—Net sales increased 12%, to Ps. 2,861 million—
—The company renovates its strategic focus and further strengthens
its competitive position in the Mexican media market—
MEXICO CITY, April 25, 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 first quarter of 2016.
First quarter results
"In the period we renewed the strategic focus of the company to show the best broadcast television content on our networks in Mexico, which will allow us to monetize large audiences and further strengthen our position in the domestic media market," said Benjamin Salinas, CEO of TV Azteca. "We will combine creativity with optimal profitability, so the productions, aside from being competitive, will follow strict financial criteria, and increasingly boost cash generation."
Net sales for the quarter were Ps.2,861 million, 12% higher than the Ps.2,545 million for the same quarter of last year. Total costs and expenses were Ps.2,451 million, compared to Ps.2,164 million for the same period last year.
As a result, TV Azteca reported EBITDA of Ps.410 million, 7% above the Ps.382 million from last year; EBITDA margin for the quarter was 14%. Operating profit grew 3% to Ps.114 million.
The company registered a net loss of Ps.554 million, compared to a net loss of Ps.676 million for the same quarter of 2015.
| 1Q 2015 | 1Q 2016 | Change | ||||||||||
Ps. | % | |||||||||||
| Net sales | $ | 2,545 | $ | 2,861 | $ | 316 | 12 | % | ||||
| EBITDA | $ | 382 | $ | 410 | $ | 28 | 7 | % | ||||
| Operating profit | $ | 110 | $ | 114 | $ | 4 | 3 | % | ||||
| Net result | $ | (676 | ) | $ | (554 | ) | $ | 122 | 18 | % | ||
| Net result per CPO | $ | (0.23 | ) | $ | (0.19 | ) | $ | 0.04 | 18 | % | ||
| Figures in millions of pesos. | ||||||||||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||||||||||
| The number of CPOs outstanding as of March 31, 2015 was 2,985 million and as of March 31, 2016 was 2,991 million. | ||||||||||||
Net sales
National advertising sales were Ps.2,067 million, compared to Ps.2,128 million a year ago.
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.328 million this quarter, a 16% increase compared to Ps.283 a year ago.
Content sales to other countries were Ps.29 million in the period, from Ps.53 million in the previous year; revenue for the quarter resulted from the commercialization of the shows La Isla and La Teniente in several countries in the Americas, and La Loba in Africa, as well as the sale of TV Azteca content to pay TV channels in the rest of the world.
Revenue from TV Azteca Guatemala and TV Azteca Honduras was Ps.12 million, in contrast with Ps.14 million for the previous year.
Sales from Azteca Comunicaciones Colombia —derived from telecommunications services through the fiber-optic network that the company operates in that country— were Ps.144 million, in comparison to Ps.67 million for the previous year.
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.281 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 during the quarter increased 13% as a result of a 20% growth in production, programming, transmission and telecommunication service costs —to Ps.2,131 million, from Ps.1,781 million in the same period a year ago— partially compensated by a 16% reduction in selling and administrative expenses —to Ps.320 million, compared to Ps.382 million for the same quarter of 2015.
The increase in costs in the period largely reflects the exchange-rate effect on the exhibition rights acquired from third-party content, US dollar denominated.
Azteca Comunicaciones Colombia reported costs of Ps.267 million in the quarter, compared to Ps.185 million for the previous year. The increase during the period includes rent paid for the transmission towers and space to operate telecommunications nodes, as well as the maintenance and operation of the network.
Costs related to Azteca Comunicaciones Peru were Ps.120 million in the quarter, mainly related to the construction of the fiber-optic network in that country. A year ago no costs were recorded in Peru because the construction of the network was at its initial stage.
The reduction in selling and administrative expenses reflects lesser expenses in operation, personnel, and services this quarter, as a result of strategies that strengthen the operational efficiency of the company.
EBITDA and net results
EBITDA was Ps.410 million, 7% higher in comparison to Ps.382 million for the same period of the prior year.
Operating profit increased 3% to Ps.114 million, from Ps.110 million.
The most significant change below EBITDA was an improvement in the exchange rate for Ps.272 million, due to appreciation of the peso against the US dollar this period, compared to depreciation a year ago.
The company registered a net loss of Ps.554 million for the quarter, compared to a net loss of Ps.676 million for the same period a year ago.
Debt
As of March 31, 2016, TV Azteca’s outstanding debt —excluding Ps.1,582 million of debt due in 2069—was Ps.13,630 million. The cash and cash equivalents balance of the company was Ps.2,414 million; as a result, net debt was Ps.11,216 million at the end of the quarter.
Renovation of the strategic focus
During the quarter, a renewed strategic approach and a new organizational structure were implemented in the company that will strengthen the position and operating efficiency of TV Azteca.
The company seeks to boost its positioning through competitive formats that optimally reach market segments of interest to advertisers. This will drive profitable growth through flexible alternative content generation that increases profitability and cash generation.
The new structure includes the creation of Estudio 13 and Estudio 7, which will procure top content from different broadcast television sources for TV Azteca networks, which will result in monetizing large audiences and increasing company profitability.
