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Grupo Elektra Announces 7% Increase in EBITDA to Ps.2,298 Million in 4Q14

—Consolidated revenue increases 9% to Ps.20,510 million, supported by a 29% solid expansion of the commercial business—

—19% growth in consolidated deposits to Ps.93,147 million generates solid perspectives in the financial business—

—Grupo Elektra surpasses 7,000 points of sale milestone in eight countries—

MEXICO CITY, Feb. 24, 2015 (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 fourth quarter, and 2014.

Consolidated fourth quarter results

Consolidated revenue totaled Ps.20,510 million, 9% higher than the Ps.18,881 million of the same period last year. Costs and operating expenses were Ps.18,212 million, from Ps.16,732 million for the same period of 2013.

As a result, Grupo Elektra reported EBITDA of Ps.2,298 million, 7% higher than the Ps.2,150 million of the previous year's quarter; EBITDA margin was 11% this period, same as the previous year.

The company reported net income of Ps.6,785 million, from net income of Ps.1,863 million a year ago.

4Q 2013 4Q 2014 Change
Ps. %
Consolidated revenue $18,881 $20,510 $1,629 9%
EBITDA $2,150 $2,298 $149 7%
Net result $1,863 $6,785 $4,923 --
Net result per share $7.85 $28.7 $20.83 --
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 million.

Revenue

Consolidated revenue grew 9%, as a result of an increase of 29% in commercial sales, together with largely unchanged financial revenues.

Commercial sales —of Ps.7,285 million from Ps.5,627 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, as well as solid marketing campaigns for the higher seasonal demand towards year-end.

Financial revenues, of Ps.13,225 million in the quarter, were stable compared to previous year, mainly as a combined result of higher revenue from Advance America —the largest non-bank provider of cash advance services in the US— and a decrease in revenue from Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 13% to Ps.9,993 million, from Ps.8,856 million from the previous year. The change mainly derives from a 31% increase in commercial cost —in line with the performance of commercial sales— and a 3% reduction in financial cost, resulting from lower interests paid.

Sales, administration and promotion expenses grew 4% to Ps.8,219 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.2,298 million, compared to Ps.2,150 million a year ago.

The most significant change below EBITDA was a positive variation of Ps.5,899 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.

The other expense line grew Ps.529 million this quarter, due mainly to non-recurring charges coming from assets deterioration.

Grupo Elektra reported net income of Ps.6,785 million, compared to net income of Ps.1,863 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 December 31, 2014, was Ps.75,901 million, compared to Ps.77,103 million from the previous year. Consolidated delinquency rate was 9% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.60,120 million, compared to Ps.62,281 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 9.3%. The non-performing loan portfolio is reserved 1.32 times. The average term of the credit portfolio for principal credit lines —consumer, personal loans and Tarjeta Azteca— was 54 weeks at the end of the fourth quarter.

The Advance America loan portfolio was Ps.5,002 million, 20% higher than the Ps.4,174 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 19%, to Ps.93,147 million, compared to Ps.78,559 million a year ago. Deposits of Banco Azteca Mexico were Ps.87,574 million, 18% higher than the Ps.73,968 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 December 31, 2014, the capitalization index of Banco Azteca Mexico was 14.9%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of December 31, 2014, was Ps.18,940 million, 16% below the Ps.22,673 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,772 million for Banco Azteca Mexico this period.

Consolidated debt at the end of December 2014 was comprised of Ps.17,442 million for the commercial business, and Ps.1,498 million for the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.19,743 million at the end of the period; as a result, that division has a positive net cash balance —excluding the debt with cost amount— of Ps.2,301 million.

Expansion

Grupo Elektra currently has 7,034 points of sale, 9% more than the 6,479 from a year ago; the change comes mainly from the addition of 293 Blockbuster stores in the period.

As previously announced, the company acquired in January 2014, 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 3,987 points of sale in Mexico, 2,414 in the United States, and 633 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.

Appointment in Banco Azteca

In January, the appointment of Alejandro Valenzuela was announced as CEO of Banco Azteca. Mr. Valenzuela has over 20 years of experience in the financial industry in Mexico, both in the public and private sectors. He was CEO of Grupo Financiero Banorte, and previously, he was Director of International Relations at Banco de Mexico and held strategic positions in the Finance Ministry.

Mr. Valenzuela plans to offer more and better world-class financial services and generate important synergies with the commercial division of Grupo Elektra, which will further drive the continued well-being of millions of families and the progress of businesses in more market segments in Mexico and Latin America.

Alejandro Valenzuela replaces Luis Niño de Rivera, who will become Vice Chairman of Banco Azteca.

