GRUPO ELEKTRA ANNOUNCES 17% GROWTH IN EBITDA TO Ps.4,840 MILLION IN THE THIRD QUARTER OF 2023

—Consolidated revenue increased 12%, to Ps.45,003 million, derived from firm dynamism in financial income—

—As a result of strategies that drive strong operational efficiencies, sales, administration, and promotion expenses remain constant—

—Continuous increase in the gross portfolio of Banco Azteca México, grows 9%, to Ps.162,843 million—

MEXICO CITY, Oct. 24, 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 third quarter 2023 results.

Third quarter results

Consolidated revenue grew 12%, to Ps.45,003 million in the period, compared to Ps.40,045 million in the same quarter of the previous year. Operating costs and expenses were Ps.40,163 million, from Ps.35,926 million in 2022.

As a result, EBITDA was Ps.4,840 million, 17% higher compared to Ps.4,119 million a year ago. Operating income was Ps.1,252 million, from Ps.1,802 million in the same period of 2022.

The company reported a net loss of Ps.183 million, compared to a loss of Ps.2,384 million a year ago.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.     
As of September 30, 2022, Elektra* outstanding shares were 225.9 million and as of September 30, 2023, were 221.0 million.

Revenue

Consolidated revenue increased 12% in the period, as a result of 18% growth in financial income and a 4% increase in commercial sales.

The increase in financial income — to Ps.28,306 million, from Ps.23,949 million the previous year — reflects, to a large extent, a 25% growth in Banco Azteca México's income — which additionally strengthens its solid financial margin — in the framework of dynamic growth of the gross credit portfolio in the period, which promotes the well-being of millions of families and the development of businesses.

The increase in income from the commercial business — to Ps.16,696 million, from Ps.16,095 million a year ago — results largely from growth in sales of Italika motorcycles — which strengthen business productivity and the mobility of millions of people — as well as household items — which boost the quality of life of a growing number of families.

Costs and expenses

Consolidated costs for the quarter were Ps.22,920 million, compared to Ps.18,653 million the previous year. The growth is explained by a 44% increase in the financial cost — derived from greater creation of preventive credit reserves, as well as higher interest paid, in line with higher market rates — and a 10% increase in the commercial cost in the period.

Sales, administrative and promotion expenses were Ps.17,243 million, practically unchanged compared to Ps.17,273 million a year ago, as a result of higher operating expenses, offset by a reduction in personnel expenses.

The stability of expenses in the period results from solid strategies that drive Grupo Elektra's operational efficiency, in conjunction with strict budgets throughout the organization — in the context of measures to rationalize structures and optimize processes.

EBITDA and net result

EBITDA was Ps.4,840 million, from Ps.4,119 million the previous year. The company reported operating income of Ps.1,252 million, compared to Ps.1,802 million in the same quarter of 2022.

Relevant variations below EBITDA were the following:

Increase of Ps.1,166 million in other expenses, due to net loss from the sale of commercial credit in the quarter.

Positive variation of Ps.3,996 million in other financial results, which reflects a 1% decrease this quarter in the market value of the underlying financial instruments that the company owns — and which does not imply cash flow — in comparison with a decrease of 11% a year ago.

Consistent with the results of the period, a positive balance of Ps.76 million in income taxes was recorded, compared to a positive balance of Ps.1,130 million a year ago.

Grupo Elektra reported a net loss of Ps.183 million, from a loss of Ps.2,384 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 as of September 30, 2023, was Ps.38,630 million, 5% lower compared to Ps.40,609 million of the previous year, mainly as a result of payments of international bonds and amortization of bank loans.

The balance of cash and cash equivalents was Ps.10,438 million, from Ps.9,480 million the previous year. Net debt was Ps.28,192 million, 9% below Ps.31,129 million a year ago.

As of September 30, 2023, the company's stockholders' equity was Ps.91,455 million, and the stockholders' equity to total liabilities ratio was 1.1 times.

   Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of September 30, 2023, grew 8%, to Ps.168,968 million, from Ps.155,737 million the previous year. The consolidated delinquency rate was 5.7% at the end of the period, compared to 3.9% the previous year.

Banco Azteca México's gross portfolio balance increased 9% to Ps.162,843 million, from Ps.149,849 million a year ago. The Bank's non-performing loan ratio at the end of the quarter was 5.3%, compared to 3.2% a year earlier.

Grupo Elektra's consolidated deposits grew 7%, to Ps.221,545 million, from Ps.208,014 million a year ago. Banco Azteca México's traditional deposits were Ps.219,639 million, 6% above the Ps.207,233 million of the previous year.

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

The Bank's liquidity coverage ratio — computable liquid assets / total net cash outflow — was 945%, an outstanding figure in the Mexican banking sector.

The capitalization ratio of Banco Azteca México was 14.57%.

Infrastructure 

Grupo Elektra currently has 6,218 contact points, compared to 6,207 units the previous year. The increase results from the net opening of 83 contact points in Mexico and 33 in Central America, partially offset by the closure of 105 Purpose Financial units in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the operational efficiency of this company.

The number of Grupo Elektra contact points in Mexico, at the end of the quarter, is 4,926, in the USA 873 and in Central America 419. The important distribution network provides the company with proximity to the customer and close service, and generates superior market positioning in the countries in which it operates.

Nine-month consolidated results

Consolidated revenue in the first nine months of the year grew 13%, to Ps.131,496 million, from Ps.116,394 million recorded in the same period of 2022, driven by a 21% growth in financial business revenue and 2 % in sales of the commercial business.

EBITDA was Ps.16,634 million, 12% higher compared to Ps.14,873 million the previous year. The company reported operating income of Ps.8,256 million, 17% above Ps.7,080 million a year ago.

In the first nine months of 2023, a net profit of Ps.5,220 million was recorded, compared to a loss of Ps.8,764 million a year ago. The change reflects superior operating results this period, as well as capital gain in the market value of the underlying financial instruments that the company owns — and which does not imply cash flow — compared to capital loss the previous year.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of September 30, 2022, Elektra* outstanding shares were 225.9 million and as of September 30, 2023, were 221.0 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 6,000 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 well-being; 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:

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