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 March 31, 2015 and 2016) | |||||||||||||||||||||
| First Quarter of : | |||||||||||||||||||||
| 2015 | 2016 | ||||||||||||||||||||
| Change | |||||||||||||||||||||
| Net revenue | Ps | 2,545 | 100 | % | Ps | 2,861 | 100 | % | Ps | 316 | 12 | % | |||||||||
| Programming, production and transmission costs | 1,781 | 70 | % | 2,131 | 74 | % | 350 | 20 | % | ||||||||||||
| Selling and administrative expenses | 382 | 15 | % | 320 | 11 | % | (62 | ) | -16 | % | |||||||||||
| Total costs and expenses | 2,164 | 85 | % | 2,451 | 86 | % | 288 | 13 | % | ||||||||||||
| EBITDA | 382 | 15 | % | 410 | 14 | % | 28 | 7 | % | ||||||||||||
| Depreciation and amortization | 178 | 209 | 31 | ||||||||||||||||||
| Other expense -Net | 93 | 87 | (7 | ) | |||||||||||||||||
| Operating profit | 110 | 4 | % | 114 | 4 | % | 3 | 3 | % | ||||||||||||
| Equity in income from affiliates | 5 | 4 | (1 | ) | |||||||||||||||||
| Comprehensive financing result: | |||||||||||||||||||||
| Interest expense | (297 | ) | (343 | ) | (46 | ) | |||||||||||||||
| Other financing expense | (13 | ) | (30 | ) | (17 | ) | |||||||||||||||
| Interest income | 33 | 24 | (9 | ) | |||||||||||||||||
| Exchange loss -Net | (260 | ) | 12 | 272 | |||||||||||||||||
| (538 | ) | (338 | ) | 199 | |||||||||||||||||
| Income before the following provision | (423 | ) | -17 | % | (221 | ) | -8 | % | 202 | 48 | % | ||||||||||
| Provision for income tax | (258 | ) | (339 | ) | (81 | ) | |||||||||||||||
| Net income | Ps | (681 | ) | Ps | (560 | ) | Ps | 121 | |||||||||||||
| Non-controlling share in net profit | Ps | (5 | ) | Ps | (7 | ) | Ps | (1 | ) | ||||||||||||
| Controlling share in net profit | Ps | (676 | ) | -27 | % | Ps | (554 | ) | -19 | % | Ps | 122 | 18 | % | |||||||
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (Millions of Mexican pesos of March 31, 2015 and 2016) | |||||||||||||
| At March 31 | |||||||||||||
| 2015 | 2016 | ||||||||||||
| Change | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | Ps | 5,422 | Ps | 2,414 | Ps | (3,007 | ) | ||||||
| Accounts receivable | 8,202 | 8,595 | 393 | ||||||||||
| Other current assets | 3,432 | 4,383 | 950 | ||||||||||
| Total current assets | 17,056 | 15,392 | (1,664 | ) | -10 | % | |||||||
| Accounts receivable | 300 | 85 | (215 | ) | |||||||||
| Exhibition rights | 2,551 | 2,548 | (3 | ) | |||||||||
| Property, plant and equipment-Net | 3,879 | 4,079 | 200 | ||||||||||
| Television concessions-Net | 9,432 | 9,930 | 498 | ||||||||||
| Other assets | 3,618 | 3,245 | (373 | ) | |||||||||
| Deferred income tax asset | 2,680 | 3,090 | 410 | ||||||||||
| Total long term assets | 22,460 | 22,977 | 517 | 2 | % | ||||||||
| Total assets | Ps | 39,516 | Ps | 38,369 | Ps | (1,147 | ) | -3 | % | ||||
| Current liabilities: | |||||||||||||
| Short-term debt | Ps | 1,145 | Ps | - | Ps | (1,145 | ) | ||||||
| Other current liabilities | 3,649 | 6,397 | 2,748 | ||||||||||
| Total current liabilities | 4,794 | 6,397 | 1,603 | 33 | % | ||||||||
| Long-term debt: | |||||||||||||
| Long-term debt | 12,011 | 13,630 | 1,619 | ||||||||||
| Total long-term debt | 12,011 | 13,630 | 1,619 | ||||||||||
| Other long term liabilities: | |||||||||||||
| Advertising advances | 8,479 | 8,407 | (72 | ) | |||||||||
| American Tower Corporation (due 2069) | 1,401 | 1,582 | 181 | ||||||||||
| Deferred income tax | 1,542 | 770 | (772 | ) | |||||||||
| Total other long-term liabilities | 11,422 | 10,759 | (663 | ) | -6 | % | |||||||
| Total liabilities | 28,227 | 30,786 | 2,559 | 9 | % | ||||||||
| Total stockholders' equity | 11,289 | 7,583 | (3,706 | ) | -33 | % | |||||||
| Total liabilities and equity | Ps | 39,516 | Ps | 38,369 | Ps | (1,147 | ) | -3 | % | ||||