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Oct. 22, 2021, 6:50 p.m. EDT

Grupo Elektra Announces 92% Growth In EBITDA, To Ps. 5,085 Million In The Second Quarter Of 2021

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--Solid performance of both commercial and financial businesses generates 34% increase in consolidated revenue, to Ps.36,068 million--

MEXICO CITY, Oct. 22, 2021 /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 second quarter 2021 financial results.

Second Quarter Results

Consolidated revenue grew 34%, to Ps.36,068 million in the period, compared to Ps.26,917 million in the same quarter of the previous year. Operating costs and expenses were Ps.30,983 million, from Ps.24,275 million in the same period of 2020.

As a result, EBITDA was Ps.5,085 million, compared to Ps.2,643 million a year ago. Operating income was Ps.3,062 million this quarter, from Ps.555 million in the same period of 2020.

The company reported net income of Ps.6,948 million, compared to a net loss of Ps.3,538 million a year ago.









Revenue

Consolidated revenue increased 34% in the period, as a result of a 45% growth in commercial sales and a 27% increase in financial income.

The growth in sales of the commercial business -- to Ps.16,054 million, from Ps.11,102 million a year ago -- results to a large extent from a solid increase in sales of Italika motorcycles -- which boost business productivity and mobility of families -- and telephony -- that strengthens the connectivity of an increasing number of users -- that are marketed with optimal customer service, in the most competitive market conditions.

Sales of the commercial business had an additional boost with the development of new stores with a format that offers an optimal mix of merchandise and services, and allows to maximize the customer's shopping experience. Similarly, the Omnichannel operations, with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices, from any device and at any time, further strengthened business performance.

The increase in financial income -- to Ps.20,014 million, from Ps.15,815 million in the previous year -- reflects, to a large extent, a 19% increase in Banco Azteca México's revenue, 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 growth of businesses.

Costs and Expenses

Consolidated costs for the quarter increased 49% to Ps.17,753 million, from Ps.11,923 million the previous year. The change is largely explained by a 66% increase in the commercial cost, to Ps.11,636 million, from Ps.7,014 million the previous year, derived from growth in sales of the commercial business, as well as higher costs associated with supply and merchandise distribution in stores.

Financial business costs grew 25%, to Ps.6,117 million, from Ps.4,909 million, as a result of the creation of loan loss reserves, which was partially offset by lower cost of consolidated deposits this period.

Selling, administrative and promotional expenses grew 7% to Ps.13,230 million as a result, mainly, of higher operating, advertising and personnel expenses, in the context of growing operations at the company.

EBITDA and net result

EBITDA was Ps.5,085 million, from Ps.2,643 million from the previous year. The company reported operating income of Ps.3,062 million, compared to Ps.555 million in the same quarter of 2020.

The most important variation below EBITDA was an increase of Ps.12,133 million in other financial results, which reflects an 18% gain this quarter in the market value of underlying assets of financial instruments held by the company -- which does not imply cash flow -- compared to a 10% decrease a year ago.

Consistent with the results of the quarter, there was an increase of Ps.4,501 million in the provision for taxes in the period.

Grupo Elektra reported net income of Ps.6,948 million, from a loss of Ps.3,538 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, 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 proforma 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.

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