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ALFA, S.A.B. de C.V.
FIRST QUARTER 2016 FINANCIAL REPORT Alfa reports 1Q16 EBITDA up 10% year-‐on-‐year
Monterrey, N.L., Mexico. April 14, 2016.-‐ ALFA, S.A.B. de C.V. (ALFA) reported today 1Q16 unaudited financial results. Revenues amounted to U.S. $3,810 million, down 7% year-‐on-‐year. EBITDA was U.S. $580 million, up 10% vis-‐à-‐vis 1Q15.
Commenting on the Company’s results Mr. Alvaro Fernandez, ALFA’s President, said: “We reported a solid first quarter despite continued economic headwinds. Although revenues declined, EBITDA increased 10% year-‐on-‐year due to better margins for petrochemical products, higher profits at the high-‐tech auto parts subsidiary and the contribution from the consolidation of the new telecom entity since mid-‐February. These factors more than offset flat EBITDA (although growing in pesos) at the food company and lower profits at the energy subsidiary, which continues to be affected by lower oil prices.”
Consolidated capital expenditures and acquisitions amounted to U.S. $321 million during 1Q16. Net debt at the quarter end of U.S. $6,145 million was 19% higher when compared to U.S. $5,181 million in 1Q15. Higher net debt primarily reflects the consolidation of Axtel’s net debt of U.S. $721 million and dividend payments of U.S. $222 million. At the end of the quarter, financial ratios were: Debt, net of cash, to EBITDA: 2.5 times; Interest Coverage: 7.5 times. These ratios compare to 2.5 times and 6.1 times in 1Q15. The 1Q16 ratios reflect the complete consolidation of Axtel’s debt, but include only 45 days of its EBITDA. On a proforma basis, the Net Debt to EBITDA ratio is 2.4 times.
Majority Net Income was U.S. $142 million in 1Q16, compared to a Majority Net Loss of U.S. $127 million in 1Q15. ALFA’s 1Q16 operating performance more than offset the negative Comprehensive Financing Expense (“CFE”) of U.S. $107 million, which resulted from higher interest expenses and mark-‐to-‐market losses in the investment in Pacific Exploration and Production (“PRE”). These same factors, along with foreign exchange losses, negatively affected CFE and Majority Net Loss in 1Q15.
SELECTED FINANCIAL INFORMATION (U.S. $ MILLIONS)
1Q16 4Q15 1Q15 CH. % VS. 4Q15
CH. % VS. 1Q15
CONSOLIDATED REVENUES 3,810 3,897 4,093 (2) (7) Sigma 1,354 1,482 1,440 (9) (6) Alpek 1,182 1,219 1,321 (3) (11) Nemak 1,076 1,048 1,172 3 (8) Axtel 147 99 93 49 58 Newpek 25 32 39 (19) (35)
CONSOLIDATED EBITDA 580 647 529 (10) 10 Sigma 163 287 162 (43) -‐ Alpek 171 143 137 20 25 Nemak 209 165 197 27 6 Axtel 48 48 35 -‐ 36 Newpek (2) 37 7 (104) (121)
MAJORITY NET INCOME 142 12 (127) 1,083 212 CAPITAL EXPENDITURES & ACQ. 321 454 230 (29) 40 NET DEBT 6,145 4,785 5,181 28 19 Net Debt/LTM EBITDA* 2.5 1.9 2.5 LTM Interest Coverage* 7.5 7.7 6.1
* Times. UDM = Last 12 months 1 EBITDA = Operating Income + depreciation and amortization + impairment of assets.
CONTENTS: Summary of Groups… 2 – Alfa Financial Tables… 4 – ALFA Groups Financial Information… 8 This release may contain forward-‐looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information. Figures are presented in Mexican pesos or U.S. Dollars, as indicated. Where applicable, peso amounts were translated into U.S. Dollars using the average exchange rate of the months during which the operations were recorded. Financial ratios are calculated in U.S. Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 2
Summary of groups´ performance during 1Q16 Sigma’s revenues totaled U.S. $1,354 million during the quarter, down 6% vis-‐à-‐vis 1Q15. The decrease was mainly the result of the appreciation of the U.S. Dollar against the Peso and the Euro during the quarter. Excluding Fx impacts, Sigma’s revenues would have increased 5% year-‐on-‐year. Sigma’s 1Q16 EBITDA was U.S. $163 million, similar to 1Q15. Excluding the impact from the stronger U.S. Dollar, 1Q16 EBITDA would have increased 13% year-‐on-‐year, mainly as a result of improved performance of its European and Latin American operations.
