Grupo Elektra Announces Revenues Of Ps.33,663 Million And EBITDA Of Ps.4,125 Million In 4Q20

--Continuous dynamism of the commercial business; revenues grew 28%, to Ps.17,260 million in the quarter--

--14% increase in deposits at Banco Azteca México, to Ps.172,049 million, consolidates firm prospects for the financial business, with optimal cost of funding--

--Solid growth of Banco Azteca México's loan portfolio; increases 11%, to Ps.103,529 million in the period--

News provided by

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

Feb 24, 2021, 19:02 ET

MEXICO CITY, Feb. 24, 2021 /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 fourth quarter 2020 and full year 2020 financial results.

Consolidated Fourth Quarter Results

Consolidated revenues grew 4%, to Ps.33,663 million in the period, compared to Ps.32,417 million in the same quarter of the previous year. Operating costs and expenses were Ps.29,537 million, from Ps.26,864 million in the same period of 2019.

As a result, EBITDA was Ps.4,125 million, compared to Ps.5,554 million a year ago. Operating income was Ps.2,338 million this quarter, from Ps.3,698 million in the same period of 2019.

The company reported a net income of Ps.3,118 million, compared to a net income of Ps.1,532 million a year ago.

	4Q 2019	4Q 2020	Change
			Ps.	%

Consolidated revenue	$32,417	$33,663	$1,245	4%

EBITDA	$5,554	$4,125	$(1,428)	-26%

Operating profit	$3,698	$2,338	$(1,360)	-37%

Net result	$1,532	$3,118	$1,585	----

Net result per share	$6.71	$13.71	$7.00	----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2019, Elektra* outstanding shares were 228.4 million and as of December 31, 2020, were 227.4 million.

Revenue

Consolidated revenues increased 4%, as a result of a 28% growth in commercial sales, partially offset by a 13% decrease in financial revenues.

The growth in sales of the commercial business — to Ps.17,260 million, from Ps.13,479 million a year ago— is largely the result of a solid increase in sales of Italika motorcycles — which boosts business productivity and the mobility of families — telephony — that strengthens the connectivity of a growing number of users — and appliances, that are commercialized with optimal customer service, in the most competitive market conditions.

Sales from the commercial business were further boosted with the development of new stores under a larger surface format, which includes a wide variety of merchandise and services, to satisfy an increasing number of customers. Similarly, Omnichannel operations, with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices, from any device and at any time, further strengthened business performance, in a context of growing online transactions, given the health contingency.

The reduction in financial income — to Ps.16,403 million, from Ps.18,938 million in the previous year — reflects lower interests earned in the period, within the framework of deterioration in economic performance indicators, as a consequence of the health emergency.

Costs and Expenses

Consolidated costs for the quarter were Ps.16,212 million, from Ps.14,075 million from the previous year. The growth in costs is explained by a 31% increase in the commercial cost, in line with the strong growth in merchandise sales, partially offset by a 13% reduction in the financial cost, largely derived from lower interests paid, in line with decreasing market rates.

Selling, administrative and marketing expenses grew 4% to Ps.13,325 million as a result, mainly, of higher operating expenses — related to the protection of the health of employees and customers — and personnel expenses — in the framework of extraordinary disbursements for operational restructurings in the face of the new economic context — as well as an increase in advertising expenses.

EBITDA and net result

EBITDA was Ps.4,125 million, from Ps.5,554 million from the previous year. The company reported operating income of Ps.2,338 million, compared to Ps.3,698 million in the same quarter of 2019.

The main variations below EBITDA were the following:

An increase of Ps.3,901 million in the other financial results line, which reflect a gain of 10% this quarter in the market value of underlying assets of financial instruments held by the company — which does not imply cash flow — in comparison to a 1% depreciation a year ago.

Congruent with the results for the quarter, there was an increase of Ps.198 million in the tax provision in the period.

Grupo Elektra reported net income of Ps.3,118 million, compared to a net income of Ps.1,532 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, a pro forma exercise of the balance sheet of Grupo Elektra is presented, excluding the net assets of the financial business, whose investment is valued under the equity method, in this case.

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. The pro forma balance sheet also does not include the bank's gross loan portfolio.

This proforma exercise provides greater clarity regarding the businesses that make up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.

Consistent with this, debt with cost was Ps.25,150 million as of December 31, 2020, compared to Ps.24,136 million in the previous year. The balance of cash and cash equivalents was Ps.7,915 million, from Ps.4,379 million from the previous year. As a result, net debt as of December 31, 2020 was Ps.17,235 million, compared to Ps.19,757 million a year ago.

As of December 31, 2020, the company's stockholders 'equity was Ps.93,645 million, and the stockholders' equity to total liabilities ratio was 1.4 times.