Twelve months consolidated results

Total consolidated revenue in 2014 was Ps.74,082 million, 5% higher than the Ps.70,423 million for 2013, as a result of a 17% and 1% growth in the commercial and financial divisions, respectively.

EBITDA was Ps.9,484 million, compared to Ps.9,882 million for the previous year; the EBITDA margin for the year was 13%. The company registered net income of Ps.7,333 million, compared to a net result of Ps.829 million in 2013, mainly due to 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.

2013 2014 Change
Ps. %
Consolidated revenue $70,423 $74,082 $3,659 5%
EBITDA $9,882 $9,484 $(398) -4%
Net result $829 $7,333 $6,504 --
Net result per share $3.49 $31.02 $27.53 --
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 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), Totalplay (www.totalplay.com.mx) and Enlace TPE (www.enlacetpe.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
4Q13 4Q14 Change
Financial income 13,254 70% 13,225 64% (30) 0%
Commercial income 5,627 30% 7,285 36% 1,658 29%
Income 18,881 100% 20,510 100% 1,629 9%
Financial cost 4,802 25% 4,681 23% (121) -3%
Commercial cost 4,054 21% 5,312 26% 1,257 31%
Costs 8,856 47% 9,993 49% 1,137 13%
Gross income 10,025 53% 10,517 51% 492 5%
Sales, administration and promotion expenses 7,876 42% 8,219 40% 343 4%
Depreciation and amortization 875 5% 800 4% (75) -9%
Operating expenses 8,750 46% 9,018 44% 268 3%
EBITDA 2,150 11% 2,298 11% 149 7%
Other expense, net (42) 0% (572) -3% (529) --
Operating income 1,233 7% 927 5% (305) -25%
Comprehensive financial result:
Interest income 173 1% 176 1% 3 2%
Interest expense (365) -2% (391) -2% (25) -7%
Foreign exchange gain, net 49 0% 353 2% 304 --
Other financial results, net 1,472 8% 7,371 36% 5,899 --
1,329 7% 7,510 37% 6,181 --
Participation in the net income of
CASA and other associated companies 258 1% 53 0% (204) -79%
Income before income tax 2,819 15% 8,490 41% 5,671 201%
Income tax (866) -5% (1,496) -7% (630) -73%
Income before discontinued operations 1,953 10% 6,994 34% 5,041 --
Result from discontinued operations (90) 0% (208) -1% (118) -131%
Consolidated net income 1,863 10% 6,785 33% 4,923 --
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
12M13 12M14 Change
Financial income 50,512 72% 50,781 69% 269 1%
Commercial income 19,911 28% 23,300 31% 3,390 17%
Income 70,423 100% 74,082 100% 3,659 5%
Financial cost 15,082 21% 16,635 22% 1,553 10%
Commercial cost 13,968 20% 16,109 22% 2,141 15%
Costs 29,050 41% 32,744 44% 3,694 13%
Gross income 41,373 59% 41,337 56% (35) 0%
Sales, administration and promotion expenses 31,490 45% 31,853 43% 362 1%
Depreciation and amortization 2,894 4% 2,829 4% (65) -2%
Operating expenses 34,385 49% 34,682 47% 297 1%
EBITDA 9,882 14% 9,484 13% (398) -4%
Other expense, net (37) 0% (867) -1% (830) --
Operating Income 6,951 10% 5,789 8% (1,162) -17%
Comprehensive financial result:
Interest income 451 1% 481 1% 29 7%
Interest expense (1,625) -2% (1,497) -2% 128 8%
Foreign exchange (loss) gain, net (194) 0% 397 1% 591 --
Other financial results, net (5,114) -7% 3,966 5% 9,080 178%
(6,481) -9% 3,347 5% 9,828 152%
Participation in the net income expense of
CASA and other associated companies 289 0% 126 0% (163) -56%
Income before income tax 759 1% 9,262 13% 8,503 --
Income tax (70) 0% (1,616) -2% (1,545) --
Income before discontinued operations 689 1% 7,647 10% 6,958 --
Result from discontinued operations 140 0% (314) 0% (454) --
Consolidated net income 829 1% 7,333 10% 6,504 --
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 December 31, 2013 At December 31, 2014
