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Grupo Elektra Announces 21% Increase in EBITDA to Ps.3,165 Million in 1Q15

—Operating income grows 31% to Ps.2,565 million—

—Consolidated revenue increases 11% to Ps.19,099 million,
supported by a 22% solid expansion of the commercial business—

—23% growth in consolidated deposits to Ps.101,386 million
generates solid perspectives in the financial business—

MEXICO CITY, April 21, 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 first quarter of 2015.

Consolidated first quarter results

Consolidated revenue totaled Ps.19,099 million,11% higher than the Ps.17,189 million of the same period last year. Costs and operating expenses were Ps.15,934 million, from Ps.14,576 million for the same period of 2014.

As a result, Grupo Elektra reported EBITDA of Ps.3,165 million, 21% higher than the Ps.2,613 million of the previous year's quarter; EBITDA margin was 17% this period, two percentage points higher than the previous year. Operating income grew 31% to Ps.2,565 million.

The company reported a net loss of Ps.3,280 million, from a net loss of Ps.175 million a year ago.

1Q 2014 1Q 2015 Change
Ps. %
Consolidated revenue $17,189 $19,099 $1,910 11%
EBITDA $2,613 $3,165 $551 21%
Net result $(175) $(3,280) $(3,105) --
Net result per share $(0.7) $(14.0) $(13.3) --
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of March 31, 2014, Elektra outstanding shares were 237.3 million and as of March 31, 2015, were 234.7 million.

Revenue

Consolidated revenue grew 11%, as a result of an increase of 22% in commercial sales, together with a 6% increase in financial revenues.

Commercial sales —of Ps.6,224 million from Ps.5,086 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.

Financial revenues, of Ps.12,875 million in the quarter, compared to Ps.12,103 million of previous year, increased mainly due to higher revenue from Advance America —the largest non-bank provider of cash advance services in the US.

Costs and expenses

Consolidated costs for the quarter increased 27% to Ps.8,897 million, from Ps.6,998 million from the previous year. The change is mainly due to 31% increase in financial cost —derived from the creations of reserves— and a 23% increase in commercial cost, in line with the performance of merchandise sales.

Sales, administration and promotion expenses decreased 7% to Ps.7,037 million, in the context of strategies that generated important operating efficiencies during the quarter.

EBITDA and net result

Consolidated EBITDA grew 21% to Ps.3,165 million this quarter.

Operating income was Ps.2,565 million, 31% higher than the Ps.1,960 million from the previous year.

The most significant change below EBITDA was a negative variation of Ps.4,745 million in other financial results, as a consequence of a bigger reduction 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 a net loss of Ps.3,280 million, compared to a net loss of Ps.175 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 March 31, 2015, was Ps.69,817 million, compared to Ps.76,828 million from the previous year. Consolidated delinquency rate was 9.6% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.55,281 million, compared to Ps.62,961 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 10%. 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 52 weeks at the end of the first quarter.

The Advance America loan portfolio was Ps.3,833 million, 16% higher than the Ps.3,310 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 23%, to Ps.101,386 million, compared to Ps.82,363 million a year ago. Deposits of Banco Azteca Mexico were Ps.96,145 million, 19% higher than the Ps.80,822 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 March 31, 2015, the estimated capitalization index of Banco Azteca Mexico was 16.2%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of March 31, 2015, was Ps.19,640 million, 12% below the Ps.22,444 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 March 2015 was comprised of Ps.17,717 million for the commercial business, and Ps.1,922 million for the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.18,961 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.1,244 million.

Expansion

Grupo Elektra currently has 6,961 points of sale, 2% more than the 6,849 from a year ago.

Grupo Elektra has 3,924 points of sale in Mexico, 2,394 in the United States, and 643 in Central and South America. The extensive distribution network allows the company to maintain close contact with clients; granting superior market positioning in the countries where it operates.

