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Azteca Announces Net Sales of Ps.2,982 Million and EBITDA of Ps.406 Million in 2Q15

Solid Progress in the Construction of Red Dorsal Nacional de Perú, Which Will Cover Close to 80% of the Country, With 13,400 Kilometers of Fiber Optics

Colombian Operations Have Associated Costs But Will Generate Solid Yields in the Future

MEXICO CITY, July 23, 2015 (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 second quarter and first half of 2015.

Second quarter results

Net sales for the quarter were Ps.2,982 million compared to Ps.3,253 million for the same quarter of last year. Total costs and expenses were Ps.2,576 million, from Ps.2,341 million for the same period last year.

As a result, Azteca reported EBITDA of Ps.406 million, compared to Ps.912 million from last year; EBITDA margin for the quarter was 14%. The company registered a net loss of Ps.630 million, compared to a net profit of Ps.276 million for the same quarter of 2014.

2Q 2014 2Q 2015 Change
Ps. %
Net sales $3,253 $2,982 $(271) -8%
EBITDA $912 $406 $(506) -56%
Net result $276 $(630) $(906) --
Net result per CPO $0.09 $(0.21) $(0.30) --

Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2014 was 2,986 million and as of June 30, 2015 was 2,985 million.

Net sales

Domestic ad sales were Ps.2,496 million, compared to Ps.3,007 million from the previous year. The reduction results mainly from extraordinary revenues a year ago related to the World Cup soccer tournament in Brazil.

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.261 million this quarter, a 31% increase compared to Ps.199 million a year ago.

Content sales to other countries were Ps.44 million in the quarter, from Ps.17 million from the previous year. The revenue was directly related to the export of programs Caminos de Guanajuato and Así en el barrio como en el cielo in Central and South America, as well as from the sale of Azteca's pay TV channels to the rest of the world.

Revenues from Azteca Guatemala and Azteca Honduras were Ps.11 million, compared to Ps.9 million from the previous year.

Sales from Azteca Comunicaciones Colombia –derived from telecommunications revenues through the fiber-optic network operating in that country– were Ps.170 million, from Ps.21 million a year ago.

Costs and expenses

Costs and expenses increased 10% as a result of an 11% growth in production, programming, transmission and telecommunication service costs —to Ps.2,171 million, from Ps.1,947 million in the same period a year ago— and a 3% increase in selling and administrative expenses —to Ps.405 million, compared to Ps.394 million in the same quarter of 2014.

The increase in costs during the period is due mainly to the company´s telecommunication operations in Colombia. Costs related to those operations were Ps.303 million in the quarter, compared to Ps.34 million of the previous year, and include paid rents for transmitting towers and spaces to operate telecommunications nodes, as well as installation, maintenance and operation of the network. The company expects the Colombian operations to generate solid yields in the future.

The increase in selling and administrative expenses reflects bigger advisory expenses in the quarter.

EBITDA and net result

EBITDA was Ps.406 million, in comparison to Ps.912 million in the same period of the prior year.

The most significant change below EBITDA was a Ps.363 million increase in the comprehensive financing result, mainly derived from a foreign exchange loss for the period compared to a gain in the same quarter a year ago.

The company registered a net loss of Ps.630 million for the quarter, compared to a net gain of Ps.276 million for the same period a year ago.

Debt

As of June 30, 2015, Azteca's outstanding debt —excluding Ps.1,439 million debt due in 2069—was Ps.13,534 million. The cash balance of the company was Ps.5,304 million. As a result, net debt was Ps.8,230 million at the end of the quarter.

Fiber-optic network in Peru

During the quarter, Azteca Comunicaciones Peru —a subsidiary of Azteca— has concluded 2,321 kilometers of fiber optics, of a total of 13,400 kilometers that will be deployed in the Red Dorsal Nacional de Fibra Óptica of the country.

As previously announced, in December 2013 Azteca won a tender to construct and operate a fiber-optic network that will offer telecommunications services in approximately 80% of Peruvian territory. Construction of the network started last December, and has an estimated time of 18 months. Azteca will commercialize the telecommunications services in 339 communities, through a 20-year concession.

Azteca offers world-class telecommunications, effectively driving the wellbeing of the population and productivity in business. The company also successfully built and operates the largest fiber optic network in Latin America, in Colombia.

Six months results

Net sales for the first six months of 2015 were Ps.5,527 million, 5% less than the Ps.5,793 million for the same period of 2014. Total costs and expenses were Ps.4,740 million, from Ps.4,354 million for the same period of the previous year. The increase in costs mainly derives from the start of the operating stage of Azteca Comunicaciones Colombia.