Cash and cash equivalents 3,302 16,508 19,810 3,810 19,306 23,116 3,306 17%
Marketable financial instruments 13,813 20,564 34,377 15,933 32,915 48,848 14,471 42%
Performing loan portfolio -- 51,568 51,568 -- 52,298 52,298 730 1%
Total past-due loans -- 6,027 6,027 -- 6,647 6,647 620 10%
Gross loan portfolio -- 57,595 57,595 -- 58,945 58,945 1,350 2%
Allowance for credit risks -- 8,643 8,643 -- 9,283 9,283 640 7%
Loan portfolio, net -- 48,952 48,952 -- 49,662 49,662 710 1%
Inventories 6,043 -- 6,043 5,906 -- 5,906 (137) -2%
Other current assets 899 8,025 8,924 130 11,039 11,170 2,245 25%
Total current assets 24,058 94,050 118,107 25,779 112,923 138,702 20,595 17%
Financial instruments 10,522 214 10,736 10,647 323 10,970 234 2%
Performing loan portfolio -- 19,293 19,293 -- 16,769 16,769 (2,524) -13%
Total past-due loans -- 215 215 -- 187 187 (28) -13%
Loan portfolio -- 19,508 19,508 -- 16,956 16,956 (2,552) -13%
Other non-current assets 6,001 2 6,003 8,398 -- 8,398 2,395 40%
Investment in shares 4,317 -- 4,317 4,348 -- 4,348 31 1%
Property, furniture, equipment and
investment in stores, net 4,676 2,958 7,634 4,459 2,916 7,375 (259) -3%
Intangible assets 624 6,687 7,311 565 7,174 7,738 427 6%
Other assets 671 486 1,158 1,002 408 1,411 253 22%
TOTAL ASSETS 50,869 123,905 174,774 55,197 140,701 195,898 21,124 12%
Demand and term deposits -- 78,559 78,559 -- 93,147 93,147 14,588 19%
Creditors from repurchase agreements -- 4,170 4,170 -- 4,788 4,788 617 15%
Short-term debt 3,341 738 4,079 1,600 207 1,807 (2,272) -56%
Short-term liabilities with cost 3,341 83,467 86,808 1,600 98,142 99,742 12,934 15%
Suppliers and other short-term liabilities 7,680 8,101 15,781 8,213 7,378 15,591 (189) -1%
Short-term liabilities without cost 7,680 8,101 15,781 8,213 7,378 15,591 (189) -1%
Total short-term liabilities 11,021 91,568 102,589 9,813 105,520 115,333 12,744 12%
Long-term debt 14,723 3,871 18,594 15,842 1,291 17,133 (1,462) -8%
Long-term liabilities with cost 14,723 3,871 18,594 15,842 1,291 17,133 (1,462) -8%
Long-term liabilities without cost 6,428 1,262 7,691 6,293 2,391 8,684 993 13%
Total long-term liabilities 21,152 5,133 26,285 22,135 3,682 25,816 (469) -2%
TOTAL LIABILITIES 32,173 96,701 128,874 31,947 109,202 141,149 12,276 10%
TOTAL STOCKHOLDERS' EQUITY 18,696 27,204 45,900 23,250 31,499 54,748 8,848 19%
LIABILITIES + EQUITY 50,869 123,905 174,774 55,197 140,701 195,898 21,124 12%
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
4Q13 4Q14 Change
Points of sale in Mexico
Elektra (1) 977 15% 990 14% 13 1%
Salinas y Rocha (1) 55 1% 55 1% -- 0%
Freestanding branches 2,372 37% 2,649 38% 277 12%
Blockbuster -- 0% 293 4% 293 100%
Total 3,404 53% 3,987 57% 583 17%
Points of sale in Central and South America
Elektra (1) 205 3% 199 3% (6) -3%
Freestanding branches 416 6% 434 6% 18 4%
Total 621 10% 633 9% 12 2%
Points of sale in North America
Advance America 2,454 38% 2,414 34% (40) -2%
Total 2,454 38% 2,414 34% (40) -2%
TOTAL 6,479 100% 7,034 100% 555 9%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 841,100 52% 848,600 50% 7,500 1%
Elektra Central and South America 150,162 9% 148,350 9% (1,812) -1%
Salinas y Rocha 58,995 4% 58,995 3% -- 0%
Freestanding branches 241,243 15% 243,150 14% 1,906 1%
Advance America 338,000 21% 330,718 19% (7,282) -2%
Blockbuster -- 0% 82,000 5% 82,000 100%
TOTAL 1,629,500 100% 1,711,812 100% 82,312 5%
Employees
Mexico 65,460 78% 59,618 77% (5,842) -9%
Central and South America 12,166 14% 11,100 14% (1,066) -9%
North America 6,708 8% 7,084 9% 376 6%
Total employees 84,334 100% 77,802 100% (6,532) -8%

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.mx

Source:Grupo Elektra SAB de CV