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Grupo Elektra Announces EBITDA of Ps.2,415 Million in 3Q14

—Consolidated Revenue Increased 7% to Ps.18,215 Million,
Supported by a 24% Increase in Commercial Business—

—14% Growth in Consolidated Deposits to Ps.86,701 Million
Generates Solid Perspectives in Financial Business—

MEXICO CITY, Oct. 23, 2014 (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, reported today its financial results for the third quarter and nine months of 2014.

Consolidated third quarter results

Consolidated revenue totaled Ps.18,215 million, 7% higher than the Ps.17,067 million of the same period last year. Costs and operating expenses were Ps.15,800 million, from Ps.14,404 million for the same period of 2013.

As a result, Grupo Elektra reported EBITDA of Ps.2,415 million, compared with Ps.2,664 million from the previous year's quarter; EBITDA margin was 13% this period.

The company reported net income of Ps.1,836 million, from a net income of Ps.672 million a year ago.

3Q 2013 3Q 2014 Change
Ps. %
Consolidated revenue $17,067 $18,215 $1,147 7%
EBITDA $2,664 $2,415 $(249) -9%
Net result $672 $1,836 $1,164 ---
Net result per share $2.83 $7.75 $4.92 ---
Figures in millions of pesos
As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 million.

Revenue

Consolidated revenue grew 7%, as a result of increases of 24% in commercial sales and 1% in financial revenue.

Commercial sales, of Ps.5,430 million from Ps.4,378 million last year, increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, which is offered by a highly trained sales force under the most competitive market conditions.

The growth of 1% in financial revenues to Ps.12,785 million, compared with Ps.12,690 million last year, is explained mainly by higher revenue from Advance America —the largest non-bank provider of cash advance services in the US— partially compensated by a decrease in revenue from Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 19% to Ps.8,070 million, from Ps.6,758 million from the previous year. The change mainly derives from a 21% increase in financial cost —derived from the creation of loan loss reserves— and an 18% increase in commercial cost.

Sales, administration and promotion expenses grew 1% to Ps.7,730 million. The increase was below the growth of consolidated revenues due to the implementation of strategies that generated operating efficiencies in the quarter.

EBITDA and net result

Consolidated EBITDA was Ps.2,415 million, compared to Ps.2,664 million a year ago.

The most significant change below EBITDA was an increase of Ps.2,186 million in other financial results, as a consequence of an improvement in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow–compared to last year.

Grupo Elektra reported net income of Ps.1,836 million, compared to net income of Ps.672 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca Latin America's consolidated gross portfolio as of September 30, 2014, was Ps.76,494 million, compared to Ps.77,576 million from the previous year. Consolidated delinquency rate was 8% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.61,656 million, compared to Ps.63,382 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8%. The non-performing loan portfolio is reserved 1.41 times. The average term of the credit portfolio for principal credit lines –consumer, personal loans and Tarjeta Azteca– was 61 weeks at the end of the third quarter.

The Advance America loan portfolio was Ps.4,598 million, 15% higher than the Ps.3,996 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.

Grupo Elektra consolidated deposits grew 14%, to Ps.86,701 million, compared to Ps.76,240 million a year ago. Deposits of Banco Azteca Mexico were Ps.80,802 million, 15% higher than the Ps.70,434 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits. The higher deposit base sets a strong foundation for future financial business growth.

As of September 30, 2014, the capitalization index of Banco Azteca Mexico was 15%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of September 30, 2014, was Ps.19,798 million, 12% below Ps.22,543 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,172 million of Banco Azteca Mexico this period.

Consolidated debt at the close of September 2014 was comprised of Ps.18,488 million of the commercial business, and Ps.1,310 million of the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,822 million at the end of the period; as a result, net debt for the commercial business was Ps.2,666 million.

Expansion

Grupo Elektra currently has 6,951 points of sale, 8% more than the 6,460 from a year ago; the change comes mainly from the addition of 312 Blockbuster stores in the period.

As previously announced, the company acquired in January 100% of the shares of Blockbuster Mexico, increasing the points of sale of Grupo Elektra's distribution network. The Blockbuster stores are located in 108 cities throughout the country, mainly in the B and C demographic areas, which will expand the customer base of the company.

In the Blockbuster stores, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the entertainment distribution network. The transition to the new formats has begun, which means costs and expenses, but will generate significant yields in the future.

Grupo Elektra has 3,882 points of sale in Mexico, 2,432 in the United States, and 637 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to clients; granting superior market positioning in the countries where it operates.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year was Ps.53,737 million, 4% higher than the Ps.51,769 million for the same period of 2013, boosted by 12% growth in the commercial business.

