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Third Quarter EBITDA Up 20% to Record of Ps.948 Million (US$83
Million)
- Net Sales Up 23%, to All-Time High Level for a 3Q -
MEXICO CITY, Oct. 20 /PRNewswire-FirstCall/ -- TV Azteca, S.A. de C.V. (NYSE:
TZA; BMV: TVAZTCA), one of the two largest producers of Spanish language
television programming in the world, announced today all-time high third
quarter net sales of Ps.2,217 million (US$194 million) and a record EBITDA
level for a third quarter of Ps.948 million (US$83 million), 23% and 20%
increases, respectively, over the prior year period. EBITDA margin for the
quarter was 43%.
"Solid drivers of growth domestically and abroad, complemented this quarter by
the 2004 Summer Olympics, lead us to sizeable top line expansion, while
preserving robust profitability," said Mario San Roman, Chief Executive Officer
of TV Azteca. "Results show strong momentum, as today's numbers mark six years
of uninterrupted growth in sales and EBITDA for a third quarter."
"On the strategic front we made further advances on our cash-usage plan, with
the board's approval of US$210 million in cash distributions by 2005. We also
announced the prepayment of our US$300 million note due 2007, with peso-
denominated debt, which furthers our goals of reducing financial expense and FX
risk," added Mr. San Roman.
As previously detailed, the company's plan for uses of cash entails making cash
distributions to shareholders above US$500 million and reducing TV Azteca's
debt by approximately US$250 million within a six-year period that started in
2003.
Third Quarter Results
Net sales grew 23% to a record high of Ps.2,217 million (US$194 million), up
from Ps.1,799 million (US$158 million) for the same quarter of 2003. Total
costs and expenses rose 25% to Ps.1,269 million (US$111 million), from Ps.1,012
million (US$89 million) for the same period of last year. As a result, the
company reported EBITDA of Ps.948 million (US$83 million), 20% higher than
Ps.787 million (US$69 million) in the third quarter of 2003. Net income was
Ps.409 million (US$36 million), 17% higher than net income of Ps.351 million
(US$31 million) for the same period of 2003.
On a pro forma basis, excluding Ps.255 million (US$22 million) of revenue and
Ps.142 million (US$12 million) of costs recorded during the quarter in
connection with the transmission of the 2004 Summer Olympic Games, net sales
grew 9% and EBITDA increased 6%.
Millions of pesos(1) and dollars(2) except percentages and per share amounts.
3Q 2003 3Q 2004 Change
US$ %
Net Sales
Pesos Ps. 1,799 Ps. 2,217
US$ US$ 158 US$ 194 37 +23 %
EBITDA(3)
Pesos Ps. 787 Ps. 948
US$ US$ 69 US$ 83 14 +20 %
Net Income
Pesos Ps. 351 Ps. 409
US$ US$ 31 US$ 36 5 +17 %
Income per ADS(4)
Pesos Ps. 1.90 Ps. 2.21
US$ US$ 0.17 US$ 0.19 0.02 +17 %
(1) Pesos of constant purchasing power as of September 30, 2004.
(2) Conversion based on the exchange rate of Ps.11.41 per US dollar as of
September 30, 2004.
(3) EBITDA is Profit Before Depreciation and Amortization under Mexican
GAAP.
(4) Calculated based on 185 million ADSs outstanding as of September 30,
2004.
Net Sales
"Content appealing to a wide array of target markets in Mexico was carefully
positioned on our networks, and effectively satisfied rising advertising demand
throughout the quarter," added Mr. San Roman. "The Summer Olympics, with our
in-depth sports analysis, was a supplemental boost to the ongoing dynamism in
domestic sales."
Third quarter net revenue includes sales from Azteca America -- the company's
wholly-owned broadcasting network focused on the U.S. Hispanic market -- of
Ps.94 million (US$8 million), compared with Ps.54 million (US$5 million) for
the same period a year ago. Azteca America revenue is composed of Ps.64
million (US$6 million) in sales from the Los Angeles station KAZA-TV, and Ps.30
million (US$3 million) from network sales.
TV Azteca also reported sales of programming to other countries of Ps.24
million (US$2 million), compared with Ps.41 million (US$4 million) in the same
period a year ago. This quarter's programming exports were primarily driven by
the company's novelas La Heredera, Belinda and Las Juanas, which were sold
mostly in Latin American markets.
TV Azteca reported Ps.34 million (US$3 million) in advertising sales to Unefon,
compared with Ps.31 million (US$3 million) in the third quarter of 2003. In
accordance with the terms of the advertising contract between Unefon and TV
Azteca, during the third quarter Unefon paid to TV Azteca in cash the Ps.32
million (US$3 million) of advertising purchases placed within the prior three
month period.
