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

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Apr 25, 2023, 21:23 ET

—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.

	1Q 2022	1Q 2023	Change
			Ps.	%

Consolidated revenue	$37,532	$42,219	$4,687	12 %

EBITDA	$5,622	$6,158	$537	10 %

Operating profit	$2,606	$3,767	$1,162	45 %
Net result	$(4,615)	$459	$5,075	---

Net result per share	$(20.43)	$2.07	$22.50	---

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.

	As of March 31 2022	As of March 31 2023	Change
	As of March 31 2022	As of March 31 2023	Ps.	%


Cash and cash equivalents	$6,691	$10,078	3,386	51 %
Marketable financial instruments	32,606	28,059	(4,547)	(14 %)
Inventories	19,549	17,663	(1,885)	(10 %)
Accounts receivables	49,505	43,350	(6,154)	(12 %)
Other current assets	4,433	5,083	650	15 %
Investments in shares	39,839	39,692	(147)	(0 %)
Fixed assets	7,620	10,037	2,416	32 %
Right of use assets	9,027	12,848	3,821	42 %
Other assets	1,838	3,619	1,781	97 %

Total assets	$171,108	$170,429	($679)	(0 %)

Short-term debt	$12,535	$9,386	(3,149)	(25 %)
Suppliers	8,221	8,016	(205)	(2 %)
Other short-term liabilities	15,921	17,934	2,013	13 %
Long-term debt	19,990	29,640	9,650	48 %
Differed taxes	4,272	1,510	(2,763)	(65 %)
Other long-term debt	11,109	14,908	3,798	34 %

Total liabilities	$72,049	$81,393	$9,344	13 %

Stakeholder´s equity	$99,059	$89,036	($10,023)	(10 %)

Liabilities and equity	$171,108	$170,429	($679)	(0 %)

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.

Investor Relations:

Bruno Rangel

Grupo Salinas

Tel. +52 (55) 1720-9167

[email protected]

Rolando Villarreal

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

Tel. +52 (55) 1720-9167

[email protected]

Press Relations:
Luciano Pascoe
Tel. +52 (55) 1720 1313 ext. 36553
[email protected]

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS


		1Q22		1Q23		Change

	Financial income	21,715	58 %	26,699	63 %	4,985	23 %
	Commercial income	15,817	42 %	15,520	37 %	(298)	-2 %
	Income	37,532	100 %	42,219	100 %	4,687	12 %

	Financial cost	5,215	14 %	8,808	21 %	3,593	69 %
	Commercial cost	11,576	31 %	11,095	26 %	(480)	-4 %
	Costs	16,791	45 %	19,904	47 %	3,113	19 %

	Gross income	20,741	55 %	22,316	53 %	1,574	8 %

	Sales, administration and promotion expenses	15,120	40 %	16,158	38 %	1,038	7 %

	EBITDA	5,622	15 %	6,158	15 %	537	10 %

	Depreciation and amortization	2,210	6 %	2,390	6 %	180	8 %


	Other expense, net	805	2 %	1	0 %	(805)	-100 %

	Operating income	2,606	7 %	3,767	9 %	1,162	45 %

	Comprehensive financial result:
	Interest income	192	1 %	377	1 %	185	96 %
	Interest expense	(947)	-3 %	(1,470)	-3 %	(523)	-55 %
	Foreign exchange gain, net	43	0 %	436	1 %	393	100 %
	Other financial results, net	(8,370)	-22 %	(2,538)	-6 %	5,832	70 %
		(9,082)	-24 %	(3,195)	-8 %	5,887	65 %

	Participation in the net income of
	CASA and other associated companies	118	0 %	56	0 %	(62)	-52 %

	(Loss) income before income tax	(6,358)	-17 %	628	1 %	6,986	----

	Income tax	1,740	5 %	(169)	0 %	(1,909)	----

	(Loss) income before discontinued operations	(4,618)	-12 %	459	1 %	5,077	----

	Result from discontinued operations	2	0 %	(0)	0 %	(2)	----

	Impairment of intangible assets		0 %		0 %	-	----

	Consolidated net (loss) income	(4,615)	-12 %	459	1 %	5,075	----

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, 2022*			*At March 31, 2023*

Cash and cash equivalents	6,691	31,128	37,819	10,078	31,216	41,294	3,475	9 %

Marketable financial instruments	5,750	95,650	101,400	5,077	94,672	99,749	(1,651)	-2 %

Performing loan portfolio	-	76,718	76,718	-	85,349	85,349	8,631	11 %
Total past-due loans	-	5,121	5,121	-	7,533	7,533	2,412	47 %
Gross loan portfolio	-	81,839	81,839	-	92,882	92,882	11,043	13 %

