GRUPO ELEKTRA ANNOUNCES EBITDA OF Ps.5,622 MILLION AND OPERATING PROFIT OF Ps.2,606 MILLION IN THE FIRST QUARTER OF 2022

—Solid performance of both commercial and financial businesses generates a 20% increase in consolidated revenue, to Ps.37,532 million—

—Firm growth in the consolidated loan portfolio of Grupo Elektra; increases 17%, to Ps.142,964 million

MEXICO CITY, May 2, 2022 /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 2022 financial results.

First quarter results

Consolidated revenue grew 20% to Ps.37,532 million in the period, compared to Ps.31,385 million in the same quarter of the previous year. Operating costs and expenses were Ps.31,911 million, from Ps.25,951 million in the same period of 2021.

As a result, EBITDA was Ps.5,622 million, compared to Ps.5,435 million a year ago. Operating income was Ps.2,606 million this quarter, from Ps.3,493 million in the same period of 2021.

The company reported a net loss of Ps.4,615 million, compared to a net profit of Ps.3,048 million a year ago.

   1Q 2021

   1Q 2022

   Change

Ps.

%

Consolidated revenue

$31,385

$37,532

$6,147

20%

EBITDA      

$5,435

$5,622

$187

3%

Operating profit

$3,493

$2,606

$(888)

-25%

Net result 

$3,048

$(4,615)

$(7,664)

—-

Net result per share

$13.39

$(20.43)

$(33.82)

—-

Figures in millions of pesos

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.

As of March 31, 2021, Elektra* outstanding shares were 227.7 million and as of March 31, 2022, were 225.9 million.

Revenue

Consolidated revenue increased 20% in the period, as a result of a 21% growth in financial income and an 18% increase in commercial sales.

The increase in financial income — to Ps.21,715 million, from Ps.18,002 million in the previous year — reflects a 33% increase in revenue from Banco Azteca México, 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 progress of thousands of businesses.

The increase in sales of the commercial business — to Ps.15,817 million, from Ps.13,383 million a year ago — reflects solid growth in motorcycle sales — which strengthen the productivity of businesses and the mobility of families — home appliances — which promotes well-being in a growing number of households — and telephony, which is commercialized with optimal customer service, in the most competitive conditions.

Costs and expenses

Consolidated costs for the quarter grew 23%, to Ps.16,791 million, from Ps.13,601 million in the previous year, as a result of a 25% increase in commercial costs — consistent with higher revenues from the sale of merchandise — and a 20% increase in the cost of the financial business, largely due to rise in the allowance for credit risks —given the strong growth of the gross loan portfolio in the period — as well as higher interest paid, in line with rising market rates.

Selling, administration and promotion expenses were Ps.15,120 million, from Ps.12,350 million a year ago, as a result of higher operating and advertising expenses, in the context of the development of initiatives that will further boost the company’s growth prospects.

EBITDA and net result

EBITDA was Ps.5,622 million, from Ps.5,435 million the previous year. The company reported operating income of Ps.2,606 million, compared to Ps.3,493 million in the same quarter of 2021.

The main variations below EBITDA were as follows:

Ps.805 million of other expenses, compared to other income of Ps.87 million a year ago, due to impairment of intangible assets of Purpose Financial this period, consistent with the company’s financial performance and outlook.

Ps.9,903 million decrease in other financial results, which reflects a 17% loss 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 gain of 4% a year ago.

Consistent with the results of the quarter, a decrease of Ps.3,055 million was registered in the tax provision in the period.

Grupo Elektra reported a net loss of Ps.4,615 million, from a net income of Ps.3,048 million in the same quarter of the previous year.

Unconsolidated Balance Sheet

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 pro forma 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.32,525 million as of March 31, 2022, compared to Ps.34,802 million of the previous year.

During the second quarter of 2021, Ps.2,030 million of Certificados Bursatiles Fiduciarios were amortized in advance. The amount corresponded to the unpaid balance of the DINEXCB 16 issues — for Ps.1,350 million due in 2023 with a rate of TIIE + 2.8% — and DINEXCB 16–2 for Ps.680 million, due in 2026 with a fixed rate of 8.8%.

The balance of cash and cash equivalents was Ps.6,691 million, from Ps.17,230 million in the previous year. As a result, net debt as of March 31, 2022 was Ps.25,834 million, compared to Ps.17,572 million a year ago.

As of March 31, 2022, the company’s stockholders’ equity was Ps.99,059 million, and the ratio of stockholders’ equity to total liabilities was 1.37 times.

As of
March 31
2021

As of
March 31
2022

        Cambio

Ps.