During 1Q16, Sigma invested U.S. $40 million in fixed assets. This figure includes U.S. $17 million corresponding to the new plant being built in Burgos, Spain. Net Debt was U.S. $1,955 million at quarter end, up from U.S. $1,775 million in 1Q15. The increase reflects the acquisitions completed in 2015 (Ecarni and remaining 37% of CFG) and dividend payments. 1Q16 Net Debt to EBITDA ratio was 2.2 times, while Interest Coverage ratio was 8.9 times.
(See appendix “A” for more comprehensive analysis of Sigma´s 1Q16 financial results)
Alpek’s 1Q16 revenues totaled U.S. $1,182 million, down 11% year-‐on-‐year driven mainly by a 10% decline in average consolidated prices reflecting lower oil and feedstock prices. 1Q16 EBITDA was U.S. $171 million, up 25% when compared to 1Q15. The increase was mainly driven by better margins in both Polyester (due to a U.S. $66 per ton increase effective April, 2015) and Plastics and Chemicals (due to higher margins for polypropylene) segments. Savings generated by the Cosoleacaque cogeneration plant also contributed to the quarter’s improved results. Both 1Q16 and 1Q15 EBITDA figures included non-‐cash inventory devaluation charges resulting from lower paraxylene prices. Adjusting for such inventory valuations and the 1Q15 one-‐time gain from the sale of the polyurethane business, which amounted to U.S. $26 million, 1Q16 EBITDA would have increased 37% year-‐on-‐year.
Alpek’s 1Q16 Capital Expenditures were U.S. $25 million, similar to 1Q15. The majority of the funds were invested in the Altamira cogeneration facility and in M&G’s Corpus Christi PTA/PET site, including the recently announced acquisition of additional supply rights of 100,000 tons of integrated PET from the facility. Net Debt as of March 31, 2016 was U.S. $904 million, up 17% year-‐on-‐year. At quarter end, financial ratios were as follows: Net Debt to EBITDA, 1.4 times; Interest Coverage, 11.3 times.
(See appendix “B” for Alpek´s 1Q16 financial report)
Nemak´s 1Q16 sales volume was 1% lower than 1Q15. By region, Europe stood out due to market recovery, while sales in North America were slightly lower. Although smaller contributors, sales in South America decreased year-‐on-‐year while the Chinese market improved. 1Q16 Revenues at U.S. 1,076 million were 8% lower year-‐on-‐year. Lower aluminum prices and the appreciation of the U.S. Dollar vis-‐à-‐vis the Euro explained the decrease. However, 1Q16 EBITDA increased 6% year-‐on-‐year to U.S. $209 million due to higher sales of value-‐added products, currency effects and efficiencies. EBITDA per unit was U.S. $16.20 in 1Q16, up from U.S. $14.70 a year ago.
Capital expenditures in the quarter amounted to U.S. $131 million. Funds were utilized to expand capacity, update existing production equipment, and improve operational efficiency. Net debt at the end of 1Q16 totaled U.S. $1,327 million, up U.S. $57 million from 1Q15, reflecting capital expenditures during the periods. Financial ratios in 1Q16 were: Net Debt to EBITDA of 1.7 times, and Interest Coverage of 10.8 times.
(See appendix “C” for Nemak´s 1Q16 financial report)
As announced on January 18th, 2016, the consolidation of Alestra and Axtel became effective February 15, 2016. As a result, ALFA’s 1Q16 results include 45 days of the combined entity figures, plus 45 days of Alestra’s results.
Taking the above into account, Axtel’s revenues in the first quarter totaled U.S. $147 million, up 58% year-‐on-‐year. The increase is mostly explained by the consolidation of Axtel revenues, but also by the positive performance of the IT segment during the quarter. In peso terms, revenues increased 90%. IT and enterprise services represented 86% of total revenues. 1Q16 EBITDA was U.S. $48 million, a year-‐on-‐year increase of 36% mostly explained by the consolidation of Axtel. In peso terms, EBITDA increased 64%.