	As of December 31,	As of December 31,	Change
	2019	2020	Ps.	%


Cash and cash equivalents	$ 4,379	$ 7,915	3,537	81%
Marketable financial instruments	41,891	32,134	(9,758)	(23%)
Inventories	11,093	14,324	3,231	29%
Accounts receivables	49,095	48,555	(541)	(1%)
Other current assets	5,478	3,119	(2,359)	(43%)
Investments in shares	34,909	36,446	1,536	4%
Fixed assets	8,180	7,422	(758)	(9%)
Right of use assets	8,763	8,358	(405)	(5%)
Other assets	1,406	1,614	207	15%

Total assets	$165,196	$159,886	($5,310)	(3%)

Short-term debt	$ 3,268	$ 10,853	7,585	232%
Suppliers	6,885	6,071	(813)	(12%)
Other short-term liabilities	16,212	14,776	(1,436)	(9%)
Long-term debt	20,868	14,297	(6,571)	(31%)
Differed taxes	10,646	9,515	(1,131)	(11%)
Other long-term debt	9,521	10,729	1,208	13%

Total liabilities	$ 67,399	$ 66,241	($1,158)	(2%)

Stakeholder´s equity	$ 97,797	$ 93,645	($4,152)	(4%)

Liabilities and equity	$165,196	$159,886	($5,310)	(3%)
Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America's consolidated gross portfolio as of December 31, 2020 grew 7% to Ps.119,106 million, from Ps.110,898 million for the previous year. The consolidated delinquency rate was 4.7% at the end of the period, compared to 4.2% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 11% to Ps.103,529 million, from Ps.93,253 million a year ago. The default rate for the bank at the end of the quarter was 4.7%, in comparison with 3.7% for the previous year.

The average term of the credit portfolio for principal credit lines — consumer, personal loans, and Tarjeta Azteca — was 64 weeks at the end of the fourth quarter.

Grupo Elektra's consolidated deposits were Ps.172,627 million, 11% higher than the Ps.154,977 million a year ago. Deposits of Banco Azteca Mexico were Ps.172,049 million, 14% higher than the Ps.151,184 million a year ago.

The ratio of deposits to gross portfolio of Banco Azteca Mexico of 1.7 times, consolidates the solid growth prospects of the Bank, with optimal funding cost.

The Bank's liquidity coverage ratio — total of eligible liquid assets / total net cash out — was 662%, an outstanding figure in the Mexican banking sector.

The estimated capitalization index of Banco Azteca Mexico was 14.36%.

Infrastructure

Grupo Elektra currently has 6,601 points of contact, compared to 7,250 units the previous year. The decrease results from the closure of 397 Purpose Financial contact points in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the company's operating efficiency — as well as the closure of 274 contact points in Latin America derived, to a large extent, from the sale of Banco Azteca del Peru.

In Mexico, in the last twelve months, 37 new Elektra stores were opened in strategic locations, with greater surface area, which increases the offer of products and services, and maximizes the customer's shopping experience.

The company has 4,803 storefronts in Mexico at the end of the quarter, 1,429 in the United States, and 369 in Central and South America. The important distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.

Sale of Banco Azteca del Perú

During the quarter, the sale of all Banco Azteca del Perú shares to a group of Peruvian investors with recognized experience in the financial sector was announced.

The parties announced the implementation of an orderly transition process in order to ensure the continuity of operations and security for its users.

Banco Azteca del Perú's operations represented a non-material proportion in relation to all the activities of Grupo Elektra's financial business. As a result of this operation, the company will concentrate its efforts in Mexico, the United States and Central America, which could further boost its solid prospects.

Issuance of Senior Notes for US$500 million

In January, Grupo Elektra announced that its subsidiary Nueva Elektra del Milenio, S.A. de C.V., as originator, successfully placed, through a special purpose vehicle established under the Luxembourg law, Senior Notes for US$500 million, for seven years, and a 4.875% rate, in international markets. The Senior Notes have a corporate guaranty from the Company.

The issue — which had a credit rating of BBB- by Fitch and BBB+ by HR Ratings — will be used to fund reserve accounts for the payment of obligations under Senior Notes and will strengthen the liquidity of the company, which will allow to further boost Grupo Elektra's financial strength.

Twelve Month Results

Total consolidated revenue in 2020 grew 5% to Ps.120,507 million, from Ps.115,173 million for 2019, as a result of a 21% increase in the commercial business and a 5% reduction in the financial business.

EBITDA was Ps.9,812 million, compared to Ps.19,253 million from the previous year. The decrease is largely due to the credit reserves made by Banco Azteca last March, for 100% of the loan amount of Ps.7,243 million from a borrower that initiated a bankruptcy process (Chapter 11) in the United States, as previously announced.

The company reported an operating income of Ps.2,057 million, from an operating profit of Ps.12,271 million a year ago. During the year, a net loss of Ps.1,914 million was registered, compared to a net income of Ps.16,151 million in 2019.