EBITDA was Ps.7,081 million, compared to Ps.7,594 million for the same period a year ago; the EBITDA margin in the first nine months of 2014 was 13%. The company registered consolidated net income of Ps.547 million, compared to a loss of Ps.1,034 million a year ago, mainly due an improvement this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to the prior year.

9M 2013 9M 2014 Change
Ps. %
Consolidated revenue $51,769 $53,737 $1,968 4%
EBITDA $7,594 $7,081 $(513) -7%
Net result $(1,034) $547 $1,581 ---
Net result per share $(4.36) $2.32 $6.68 ---
Figures in millions of pesos
As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 million.

Company Profile:

Grupo Elektra (www.grupoelektra.com.mx) 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 over 6,000 points of sale in Mexico, USA, Brazil, 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 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.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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
3Q13 3Q14 Change
Financial income 12,690 74% 12,785 70% 95 1%
Commercial income 4,378 26% 5,430 30% 1,052 24%
Income 17,067 100% 18,215 100% 1,147 7%
Financial cost 3,731 22% 4,502 25% 771 21%
Commercial cost 3,027 18% 3,568 20% 541 18%
Costs 6,758 40% 8,070 44% 1,312 19%
Gross income 10,309 60% 10,144 56% (165) -2%
Sales, administration and promotion expenses 7,646 45% 7,730 42% 84 1%
Depreciation and amortization 737 4% 705 4% (32) -4%
Operating expenses 8,383 49% 8,435 46% 52 1%
Operating income 1,927 11% 1,710 9% (217) -11%
EBITDA 2,664 16% 2,415 13% (249) -9%
Comprehensive financial result:
Interest income 17 0% 89 0% 72 ----
Interest expense (460) -3% (342) -2% 119 26%
Foreign exchange loss, net (65) 0% (72) 0% (6) -10%
Other financial results, net (1,043) -6% 1,143 6% 2,186 ----
(1,552) -9% 818 4% 2,370 ----
Other income (expense), net 9 0% (12) 0% (21) ----
Participation in the net income of CASA and other associated companies (23) 0% 62 0% 85 ----
Income before income tax 361 2% 2,578 14% 2,217 ----
Income tax (59) 0% (743) -4% (683) ----
Income before discontinued operations 302 2% 1,836 10% 1,534 ----
Result from discontinued operations 370 2% - 0% (370) ----
Consolidated net income 672 4% 1,836 10% 1,164 ----
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
9M13 9M14 Change
Financial income 37,258 72% 37,557 70% 299 1%
Commercial income 14,511 28% 16,181 30% 1,670 12%
Income 51,769 100% 53,737 100% 1,968 4%
Financial cost 10,280 20% 11,954 22% 1,674 16%
Commercial cost 10,108 20% 10,959 20% 851 8%
Costs 20,388 39% 22,913 43% 2,525 12%
Gross income 31,381 61% 30,824 57% (557) -2%
Sales, administration and promotion expenses 23,787 46% 23,743 44% (44) 0%
Depreciation and amortization 2,044 4% 2,038 4% (6) 0%
Operating expenses 25,830 50% 25,781 48% (49) 0%
Operating Income 5,550 11% 5,043 9% (507) -9%
EBITDA 7,594 15% 7,081 13% (513) -7%
Comprehensive financial result:
Interest income 278 1% 304 1% 26 9%
Interest expense (1,260) -2% (1,106) -2% 154 12%
Foreign exchange (loss) gain, net (243) 0% 45 0% 287 ----
Other financial results, net (6,586) -13% (3,405) -6% 3,181 48%
(7,810) -15% (4,162) -8% 3,648 47%
Other income (expense), net 15 0% (287) -1% (302) ----
Participation in the net income expense of CASA and other associated companies 32 0% 73 0% 41 ----
(Loss) income before income tax (2,213) -4% 667 1% 2,879 ----
Income tax 795 2% (119) 0% (915) ----
(Loss) income before discontinued operations (1,417) -3% 547 1% 1,965 ----
Result from discontinued operations 383 1% - 0% (383) ----
Consolidated net (loss) income (1,034) -2% 547 1% 1,581 ----
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 September 30, 2013 At September 30, 2014