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 3
During 1Q16, capital expenditures totaled U.S. $71 million mostly directed to provide last-‐mile access to connect customers, to deploy IT infrastructure and to further increase data center capacity. At the end of the first quarter, net debt was U.S. $1,061 million, up U.S. $846 million year-‐on-‐year, including U.S. $721 million due to the consolidation of Axtel’s net debt after the merger with Alestra. Financial ratios at the end of 1Q16 were: Net Debt to EBITDA ratio of 5.9 times and Interest Coverage of 5.4 times. On a proforma basis, including Axtel’s and Alestra’s LTM EBITDA, Net Debt to EBITDA was 4.1 times.
(See appendix “D” for Axtel´s 1Q16 financial report)
Newpek’s operations in the U.S. continued to be impacted by industry-‐wide lower oil prices, which continued to fall, averaging U.S. $33 per barrel during 1Q16, a decline of U.S. $9 per barrel from the previous quarter, and U.S. $16 per barrel below the average for 1Q15. Newpek and its partners have decided to stop further drilling activities until a better hydrocarbon price environment is reached.
Newpek´s sales volume in the U.S. averaged 7.5 Thousand Barrels of Oil Equivalent per Day (“MBOED”) during 1Q16, down 12% from 1Q15. In Mexico, production averaged 3.6 MBOED during 1Q16, down 34% from 1Q15.
1Q16 revenues totaled U.S. $25 million and EBITDA was negative U.S. $1.5 million. This represented year-‐on-‐year decreases of 35% and 121%, respectively. Capital expenditures in the quarter amounted to U.S. $9 million. Net debt at the end of 1Q16 totaled U.S. $86 million, up U.S. $11 million from 1Q15.
(See appendix “E” for more comprehensive analysis of Newpek´s 1Q16 financial results)
Consolidated financial results 1Q16 Consolidated revenues amounted to U.S. $3,810 million, down 7% from the U.S. $4,093 million reported in 1Q15. The decrease mainly reflects lower raw materials prices for both Alpek (oil-‐related feedstocks) and Nemak (aluminum). Revenues were also negatively impacted by the stronger U.S. Dollar exchange rate, which reduced the amount of revenues translated to dollars of companies exposed to the Mexican Peso and the Euro, such as Sigma, Axtel and Nemak. During the quarter, foreign sales represented 65% of the total, similar to 1Q15.
1Q16 Consolidated Operating Income totaled U.S. $376 million, up 24% from 1Q15. The increase is due to higher operating income at Alpek, driven mainly by better PTA and PP margins, as well as an improved mix, currency effects and operational efficiencies at Nemak, and the contribution of the consolidation of Axtel for 45 days in the quarter. 1Q16 EBITDA was U.S. $580 million, up 10% year-‐on-‐year, reflecting the improvement in Operating Income already explained.
ALFA reported 1Q16 Comprehensive Financing Expense (“CFE”) of U.S. $107 million, compared to U.S. $421 million in 1Q15. The main factors behind the lower 1Q16 CFE were the absence of the high Fx losses reported in 1Q15, which amounted to U.S. $110 million, and a lower mark-‐to-‐market loss in the investment in shares of PRE (U.S. $34 million in 1Q16 vs. U.S. $224 million in 1Q15). At the quarter end, the book value of ALFA’s investment in PRE was U.S. $38 million.
Majority Net Income totaled U.S. $142 million in 1Q16, compared to a Majority Net Loss of U.S. $127 million in 1Q15. This is the result of ALFA’s year-‐on-‐year improvement in operating performance and much lower CFE charges as explained above.
Capital expenditures and acquisitions; net debt Consolidated capital expenditures and acquisitions totaled U.S. $321 million in 1Q16. All subsidiaries continued to make progress on their investment plans as discussed in the initial section of this report. At quarter-‐end 2016, ALFA’s Net Debt amounted to U.S. $6,145 million, U.S. $964 million higher than 1Q15. As explained in the cover page of this report, higher net debt reflects mainly the consolidation of Axtel’s debt of U.S. $721 million and dividend payments of U.S. $222 million. At the end of the quarter, financial ratios were: Debt, net of cash, to EBITDA: 2.5 times; Interest Coverage: 7.5 times. These ratios compare to 2.5 times and 6.1 times in 1Q15. The 1Q16 ratios reflect the complete consolidation of Axtel’s debt, but include only 45 days of its EBITDA. On a proforma basis, the Net Debt to EBITDA ratio is 2.4 times.
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 4
ALFA TABLE 1 | VOLUME AND PRICE CHANGES (%)
1Q16 vs.