%

Cash and cash equivalents

$17,230

$6,691

(10,539)

(61%)

Marketable financial instruments

32,562

32,606

44

0%

Inventories

17,060

19,549

2,488

15%

Accounts receivables

51,752

49,505

(2,247)

(4%)

Other current assets

2,678

4,433

1,755

66%

Investments in shares

36,848

39,839

2,990

8%

Fixed assets

7,119

7,620

501

7%

Right of use assets

8,550

9,027

477

6%

Other assets

1,408

1,838

430

31%

Total assets

$175,208

$171,108

(4,100)

(2%)

Short-term debt

$18,978

$12,535

(6,443)

(34%)

Suppliers

8,008

8,221

213

3%

Other short-term liabilities

14,723

15,921

1,198

8%

Long-term debt

15,824

19,990

4,166

26%

Differed taxes

9,777

4,272

(5,505)

(56%)

Other long-term debt

10,778

11,109

331

3%

Total liabilities

$78,089

$72,049

(6,041)

(8%)

Stakeholder´s equity

$97,118

$99,059

$1,940

2%

Liabilities and equity

$175,208

$171,108

(4,100)

(2%)

Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

As of January 1, 2022, in accordance with current regulations, Banco Azteca México adopted NIIF-9 (‘Financial Instruments’) and NIIF-16 (‘Leases’), contained in the International Financial Reporting Standards (IFRS) to report its financial statements.

The main changes this quarter, as a result of the adoption, are: (i) growth of the balance of the consumer credit portfolio of Ps.11,950 million (registered at amortized cost under the effective interest rate method); (ii) increase in the balance of the allowance for credit risks for Ps.2,375 million, (recognition of the expected loss instead of the loss incurred for its calculation); (iii) increase in right-of-use assets and lease liabilities; as well as (iv) increase in the amount of accumulated results for Ps.6,261 million, derived from the recording of the previous effects. As a result of the aforementioned changes, the capitalization ratio at the end of the period grew by approximately 191 basis points.

The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of March 31, 2022, grew 17%, to Ps.142,964 million, from Ps.122,091 million in the previous year. The consolidated delinquency rate was 4.6% at the end of this period, compared to 3.4% the previous year.

Banco Azteca México’s gross portfolio balance increased 29% to Ps.135,721 million, from Ps.105,396 million a year ago. The Bank’s delinquency rate at the end of the quarter was 4.2%, compared to 3.4% a year earlier.

Grupo Elektra’s consolidated deposits grew 3%, to Ps.195,383 million, compared to Ps.189,105 million a year ago. Banco Azteca México’s traditional deposits were Ps.192,166 million, from Ps.190,614 million the previous year.

Banco Azteca México’s ratio of deposits to gross portfolio was 1.4 times, which allows solid growth for the Bank, with optimal funding cost.

The estimated capitalization ratio of Banco Azteca México was 16.54%.

Infrastructure

Grupo Elektra currently has 6,235 points of contact, compared to 6,736 units the previous year. The decrease derives mainly from the closure of 265 Purpose Financial points of contact in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the company’s operational efficiency.

The company has 4,736 storefronts in Mexico at the end of the quarter, 1,133 in the United States, and 366 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.

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 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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

MILLIONS OF MEXICAN PESOS

1Q21

1Q22

Change

Financial income

18,002

57%

21,715

58%

3,713

21%

Commercial income

13,383

43%

15,817

42%

2,434

18%

Income

31,385

100%

37,532

100%

6,147

20%

Financial cost

4,359

14%

5,215

14%

856

20%

Commercial cost

9,242

29%

11,576

31%

2,334

25%

Costs

13,601

43%

16,791

45%

3,190

23%

Gross income

17,784

57%

20,741

55%

2,957

17%

Sales, administration and promotion expenses

12,350

39%

15,120

40%

2,770

22%

EBITDA 

5,435

17%

5,622

15%

187

3%

Depreciation and amortization

2,029

6%

2,210

6%

182

9%

Depreciation right of use asset

0%

0%

0%

Other (income) loss, net

(87)

0%

805

2%

893

—-

Operating income

3,493

11%

2,606

7%

(888)

-25%

Comprehensive financial result:

     Interest income

220

1%

192

1%

(28)

-13%

     Interest expense

(987)

-3%

(947)

-3%

39

4%

     Foreign exchange gain, net

244

1%

43

0%

(201)

-82%

     Monetary loss

0%

0%

—-

     Other financial results, net

1,534

5%

(8,370)

-22%

(9,903)

—-

1,011

3%

(9,082)

-24%

(10,093)

—-

Participation in the net income of

CASA and other associated companies

(51)

0%

118

0%

169

—-

Income (loss) before income tax

4,454

14%

(6,358)

-17%

(10,811)

—-

Income tax

(1,315)

-4%

1,740

5%

3,055

—-

Income (loss) before discontinued operations

3,139

10%

(4,618)

-12%

(7,756)

—-

Result from discontinued operations 

(90)

0%

2

0%

93

—-

Impairment of intangible assets

0%

0%

—-

Consolidated net income (loss)

3,048

10%

(4,615)

-12%

(7,664)

—-

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, 2021

At March 31, 2022

Cash and cash equivalents

17,230

32,129

49,359

6,691

31,128

37,819

(11,539)