Azteca reported EBITDA of Ps.788 million, compared to Ps.1,439 million for the first half a year ago; EBITDA margin was 14% for the six-month period. The company recorded a net loss of Ps.1,306 million, compared to net profit of Ps.99 million for the same period of 2014.

6M 2014 6M 2015 Change
Ps. %
Net sales $5,793 $5,527 $(266) -5%
EBITDA $1,439 $788 $(652) -45%
Net results $99 $(1,306) $(1,405) --
Net results per CPO $0.03 $(0.44) $(0.47) --

Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2014 was 2,986 million and as of June 30, 2015 was 2,985 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, El trece and Azteca 7, through more than 300 owned and operated stations across the country. 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.

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), 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, 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 June 30 of 2014 and 2015 )
Second Quarter of :
2014 2015
Change
Net revenue Ps 3,253 100% Ps 2,982 100% Ps (271) -8%
Programming, production and transmission costs 1,947 60% 2,171 73% 224 11%
Selling and administrative expenses 394 12% 405 14% 11 3%
Total costs and expenses 2,341 72% 2,576 86% 235 10%
EBITDA 912 28% 406 14% (506) -56%
Depreciation and amortization 177 169 (8)
Other expense -Net 111 151 41
Operating profit 624 19% 85 3% (539) -86%
Equity in income from affiliates (3) 9 12
Comprehensive financing result:
Interest expense (243) (306) (63)
Other financing expense (17) (25) (7)
Interest income 46 31 (16)
Exchange loss -Net 58 (218) (277)
(155) (518) (363)
Income before the following provision 466 14% (424) -14% (890) -191%
Provision for income tax (193) (211) (18)
Net income Ps 273 Ps (635) Ps (908)
Non-controlling share in net profit Ps (4) Ps (6) Ps (2)
Controlling share in net profit Ps 276 8% Ps (630) -21% Ps (906)
TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Mexican pesos of June 30 of 2014 and 2015 )
Period ended June 30,
2014 2015
Change
Net revenue Ps 5,793 100% Ps 5,527 100% Ps (266) -5%
Programming, production and transmission costs 3,569 62% 3,952 72% 383 11%
Selling and administrative expenses 785 14% 787 14% 2 0%
Total costs and expenses 4,354 75% 4,740 86% 386 9%
EBITDA 1,439 25% 788 14% (652) -45%
Depreciation and amortization 347 347 0
Other expense -Net 172 245 73
Operating profit 920 16% 195 4% (725) -79%
Equity in income from affiliates 9 14 4
Comprehensive financing result:
Interest expense (496) (603) (106)
Other financing expense (39) (38) 1
Interest income 82 64 (19)
Exchange Gain -Net 54 (479) (532)
(399) (1,056) (657)
Income before the following provision 530 9% (847) -15% (1,377) -260%
Provision for income tax (439) (470) (30)
Net income Ps 91 Ps (1,316) Ps (1,407)
Non-controlling share in net profit Ps (8) Ps (11) Ps (3)
Controlling share in net profit Ps 99 2% Ps (1,306) -24% Ps (1,404)
TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Mexican pesos of June 30 of 2014 and 2015)
At June 30
2014 2015
Change
Current assets:
Cash and cash equivalents Ps 5,792 Ps 5,304 Ps (488)
Accounts receivable 6,164 6,762 598
Other current assets 3,329 3,855 526
Total current assets 15,285 15,921 636 4%
Accounts receivable 136 497 361
Exhibition rights 2,268 2,338 70
Property, plant and equipment-Net 3,582 4,201 619
Television concessions-Net 7,763 9,538 1,775
Other assets 4,045 3,664 (381)
Deferred income tax asset 3,128 2,680 (448)
Total long term assets 20,922 22,918 1,996 10%
Total assets Ps 36,207 Ps 38,839 Ps 2,632 7%
Current liabilities:
Short-term debt Ps -- Ps 1,176 Ps 1,176
Other current liabilities 3,723 3,915 192
Total current liabilities 3,723 5,091 1,368 37%
Long-term debt:
Long-term debt 10,143 12,358 2,215
Total long-term debt 10,143 12,358 2,215
Other long term liabilities:
Advertising advances 7,188 8,032 844
American Tower Corporation (due 2069) 1,190 1,439 249
Deferred income tax asset 1,741 1,128 (613)
Total other long-term liabilities 10,119 10,599 480 5%
Total liabilities 23,985 28,048 4,063 17%
Total stockholders' equity 12,222 10,791 (1,431) -12%
Total liabilities and equity Ps 36,207 Ps 38,839 Ps 2,632 7%

CONTACT: Investor Relations Bruno Rangel Grupo Salinas Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mx Rolando Villarreal Grupo Salinas 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:TV Azteca, SAB de CV