4Q15 1Q15 Total Volume 1.0 0.9 Domestic Volume 0.0 5.8 Foreign Volume (2.4) 1.8 Avg. Ps. Prices 4.1 11.3 Avg. U.S. $ Prices (3.2) (7.7)
TABLE 2 | REVENUES (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 TOTAL REVENUES Ps. Millions 68,628 65,232 61,122 5 12 U.S. $ Millions 3,810 3,897 4,093 (2) (7)
DOMESTIC REVENUES Ps. Millions 23,873 22,115 21,345 8 12 U.S. $ Millions 1,326 1,321 1,430 -‐ (7)
FOREIGN REVENUES Ps. Millions 44,755 43,117 39,778 4 13 U.S. $ Millions 2,484 2,576 2,663 (4) (7) Foreign / Total (%) 65 66 65
TABLE 3 | OPERATING INCOME AND EBITDA (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 OPERATING INCOME Ps. Millions 6,761 5,932 4,524 14 49 U.S. $ Millions 376 357 302 5 24 EBITDA Ps. Millions 10,444 10,809 7,918 (3) 32 U.S. $ Millions 580 647 529 (10) 10
TABLE 4 | COMPREHENSIVE FINANCING (EXPENSE) / INCOME (CFI) (U.S. $ MILLIONS) (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 Financial Expenses (109) (88) (91) (24) (20) Financial Income 9 12 7 (22) 36 Net Financial Expenses (100) (76) (84) (31) (19) Fx Gains (Losses) 27 (46) (112) 158 124 PRE valuation (34) (53) (224) 36 85 Capitalized CFE 0 3 0 (86) 995 CFE (107) (172) (421) 38 75 Avg. Cost of Borrowed Funds (%) 5.0 4.3 4.6
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 5
ALFA TABLE 5 | MAJORITY NET INCOME (U.S. $ MILLIONS) (%) 1Q16 VS.
1Q16 4Q15 1Q15 4Q15 1Q15 Consolidated Net Income (Loss) 212 50 (98) 320 316 Minority Interest 70 39 29 79 141 Majority Net Income (Loss) 142 12 (127) 1,118 212 Per Share (U.S. Dollars) 0.03 0.00 (0.02) 1,285 239 Avg. Outstanding Shares (Millions) 5,121 5,121 5,135
TABLE 6 | CASH FLOW (U.S. $ MILLIONS) (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 EBITDA 580 647 529 (10) 10 Net Working Capital & Others (387) 170 (258) (328) (50) Capital Expenditures & Acquisitions (321) (454) (230) 29 (40) Net Financial Expenses (111) (81) (86) (37) (29) Taxes (122) (84) (63) (45) (94) Dividends (ALFA, S.A.B.) (172) 0 0 -‐ -‐ Other Sources / Uses (826) (123) 50 (572) (1,752) Decrease (Increase) in Net Debt (1,360) 75 (58) (1,913) (2,245)
TABLE 7 | SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS)
1Q16 4Q15 1Q15 Assets 16,794 15,500 15,609 Liabilities 11,937 10,862 11,250 Stockholders’ Equity 4,857 4,639 4,359 Majority Equity 3,645 3,614 3,447 Net Debt 6,145 4,785 5,181 Net Debt/EBITDA* 2.5 1.9 2.5 Interest Coverage* 7.5 7.7 6.1 * Times: LTM = Last 12 months
Appendix AALFA, S.A.B. de C.V. and SubsidiariesBALANCE SHEETInformation in millions of Nominal Mexican Pesos
Mar-‐16 Dec-‐15 Mar-‐15 Dec 15 Mar 15ASSETS
CURRENT ASSETS:Cash and cash equivalents 18,995 24,852 22,884 (24) (17) Trade accounts receivable 28,143 23,946 22,413 18 26 Other accounts and notes receivable 7,719 9,530 8,079 (19) (4) Inventories 35,062 34,128 30,389 3 15 Other current assets 8,542 4,874 5,734 75 49 Total current assets 98,461 97,331 89,499 1 10
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 2,399 1,974 1,673 22 43 PROPERTY, PLANT AND EQUIPMENT 124,047 106,376 93,447 17 33 INTANGIBLE ASSETS 47,638 44,615 38,633 7 23 OTHER NON-‐CURRENT ASSETS 19,695 16,409 13,287 20 48
Total assets 292,240 266,705 236,539 10 24 LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:Current portion of long-‐term debt 4,132 3,135 11,374 32 (64) Bank loans and notes payable 1,445 2,443 8,143 (41) (82) Suppliers 38,749 38,915 33,101 (0) 17 Other current liabilities 20,225 18,473 16,141 9 25 Total current liabilities 68,404 62,966 68,759 9 (1) LONG-‐TERM LIABILITIES:Long-‐term debt 116,445 101,631 82,685 15 41 Deferred income taxes 12,282 11,957 9,775 3 26 Other liabilities 6,722 6,802 6,241 (1) 8 Estimated liabilities for seniority premiums and pension plans 3,875 3,535 3,025 10 28
Total liabilities 207,728 186,890 170,485 11 22 STOCKHOLDERS' EQUITY:Controlling interest:Capital stock 205 205 207 0 (1)
Contributed capital 205 205 207 0 (1) Earned surplus 63,215 61,986 52,030 2 21 Total controlling interest 63,421 62,191 52,237 2 21 Total Non-‐controlling interest 21,091 17,624 13,817 20 53
Total stockholders' equity 84,512 79,815 66,054 6 28 Total liabilities and stockholders' equity 292,240 266,705 236,539 10 24 Current ratio 1.44 1.55 1.30Debt to equity 2.46 2.34 2.57
(%) Mar 16 vs.
