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TV Azteca announces 15% growth in EBITDA to Ps.1,219 million in 4Q19

  • Solid 24% increase in operating income, to Ps.958 million in the period
  • Growing demand for advertising spaces on TV Azteca´s platforms, resulted into a 16% increase in net sales, to Ps.4,082 million

Mexico City, February 25, 2020-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, today announced fourth quarter 2019 and full year 2019 financial results.

"People are watching TV Azteca more than ever, as a result of agile, dynamic content with the best quality,” commented Benjamín Salinas, CEO of TV Azteca; “this is reflected in the fact that 40% of Mexicans with the highest purchasing power are tuning in TV Azteca’s prime time, and with the increased advertising demand in the quarter, we will boost a new commercialization model with enhanced screens,” he concluded.

Fourth Quarter Results

Net revenue for the period was Ps.4,082 million, 16% higher than the Ps.3,516 million for the same quarter of last year. Total costs and expenses were Ps.2,863 million, in comparison to Ps.2,458 million for the previous year.

As a result, TV Azteca reported EBITDA of Ps.1,219 million, from Ps.1,058 million a year ago. The EBITDA margin for the quarter was 30%, constant from a year ago. Operating income was Ps.958 million, 24% higher from Ps.771 million a year ago.

The company registered a net income of Ps.1,132 million, from a net loss of Ps.113 million for the same period in 2018.

Net sales

Advertising sales in Mexico increased 17%, to Ps.3,927 million, from Ps.3,345 million the previous year, as a result of solid advertising spending from domestic advertisers in the framework of successful programming of TV Azteca in the quarter.

During this period, content sales to other countries were Ps.27 million in comparison with Ps.42 million from the previous year. Revenue for the quarter resulted mainly from the commercialization of the shows La fiscal de hierro, Vuélveme a querer and Las Bravo in Europe, as well as the sale of TV Azteca´s signals to the rest of the world.

Revenue from TV Azteca Guatemala and TV Azteca Honduras was Ps.30 million, in comparison with Ps.32 million of the previous year.

Azteca Comunicaciones Perú reported revenue of Ps.98 million, in comparison to Ps.97 million a year ago. Revenue resulted from telecommunications services and reimbursements from the Peruvian government for maintenance and operation of the fiber optic network.

Costs and SG&A Expenses

Total costs and expenses increased 16% in the quarter as a result of a 18% increase in production, programming, transmission and telecommunications services costs to Ps.2,443 million, from Ps.2,070 million a year ago, and an 8% increase in sales and administrative expenses, to Ps.421 million, compared to Ps.388 million in the previous year.

The increase in costs results from efforts to produce higher quality programs that have a positive impact on net sales.

The costs of Azteca Comunicaciones Perú were Ps.87 million, from Ps.93 million a year ago. The lower costs derive from transmission infrastructure rent reduction, operations efficiencies and lower advisory fees.

The increase in expenses at TV Azteca reflects higher service and operating expenses, partially offset by lower personnel expenses this quarter.

EBITDA and net results

Consolidated EBITDA of the company was Ps.1,219 million, compared to Ps.1,058 million for the same period of the prior year. Operating profit was Ps.958 million, from Ps.771 million a year ago.

Significant variations below EBITDA were the following:

An increase of Ps.84 million in other financial expenses, due to operating costs from factoring and coverage of financial instruments in the period.

A foreign exchange gain of Ps.306 million this quarter in comparison to a loss in foreign exchange for Ps.269 million a year ago, as a result of a net liability monetary balance in dollars in the company, along with appreciation of the peso this quarter, compared with a depreciation a year ago.

A benefit in tax provision for Ps.631 million this period, in comparison with a charge of Ps.220 million a year ago. The benefit this quarter derives from the partial release of the deferred tax asset reserve, based on an analysis of the company's tax loss recovery, which considers the financial and fiscal estimate of future results.

Growth of Ps.268 million in discontinued operations, as a result of the deconsolidation of the Atlas soccer team in the results of TV Azteca, which was previously announced.

TV Azteca registered net income of Ps.1,132 million for the quarter, compared to a net loss of Ps.113 million for the same period a year ago.

Cash Flow

During the period that ended on December 31, 2019, TV Azteca generated net cash flow from operations of Ps.2,544 million, in comparison to Ps.3,845 million of the previous year.

Once the flows of investment and financing activities were included, the generation of cash and cash equivalents of the company was Ps.581 million in the period, which contributed to strengthening TV Azteca's balance sheet.

Debt

As of December 31, 2019, TV Azteca’s outstanding debt was Ps.13,114 million, in comparison to Ps.13,396 million in the previous year.

The cash and cash equivalents balance at the end of the quarter, summed up at Ps.2,283 million, 34% above the Ps.1,702 million a year ago. Net debt of the company as of December 31, 2019 was Ps.10,831 million, in comparison to Ps.11,694 million in the previous year.

Twelve-month results

Net sales for 2019 were Ps.12,814 million, in comparison with Ps.13,680 million for the previous year. The reduction results from lower advertising investment by the federal government this period, as well as revenues related to the Soccer World Cup, a year ago.

Total costs and expenses were Ps.10,231 million, a 6% reduction from Ps.10,866 million for the same period of the previous year, mainly from costs related to the transmission of the Soccer World Cup in Russia in 2018.

TV Azteca reported EBITDA of Ps.2,584 million, compared to Ps.2,814 million from the previous year. EBITDA margin for 2019 was 20%. Operating profit was Ps.1,525 million, from Ps.1,647 million a year ago. The company reported a net gain of Ps.1,050 million, compared to a net loss of Ps.652 million in 2018.