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.lenlacetpe.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
1Q14 1Q15 Change
Financial income 12,103 70% 12,875 67% 771 6%
Commercial income 5,086 30% 6,224 33% 1,139 22%
Income 17,189 100% 19,099 100% 1,910 11%
Financial cost 3,598 21% 4,699 25% 1,101 31%
Commercial cost 3,400 20% 4,198 22% 798 23%
Costs 6,998 41% 8,897 47% 1,899 27%
Gross income 10,191 59% 10,201 53% 10 0%
Sales, administration and promotion expenses 7,578 44% 7,037 37% (541) -7%
Depreciation and amortization 653 4% 599 3% (53) -8%
Operating expenses 8,230 48% 7,636 40% (595) -7%
Operating income 1,960 11% 2,565 13% 605 31%
EBITDA 2,613 15% 3,165 17% 551 21%
Comprehensive financial result:
Interest income 128 1% 103 1% (25) -20%
Interest expense (378) -2% (336) -2% 42 11%
Foreign exchange gain, net 83 0% 41 0% (43) -51%
Other financial results, net (1,988) -12% (6,733) -35% (4,745) -239%
(2,155) -13% (6,926) -36% (4,771) -221%
Other expense, net (12) 0% (36) 0% (24) -209%
Participation in the net income of
CASA and other associated companies (37) 0% (130) -1% (94) -256%
Loss before income tax (242) -1% (4,527) -24% (4,284) --
Income tax 116 1% 1,263 7% 1,147 --
Loss before discontinued operations (126) -1% (3,264) -17% (3,138) --
Result from discontinued operations (49) 0% (16) 0% 33 67%
Consolidated net loss (175) -1% (3,280) -17% (3,105) --
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, 2014 At March 31, 2015
Cash and cash equivalents 2,983 18,069 21,052 5,558 25,745 31,303 10,251 49%
Marketable financial instruments 12,463 20,870 33,333 13,403 42,411 55,814 22,481 67%
Performing loan portfolio -- 50,277 50,277 -- 47,226 47,226 (3,051) -6%
Total past-due loans -- 6,194 6,194 -- 6,371 6,371 177 3%
Gross loan portfolio -- 56,471 56,471 -- 53,597 53,597 (2,874) -5%
Allowance for credit risks -- 8,735 8,735 -- 9,556 9,556 822 9%
Loan portfolio, net -- 47,737 47,737 -- 44,041 44,041 (3,695) -8%
Inventories 6,139 -- 6,139 6,090 6,090 (49) -1%
Other current assets 4,343 7,181 11,524 2,226 6,781 9,007 (2,517) -22%
Total current assets 25,928 93,857 119,785 27,277 118,978 146,255 26,470 22%
Financial instruments 10,507 200 10,708 11,286 240 11,526 818 8%
Performing loan portfolio -- 20,142 20,142 15,867 15,867 (4,275) -21%
Total past-due loans -- 215 215 354 354 139 65%
Loan portfolio -- 20,357 20,357 -- 16,220 16,220 (4,136) -20%
Other non-current assets 3,400 987 4,387 1,603 919 2,521 (1,866) -43%
Investment in shares 4,240 -- 4,240 4,173 4,173 (68) -2%
Property, furniture, equipment and investment in stores, net 4,765 2,897 7,662 4,284 2,903 7,187 (475) -6%
Intangible assets 623 6,615 7,239 556 7,410 7,966 727 10%
Other assets 1,024 614 1,637 991 675 1,666 29 2%
TOTAL ASSETS 50,488 125,526 176,014 50,170 147,344 197,514 21,500 12%
Demand and term deposits 82,363 82,363 101,386 101,386 19,023 23%
Creditors from repurchase agreements 3,490 3,490 3,129 3,129 (362) -10%
Short-term debt 4,150 518 4,668 7,627 784 8,411 3,742 80%
Short-term liabilities with cost 4,150 86,372 90,522 7,627 105,299 112,926 22,404 25%
Suppliers and other short-term liabilities 8,578 6,637 15,215 8,703 6,193 14,896 (319) -2%
Short-term liabilities without cost 8,578 6,637 15,215 8,703 6,193 14,896 (319) -2%
Total short-term liabilities 12,728 93,009 105,737 16,330 111,492 127,822 22,085 21%
Long-term debt 13,910 3,866 17,776 10,090 1,138 11,229 (6,547) -37%
Long-term liabilities with cost 13,910 3,866 17,776 10,090 1,138 11,229 (6,547) -37%
Long-term liabilities without cost 5,757 1,259 7,016 4,692 2,869 7,561 545 8%
Total long-term liabilities 19,667 5,124 24,791 14,782 4,007 18,789 (6,002) -24%
TOTAL LIABILITIES 32,395 98,133 130,528 31,112 115,499 146,612 16,083 12%
TOTAL STOCKHOLDERS' EQUITY 18,093 27,393 45,486 19,058 31,844 50,902 5,416 12%
LIABILITIES + EQUITY 50,488 125,526 176,014 50,170 147,344 197,514 21,500 12%
INFRASTRUCTURE
1Q14 1Q15 Change
Points of sale in Mexico
Elektra (1) 988 14% 974 14% (14) -1%
Salinas y Rocha (1) 55 1% 54 1% (1) -2%
Freestanding branches 2,411 35% 2,600 37% 189 8%
Blockbuster 327 5% 296 4% (31) -9%
Total 3,781 55% 3,924 56% 143 4%
Points of sale in Central and South America
Elektra (1) 215 3% 190 3% (25) -12%
Freestanding branches 407 6% 453 7% 46 11%
Total 622 9% 643 9% 21 3%
Points of sale in North America
Advance America 2,446 36% 2,394 34% (52) -2%
Total 2,446 36% 2,394 34% (52) -2%
TOTAL 6,849 100% 6,961 100% 112 2%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 843,900 48% 839,387 50% (4,512) -1%
Elektra Central and South America 151,891 9% 143,315 8% (8,576) -6%
Salinas y Rocha 58,995 3% 57,795 3% (1,200) -2%
Freestanding branches 241,389 14% 240,348 14% (1,041) 0%
Advance America 335,142 19% 327,978 19% (7,164) -2%
Blockbuster 110,000 6% 82,250 5% (27,750) -25%
TOTAL 1,741,316 100% 1,691,073 100% (50,243) -3%
Employees
Mexico 67,516 79% 54,730 75% (12,786) -19%
Central and South America 11,327 13% 10,993 15% (334) -3%
North America 6,666 8% 7,050 10% 384 6%
Total employees 85,509 100% 72,773 100% (12,736) -15%

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