—11% Growth in Operating Profit to Ps.755 Million—
—Net Sales Increase 9% to Ps.3,277 Million—
—Solid Progress in the Construction of the Largest Fiber Optic Network in Latin America —
MEXICO CITY, Oct. 23, 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 third quarter and for the first nine months of 2014.
Third quarter results
"The popularity of our content, in conjunction with the marketing of the final phase of World Cup Soccer in Brazil, and comprehensive services for market positioning of client's products, boosted Azteca net sales, and created higher EBITDA levels this period," said Mario San Roman, CEO of Azteca.
Net sales for the quarter were Ps.3,277 million, 9% above the Ps.3,016 million of the same period last year. Total costs and expenses were Ps.2,245 million compared to Ps.2,044 million of the previous year.
As a result, Azteca reported EBITDA of Ps.1,032 million, 6% higher than the Ps.971 million from last year; EBITDA margin for the quarter was 31%. The company registered a net profit of Ps.11 million, from a net profit of Ps.330 million for the same quarter of 2013.
| 3Q 2013 | 3Q 2014 | Change | ||
| Ps. | % | |||
| Net sales | $ 3,016 | $ 3,277 | $ 262 | 9% |
| EBITDA | $ 971 | $ 1,032 | $ 61 | 6% |
| Net result | $ 330 | $ 11 | $ (319) | --- |
| Net result per CPO | $ 0.11 | $ 0.004 | $ (0.11) | --- |
| Figures in millions of pesos. | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| The number of CPOs outstanding as of September 30, 2013 was 2,987 million and as of September 30, 2014 was 2,988 million. | ||||
Net sales
Sales in Mexico had a solid performance in the context of superior preference of advertisers to reach their targeted market segments through the daily programming of Azteca and the company's services for product positioning, together with the transmission of the final stage of World Cup Soccer.
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.243 million this quarter, an 8% increase compared to Ps.224 million a year ago.
Content sales to other countries were Ps.91 million in the period, from Ps.43 million in the previous year; revenue for the quarter resulted from programs that attract global audiences such as Pasión Morena in Africa, Emperatriz in Asia and Vivir a Destiempo in Latin America, as well as the sale of Azteca pay TV channels in the rest of the world.
Costs and expenses
Costs and expenses grew 10% during the period, as a result of a 11% increase in production, programming and transmission costs —to Ps.1,835 million from Ps.1,659 million in the same period a year ago— and a 7% increase in selling and administrative expenses —to Ps.410 million, compared to Ps.385 million in the same quarter of 2013.
The growth in costs mainly derives from exhibition rights and production and broadcasting costs related to the final stage of the World Cup in Brazil, as well as the consolidation of the Atlas soccer team in the results of Azteca. As was previously announced, the soccer team was acquired by the company in 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.1,032 million, 6% higher than the Ps.971 million of the same period of the prior year.
The most significant change below EBITDA was a Ps.394 million increase in the comprehensive financing cost, mainly derived from a larger foreign exchange loss this quarter.
The company registered net income of Ps.11 million for the quarter, compared to a net income of Ps.330 million for the same period a year ago
Debt
As of September 30, 2014, Azteca's outstanding debt —excluding Ps.1,233 million debt due in 2069—was Ps.11,531 million, 23% below the Ps.14,937 million of the previous year.
The cash and cash equivalents balance of the company was Ps.5,522 million. As a result, net debt was Ps.6,009 million at the end of the quarter.
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 September, there were 19,500 kilometers already built across Colombian territory, equivalent to 95% of the 20,500 kilometers of the project. The network currently covers 752 of the 788 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.
Given the social value of the project, the Colombian government recently asked Azteca to increase the length of the network to 20,500 kilometers, from the original 19,000 kilometers planned, and the number of municipalities covered to 788, compared to 753 for the initial project. Consistent with this, the government increased the resources granted to Azteca for the construction of the network by US$10 million to approximately US$245 million.
Nine month results
Net sales for the first nine months of 2014 were Ps.9,071 million, 10% higher than the Ps.8,252 million for the same period of 2013. Total costs and expenses were Ps.6,599 million, from Ps.5,821 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.2,472 million, 2% higher than the Ps.2,432 million from the first nine months a year ago; EBITDA margin was 27% for the nine-month period. The company registered net income of Ps.109 million, compared to Ps.397 million for the same period of 2013.
