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TV Azteca Announces 4% EBITDA Growth to Ps.949 Million in 3Q18

—Operating income increases 3% to Ps.684 million—

—Net sales grow 8% to Ps.3,539 million in the period—

—The company further strengthens its capital structure
through early amortization of US$92 million ATC loan—

MEXICO CITY, Oct. 23, 2018 (GLOBE NEWSWIRE) -- TV Azteca, S.A.B. de C.V. (BMV: AZTECACPO; Latibex: XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the third quarter 2018.

"We made solid progress in our quest to consolidate the company at the top of audience preferences, expanding successful content with an emphasis on live entertainment programs," commented TV Azteca CEO Benjamín Salinas. "Our superior content captivated millions of viewers and effectively reached target markets of numerous advertisers, which translated into revenue and EBITDA growth for the quarter."

Third quarter consolidated results

Net revenue for the period was Ps.3,539 million, 8% higher than the Ps.3,272 million for the same quarter of last year. Total costs and expenses were Ps.2,590 million, compared to Ps.2,360 million for the previous year.

As a result, TV Azteca reported EBITDA of Ps.949 million, 4% higher than the Ps.911 million of last year; EBITDA margin for the quarter was 27%. Operating income was Ps.684 million, 3% above the Ps.666 million for the previous year.

The company registered net income of Ps.438 million, compared to a net loss of Ps.308 million for the same quarter of 2017.

         
    3Q 2017 3Q 2018 Change
        Ps. %
           
Net sales   $3,272 $3,539 $267 8%
           
EBITDA

Operating income 
  $911

$666
$949

$684
$38

$17
4%

3%
           
Net result     $(308) $438 $745 ---
           
Net result per CPO   $(0.10) $0.15 $0.25 ---
           

Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
The number of CPOs outstanding as of September 30, 2017 was 2,986 million and as of September 30, 2018 was 2,987 million.

Net sales

Domestic advertising sales grew 7% to Ps.3,351 million, from Ps.3,140 million a year ago, as a result of superior content, which monetized large audiences.

Additionally, content sales to other countries were Ps.41 million in the quarter, from Ps.25 million in the previous year; revenue for the quarter resulted mainly from the commercialization of the shows La fiscal de hierro in South America, Pobre diabla in Europe and Africa and Las malcriadas in Central America, as well as the sale of TV Azteca content to pay TV channels in the rest of the world.

Revenue from TV Azteca Guatemala and TV Azteca Honduras was Ps.52 million, compared to Ps.13 million for the year-ago period.

Azteca Comunicaciones Perú reported revenue of Ps.95 million, from Ps.94 million a year ago.

Costs and SG&A expenses

Total costs and expenses increased 10% in the quarter as a result of a 10% increase in production, programming and transmission costs and telecommunications services to Ps.2,152 million, from Ps.1,954 million a year ago, in conjunction with 8% growth in selling and administrative expenses, to Ps.437 million, compared to Ps.406 million in the previous year.

The increase in costs results from efforts to produce superior quality programs, which translate into higher revenues. This increase was partially offset by a reduction in costs from Azteca Comunicaciones Perú, to Ps.117 million, from Ps.138 million, derived from the lower cost from the renting infrastructure of the network this quarter.

The growth in expenses reflects higher operating, personnel and travel expenses this quarter.

Consolidated EBITDA and net result

Consolidated EBITDA of the company was Ps.949 million, compared to Ps.911 million for the same period of the prior year. Operating profit was Ps.684 million, from Ps.666 million a year ago.

The most significant variations below EBITDA were the following:

A reduction of Ps.71 million in interest payments, due to lower total debt this period compared to the previous year.

A decrease of Ps.248 million in other financial expenses, due to expenses a year ago associated with the advanced payment of debt, as well as the new issues of Senior Notes.

A gain of Ps.338 million in foreign exchange this quarter, compared to a loss of Ps.10 million a year ago. The profit this quarter results from a net liability monetary balance in dollars, combined with an appreciation of the peso in the period.

A reduction of Ps.99 million in discontinued operations, as a consequence of a charge a year ago from the deterioration in the value of the spectrum of Azteca America stations that were sold in 2017.

TV Azteca registered net income of Ps.438 million for the quarter, compared to a net loss of Ps.308 million for the same period a year ago.

Cash Flow

During the first nine months of the year, TV Azteca generated operating cash flow of Ps.2,017 million. To this figure, cash flow from investment activities was added for Ps.473 million, largely due to the sale of Azteca America assets to HC2 Network Inc., as previously reported.

"The results of the period, together with effective financial planning, translated into solid cash generation, which allows us to further improve our financial perspectives," commented Esteban Galíndez, CFO of TV Azteca.

Early repayment of the credit with ATC

During the quarter, TV Azteca prepaid its credit of US$92 million, due in 2020, with American Tower Corporation (ATC), and agreed on new terms for the use of TV Azteca’s transmission towers.

The agreement included a cash payment of US$53 million; the remaining US$39 million are amortized through the use by ATC of available space on TV Azteca’s transmission towers in Mexico. The company also paid interest for US$6.5 million.