Allowance for credit risks	-	11,063	11,063	-	14,063	14,063	3,001	27 %

Loan portfolio, net	-	70,776	70,776	-	78,819	78,819	8,043	11 %

Inventories	19,549	-	19,549	17,663	-	17,663	(1,885)	-10 %

Other current assets	16,887	11,354	28,241	19,676	13,699	33,376	5,135	18 %

Total current assets	48,877	208,909	257,786	52,495	218,407	270,901	13,115	5 %

Financial instruments	26,856	40	26,896	22,981	3	22,985	(3,912)	-15 %

Performing loan portfolio	-	59,613	59,613	-	70,807	70,807	11,193	19 %
Total past-due loans	-	1,512	1,512	-	1,977	1,977	465	31 %
Gross loan portfolio	-	61,125	61,125	-	72,784	72,784	11,659	19 %

Allowance for credit risks	-	3,771	3,771	-	4,918	4,918	1,147	30 %

Loan portfolio	-	57,353	57,353	-	67,865	67,865	10,512	18 %

Other non-current assets	24,245	183	24,428	16,627	331	16,958	(7,470)	-31 %
Investment in shares	2,209	-	2,209	2,103	-	2,103	(106)	-5 %
Property, furniture, equipment and
investment in stores, net	7,620	7,365	14,985	10,037	11,028	21,065	6,080	41 %
Intangible assets	541	8,352	8,893	780	8,134	8,914	22	0 %
Right of use asset	8,840	2,254	11,094	12,675	2,189	14,864	3,770	34 %
Other assets	1,297	8,194	9,491	2,839	7,734	10,573	1,081	11 %
TOTAL ASSETS	120,486	292,650	413,136	120,537	315,692	436,228	23,092	6 %


Demand and term deposits	-	195,383	195,383	-	216,631	216,631	21,248	11 %
Creditors from repurchase agreements	-	24,546	24,546	-	27,753	27,753	3,207	13 %
Short-term debt	12,465	384	12,850	9,281	542	9,823	(3,027)	-24 %
Leasing	1,647	933	2,580	2,317	887	3,204	624	24 %
Short-term liabilities with cost	14,112	221,247	235,359	11,598	245,813	257,411	22,052	9 %

Suppliers and other short-term liabilities	22,271	18,604	40,875	23,409	20,183	43,592	2,717	7 %
Short-term liabilities without cost	22,271	18,604	40,875	23,409	20,183	43,592	2,717	7 %

Total short-term liabilities	36,383	239,851	276,234	35,006	265,997	301,003	24,769	9 %

Long-term debt	19,710	12	19,722	26,970	0	26,970	7,248	37 %
Leasing	8,140	1,418	9,558	11,402	1,440	12,842	3,284	34 %
Long-term liabilities with cost	27,851	1,430	29,280	38,372	1,440	39,812	10,532	36 %

Long-term liabilities without cost	7,241	1,322	8,563	5,015	1,362	6,377	(2,186)	-26 %

Total long-term liabilities	35,092	2,751	37,843	43,387	2,802	46,190	8,347	22 %

TOTAL LIABILITIES	71,475	242,602	314,077	78,394	268,799	347,193	33,116	11 %

TOTAL STOCKHOLDERS' EQUITY	49,011	50,048	99,059	42,143	46,893	89,036	(10,023)	-10 %


LIABILITIES + EQUITY	120,486	292,650	413,136	120,537	315,692	436,228	23,092	6 %

	INFRASTRUCTURE

	1Q22		1Q23		Change

Points of sale in Mexico
Elektra	1,162	19 %	1,224	19 %	62	5 %
Salinas y Rocha	36	1 %	33	1 %	(3)	-8 %
Banco Azteca	1,885	30 %	1,937	31 %	52	3 %
Freestanding branches	1,653	27 %	1,787	28 %	134	8 %
Total	4,736	76 %	4,981	79 %	245	5 %

Points of sale in Central America
Elektra	105	2 %	119	2 %	14	13 %
Banco Azteca	204	3 %	225	4 %	21	10 %
Freestanding branches	57	1 %	65	1 %	8	14 %
Total	366	6 %	409	6 %	43	12 %

Points of sale in North America
Purpose Financial	1,133	18 %	917	15 %	(216)	-19 %
Total	1,133	18 %	917	15 %	(216)	-19 %

TOTAL	6,235	100 %	6,307	100 %	72	1 %







Floor space (m²)	1,497	100 %	1,527	100 %	30	2 %




Employees
Mexico	61,465	88 %	60,897	87 %	(568)	-1 %
Central and South America	5,421	8 %	6,082	9 %	661	12 %
North America	2,829	4 %	2,673	4 %	(156)	-6 %
Total employees	69,715	100 %	69,652	100 %	(63)	0 %