Appendix BALFA, S.A.B. DE C.V. and Subsidiaries
STATEMENT OF COMPREHENSIVE INCOMEInformation in millions of Nominal Mexican Pesos
1Q16 4Q15 1Q15 YTD '16 YTD '15 4Q15 1Q15
Net sales 68,628 65,232 61,122 68,628 61,122 5 12
Domestic 23,873 22,115 21,345 23,873 21,345 8 12
Export 44,755 43,117 39,778 44,755 39,778 4 13
Cost of sales (52,584) (51,732) (48,938) (52,584) (48,938) (2) (7)
Gross profit 16,044 13,500 12,184 16,044 12,184 19 32
Operating expenses and others (9,283) (7,568) (7,660) (9,283) (7,660) (23) (21)
Operating income 6,761 5,932 4,524 6,761 4,524 14 49
Comprehensive financing expense, net (1,946) (2,918) (6,244) (1,946) (6,244) 33 69
Equity in income (loss) of associates (12) 7 (83) (12) (83) (265) 86
Income before the following provision 4,803 3,021 (1,803) 4,803 (1,803) 59 366
Provisions for:Income tax (1,018) (2,211) 367 (1,018) 367 54 (377)
Consolidated net income 3,784 810 (1,436) 3,784 (1,436) 367 364
Income (loss) corresponding to minority interest 1,247 648 435 1,247 435 92 187
Net income (loss) corresponding to majority interest 2,538 162 (1,871) 2,538 (1,871) 1,466 236
EBITDA 10,444 10,809 7,917 10,444 7,917 (3) 32 Interest coverage* 7.4 7.7 6.1 7.4 6.1 * LTM
1Q16 vs. (%)
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 8
ENRIQUE FLORES +52 (81) 8748.1207 [email protected]
LUIS OCHOA +52 (81) 8748.2521 [email protected]
JUAN ANDRÉS MARTÍN +52 (81) 8748.1676 [email protected]
MARCELA ELIZONDO +52 (81) 8748.1223 [email protected]
MBS VALUE PARTNERS SUSAN BORINELLI +1 (646) 330.5907 [email protected]
Appendix: A SIGMA 9 B ALPEK 11 C NEMAK 23 D AXTEL 30 E NEWPEK 36
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 9
SIGMA
Refrigerated Food Products | 36% AND 28% OF ALFA´S REVENUES AND EBITDA IN 1Q16
Industry comments In Mexico, the consumer confidence index showed a decrease when compared with 4Q15 and also was slightly lower than 1Q15. According to the National Association of Supermarkets and Department Stores (ANTAD), 1Q16 supermarket same store sales were up 7% year-‐on-‐year in nominal pesos, an improvement from the 6% year-‐on-‐year increase reported in 4Q15. In the U.S., consumer confidence remained robust throughout the quarter, but lower than 1Q15, while food retail sales have been stable the last 3 quarters. Lastly, the European consumer confidence index decreased slightly during 1Q16. With respect to raw materials, prices in dollars of key ingredients for Sigma’s products during 1Q16 remained below 1Q15 levels. More specifically, pork prices decreased approximately 5%, while turkey thighs and milk prices were 25% and 29% lower, respectively. Turkey breasts prices were 30% lower than 4Q15, but still remained 29% higher than 1Q15.