-23%

Marketable financial instruments

5,183

91,709

96,891

5,750

95,650

101,400

4,509

5%

Performing loan portfolio

70,809

70,809

76,718

76,718

5,909

8%

Total past-due loans

3,428

3,428

5,121

5,121

1,693

49%

Gross loan portfolio

74,237

74,237

81,839

81,839

7,602

10%

Allowance for credit risks

8,577

8,577

11,063

11,063

2,486

29%

Loan portfolio, net

65,660

65,660

70,776

70,776

5,116

8%

Inventories

17,060

0

17,060

19,549

19,549

2,488

15%

Other current assets 

15,182

12,224

27,407

16,887

11,354

28,241

835

3%

Total current assets

54,655

201,722

256,377

48,877

208,909

257,786

1,409

1%

Financial instruments

27,379

96

27,475

26,856

40

26,896

(578)

-2%

Performing loan portfolio

47,087

47,087

59,613

59,613

12,526

27%

Total past-due loans

767

767

1,512

1,512

744

97%

Gross loan portfolio

47,854

47,854

61,125

61,125

13,271

28%

Allowance for credit risks

1,682

1,682

3,771

3,771

2,089

124%

Loan portfolio

46,172

46,172

57,353

57,353

11,182

24%

Other non-current assets 

26,360

358

26,719

24,245

183

24,428

(2,290)

-9%

Investment in shares

1,629

1,629

2,209

11

2,220

591

36%

Property, furniture, equipment and

  investment in stores, net

7,119

8,413

15,532

7,620

7,365

14,985

(548)

-4%

Intangible assets

519

6,543

7,062

541

8,352

8,893

1,830

26%

Right of use asset

8,349

2,470

10,820

8,840

2,254

11,094

274

3%

Other assets

889

7,697

8,586

1,297

8,184

9,481

895

10%

TOTAL ASSETS

126,899

273,472

400,372

120,486

292,650

413,136

12,764

3%

Demand and term deposits

189,105

189,105

195,383

195,383

6,279

3%

Creditors from repurchase agreements

18,409

18,409

24,546

24,546

6,137

33%

Short-term debt

18,744

103

18,847

12,465

384

12,850

(5,998)

-32%

Leasing

1,331

1,119

2,450

1,647

933

2,580

129

5%

Short-term liabilities with cost

20,076

208,736

228,812

14,112

221,247

235,359

6,547

3%

Suppliers and other short-term liabilities

21,154

13,766

34,920

22,271

18,604

40,875

5,955

17%

Short-term liabilities without cost

21,154

13,766

34,920

22,271

18,604

40,875

5,955

17%

Total short-term liabilities

41,229

222,503

263,732

36,383

239,851

276,234

12,502

5%

Long-term debt

15,804

15

15,820

19,710

12

19,722

3,902

25%

Leasing

7,817

1,332

9,149

8,140

1,418

9,558

410

4%

Long-term liabilities with cost

23,621

1,347

24,968

27,851

1,430

29,280

4,312

17%

Long-term liabilities without cost

12,739

1,814

14,553

7,241

1,322

8,563

(5,990)

-41%

Total long-term liabilities

36,360

3,161

39,521

35,092

2,751

37,843

(1,678)

-4%

TOTAL LIABILITIES

77,589

225,664

303,253

71,475

242,602

314,077

10,824

4%

TOTAL STOCKHOLDERS’ EQUITY

49,310

47,808

97,118

49,011

50,048

99,059

1,940

2%

LIABILITIES + EQUITY

126,899

273,472

400,372

120,486

292,650

413,136

12,764

3%

INFRASTRUCTURE

1Q21

1Q22

Change

Points of sale in Mexico

Elektra 

1,142

17%

1,162

19%

20

2%

Salinas y Rocha 

36

1%

36

1%

0%

Banco Azteca

1,848

27%

1,885

30%

37

2%

Freestanding branches

1,934

29%

1,653

27%

(281)

-15%

Total

4,960

74%

4,736

76%

(224)

-5%

Points of sale in Central America

Elektra 

107

2%

105

2%

(2)

-2%

Banco Azteca

205

3%

204

3%

(1)

0%

Freestanding branches

66

1%

57

1%

(9)

-14%

Total

378

6%

366

6%

(12)

-3%

Points of sale in North America

Purpose Financial

1,398

21%

1,133

18%

(265)

-19%

Total

1,398

21%

1,133

18%

(265)

-19%

TOTAL

6,736

100%

6,235

100%

(501)

-7%

Floor space (m²)

1,544

100%

1,497

100%

(47)

-3%

Employees

Mexico

61,697

88%

61,465

88%

(232)

0%

Central and South America

5,090

7%

5,421

8%

331

7%

North America

3,186

5%

2,829

4%

(357)

-11%

Total employees

69,973

100%

69,715

100%

(258)

0%

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