Grupo Elektra Announces 92% Growth In EBITDA, To Ps. 5,085 Million In The Second Quarter Of 2021

MEXICO CITY, Oct. 22, 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 second quarter 2021 financial results.

Second Quarter Results

Consolidated revenue grew 34%, to Ps.36,068 million in the period, compared to Ps.26,917 million in the same quarter of the previous year. Operating costs and expenses were Ps.30,983 million, from Ps.24,275 million in the same period of 2020.

As a result, EBITDA was Ps.5,085 million, compared to Ps.2,643 million a year ago. Operating income was Ps.3,062 million this quarter, from Ps.555 million in the same period of 2020.

The company reported net income of Ps.6,948 million, compared to a net loss of Ps.3,538 million a year ago.

Revenue

Consolidated revenue increased 34% in the period, as a result of a 45% growth in commercial sales and a 27% increase in financial income.

The growth in sales of the commercial business — to Ps.16,054 million, from Ps.11,102 million a year ago — results to a large extent from a solid increase in sales of Italika motorcycles — which boost business productivity and mobility of families — and telephony — that strengthens the connectivity of an increasing number of users — that are marketed with optimal customer service, in the most competitive market conditions.

Sales of the commercial business had an additional boost with the development of new stores with a format that offers an optimal mix of merchandise and services, and allows to maximize the customer's shopping experience. Similarly, the 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.

The increase in financial income — to Ps.20,014 million, from Ps.15,815 million in the previous year — reflects, to a large extent, a 19% increase in Banco Azteca México's revenue, in the context of strong growth in the gross loan portfolio in the period, which boosts the well-being of millions of families and the growth of businesses.

Costs and Expenses

Consolidated costs for the quarter increased 49% to Ps.17,753 million, from Ps.11,923 million the previous year. The change is largely explained by a 66% increase in the commercial cost, to Ps.11,636 million, from Ps.7,014 million the previous year, derived from growth in sales of the commercial business, as well as higher costs associated with supply and merchandise distribution in stores.

Financial business costs grew 25%, to Ps.6,117 million, from Ps.4,909 million, as a result of the creation of loan loss reserves, which was partially offset by lower cost of consolidated deposits this period.

Selling, administrative and promotional expenses grew 7% to Ps.13,230 million as a result, mainly, of higher operating, advertising and personnel expenses, in the context of growing operations at the company.

EBITDA and net result

EBITDA was Ps.5,085 million, from Ps.2,643 million from the previous year. The company reported operating income of Ps.3,062 million, compared to Ps.555 million in the same quarter of 2020.

The most important variation below EBITDA was an increase of Ps.12,133 million in other financial results, which reflects an 18% gain this quarter in the market value of underlying assets of financial instruments held by the company — which does not imply cash flow — compared to a 10% decrease a year ago.

Consistent with the results of the quarter, there was an increase of Ps.4,501 million in the provision for taxes in the period.

Grupo Elektra reported net income of Ps.6,948 million, from a loss of Ps.3,538 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, the debt with cost was Ps.32,185 million as of June 30, 2021, compared to Ps.25,852 million in the previous year. The balance of cash and cash equivalents was Ps.10,355 million, from Ps.6,124 million from the previous year. As a result, net debt as of June 30, 2021 was Ps.21,830 million, compared to Ps.19,728 million a year ago.

As previously announced, during the quarter, Grupo Elektra's subsidiary, Nueva Elektra del Milenio, S.A. de C.V., as originator, placed through a special purpose vehicle established under Luxembourg law, Senior Notes for US$500 million, for seven years, at a 4.875% rate, in international markets.

On the other hand, during the quarter, Certificados Bursátiles Fiduciarios for Ps.2,030 million were early amortized. The amount corresponds to the outstanding balance of the DINEXCB 16 issues — for Ps.1,350 million due 2023 with a rate of TIIE + 2.8% — and DINEXCB 16-2 for Ps.680 million, due 2026 and a fixed rate of 8.8%.

As of June 30, 2021, the company's stockholders 'equity was Ps.103,700 million, and the stockholders' equity to total liabilities ratio was 1.4 times.

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America's consolidated gross portfolio as of June 30, 2021, grew 12%, to Ps.126,674 million, from Ps.113,174 million the previous year. The consolidated delinquency rate was 3.8% at the end of this period, compared to 5% the previous year.

Banco Azteca México's gross portfolio balance increased 16% to Ps.108,858 million, from Ps.93,595 million a year ago. The Bank's delinquency rate at the end of the quarter was 3.8%, compared to 5.3% 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 second quarter.

Grupo Elektra's consolidated deposits were Ps.180,695 million, compared to Ps.183,746 million a year ago. Banco Azteca México's traditional deposits were Ps.177,723 million, from Ps.177,335 million from the previous year.

The ratio of deposits to gross portfolio of Banco Azteca Mexico of 1.6 times, consolidates the solid growth prospects of the Bank, with optimal funding cost.

The estimated capitalization ratio of Banco Azteca México was 14.11%.

Infrastructure

Grupo Elektra currently has 6,400 points of contact, compared to 7,047 units the previous year. The decrease is mainly due to the closure of 316 contact points in Latin America, largely derived from the sale of Banco Azteca del Peru in the fourth quarter of 2020, as well as the closure of 290 contact points of Purpose Financial in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the company's operating efficiency.

In Mexico, in the last twelve months, 25 new Elektra stores were opened in strategic locations, with a format that offers an optimal mix of products and services, and allows the customer to maximize the purchase experience.

The company has 4,721 storefronts in Mexico at the end of the quarter, 1,311 in the United States, and 368 in Central 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.

Six-month consolidated results

Consolidated revenue in the first six months of the year grew 18%, to Ps.67,453 million, from Ps.57,199 million registered in the same period of 2020, driven by a 37% growth in sales of the commercial business and a 7 % increase in the financial business income.

EBITDA was Ps.10,520 million, compared to Ps.3,480 million from the previous year. The company reported operating income of Ps.6,556 million, from an operating loss of Ps.562 million a year ago.

In the first six months of 2021, a net income of Ps.9,997 million was recorded, compared to a loss of Ps.3,396 million a year ago. The change reflects superior operating results this period, as well as a gain in the market value of the underlying financial instruments that the company owns — and that does not imply cash flow — compared to a loss in the previous year.

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 (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 Spains' 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.