Despite the lower price of key raw materials explained above, the strengthening of the U.S. Dollar vis-‐a-‐vis the Mexican Peso continued to offset the above mentioned cost reduction for Mexican packaged meats producers, as most of their inputs are sourced from the U.S.
Operations During 1Q16, Sigma sold approximately 400,100 tons of food products, 1% lower than in 1Q15. Sigma’s 1Q16 average sales prices in dollars decreased 5% when compared to 1Q15, mainly due to the stronger U.S. Dollar exchange rate against both the Mexican Peso and the Euro. However, excluding the exchange rate effect, average prices increased 5%.
Financial results Revenues totaled U.S. $1,354 million during 1Q16, down 6% year-‐on-‐year, primarily due to a stronger U.S. Dollar, which increased 21% and 3% year-‐on-‐year against the Peso and the Euro, respectively. Excluding FX impacts, Sigma’s revenues would have increased 5%. Sales in Mexico accounted for 42% of the quarter’s total, while Europe represented 36%, the U.S. 15%, and Latin America 7%.
1Q16 Operating Income and EBITDA were U.S. $118 million and U.S. $163 million, up 2% and flat year-‐on-‐year, respectively. Europe and Latin America were the main contributors to operating income growth in the period. Excluding the effect of a stronger U.S. Dollar, 1Q16 EBITDA would have increased 13% year-‐on-‐year.
Capital expenditures and acquisitions; net debt During 1Q16, capital expenditures totaled U.S. $40 million. This includes a disbursement of U.S. $17 million corresponding to the initial investment to rebuild the plant in Burgos, Spain. The remaining funds were invested in fixed assets at various facilities and other projects.
At the end of 1Q16, Net Debt was U.S. $1,955 million, up U.S. $180 million from 1Q15 due to the acquisitions completed during 2015 (Ecarni and remaining 37% of CFG) and dividend payments. 1Q16 Net Debt to EBITDA was 2.2 times and Interest Coverage was 8.9 times. These ratios compare favorably with those reported in 1Q15, which were 2.6 times and 5.6 times, respectively.
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 10
SIGMA
TABLE 1 | VOLUME AND PRICE CHANGES (%) 1Q16 vs.
4Q15 1Q15 Total Volume (2.1) (0.6) Avg. Ps. Prices 0.4 14.2 Avg. U.S. $ Prices (6.7) (5.3) TABLE 2 | REVENUES (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 TOTAL REVENUES Ps. Millions 24,388 24,825 21,494 (2) 13 U.S. $ Millions 1,354 1,482 1,440 (9) (6)
DOMESTIC REVENUES Ps. Millions 10,172 10,479 9,468 (3) 7 U.S. $ Millions 565 625 634 (10) (11)
FOREIGN REVENUES Ps. Millions 14,216 14,347 12,026 (1) 18 U.S. $ Millions 789 857 805 (8) (2) Foreign / Total (%) 58 58 56
TABLE 3 | OPERATING INCOME AND EBITDA (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 OPERATING INCOME Ps. Millions 2,117 3,960 1,728 (47) 23 U.S. $ Millions 118 237 115 (50) 2 EBITDA Ps. Millions 2,929 4,792 2,428 (39) 21 U.S. $ Millions 163 287 162 (43) -‐ TABLE 4 | SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS)
1Q16 4Q15 1Q15 Assets 4,977 4,858 5,127 Liabilities 4,028 4,024 4,134 Stockholders’ Equity 949 834 993 Majority Equity 918 805 786 Net Debt 1,955 1,925 1,775 Net Debt/EBITDA* 2.2 2.2 2.6 Interest Coverage* 8.9 8.5 5.6 * Times: LTM = Last 12 months
First Quarter 2016 (1Q16) |
This release contains forward‐looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information based on International Financial Reporting Standards (IFRS). Figures are stated in nominal Mexican pesos ($) and in current U.S. Dollars (U.S. $), as indicated. Where applicable, peso amounts were translated into U.S. Dollars using the average exchange rate of the months during which operations were recorded. Financial ratios are calculated in U.S. Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.