| 9M 2013 | 9M 2014 | Change | ||
| Ps. | % | |||
| Net Sales | $ 8,252 | $ 9,071 | $ 818 | 10% |
| EBITDA | $ 2,432 | $ 2,472 | $ 40 | 2% |
| Net result | $ 397 | $ 109 | $ (287) | -72% |
| Net result por CPO | $ 0.13 | $ 0.04 | $ (0.09) | -72% |
| Figures in millions of pesos. | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| The number of CPOs outstanding as of September 30, 2013 was 2,987 million and as of September 30, 2014 was 2,988 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 September 30 of 2013 and 2014) | ||||||
| Third Quarter of : | ||||||
| 2013 | 2014 | |||||
| Change | ||||||
| Net revenue | Ps 3,016 | 100% | Ps 3,277 | 100% | Ps 262 | 9% |
| Programming, production and transmission costs | 1,659 | 55% | 1,835 | 56% | 175 | 11% |
| Selling and administrative expenses | 385 | 13% | 410 | 13% | 25 | 7% |
| Total costs and expenses | 2,044 | 68% | 2,245 | 69% | 201 | 10% |
| EBITDA | 971 | 32% | 1,032 | 31% | 61 | 6% |
| Depreciation and amortization | 154 | 173 | 19 | |||
| Other expense -Net | 136 | 104 | (32) | |||
| Operating profit | 682 | 23% | 755 | 23% | 73 | 11% |
| Equity in income from affiliates | 2 | 8 | 6 | |||
| Comprehensive financing result: | ||||||
| Interest expense | (237) | (253) | (16) | |||
| Other financing expense | (4) | (29) | (25) | |||
| Interest income | 32 | 21 | (11) | |||
| Exchange loss -Net | (9) | (351) | (342) | |||
| (218) | (612) | (394) | ||||
| Income before the following provision | 466 | 15% | 151 | 5% | (314) | -68% |
| Provision for income tax | (140) | (145) | (5) | |||
| Net income | Ps 326 | Ps 6 | Ps (320) | |||
| Non-controlling share in net profit | Ps (4) | Ps (4) | Ps (0) | |||
| Controlling share in net profit | Ps 330 | 11% | Ps 11 | 0% | Ps (319) | -97% |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED RESULTS OF OPERATIONS | ||||||
| (Millions of Mexican pesos of September 30 of 2013 and 2014) | ||||||
| Period ended September 30, | ||||||
| 2013 | 2014 | |||||
| Change | ||||||
| Net revenue | Ps 8,252 | 100% | Ps 9,071 | 100% | Ps 818 | 10% |
| Programming, production and transmission costs | 4,682 | 57% | 5,404 | 60% | 722 | 15% |
| Selling and administrative expenses | 1,139 | 14% | 1,195 | 13% | 56 | 5% |
| Total costs and expenses | 5,821 | 71% | 6,599 | 73% | 778 | 13% |
| EBITDA | 2,432 | 29% | 2,472 | 27% | 40 | 2% |
| Depreciation and amortization | 446 | 521 | 74 | |||
| Other expense -Net | 345 | 275 | (69) | |||
| Operating profit | 1,641 | 20% | 1,676 | 18% | 35 | 2% |
| Equity in income from affiliates | (7) | 17 | 24 | |||
| Comprehensive financing result: | ||||||
| Interest expense | (702) | (750) | (48) | |||
| Other financing expense | (65) | (67) | (3) | |||
| Interest income | 119 | 103 | (16) | |||
| Exchange Gain -Net | (29) | (297) | (268) | |||
| (677) | (1,011) | (334) | ||||
| Income before the following provision | 957 | 12% | 682 | 8% | (275) | -29% |
| Provision for income tax | (572) | (584) | (13) | |||
| Net income | Ps 385 | Ps 97 | Ps (288) | |||
| Non-controlling share in net profit | Ps (11) | Ps (12) | Ps (1) | |||
| Controlling share in net profit | Ps 397 | 5% | Ps 109 | 1% | Ps (287) | -72% |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||
| CONSOLIDATED BALANCE SHEETS | ||||
| (Millions of Mexican pesos of September 30 of 2013 and 2014) | ||||
| At September 30 | ||||
| 2013 | 2014 | |||
| Change | ||||
| Current assets: | ||||
| Cash and cash equivalents | Ps 10,858 | Ps 5,522 | Ps (5,336) | |
| Accounts receivable | 6,031 | 6,222 | 191 | |
| Other current assets | 3,483 | 2,863 | (620) | |
| Total current assets | 20,372 | 14,607 | (5,765) | -28% |
| Accounts receivable | 352 | 194 | (158) | |
| Exhibition rights | 2,401 | 2,619 | 218 | |
| Property, plant and equipment-Net | 3,389 | 3,544 | 155 | |
| Television concessions-Net | 7,760 | 7,763 | 3 | |
| Other assets | 1,833 | 4,385 | 2,552 | |
| Deferred income tax asset | 4,672 | 3,372 | (1,300) | |
| Total long term assets | 20,407 | 21,877 | 1,470 | 7% |
| Total assets | Ps 40,779 | Ps 36,484 | Ps (4,295) | -11% |
| Current liabilities: | ||||
| Short-term debt | Ps 667 | Ps 1,007 | Ps 340 | |
| Other current liabilities | 3,328 | 4,365 | 1,037 | |
| Total current liabilities | 3,995 | 5,372 | 1,377 | 34% |
| Long-term debt: | ||||
| Structured Securities Certificates | 4,111 | -- | (4,111) | |
| Long-term debt | 10,159 | 10,524 | 365 | |
| Total long-term debt | 14,270 | 10,524 | (3,746) | |
| Other long term liabilities: | ||||
| Advertising advances | 5,409 | 5,392 | (17) | |
| American Tower Corporation (due 2069) | 1,558 | 1,233 | (325) | |
| Deferred income tax asset | 3,463 | 1,728 | (1,735) | |
| Total other long-term liabilities | 10,430 | 8,353 | (2,077) | -20% |
| Total liabilities | 28,695 | 24,249 | (4,446) | -15% |
| Total stockholders' equity | 12,084 | 12,235 | 151 | 1% |
| Total liabilities and equity | Ps 40,779 | Ps 36,484 | Ps (4295) | -11% |