Cash and cash equivalents 2,755 15,754 18,510 2,736 16,226 18,963 453 2%
Marketable financial instruments 22,461 15,891 38,352 13,086 29,509 42,595 4,243 11%
Performing loan portfolio - 52,330 52,330 - 52,597 52,597 267 1%
Total past-due loans - 5,453 5,453 - 5,819 5,819 366 7%
Gross loan portfolio - 57,783 57,783 - 58,417 58,417 634 1%
Allowance for credit risks - 8,128 8,128 - 8,901 8,901 773 10%
Loan portfolio, net - 49,655 49,655 - 49,515 49,515 (139) 0%
Inventories 5,901 5,901 6,249 6,249 348 6%
Other current assets 4,026 6,190 10,216 3,887 5,676 9,562 (654) -6%
Total current assets 35,142 87,491 122,634 25,958 100,927 126,884 4,251 3%
Financial instruments - - - 10,042 222 10,264 10,264 ----
Performing loan portfolio - 19,605 19,605 17,744 17,744 (1,861) -9%
Total past-due loans - 188 188 332 332 144 77%
Loan portfolio - 19,793 19,793 - 18,077 18,077 (1,716) -9%
Other non-current assets 4,728 2 4,730 3,100 0 3,101 (1,629) -34%
Investment in shares 3,923 - 3,923 4,394 4,394 471 12%
Property, furniture, equipment and investment in stores, net 4,552 2,873 7,425 4,645 2,821 7,467 41 1%
Intangible assets 625 6,865 7,490 628 6,707 7,334 (155) -2%
Other assets 688 209 897 703 628 1,331 435 48%
TOTAL ASSETS 49,658 117,233 166,891 49,471 129,381 178,852 11,961 7%
Demand and term deposits 76,240 76,240 86,701 86,701 10,461 14%
Creditors from repurchase agreements 2,430 2,430 3,817 3,817 1,387 57%
Short-term debt 3,725 2,325 6,051 2,244 161 2,405 (3,646) -60%
Short-term liabilities with cost 3,725 80,996 84,721 2,244 90,680 92,924 8,202 10%
Suppliers and other short-term liabilities 6,062 6,389 12,451 8,713 6,521 15,234 2,783 22%
Short-term liabilities without cost 6,062 6,389 12,451 8,713 6,521 15,234 2,783 22%
Total short-term liabilities 9,787 87,385 97,172 10,957 97,201 108,158 10,986 11%
Long-term debt 14,788 1,704 16,492 16,244 1,149 17,393 901 5%
Long-term liabilities with cost 14,788 1,704 16,492 16,244 1,149 17,393 901 5%
Long-term liabilities without cost 7,684 1,378 9,062 4,851 1,580 6,431 (2,631) -29%
Total long-term liabilities 22,472 3,082 25,554 21,095 2,729 23,824 (1,731) -7%
TOTAL LIABILITIES 32,259 90,467 122,726 32,051 99,930 131,982 9,255 8%
TOTAL STOCKHOLDERS' EQUITY 17,399 26,766 44,165 17,420 29,451 46,871 2,706 6%
LIABILITIES + EQUITY 49,658 117,233 166,891 49,471 129,381 178,852 11,961 7%
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
3Q13 3Q14 Change
Points of sale in Mexico
Elektra (1) 975 15% 998 14% 23 2%
Salinas y Rocha (1) 55 1% 55 1% - 0%
Freestanding branches 2,337 36% 2,517 36% 180 8%
Blockbuster - 0% 312 4% 312 100%
Total 3,367 52% 3,882 56% 515 15%
Points of sale in Central and South America
Elektra (1) 210 3% 215 3% 5 2%
Freestanding branches 418 6% 422 6% 4 1%
Total 628 10% 637 9% 9 1%
Points of sale in North America
Advance America 2,465 38% 2,432 35% (33) -1%
Total 2,465 38% 2,432 35% (33) -1%
TOTAL 6,460 100% 6,951 100% 491 8%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 837,424 52% 848,912 49% 11,487 1%
Elektra Central and South America 149,761 9% 151,891 9% 2,130 1%
Salinas y Rocha 58,995 4% 58,995 3% - 0%
Freestanding branches 239,343 15% 241,603 14% 2,260 1%
Advance America 337,745 21% 333,184 19% (4,561) -1%
Blockbuster - 0% 104,954 6% 104,954 100%
TOTAL 1,623,268 100% 1,739,539 100% 116,271 7%
Employees
Mexico 61,064 77% 61,676 77% 612 1%
Central and South America 12,071 15% 11,269 14% (802) -7%
North America 6,522 8% 6,947 9% 425 7%
Total employees 79,657 100% 79,892 100% 235 0%

CONTACT: 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 Grupo Salinas Tel. +52 (55) 1720 1313 ext. 36553 lpascoe@gruposalinas.com.mx Daniel McCosh Grupo Salinas Tel. +52 (55) 1720-0059 dmccosh@gruposalinas.com.mxSource:Grupo Elektra SAB de CV