Monterrey, Mexico. April 14, 2016 – Alpek, S.A.B. de C.V. (BMV: ALPEK)
Alpek reports 1Q16 EBITDA of U.S. $171 million
Selected Financial Information (U.S. $ Millions)
(1) Times: Last 12 months
Operating & Financial Highlights (1Q16)
Alpek
• 1Q16 Consolidated EBITDA of U.S. $171 million, including a U.S. $9 million non-cash
inventory devaluation charge and a U.S. $2 million one-time gain from EPS asset acquisition
• U.S. $110 million cash dividend paid in March, as approved at Annual Shareholder Meeting
• Solid balance sheet: 1.4x Net Debt / EBITDA and 11.3x Interest Coverage
Polyester
• 1Q16 Polyester EBITDA of U.S. $73 million, impacted by an U.S. $11 million non-cash
inventory devaluation charge
• U.S. Intl. Trade Commission made affirmative final determination to apply antidumping
and/or countervailing duties on PET imports from China, India, Oman and Canada
Plastics &
Chemicals
(P&C)
• 1Q16 P&C EBITDA of U.S. $99 million, including a U.S. $2 million non-cash inventory
valuation credit and a U.S. $2 million one-time gain from EPS asset acquisition
• Better-than-expected polypropylene performance boosted P&C results
• Closing of the 20 Kta EPS plant acquisition in Concon, Chile as planned
1Q16 4Q15 1Q15 4Q15 1Q15
988 967 989 2 -
Polyester 755 733 757 3 -
Plastics & Chemicals 234 235 232 - 1
1,182 1,219 1,321 (3) (11)
Polyester 837 884 930 (5) (10)
Plastics & Chemicals 345 335 391 3 (12)
171 143 137 20 25
Polyester 73 70 60 4 22
Plastics & Chemicals 99 72 75 37 32
72 29 25 150 190
32 168 69 (81) (54)
904 722 774 25 17
1.4 1.1 1.7
11.3 10.7 7.1
Net Debt/LTM EBITDA(1)
Interest Coverage(1)
Profit Attributable to Controlling Interest
CAPEX and Acquisitions
Net Debt
Consolidated EBITDA
Total Volume (ktons)
Consolidated Revenues
(%) 1Q16 vs.
First Quarter 2016 (1Q16) |
www.alpek.com 2
Message from the CEO
Alpek’s first quarter 2016 results reflect solid performance in both our Polyester and Plastics & Chemicals
(P&C) business segments. Consolidated EBITDA was U.S. $171 million, up 25% year-on-year, as oil and feedstock
price volatility was more than offset by positive drivers.
Reference Brent oil prices were volatile during 1Q16, ranging between a 12-year low of U.S. $ 26/bbl in
January and a 3-month high of U.S. $41/bbl in March. Similarly, the U.S. reference paraxylene (Px) price reached
a 7-year low in February, before recovering slightly at the end of the quarter. Yet, the March 2016 Px price was
5% and 14% below December and March 2015, respectively.
As a result, Alpek’s 1Q16 Consolidated EBITDA was impacted by a U.S. $9 million non-cash inventory
devaluation charge. The breakdown of inventory charges by business segment was: U.S. $11 million in Polyester
and a U.S. $2 million credit in Plastics & Chemicals.
Polyester segment EBITDA was U.S. $73 million in 1Q16. Adjusting for inventory valuation, 1Q16
Polyester EBITDA increased 12% year-on-year despite a lower oil and feedstock price environment. The increase
in the North American PTA price formula that came into effect in 2Q15, savings from our Cosoleacaque
cogeneration facility and resilient volume contributed to 1Q16 Polyester results.
This quarter was also marked by a significant development in the U.S. polyester industry. On March 31,
the U.S. International Trade Commission (ITC) made an affirmative final determination in its antidumping and
countervailing duty investigations on PET resin imports from China, India, Oman and Canada. This was the final
step in the trade cases against these four countries, whose PET resin will be subject to antidumping and/or
countervailing duties ranging from 7.6% to 153.8% at the time of entry into the U.S. for a minimum period of five
years. We are pleased with the Commission’s unanimous ruling against unfairly traded PET imports.
1Q16 P&C EBITDA of U.S. $99 million represents the highest quarterly figure obtained by this segment.
Adjusting for inventory valuation and one-time gains in 1Q16 from EPS assets acquired in South America and in
1Q15 from the sale of our polyurethane business, 1Q16 P&C EBITDA increased 72% year-on-year. Polypropylene
(PP) margin expansion, supported by strong industry fundamentals, was the main driver behind EBITDA growth.
1Q16 Capex was lower than the previous quarters, totaling U.S. $32 million. However, it is expected to
reach U.S. $320 million by year-end as a result of scheduled strategic project payments. This year’s investments
will include the Altamira cogeneration facility, the Corpus Christi PTA/PET facility, the monoethyleneglycol (MEG)
tolling agreement with Huntsman, the construction of two propylene storage spheres and the previously
announced polyester fiber and expandable polystyrene capacity expansions.
