison to Ps.1,299 million for the same period of the prior year.
The most significant change below EBITDA was an extraordinary charge —which does not imply cash flow— for Ps.532 million in the line of impairment of assets, as a result of lesser value for content transmission assets during the quarter.
The company registered a net loss of Ps.511 million for the quarter, compared to a net gain of Ps.170 million for the same period a year ago.
Debt
As of December 31, 2015, TV Azteca’s outstanding debt —excluding Ps.1,583 million of debt due in 2069—was Ps.13,629 million. The cash and cash equivalents balance of the company was Ps.3,721 million; as a result, net debt was Ps.9,908 million at the end of the quarter.
Competitive content for prime time
The company is prepared to offer competitive and innovative content to gain greater audience in prime time, where the largest proportion of advertising income is concentrated, and to better position itself in the Mexican media market.
For 2016, plans include the creation of original productions, co-productions and strategic alliances with independent producers and writers to generate competitive formats with a solid criteria of efficiency that attract a growing number of viewers, and optimally reach market segments of interest to advertisers, which will drive profitable growth.
Twelve month results
Net sales for 2015 totaled Ps.12,859 million, virtually unchanged, compared to Ps.12,921 million for the previous year. Total costs and expenses were Ps.10,325 million, from Ps.9,150 million in 2014. Higher costs resulted from the exchange rate depreciation effect in US dollar-denominated exhibition rights, and from the start of the operating stage of Azteca Comunicaciones Colombia.
TV Azteca reported EBITDA of Ps.2,534 million, compared to Ps.3,771 million from the previous year. EBITDA margin was 20% for 2015. The company recorded a net loss of Ps.2,634 million, compared to net profit of Ps.280 million for 2014.
2015 was a year of great challenges; TV Azteca faces them with a renewed administration, with strong leadership and creativity, to strengthen the company results.
| 2014 | 2015 | Change | ||||||||||
| Ps. | % | |||||||||||
| Net revenues | $ | 12,921 | $ | 12,859 | $ | (61 | ) | 0 | % | |||
| EBITDA | $ | 3,771 | $ | 2,534 | $ | (1,237 | ) | -33 | % | |||
| Net result | $ | 280 | $ | (2,634 | ) | $ | (2,913 | ) | ---- | |||
| Net result per CPO | $ | 0.09 | $ | (0.88 | ) | $ | (0.97 | ) | ---- | |||
| Figures in millions of pesos. | ||||||||||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||||||||||
| The number of CPOs outstanding as of December 31, 2014 was 2,985 million and as of December 31, 2015 was 2,989 million. | ||||||||||||
Company Profile
TV Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca Trece and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca US, a broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers.
TV 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 TV Azteca (www.tvazteca.com; www.irtvazteca.com), Azteca US (us.azteca.com), Grupo Elektra (www.elektra.com.mx: 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), Totalplay (www.totalplay.com.mx) and Enlace TP (enlacetp.mx). Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. However, the 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 Grupo Elektra 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 December 31 of 2014 and 2015) | |||||||||||||||||||||
| Fourth Quarter of : | |||||||||||||||||||||
| 2014 | 2015 | ||||||||||||||||||||
| Change | |||||||||||||||||||||
| Net revenue | Ps | 3,850 | 100 | % | Ps | 4,148 | 100 | % | Ps | 297 | 8 | % | |||||||||
| Programming, production and transmission costs | 2,105 | 55 | % | 2,510 | 61 | % | 405 | 19 | % | ||||||||||||
| Selling and administrative expenses | 446 | 12 | % | 416 | 10 | % | (30 | ) | -7 | % | |||||||||||
| Total costs and expenses | 2,551 | 66 | % | 2,926 | 71 | % | 375 | 15 | % | ||||||||||||
| EBITDA | 1,299 | 34 | % | 1,222 | 29 | % | (78 | ) | -6 | % | |||||||||||
| Depreciation and amortization | 170 | 367 | 197 | ||||||||||||||||||
| Other expense -Net | 134 | 128 | (6 | ) | |||||||||||||||||
| Operating profit | 995 | 26 | % | 727 | 18 | % | (268 | ) | -27 | % | |||||||||||
| Equity in income from affiliates | 6 | (4 | ) | (10 | ) | ||||||||||||||||
| Comprehensive financing result: | |||||||||||||||||||||
| Interest expense | (279 | ) | (329 | ) | (50 | ) | |||||||||||||||
| Other financing expense | (19 | ) | (123 | ) | (103 | ) | |||||||||||||||
| Interest income | 26 | 20 | (5 | ) | |||||||||||||||||
| Exchange loss -Net | (486 | ) | (171 | ) | 315 | ||||||||||||||||
| (759 | ) | (602 | ) | 156 | |||||||||||||||||