	2019	2020	Change
			Ps.	%

Consolidated revenue	$115,173	$120,507	$5,334	5%

EBITDA	$19,253	$9,812	$(9,441)	-49%

Operating result	$12,271	$2,057	$(10,214)	-83%

Net result	$16,151	$(1,914)	$(18,064)	----

Net result per share	$70.71	$(8.42)	$(79.13)	----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2019, Elektra* outstanding shares were 228.4 million and as of December 31, 2020, were 227.4 million.

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 6,600 points of contact in Mexico, the United States, Guatemala, Honduras, Panama and Peru.

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 (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.

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

	4Q19		4Q20		Change

Financial income	18,938	58%	16,403	49%	(2,535)	-13%
Commercial income	13,479	42%	17,260	51%	3,781	28%
Income	32,417	100%	33,663	100%	1,245	4%

Financial cost	5,005	15%	4,370	13%	(636)	-13%
Commercial cost	9,069	28%	11,843	35%	2,774	31%
Costs	14,075	43%	16,212	48%	2,138	15%

Gross income	18,343	57%	17,450	52%	(893)	-5%

Sales, administration and promotion expenses	12,789	39%	13,325	40%	536	4%

EBITDA	5,554	17%	4,125	12%	(1,428)	-26%

Depreciation and amortization	969	3%	1,417	4%	448	46%

Depreciation right of use asset	863	3%	732	2%	(131)	-15%

Other expense (income), net	23	0%	(363)	-1%	(386)	----

Operating income	3,698	11%	2,338	7%	(1,360)	-37%

Comprehensive financial result:
Interest income	245	1%	236	1%	(9)	-4%
Interest expense	(921)	-3%	(827)	-2%	94	10%
Foreign exchange loss, net	(395)	-1%	(792)	-2%	(398)	-100%
Other financial results, net	(508)	-2%	3,393	10%	3,901	----
	(1,578)	-5%	2,010	6%	3,588	----

Participation in the net income of
CASA and other associated companies	305	1%	401	1%	96	32%

Income before income tax	2,425	7%	4,749	14%	2,324	96%

Income tax	(775)	-2%	(973)	-3%	(198)	-26%

Income before discontinued operations	1,650	5%	3,776	11%	2,126	100%

Result from discontinued operations	(117)	0%	(658)	-2%	(541)	-100%

Consolidated net income	1,532	5%	3,118	9%	1,585	100%

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

	12M19		12M20		Change

Financial income	71,958	62%	68,253	57%	(3,705)	-5%
Commercial income	43,215	38%	52,254	43%	9,039	21%
Income	115,173	100%	120,507	100%	5,334	5%

Financial cost	18,631	16%	24,778	21%	6,147	33%
Commercial cost	28,588	25%	34,970	29%	6,382	22%
Costs	47,219	41%	59,749	50%	12,530	27%

Gross income	67,954	59%	60,759	50%	(7,195)	-11%

Sales, administration and promotion expenses	48,700	42%	50,946	42%	2,246	5%

EBITDA	19,253	17%	9,812	8%	(9,441)	-49%

Depreciation and amortization	3,897	3%	5,115	4%	1,218	31%

Depreciation right of use asset	3,033	3%	3,072	3%	39	1%

Other expense (income), net	52	0%	(432)	0%	(484)	----

Operating Income	12,271	11%	2,057	2%	(10,214)	-83%

Comprehensive financial result:
Interest income	1,148	1%	975	1%	(173)	-15%
Interest expense	(3,582)	-3%	(3,559)	-3%	22	1%
Foreign exchange (loss) gain, net	(382)	0%	1,696	1%	2,078	----
Other financial results, net	13,364	12%	(2,646)	-2%	(16,009)	----
	10,548	9%	(3,534)	-3%	(14,082)	----

Participation in the net income of
CASA and other associated companies	303	0%	(296)	0%	(599)	----

Income (loss) before income tax	23,122	20%	(1,772)	-1%	(24,894)	----

Income tax	(6,769)	-6%	1,071	1%	7,840	----

Income (loss) before discontinued operations	16,353	14%	(702)	-1%	(17,054)	----

Result from discontinued operations	(202)	0%	(1,212)	-1%	(1,010)	----

Consolidated net income (loss)	16,151	14%	(1,914)	-2%	(18,064)	----

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
	Commercial Business	Financial Business	Grupo Elektra	Commercial Business	Financial Business	Grupo Elektra	Change

	*At December 31, 2019*			*At December 31, 2020*

Cash and cash equivalents	4,379	21,635	26,014	7,915	29,744	37,659	11,645	45%

Marketable financial instruments	16,071	79,964	96,035	5,244	84,797	90,041	(5,994)	-6%