TV Azteca used a peso-denominated bank loan for the US$53 million payment.

"The agreement reduces the balance of the company's total debt, which further strengthens our capital structure," said Mr. Galíndez. "Similarly, it reduces interest expenses and TV Azteca's exposure to liabilities in foreign currency."

Debt

As of September 30, 2018, TV Azteca’s outstanding debt was Ps.13,016 million, 19% lower than the Ps.16,000 million a year ago.

In addition to the reduction of debt as a result of the early amortization of the ATC loan, during 2017 the company carried out a solid strategy to strengthen its capital structure, which also contributed to reducing the balance of its total debt.

The cash and cash equivalents balance at the end of the quarter totaled Ps.4,897 million, from Ps.6,119 million a year ago.

As a result, net debt of the company as of September 30, 2018 was Ps.8,119 million, 18% lower than the Ps.9,881 million a year ago.

Fiber-optic network in Peru

As previously announced, TV Azteca management is in the process of updating the valuation and perspectives of its investments in telecommunications in Peru, as previously requested by the board, in order to determine its consistency with the strategic focus of the company. Based on this analysis, TV Azteca will formulate a plan of action regarding these investments.

Nine months results

Net sales for the first nine months of 2018 were Ps.10,842 million, 10% higher than the Ps.9,825 million for the same period of 2017. Total costs and expenses were Ps.9,073 million, from Ps.7,150 million for the same period of the previous year. The higher costs mainly relate to the broadcast exhibition rights of World Cup Soccer in Russia, as well as the production of successful content that generates increasing revenues.

TV Azteca reported EBITDA of Ps.1,769 million, compared to Ps.2,674 million for the first nine months of the previous year. EBITDA margin for the period was 16%. Operating profit was Ps.1,017 million, from Ps.1,911 million a year ago. The company reported a net loss of Ps.539 million, compared to a net profit of Ps.144 million for the same period of 2017.

         
    9M 2017 9M 2018 Change
        Ps. %
           
Net sales   $9,825 $10,842 $1,017 10%
           
EBITDA 

Operating profit 
  $2,674

$1,911
$1,769

$1,017
$(905)

$(894)
-34%

-47%
           
Net result     $144 $(539) $(683) ----
           
Net result per CPO   $0.05 $(0.18) $(0.23) ----
           

Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
The number of CPOs outstanding as of September 30, 2017 was 2,986 million and as of September 30, 2018 was 2,987 million.


About TV Azteca

TV Azteca is one of the two largest producers of Spanish-language television programming in the world, operating four television networks in Mexico:  Azteca uno, Azteca 7, adn40 and a+ through more than 300 owned and operated stations across the country.  The company also operates Azteca Digital, the operator of several Mexico’s most visited websites and social media platforms.

TV Azteca 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), Advance America (www.advanceamerica.net), 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 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 TV Azteca and its subsidiaries are presented in documents sent to the securities authorities.

Investor Relations:

Bruno Rangel
Grupo Salinas
Tel. +52 (55) 2601-5400, ext. 11502
jrangelk@gruposalinas.com.mx
 
  Rolando Villarreal
TV Azteca, S.A.B. de C.V.
Tel. +52 (55) 2601-5400, ext. 11508
rvillarreal@gruposalinas.com.mx

Press Relations:

Luciano Pascoe
Grupo Salinas
Tel. +52 (55) 1720-1313 ext. 36553
lpascoe@gruposalinas.com.mx
  Daniel McCosh
Grupo Salinas
Tel. +52 (55) 1720-0059
dmccosh@gruposalinas.com.mx


TV AZTECA, S.A.B. DE C.V.  AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Mexican pesos of September 30 of 2017 and 2018)
                     
                     
    Third Quarter of:      
    2017   2018      
                    Change
                     
Net revenue   Ps   3,272   100 % Ps   3,539   100 % Ps   267   8 %
                     
Programming, production and transmission costs       1,954   60 %     2,152   61 %     198   10 %
Selling and administrative expenses       406   12 %     437   12 %     31   8 %
Total costs and expenses       2,360   72 %     2,590   73 %     229   10 %
                     
EBITDA       911   28 %     949   27 %     38   4 %
                     
Depreciation and amortization       191         179         (11 )  
Other expense -Net       54         86         32    
Operating profit       666   20 %     684   19 %     17   3 %
                     
Equity in income from affiliates       (36 )       (49 )       (13 )  
                     
Comprehensive financing result:                    
Interest expense       (368 )       (297 )       71    
Other financing expense       (319 )       (70 )       248    
Interest income       37         52         15    
Exchange loss  -Net       (10 )       338         348    
        (660 )       23         683    
                     
Income before the following provision       (30 ) -1 %     657   19 %     687    
                     
Provision for income tax       (179 )       (220 )       (41 )  
                     
Profit (Loss) from continuing operations       (209 )       438         646    
                     
Profit (loss) from discontinued operations       (99 )       -          99    
                     
Net income   Ps   (308 )   Ps   438     Ps   745    
                     
Non-controlling share in net profit   Ps   (1 )   Ps   (0 )   Ps   0    
                     
Controlling share in net profit    Ps   (307 ) -9 % Ps   438   12 % Ps   745    
                     

 

TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Mexican pesos of September 30 of 2017 and 2018)
                     
                     
    Period ended September 30,      
    2017   2018      
                Change
                     
Net revenue   Ps   9,825   100 % Ps   10,842   100 % Ps   1,017   10 %
                     
Programming, production and transmission costs       6,088   62 %     7,989   74 %     1,900   31 %
Selling and administrative expenses       1,062   11 %     1,084   10 %     22   2 %
Total costs and expenses       7,150   73 %     9,073   84 %     1,922   27 %
                     
EBITDA       2,674   27 %     1,769   16 %     (905 ) -34 %
                     
Depreciation and amortization       573         553         (21 )  
Other expense -Net       190         199         9    
Operating profit       1,911   19 %     1,017   9 %     (894 ) -47 %
                     
Equity in income from affiliates       (127 )       (136 )       (10 )  
                     
Comprehensive financing result:                    
Interest expense       (1,062 )       (968 )       94    
Other financing expense       (338 )       (157 )       180    
Interest income       90         120         30    
Exchange Gain  -Net       1,273         304         (969 )  
        (36 )       (700 )       (664 )  
                     
Income before the following provision       1,748   18 %     180   2 %     (1,568 ) 90 %
                     
Provision for income tax       (702 )       (719 )       (17 )  
                     
Profit (Loss) from continuing operations       1,046         (539 )       (1,585 )  
                     
Profit (loss) from discontinued operations       (902 )       -          902    
                     
Net income   Ps   144     Ps   (539 )   Ps   (683 )  
                     
Non-controlling share in net profit    Ps   (11 )   Ps   (1 )   Ps   10    
                     
Controlling share in net profit    Ps   155   2 % Ps   (538 ) -5 % Ps   (693 )  
                     

 

TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Mexican pesos of September 30 of 2017 and 2018)
                     
             
    At September 30        
    2017   2018        
                Change
Current assets:                    
Cash and cash equivalents    Ps    6,119    Ps    4,897    Ps    (1,222 )  
Accounts receivable       7,201       6,910       (291 )  
Other current assets       4,826       4,812       (14 )  
                     
Total current assets       18,146       16,619       (1,527 ) -8 %
                     
Accounts receivable       311       350       39    
Exhibition rights       2,476       2,161       (315 )  
Property, plant and equipment-Net       3,806       3,558       (248 )  
Television concessions-Net       6,730       5,484       (1,246 )  
Other assets       1,893       1,503       (390 )  
Deferred income tax asset       1,537       1,123       (414 )  
Total long term assets       16,753       14,179       (2,574 ) -15 %
                     
Total assets    Ps    34,899    Ps    30,798    Ps    (4,101 ) -12 %
                     
                     
Current liabilities:                    
Short-term debt    Ps    2,968    Ps    -     Ps    (2,968 )  
Other current liabilities       5,407       6,013       606    
Total current liabilities       8,375       6,013       (2,362 ) -28 %
                     
Long-term debt:                    
Structured Securities Certificates       3,943       3,958       15    
Long-term debt       7,423       9,058       1,635    
Total long-term debt       11,366       13,016       1,650   15 %
Other long term liabilities:                    
Advertising advances       7,743       8,287       544    
American Tower Corporation (due 2069)       1,666       -        (1,666 )  
Deferred income tax       311       -        (311 )  
Other long term liabilities       147       206       59    
Total other long-term liabilities       9,867       8,493       (1,374 ) -14 %
                     
Total liabilities       29,608       27,522       (2,086 ) -7 %
                     
Total stockholders' equity       5,291       3,276       (2,015 ) -38 %
                     
Total liabilities and equity    Ps    34,899    Ps    30,798    Ps    (4,101 ) -12 %
                     

 

               
TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Mexican pesos of September 30 of 2017 and 2018)
               
               
        Period ended September 30,
        2017     2018
Operating activities:              
Income before taxes on earnings     Ps   1,748     Ps   180  
               
  Charges to income not affecting resource         (531 )       1,139  
Cash flow generated before taxes to income         1,217         1,319  
               
  Accounts receivable and related parties         105         675  
  Inventories and performance rights         (477 )       231  
  Accounts payable, accrued expenses and taxes on earnings         89         (207 )
Net cash flow from operating activities         934         2,017  
               
Investing activities:              
  Acquisitions of property and equipment, intangibles and others         (280 )       (357 )
  Financial assets available-for-sale         -         -  
  Net sale of Azteca America assets         2,820         830  
Net cash flows from investing activities         2,540         473  
               
Financing activities:              
  Repayment of borrowings         (12,245 )       (999 )
  Proceeds from borrowings         11,636         1,748  
  Interest paid         (1,193 )       (1,111 )
  Others         (24 )       (13 )
Net cash flows from financing activities         (1,826 )       (376 )
               
  Increase in cash and cash equivalents         1,648         2,114  
  Cash and cash equivalents at beginning of year         4,470         2,783  
Cash and cash equivalents at end of year     Ps   6,119     Ps   4,897  
               

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