GRUPO ELEKTRA ANNOUNCES REVENUE OF Ps.48,297 MILLION AND EBITDA OF Ps.3,266 MILLION IN THE FOURTH QUARTER OF 2022

—Continued dynamism of Grupo Elektra's consolidated gross portfolio, increases 19%, to Ps.166,944 million—

—17% increase in consolidated deposits, to Ps.215,747 million generates solid prospects for the financial business—

MEXICO CITY, Feb. 21, 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 fourth quarter 2022 and full-year 2022 financial results.

Fourth quarter results

Consolidated revenue grew 12% to Ps.48,297 million in the period, compared to Ps.43,062 million in the same quarter of the previous year. Operating costs and expenses were Ps.45,031 million, from Ps.37,123 million in 2021.

As a result, EBITDA was Ps.3,266 million, compared to Ps.5,939 million a year ago. Operating income was Ps.897 million this quarter, from Ps.3,680 million in 2021.

The company reported net income of Ps.1,411 million, compared to a net income of Ps.1,948 million a year ago.

Figures in millions of pesos 
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.           
As of December 31, 2021, Elektra* outstanding shares were 226.3 million and as of December 31, 2022, were 221.7 million.

Revenue

Consolidated revenue increased 12% in the period, as a result of a 19% growth in financial income and a 5% increase in commercial sales.

The increase in financial income — to Ps.26,456 million, from Ps.22,272 million the previous year — reflects, to a large extent, a 27% increase in the revenue of Banco Azteca México, within the framework of dynamic growth of the gross credit portfolio in the period, which improves the well-being of millions of families and the growth of businesses.

The increase in sales of the retail business — to Ps.21,841 million, from Ps.20,790 million a year ago — is largely the result of strong growth in white line sales — which boosts the quality of life in households — and income related to electronic money transfers, in the context of important transfer flows from the United States to Mexico, which contribute to the well-being and progress of millions of families.

Costs and expenses

Consolidated costs for the quarter were Ps.26,197 million, compared to Ps.20,970 million for the previous year. The growth is explained by a 51% increase in the financial cost — derived from a greater creation of credit preventive reserves, in the context of solid dynamism of the consolidated gross portfolio, as well as higher interest paid, in line with growing market rates — and a 14% increase in commercial costs, largely as a result of higher costs in the supply chain and campaigns oriented to further boost merchandise sales.

Selling, administrative and promotional expenses totaled Ps.18,834 million, from Ps.16,153 million a year ago, largely as a result of higher operating expenses in the period. The increase is related to the development of supply logistics strategies that will further strengthen the product supply process, to promptly meet the growing demand for world-class merchandise by millions of customers, both on the sales floor and through the company's Omnichannel operations.

Similarly, impacting expenses are system developments to additionally promote high efficiency standards, both in digital banking which currently has more than 19 million users and which is growing dynamically — and in Omnichannel sales, with superior levels of security, comfort, and time savings —, as well as higher personnel and maintenance costs, in the context of a solid expansion of contact points, which allow maximizing the customer's shopping experience.

The company anticipates that the solid strategies to boost operational efficiency, together with strict budgets for expenses that will be implemented as of 2023, in the context of measures to streamline structures and optimize processes, will contribute to strengthen results of subsequent quarters.

EBITDA and net result

EBITDA was Ps.3,266 million, from Ps.5,939 million the previous year. The company reported operating income of Ps.897 million, compared to Ps.3,680 million in the same quarter of 2021.

The most important variation below EBITDA was an increase of Ps.2,418 million in other financial results, which reflects a 7% capital gain this quarter in the market value of the underlying financial instruments held by the company — and does not imply cash flow —compared to a 1% loss a year ago.

Grupo Elektra reported net income of Ps.1,411 million, from a net income of Ps.1,948 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.

Thus, the debt with cost was Ps.40,759 million as of December 31, 2022, compared to Ps.34,467 million of the previous year. The growth of the debt balance is related to the issuance of Certificados Busatiles and bank loans during the period.

The balance of cash and cash equivalents was Ps.9,808 million, from Ps.5,748 million the previous year.

As of December 31, 2022, the company's stockholders' equity was Ps.90,453 million, and the ratio of stockholders' equity to total liabilities was 1.1 times.

Consolidated Balance Sheet

Loan Portfolio and Deposits

As previously detailed, starting on January 1, 2022, Banco Azteca México adopted IFRS-9 ('Financial Instruments') and IFRS-16 ('Leases'), contained in the International Financial Reporting Standards (IFRS) to report their financial statements. These changes implied: growth in its portfolio, in the reserve for credit risks and in the accumulated results (IFRS-9) and a growth in the assets for rights of use and in the liabilities for leases (IFRS-16), when compared to figures for 2021.

The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of December 31, 2022, grew 19%, to Ps.166,944 million, from Ps.140,705 million the previous year.

Banco Azteca México's gross portfolio balance increased 31% to Ps.161,307 million, from Ps.123,197 million a year ago. The Bank's delinquency rate at the end of the quarter was 4.0%, compared to 4.7% a year earlier.

Grupo Elektra's consolidated deposits grew 17%, to Ps.215,747 million, from Ps.184,898 million a year ago. Banco Azteca México's traditional deposits were Ps.215,137 million, 17% above the Ps.183,726 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 cost.

The capitalization index of Banco Azteca México was 14.32%.

Infrastructure

Grupo Elektra currently has 6,346 contact points, compared to 6,279 units the previous year. The increase results from the opening of 310 contact points in Mexico and 40 in Central America, partially compensated by the closing of 283 Purpose Financial units in the United States, in the context of strategies oriented to promoting online credit operations and strengthening this company's operating efficiency.

The company has 4,990 storefronts in Mexico at the end of the quarter, 950 in the United States, and 406 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.

Twelve months results

Consolidated revenue for 2022 grew 13%, to Ps.164,691 million, from Ps.146,019 million registered in 2021, driven by a 17% growth in financial income and a 7% increase in commercial sales.

EBITDA was Ps.18,139 million, compared to Ps.22,015 million of the previous year. The company reported operating income of Ps.7,976 million, from Ps.13,668 million a year ago.

A net loss of Ps.7,353 million was recorded for the year, compared to a net income of Ps.12,944 million a year ago. The change reflects, to a large extent, a decrease in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to a gain of the previous year.

Figures in millions of pesos  
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.           
As of December 31, 2021, Elektra* outstanding shares were 226.3 million and as of December 31, 2022, were 221.7 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 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:

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