Performing loan portfolio	-	73,150	73,150	-	67,966	67,966	(5,184)	-7%
Total past-due loans	-	4,117	4,117	-	4,688	4,688	572	14%
Gross loan portfolio	-	77,267	77,267	-	72,654	72,654	(4,613)	-6%

Allowance for credit risks	-	8,601	8,601	-	9,070	9,070	470	5%

Loan portfolio, net	-	68,666	68,666	-	63,584	63,584	(5,082)	-7%

Inventories	11,093	-	11,093	14,324	-	14,324	3,231	29%

Other current assets	14,548	8,716	23,265	14,298	9,987	24,284	1,020	4%

Total current assets	46,091	178,982	225,073	41,781	188,112	229,893	4,820	2%

Financial instruments	25,820	266	26,086	26,890	99	26,988	902	3%

Performing loan portfolio	-	33,059	33,059	-	45,593	45,593	12,534	38%
Total past-due loans	-	572	572	-	859	859	287	50%
Gross loan portfolio	-	33,631	33,631	-	46,452	46,452	12,821	38%

Allowance for credit risks	-	1,455	1,455	-	1,627	1,627	172	12%

Loan portfolio	-	32,176	32,176	-	44,825	44,825	12,649	39%

Other non-current assets	27,598	189	27,787	24,888	191	25,079	(2,708)	-10%
Investment in shares	2,050	-	2,050	1,693	-	1,693	(357)	-17%
Property, furniture, equipment and
investment in stores, net	8,180	7,280	15,460	7,422	7,938	15,360	(100)	-1%
Intangible assets	697	6,714	7,412	520	7,065	7,584	173	2%
Right of use asset	8,763	2,014	10,777	8,154	2,045	10,199	(578)	-5%
Other assets	709	578	1,286	1,094	8,182	9,275	7,989	----
TOTAL ASSETS	119,908	228,198	348,106	112,441	258,456	370,897	22,790	7%


Demand and term deposits	-	154,977	154,977	-	172,627	172,627	17,650	11%
Creditors from repurchase agreements	-	13,536	13,536	-	21,814	21,814	8,278	61%
Short-term debt	3,212	245	3,457	10,637	203	10,840	7,382	214%
Leasing	1,557	936	2,493	1,134	883	2,018	(475)	-19%
Short-term liabilities with cost	4,769	169,694	174,463	11,771	195,527	207,298	32,835	19%

Suppliers and other short-term liabilities	17,882	13,653	31,535	19,461	13,167	32,628	1,093	3%
Short-term liabilities without cost	17,882	13,653	31,535	19,461	13,167	32,628	1,093	3%

Total short-term liabilities	22,650	183,348	205,998	31,232	208,694	239,926	33,928	16%

Long-term debt	18,920	2,020	20,940	14,259	16	14,275	(6,665)	-32%
Leasing	7,622	1,103	8,725	7,788	1,294	9,081	357	4%
Long-term liabilities with cost	26,542	3,122	29,664	22,047	1,310	23,357	(6,308)	-21%

Long-term liabilities without cost	12,545	2,102	14,647	12,457	1,512	13,969	(678)	-5%

Total long-term liabilities	39,087	5,224	44,312	34,503	2,822	37,326	(6,986)	-16%

TOTAL LIABILITIES	61,737	188,572	250,309	65,735	211,516	277,252	26,942	11%

TOTAL STOCKHOLDERS' EQUITY	58,171	39,626	97,797	46,706	46,939	93,645	(4,152)	-4%

INFRASTRUCTURE

	4Q19		4Q20		Change

Points of sale in Mexico
Elektra	1,142	16%	1,143	17%	1	0%
Salinas y Rocha	38	1%	36	1%	(2)	-5%
Banco Azteca	1,838	25%	1,853	28%	15	1%
Freestanding branches	1,763	24%	1,771	27%	8	0%
Total	4,781	66%	4,803	73%	22	0%

Points of sale in Central and South America
Elektra	172	2%	108	2%	(64)	-37%
Banco Azteca	378	5%	213	3%	(165)	-44%
Freestanding branches	93	1%	48	1%	(45)	-48%
Total	643	9%	369	6%	(274)	-43%

Points of sale in North America
Purpose Financial	1,826	25%	1,429	22%	(397)	-22%
Total	1,826	25%	1,429	22%	(397)	-22%

TOTAL	7,250	100%	6,601	100%	(649)	-9%



Floor space (m²)	1,761	100%	1,542	100%	(219)	-12%



Employees
Mexico	74,154	83%	62,994	88%	(11,160)	-15%
Central and South America	9,671	11%	4,965	7%	(4,706)	-49%
North America	5,058	6%	3,319	5%	(1,739)	-34%
Total employees	88,883	100%	71,278	100%	(17,605)	-20%