GRUPO ELEKTRA ANNOUNCES 10% GROWTH IN EBITDA, TO Ps.6,158 MILLION IN THE FIRST QUARTER OF 2023

—Consolidated revenue increases 12%, to Ps.42,219 million as a result of strong dynamism in financial income—

—The consolidated gross portfolio grows 16%, to Ps.165,666 million—

—11% increase in consolidated deposits, to Ps.216,631 million, reaffirms solid prospects for the financial business, with optimal cost of funding—

MEXICO CITY, April 25, 2023 /PRNewswire/ -- 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, today announced first quarter 2023 results.

First quarter results

Consolidated revenue grew 12% to Ps.42,219 million in the period, compared to Ps.37,532 million in the same quarter of the previous year. Operating costs and expenses were Ps.36,062 million, from Ps.31,911 million in 2022.

As a result, EBITDA was Ps.6,158 million, 10% higher compared to Ps.5,622 million a year ago. Operating income was Ps.3,767 million this quarter, 45% above Ps.2,606 million in the same period of 2022.

The company reported net income of Ps.459 million, compared to a loss of Ps.4,615 million a year ago.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.           
As of March 31, 2022, Elektra* outstanding shares were 225.9 million and as of March 31, 2023, were 221.4 million.

Revenue

Consolidated revenue increased 12% in the period, as a result of a 23% growth in financial revenues and a 2% decrease in commercial sales.

The increase in financial income — to Ps.26,699 million, from Ps.21,715 million the previous year — reflects, to a large extent, a 31% increase in the income of Banco Azteca Mexico — which further strengthens its solid financial margin — within the framework of dynamic growth of the gross credit portfolio in the period, which boosts the well-being of millions of families and the development of businesses.

The reduction in sales of the commercial business — to Ps.15,520 million, from Ps.15,817 million a year ago — largely reflects the decrease in sales of certain lines of merchandise due to lower seasonal demand, partially offset by strong growth in income from commercialization of motorcycles — which strengthen the productivity of businesses and the mobility of millions of families.

Costs and expenses

Consolidated costs for the quarter were Ps.19,904 million, compared to Ps.16,791 million for the previous year. The growth is explained by a 69% increase in the financial cost — derived from greater creation of credit preventive reserves, in the context of solid dynamism of the consolidated gross portfolio, as well as higher interests paid, in line with growing market rates — and a 4% reduction in commercial costs, consistent with the performance of income from merchandise sales.

Selling, administrative and promotion expenses increased 7% to Ps.16,158 million, from Ps.15,120 million a year ago, as a result of higher personnel and operating expenses.

Expenses grow to a lesser extent than consolidated revenue, which is the result of solid strategies that drive Grupo Elektra's operating efficiency, together with strict budgets throughout the organization — in the context of measures to rationalize structures and optimize processes.

EBITDA and net result

EBITDA was Ps.6,158 million, from Ps.5,622 million the previous year. The company reported operating income of Ps.3,767 million, compared to Ps.2,606 million in the same quarter of 2022.

The main variations below EBITDA were the following:

A reduction of Ps.805 million in other expenses, due to impairment of Purpose Financial's intangible assets in the first quarter of 2022, consistent with the company's performance and financial perspectives a year ago.

A positive variation of Ps.5,832 million in other financial results, which reflects a 7% reduction this quarter in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to a 17% reduction a year ago.

Consistent with the results of the quarter, an increase of Ps.1,909 million was registered in the provision for taxes in the period.

Grupo Elektra reported a net income of Ps.459 million, from a loss of Ps.4,615 million a year ago.

Unconsolidated Balance Sheet

A proforma balance sheet exercise of Grupo Elektra is presented, which allows knowing the non-consolidated financial situation, excluding the net assets of the financial business, whose investment is valued in this case under the participation method.

This presentation shows the debt of the company without considering Banco Azteca's immediate and term deposits, which do not constitute debt with cost for Grupo Elektra. Also, the pro forma balance sheet does not include the bank's gross loan portfolio.

This provides greater clarity about the different businesses that make up the company and allows financial market participants to make estimates of the value of the company, considering only the relevant debt for said calculations.

Consistent with this, the debt with cost was Ps.39,026 million as of March 31, 2023, compared to Ps.32,525 million of the previous year. The growth of the debt balance is mainly related to issuances of Certificados Busatiles.

The balance of cash and cash equivalents was Ps.10,078 million, from Ps.6,691 million the previous year.

As of March 31, 2023, the company's stockholders' equity was Ps.89,036 million, and the ratio of stockholders' equity to total liabilities was 1.1 times.

Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

The consolidated gross portfolio of Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America as of March 31, 2023, grew 16%, to Ps.165,666 million, from Ps.142,964 million the previous year. The consolidated delinquency rate was 5.7% at the end of the period, compared to 4.6% the previous year.

Banco Azteca Mexico's gross portfolio balance increased 18% to Ps.160,451 million, from Ps.135,721 million a year ago. The Bank's delinquency rate at the end of the quarter was 4.9%, compared to 4.2% a year earlier.

Grupo Elektra's consolidated deposits grew 11%, to Ps.216,631 million, from Ps.195,383 million a year ago. Banco Azteca Mexico's traditional deposits were Ps.215,332 million, 12% above the Ps.192,166 million of the previous year.

The ratio of traditional deposits to gross credit portfolio of Banco Azteca Mexico was 1.3 times, which allows solid growth of the Bank, with optimal funding cost.

The Bank's liquidity coverage ratio — computable liquid assets / total net cash outflow — was 1.304%, an outstanding figure in the Mexican banking sector.

The capitalization index of Banco Azteca Mexico was 14.79%.

Infrastructure

Grupo Elektra currently has 6,307 contact points, compared to 6,235 units the previous year. The increase results from the net opening of 245 contact points in Mexico and 43 in Central America, partially offset by the closure of 216 Purpose Financial units in the United States — in the context of strategies aimed at boosting online credit operations and strengthening efficiency operations of this company.

The company has 4,981 storefronts in Mexico at the end of the quarter, 917 in the United States and 409 in Central America. The important distribution network provides the company with proximity to the customer and closeness in service and generates a superior market position in the countries in which it operates.

Company Profile:

Grupo Elektra 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 more than 6,000 points of contact in Mexico, the United States, Guatemala, Honduras and Panama.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating economic value through market innovation and goods and services that improve standards of living; social value to improve community wellbeing; and environmental value by reducing the negative impact of its business activities. 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. These companies include TV Azteca (www.TVazteca.com; www.irtvazteca.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Purpose Financial (havepurpose.com), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (irtotalplay.mx; www.totalplay.com.mx) and Totalplay Empresarial (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spain's' Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares 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 concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect Grupo Elektra and its subsidiaries are presented in documents sent to the securities authorities.

SOURCE Grupo Elektra, S.A.B. de C.V.