During the quarter, content and advertising sales to Todito.com were Ps.49
million (US$4 million), compared with Ps.59 million (US$5 million) in the same
period of the prior year.
Barter sales were Ps.101 million (US$9 million), compared with Ps.88 million
(US$8 million) in the same period of last year. Inflation adjustment of
advertising advances was Ps.91 million (US$8 million), compared with Ps.53
million (US$5 million) for the third quarter of 2003.
Costs and Expenses
The 25% increase in third quarter costs and expenses resulted from the combined
effect of a 32% rise in programming, production and transmission costs to
Ps.982 million (US$86 million), from Ps.742 million (US$65 million) in the
prior year period, and a 6% growth in administration and selling expense to
Ps.287 million (US$25 million), from Ps.270 million (US$24 million) in the same
quarter a year ago.
On a pro froma basis, excluding exhibition rights and production costs during
the third quarter related to the 2004 Summer Olympics of Ps.142 million (US$12
million), programming, production and transmission costs grew 13%.
"Congruent with dynamic seasonal demand for advertising in Mexico and in the
US, we triggered strategic television programming initiatives during the
quarter, which contributed to the increase in costs. As a result of the new
shows, we have captured growing advertising opportunities in the two expanding
markets," said Carlos Hesles, Chief Financial Officer of TV Azteca.
Consistent with the growing production efforts, TV Azteca increased the overall
number of hours of its internally produced programming during the three month
period to 2,211 -- excluding the transmission of the 2004 Summer Olympics --
from 2,039 in the same quarter of the previous year.
The 6% growth in administration and selling expense primarily results from the
company's increased operations in Mexico and in the US Hispanic market.
EBITDA and Net Income
The 23% increase in third quarter net sales, combined with the 25% growth in
costs and expenses, resulted in EBITDA of Ps.948 million (US$83 million), up
20% from Ps.787 million (US$69 million) a year ago. The EBITDA margin was 43%,
compared with 44% in the same period of 2003.
Below EBITDA, third quarter results were negatively impacted by an increase in
other expense to Ps.205 million (US$18 million) from Ps.87 million (US$8
million) a year ago. Other expense for the quarter was primarily composed of
charitable donations of Ps.50 million (US$4 million), legal expenses of Ps.47
million (US$4 million), loss from the sale of fixed assets of Ps.38 million
(US$3 million), Ps.29 million (US$3 million) from the recognition of 50% of the
net loss of Todito.com in TV Azteca's financial statements, and Ps.41 million
(US$4 million) for the net effect of the recognition of the results from
Monarcas, TV Azteca's soccer team, and other expenses.
Net comprehensive financing cost during the quarter was Ps.223 million (US$20
million) compared with Ps.276 million (US$24 million) a year ago. The decline
was primarily influenced by a Ps.5 million (US$0.4 million) exchange loss
following a constant exchange rate during the three month period, compared with
a Ps.128 million (US$11 million) exchange loss resulting from a 5% depreciation
of the peso in the same period of 2003.
The lower exchange loss was partly compensated by other financing expense of
Ps.46 million (US$4 million) compared with Ps.17 million (US$1 million) in the
prior year period, primarily reflecting fees and costs related to the opening
of the recently announced secured credit line for the peso equivalent of US$300
million with Banco Inbursa. Additionally, loss on monetary position was Ps.27
million (US$2 million), compared with a gain of Ps.3 million (US$0.3 million) a
year ago, coming from a net asset monetary position this quarter.
Provision for income tax was Ps.15 million (US$1 million), compared with an
Ps.18 million (US$2 million) tax benefit in the same period of the prior year,
reflecting lower fiscal losses from subsidiaries this quarter.
Net income was Ps.409 million (US$36 million), 17% higher than net income of
Ps.351 million (US$31 million) for the same period of 2003.
Uses of Cash
The company noted its sound financial results have translated into solid cash
generation in the first nine months of 2004, in line with targets to create
free cash -- before debt payment and distributions to shareholders -- of US$150
million in 2004.
During the quarter, TV Azteca announced that its board of directors unanimously
approved US$210 million cash distributions to shareholders by 2005, of which
US$130 million are expected to be distributed during the fourth quarter of 2004
and US$80 million in 2005. The distributions are part of the company's
cash-usage plan, and are in addition to the approximately US$22 million of cash
disbursements scheduled for November 11, 2004, which were approved by the
company's shareholders on April 15.
