—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 | $3,055 | 13 | % | ||||
| EBITDA | $4,397 | $5,578 | $1,181 | 27 | % | ||||
| Operating profit | $3,720 | $3,914 | $194 | 5 | % | ||||
| 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, 2019 | Ps. | % | |||||||
| Cash & marketable fin. instr. | $14,795 | $28,854 | $14,059 | 95 | % | |||||
| Inventories | $9,760 | $9,731 | $(29) | 0 | % | |||||
| Other current assets | $1,385 | $4,118 | $2,733 | --- | ||||||
| Financial instruments | $16,558 | $16,611 | $54 | 0 | % | |||||
| Accounts receivable | $19,489 | $36,557 | $17,068 | 88 | % | |||||
| Investment share | $31,473 | $35,114 | $3,641 | 12 | % | |||||
| Fixed assets | $5,357 | $7,485 | $2,128 | 40 | % | |||||
| Right of use asset | --- | $7,932 | $7,932 | --- | ||||||
| Other assets | $761 | $1,386 | $625 | 82 | % | |||||
| Total assets | $99,580 | $147,789 | $48,210 | 48 | % | |||||
| Short-term debt | $8,741 | $4,182 | $(4,559) | -52 | % | |||||
| Leasing | --- | $979 | $979 | --- | ||||||
| Other short-term liabilities | $16,590 | $18,267 | $1,677 | 10 | % | |||||
| 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 | $24,635 | 71 | % | |||||
| Stakeholder´s equity | $64,981 | $88,555 | $23,574 | 36 | % | |||||
| Liabilities and equity | $99,580 | $147,789 | $48,210 | 48 | % | |||||
| 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 | 1,056 | 14 | % | 1,118 | 15 | % | 62 | 6 | % | ||||
| Salinas y Rocha | 47 | 1 | % | 44 | 1 | % | (3 | ) | -6 | % | |||
| Banco Azteca | 1,287 | 18 | % | 1,309 | 18 | % | 22 | 2 | % | ||||
| Freestanding branches | 2,282 | 31 | % | 2,171 | 30 | % | (111 | ) | -5 | % | |||
| Total | 4,672 | 64 | % | 4,642 | 64 | % | (30 | ) | -1 | % | |||
| Points of sale in Central and South America | |||||||||||||
| Elektra | 164 | 2 | % | 170 | 2 | % | 6 | 4 | % | ||||
| Banco Azteca | 164 | 2 | % | 170 | 2 | % | 6 | 4 | % | ||||
| Freestanding branches | 316 | 4 | % | 309 | 4 | % | (7 | ) | -2 | % | |||
| Total | 644 | 9 | % | 649 | 9 | % | 5 | 1 | % | ||||
| Points of sale in North America | |||||||||||||
| Advance America | 2,028 | 28 | % | 1,965 | 27 | % | (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 | 58,329 | 80 | % | 74,366 | 83 | % | 16,037 | 27 | % | ||||
| Central and South America | 8,789 | 12 | % | 9,631 | 11 | % | 842 | 10 | % | ||||
| North America | 5,677 | 8 | % | 5,583 | 6 | % | (94 | ) | -2 | % | |||
| Total employees | 72,795 | 100 | % | 89,580 | 100 | % | 16,785 | 23 | % | ||||