| Income before the following provision | 242 | 6 | % | 120 | 3 | % | (122 | ) | |||||||||||||
| Provision for income tax | (69 | ) | (96 | ) | (27 | ) | |||||||||||||||
| Profit (Loss) from continuing operations | 173 | 24 | (149 | ) | |||||||||||||||||
| Impairment of assets | - | (532 | ) | (532 | ) | ||||||||||||||||
| Net income | Ps | 173 | Ps | (508 | ) | Ps | (681 | ) | |||||||||||||
| Non-controlling share in net profit | Ps | 3 | Ps | 3 | Ps | 1 | |||||||||||||||
| Controlling share in net profit | Ps | 170 | 4 | % | Ps | (511 | ) | -12 | % | Ps | (682 | ) | |||||||||
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||||||||||||||
| CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||||||
| (Millions of Mexican pesos of December 31 of 2014 and 2015) | |||||||||||||||||||||
| Period ended December 31, | |||||||||||||||||||||
| 2014 | 2015 | ||||||||||||||||||||
| Change | |||||||||||||||||||||
| Net revenue | Ps | 12,921 | 100 | % | Ps | 12,859 | 100 | % | Ps | (61 | ) | 0 | % | ||||||||
| Programming, production and transmission costs | 7,508 | 58 | % | 8,720 | 68 | % | 1,211 | 16 | % | ||||||||||||
| Selling and administrative expenses | 1,641 | 13 | % | 1,605 | 12 | % | (36 | ) | -2 | % | |||||||||||
| Total costs and expenses | 9,150 | 71 | % | 10,325 | 80 | % | 1,175 | 13 | % | ||||||||||||
| EBITDA | 3,771 | 29 | % | 2,534 | 20 | % | (1,237 | ) | -33 | % | |||||||||||
| Depreciation and amortization | 691 | 910 | 219 | ||||||||||||||||||
| Other expense -Net | 410 | 496 | 87 | ||||||||||||||||||
| Operating profit | 2,671 | 21 | % | 1,128 | 9 | % | (1,543 | ) | -58 | % | |||||||||||
| Equity in income from affiliates | 23 | (13 | ) | (36 | ) | ||||||||||||||||
| Comprehensive financing result: | |||||||||||||||||||||
| Interest expense | (1,028 | ) | (1,256 | ) | (228 | ) | |||||||||||||||
| Other financing expense | (87 | ) | (178 | ) | (92 | ) | |||||||||||||||
| Interest income | 128 | 107 | (21 | ) | |||||||||||||||||
| Exchange Gain -Net | (783 | ) | (1,187 | ) | (404 | ) | |||||||||||||||
| (1,770 | ) | (2,514 | ) | (745 | ) | ||||||||||||||||
| Income before the following provision | 924 | 7 | % | (1,400 | ) | -11 | % | (2,324 | ) | ||||||||||||
| Provision for income tax | (654 | ) | (716 | ) | (62 | ) | |||||||||||||||
| Profit (Loss) from continuing operations | 270 | (2,116 | ) | (2,386 | ) | ||||||||||||||||
| Impairment of assets | - | (532 | ) | (532 | ) | ||||||||||||||||
| Net income | Ps | 270 | Ps | (2,648 | ) | Ps | (2,918 | ) | |||||||||||||
| Non-controlling share in net profit | Ps | (9 | ) | Ps | (14 | ) | Ps | (5 | ) | ||||||||||||
| Controlling share in net profit | Ps | 280 | 2 | % | Ps | (2,634 | ) | -20 | % | Ps | (2,913 | ) | |||||||||
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (Millions of Mexican pesos of December 31 of 2014 and 2015) | |||||||||||||
| At December 31 | |||||||||||||
| 2014 | 2015 | ||||||||||||
| Change | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | Ps | 5,529 | Ps | 3,721 | Ps | (1,808 | ) | ||||||
| Accounts receivable | 6,426 | 6,379 | (48 | ) | |||||||||
| Other current assets | 3,044 | 3,530 | 486 | ||||||||||
| Total current assets | 14,999 | 13,630 | (1,370 | ) | -9 | % | |||||||
| Accounts receivable | 71 | 165 | 95 | ||||||||||
| Exhibition rights | 2,703 | 2,382 | (321 | ) | |||||||||
| Property, plant and equipment-Net | 3,691 | 4,192 | 501 | ||||||||||
| Television concessions-Net | 9,323 | 9,934 | 611 | ||||||||||
| Other assets | 3,407 | 3,155 | (252 | ) | |||||||||
| Deferred income tax asset | 2,680 | 3,090 | 410 | ||||||||||
| Total long term assets | 21,875 | 22,918 | 1,044 | 5 | % | ||||||||
| Total assets | Ps | 36,874 | Ps | 36,548 | Ps | (326 | ) | -1 | % | ||||
| Current liabilities: | |||||||||||||
| Short-term debt | Ps | 1,106 | Ps | - | Ps | (1,106 | ) | ||||||
| Other current liabilities | 3,829 | 5,052 | 1,223 | ||||||||||
| Total current liabilities | 4,935 | 5,052 | 117 | 2 | % | ||||||||
| Long-term debt: | |||||||||||||
| Long-term debt | 11,581 | 13,629 | 2,048 | ||||||||||
| Total long-term debt | 11,581 | 13,629 | 2,048 | ||||||||||
| Other long term liabilities: | |||||||||||||
| American Tower Corporation (due 2069) | 1,353 | 1,583 | 230 | ||||||||||
| Deferred income tax | 1,511 | 910 | (601 | ) | |||||||||
| Total other long-term liabilities | 2,864 | 2,493 | (371 | ) | -13 | % | |||||||
| Total liabilities | 19,380 | 21,174 | 1,794 | 9 | % | ||||||||
| Advertising advances | 5,344 | 6,859 | 1,515 | 28 | % | ||||||||
| Total stockholders' equity | 12,150 | 8,515 | (3,635 | ) | -30 | % | |||||||
| Total liabilities and equity | Ps | 36,874 | Ps | 36,548 | Ps | (326 | ) | -1 | % | ||||