Within the cash usage-plan the company has made aggregate distributions of
US$173 million, consisting of a US$125 million disbursement on June 30, 2003,
US$15 million on December 5, 2003, and US$33 million on May 13, 2004. The
accumulated distributions are equivalent to a 9% yield based on the closing
price of the TV Azteca ADR on October 19, 2004.
The distributions made to date, when added to the upcoming US$22 million and
US$210 million disbursements, will represent an aggregate amount of US$405
million cash distributions, equivalent to a 22% yield on the October 19, 2004
ADR price.
Under the cash plan, TV Azteca has also reduced its total debt by US$82
million, on a nominal US dollar basis, since June 2003. Additionally the
company announced the prepayment of its US$300 million 10 1/2% note due
February 15, 2007, with resources coming from the company's new credit facility
denominated in pesos with Banco Inbursa, with a Structured Securities
Certificate, or with a combination of both. On October 15, the trust that will
be issuing the Certificates filed with the Mexican Securities Authorities
(CNBV) an application for the issuance in the Mexican debt markets.
Debt Outstanding
As of September 30, 2004, the company's total outstanding debt was Ps.5,967
million (US$523 million). TV Azteca's cash balance was Ps.1,320 million
(US$116 million), resulting in net debt of Ps.4,647 million (US$407 million).
The total debt to last twelve months (LTM) EBITDA ratio was 1.6 times, and net
debt to EBITDA was 1.3 times. LTM EBITDA to net interest expense ratio was 6.3
times.
The company noted that excluding -- for analytical purposes -- Ps.1,366 million
(US$120 million) debt due 2069, total debt was Ps.4,601 million (US$403
million), and total debt to EBITDA ratio was 1.2 times.
Nine Month Results
Millions of pesos(1) and dollars(2) except percentages and per share amounts.
9M 2003 9M 2004 Change
US$ %
Net Sales
Pesos Ps. 5,153 Ps. 5,788
US$ US$ 452 US$ 507 56 +12 %
EBITDA(3)
Pesos Ps. 2,287 Ps. 2,506
US$ US$ 200 US$ 220 20 +10 %
Net Income
Pesos Ps. 1,014 Ps. 1,046
US$ US$ 89 US$ 92 3 +3 %
Income per ADS(4)
Pesos Ps. 5.48 Ps. 5.65
US$ US$ 0.48 US$ 0.50 0.02 +3 %
(1) Pesos of constant purchasing power as of September 30, 2004.
(2) Conversion based on the exchange rate of Ps.11.41 per US dollar as of
September 30, 2004.
(3) EBITDA is Profit Before Depreciation and Amortization under Mexican
GAAP.
(4) Calculated based on 185 million ADSs outstanding as of September 30,
2004.
Company Profile
TV Azteca is one of the two largest producers of Spanish language television
programming in the world, operating two national television networks in Mexico,
Azteca 13 and Azteca 7, through more than 300 owned and operated stations
across the country. TV Azteca affiliates include Azteca America Network, a new
broadcast television network focused on the rapidly growing US Hispanic market,
and Todito.com, an Internet portal for North American Spanish speakers.
Except for historical information, the matters discussed in this press release
are forward-looking statements and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. Risks that may affect TV Azteca are identified in its Form 20-F and
other filings with the US Securities and Exchange Commission.
TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS*
(Millions of Mexican pesos of September 30, 2004 purchasing power)
Third Quarter of:
2003 2004
Net revenue Ps 1,799 Ps 2,217
Programming, production and
transmission costs 742 982
Sales and administrative expenses 270 287
Total costs and expenses 1,012 1,269
EBITDA 787 948
Depreciation and amortization 91 97
Operating profit 696 851
Other expense - Net (87) (205)
Comprehensive financing cost:
Interest expense (204) (177)
Other financing expense (17) (46)
Interest income 71 32
Exchange loss - Net (128) (5)
Gain (loss) on monetary position 3 (27)
Net comprehensive financing cost (276) (223)
Income before provision for income
tax 333 423
Provision for income tax 18 (15)
Net income Ps 351 Ps 409
Net income of minority
stockholders Ps 1 Ps --
Net income of majority
stockholders Ps 351 Ps 409
End of period exchange rate Ps 11.00 Ps 11.41
Third Quarter of:
2003 2004 Change
Millions of US Dollars **
%
Net revenue US$ 158 100% US$ 194 100% US$ 37 23%
Programming, production and
transmission costs 65 41% 86 44% 21 32%
Sales and administrative
expenses 24 15% 25 13% 1 6%
Total costs and expenses 89 56% 111 57% 22 25%
EBITDA 69 44% 83 43% 14 20%
Depreciation and amortization 8 8 0
Operating profit 61 39% 75 38% 14 22%
Other expense - Net (8) (18) (10)
Comprehensive financing cost:
Interest expense (18) (16) 2
Other financing expense (1) (4) (3)
Interest income 6 3 (3)
Exchange loss -Net (11) (0) 11
Gain (loss) on monetary
position 0 (2) (3)
Net comprehensive financing
cost (24) (20) 5
Income before provision for
income tax 29 19% 37 19% 8 27%
Provision for income tax 2 (1) (3)
Net income US$ 31 20% US$ 36 18% US$ 5 16%
Net income of minority
stockholders US$ 0 US$ -- US$ (0)
Net income of majority
stockholders US$ 31 19% US$ 36 18% US$ 5 17%
End of period exchange rate
* Mexican GAAP.
** The U.S. dollar figures represent the Mexican peso amounts as of
September 30, 2004 expressed as of September 30, 2004 purchasing power,
translated at the exchange rate of Ps. 11.41 per U.S. dollar.
TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS*
(Millions of Mexican pesos of September 30, 2004 purchasing power)
Nine months ended September 30,
2003 2004
Net revenue Ps 5,153 Ps 5,788
Programming, production and
transmission costs 2,063 2,452
Sales and administrative expenses 803 830
Total costs and expenses 2,866 3,282
EBITDA 2,287 2,506
Depreciation and amortization 267 303
Operating profit 2,019 2,204
Other expense - Net (300) (439)
Comprehensive financing cost:
Interest expense (578) (551)
Other financing expense (44) (78)
Interest income 164 126
Exchange loss - Net (141) (14)
Loss on monetary position (21) (79)
Net comprehensive financing cost (619) (596)
Income before provision for income
tax 1,100 1,168
Provision for income tax (85) (122)
Net income Ps 1,015 Ps 1,046
Net income of minority
stockholders Ps 1 Ps --
Net income of majority
stockholders Ps 1,014 Ps 1,046
End of period exchange rate Ps 11.00 Ps 11.41
Nine months ended September 30,
2003 2004 Change
Millions of US Dollars**
%
Net revenue US$ 452 100% US$ 507 100% US$ 56 12%
Programming, production and
transmission costs 181 40% 215 42% 34 19%
Sales and administrative
expenses 70 16% 73 14% 2 3%
Total costs and expenses 251 56% 288 57% 36 15%
EBITDA 200 44% 220 43% 20 10%
Depreciation and amortization 23 27 3
Operating profit 177 39% 193 38% 16 9%
Other expense - Net (26) (39) (12)
Comprehensive financing cost:
Interest expense (51) (48) 2
Other financing expense (4) (7) (3)
Interest income 14 11 (3)
Exchange loss -Net (12) (1) 11
Loss on monetary position (2) (7) (5)
Net comprehensive financing
cost (54) (52) 2
Income before provision for
income tax 96 21% 102 20% 6 6%
Provision for income tax (7) (11) (3)
Net income US$ 89 20% US$ 92 18% US$ 3 3%
Net income of minority
stockholders US$ 0.1 US$ -- US$ (0)
Net income of majority
stockholders US$ 89 20% US$ 92 18% US$ 3 3%
End of period exchange rate
* Mexican GAAP.
** The U.S. dollar figures represent the Mexican peso amounts as of
September 30, 2004 expressed as of September 30, 2004 purchasing
power, translated at the exchange rate of Ps. 11.41 per U.S. dollar.
TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS*
(Millions of Mexican pesos of September 30, 2004 purchasing power)
At September 30,
2003 2004
Current assets:
Cash and cash equivalents Ps 1,300 Ps 1,320
Accounts receivable 3,263 3,239
Other current assets 1,303 953
Total current assets 5,866 5,512
Accounts receivable from Unefon 1,944 1,732
Investment in Azteca America 1,504 1,470
Exhibition rights 1,236 890
Property, plant and equipment-Net 2,380 2,084
Television concessions-Net 4,020 3,985
Investment in Todito 251 155
Other assets 850 1,052
Investment in Unefon 1,846 --
Investment in Cosmofrecuencias 380 --
Goodwill -Net 658 570
Deferred income tax asset 84
Total long term assets 15,153 11,938
Total assets Ps 21,019 Ps 17,450
Current liabilities:
Short-term debt Ps 1,018 Ps 577
Guaranteed senior notes 1,445 --
Other current liabilities 1,939 1,252
Total current liabilities 4,402 1,829
Long-term debt:
Guaranteed senior notes 3,468 3,423
Bank loans 26 601
Total long-term debt 3,494 4,024
Other long-term liabilities:
American Tower Corporation (due 2019) 1,384 1,366
Advertising advances 2,560 3,014
Unefon advertising advance 2,202 2,024
Todito advances 399 89
Other long term liabilities 137 81
Deferred income tax payable 184
Total other long-term liabilities 6,682 6,758
Total liabilities 14,578 12,611
Total stockholders' equity 6,441 4,839
Total liabilities and equity Ps 21,019 Ps 17,450
End of period exchange rate Ps 11.00 Ps 11.41
At September 30,
2003 2004 Change
Millions of US Dollars**
Current assets: %
Cash and cash equivalents US$ 114 US$ 116 US$ 2
Accounts receivable 286 284 (2)
Other current assets 114 84 (31)
Total current assets 514 483 (31) -6%
Accounts receivable from Unefon 170 152 (19)
Investment in Azteca America 132 129 (3)
Exhibition rights 108 78 (30)
Property, plant and equipment - Net 209 183 (26)
Television concessions - Net 352 349 (3)
Investment in Todito 22 14 (8)
Other assets 74 92 18
Investment in Unefon 162 -- (162)
Investment in Cosmofrecuencias 33 -- (33)
Goodwill -Net 58 50 (8)
Deferred income tax asset 7 (7)
Total long term assets 1,328 1,046 (282) -21%
Total assets US$ 1,842 US$ 1,529 US$ (313) -17%
Current liabilities:
Short-term debt US$ 89 US$ 51 US$ (39)
Guaranteed senior notes 127 -- (127)
Other current liabilities 170 110 (60)
Total current liabilities 386 160 (225) -58%
Long-term debt:
Guaranteed senior notes 304 300 (4)
Bank loans 2 53 50
Total long-term debt 306 353 46
Other long-term liabilities:
American Tower Corporation
(due 2019) 121 120 (2)
Advertising advances 224 264 40 18%
Unefon advertising advance 193 177 (16)
Todito advances 35 8 (27)
Other long term liabilities 12 7 (5)
Deferred income tax payable -- 16 16
Total other long-term liabilities 586 592 7 1%
Total liabilities 1,278 1,105 (172) -13%
Total stockholders' equity 564 424 (140) -25%
Total liabilities and equity US$ 1,842 US$ 1,529 US$ (313) -17%
End of period exchange rate
* Mexican GAAP.
** The U.S. dollar figures represent Mexican peso amounts as of September
30, 2004, expressed as of September 30, 2004 purchasing power,
translated at the exchange rate of Ps. 11.41 per U.S. dollar.
TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
Millions of Mexican pesos of September 30, 2004 purchasing power
Nine months ended September 30,
Operations: 2003 2004
Net income Ps 1,015 Ps 1,046
Charges (credits) to results
of operation not affecting resources:
Amortization of goodwill 34 29
Depreciation 233 274
Equity in affiliates 21 9
Deferred income tax (27) --
Net change in accounts receivable,
inventories, exhibition rights,
related parties, accounts payable
and accrued expenses 1,961 2,329
Unefon advertising advances (143) (122)
Todito advertising, programming,
and services advances (128) (242)
Advertising advances (2,219) (2,054)
Resources provided by operations 747 1,269
Investment:
Acquisition of property, machinery
and equipment - Net (184) (74)
Reimbursement of premium on issuance of
capital stock of Todito 35 --
Resources used in investing activities (149) (74)
Financing:
Guaranteed senior notes 164 (1,511)
Bank loans - Net 558 (291)
Stock options exercised 3 25
Preferred dividend paid (38) (49)
Repurchase of shares -- (624)
Sale of treasury shares 103 --
Capital stock decrease (1,482) (590)
Loan collected from a related party -- 186
Financial instruments (103) 414
Resources used in financing activities (795) (2,440)
Decrease in cash and cash equivalents (197) (1,245)
Cash and cash equivalents at beginning
of period 1,497 2,565
Cash and cash equivalents at end of
period Ps 1,300 Ps 1,320
DATASOURCE: TV Azteca, S.A. de C.V.
CONTACT: Investor Relations: Bruno Rangel, +5255-1720-9167,
, or Omar Avila, +5255-1720-0041,
, or Media Relations: Tristan Canales, +5255-1720-5786,
, or Daniel McCosh, +5255-1720-0059,
, all of TV Azteca, S.A. de C.V.
Web site: http://www.tvazteca.com.mx/