In addition to the progress in organic projects, we successfully completed the acquisition of BASF’s 20 kta
EPS plant in Concon, Chile. This facility began operations under Alpek control as of April 1, 2016, thus
complementing our assets in the region.
Alpek recorded a positive start this year as a result of better-than-expected P&C profitability and in-line
Polyester results. Even though oil and feedstock price volatility was particularly high during the first quarter, it
was encouraging to see the Brent oil price recover close to our estimated $38 usd/bbl by end of March. In this
context, we maintain our 2016 EBITDA guidance with an optimistic outlook.
First Quarter 2016 (1Q16) |
www.alpek.com 3
Results by Business Segment
Polyester (PTA, PET, Polyester fibers – 73% of Alpek’s Net Sales)
Alpek’s first quarter 2016 Polyester revenues were down 10% year-on-year and 5% quarter-on-quarter, as a
result of lower prices. Average 1Q16 Polyester prices decreased 10% annually and 8% on a quarterly basis,
reflecting the downward trend in crude oil and feedstock prices, mainly those of Px.
The U.S. reference Px price reached a 7-year low in February 2016, after sustained monthly declines since
August 2015. However, Px prices increased 3% in March 2016 following crude oil recovery.
1Q16 Polyester volume was flat year-on-year and increased 3% quarter-on-quarter, supported by resilient
demand amid a challenging feedstock price environment. 1Q16 volume growth was negatively impacted by a major
customer’s planned plant shutdown and higher intercompany PTA volume. Excluding the effect from Alpek’s
intercompany PTA sales, 1Q16 Polyester volume grew 2% year-on-year.
First quarter 2016 segment EBITDA was U.S. $73 million, including an U.S. $11 million non-cash inventory
devaluation charge. Adjusting for inventory devaluation, 1Q16 Polyester EBITDA increased 12% year-on-year and
was 10% lower quarter-on-quarter. The annual EBITDA growth was mainly driven by the increase in the North
American PTA price formula that came into effect in 2Q15, whereas the lower sequential figure reflects a higher
mix of export sales in 1Q16.
Plastics & Chemicals (P&C) (Polypropylene (PP), Expandable Polystyrene (EPS), Caprolactam (CPL), Other products – 27% of Alpek’s Net Sales)
First quarter 2016 P&C revenues decreased 12% year-on-year, but increased 3% quarter-on-quarter as
average P&C prices decreased 12% when compared to 1Q15, and increased 3% versus 4Q15.
Alpek’s 1Q16 P&C volume increased 1% and was flat when compared to 1Q15 and 4Q15, respectively.
Expandable polystyrene and polypropylene annual volume growth offset a 25% decrease in caprolactam volume
associated with an ammonia supply force majeure.
1Q16 P&C EBITDA totaled U.S. $99 million driven by record-high polypropylene margins and better than
expected expandable polystyrene results. Adjusting for inventory valuation and one-time gains of U.S. $2 million in
1Q16 from EPS assets acquired in South America, and of U.S. $26 million from the sale of our polyurethane business
in 1Q15, 1Q16 P&C EBITDA was up 72% year-on-year. Solid fundamentals reflected in margin expansion from lower
feedstock costs and robust demand continued to boost our P&C segment’s performance.
First Quarter 2016 (1Q16) |
www.alpek.com 4
Consolidated Financial Results
Net Sales Net Sales for the first quarter totaled U.S. $1.2 billion, down 11% year-on-year and 3% quarter-on-quarter, as a
result of lower average consolidated prices. Average 1Q16 consolidated prices decreased 10% and 5% when
compared to 1Q15 and 4Q15, respectively, reflecting the decline in oil and feedstock prices. 1Q16 consolidated
volume was flat year-on-year and up 2% on a quarterly basis. 1Q16 Polyester revenues decreased 10% and 5%
versus 1Q15 and 4Q15, respectively, due to lower prices. Meanwhile, Plastics & Chemicals revenues declined 12%
when compared to 1Q15, and were 3% higher than the previous quarter.
EBITDA First quarter 2016 Consolidated EBITDA was U.S. $171 million, up 25% and 20% when compared to 1Q15 and 4Q15,
respectively. 1Q16 Consolidated EBITDA was impacted by a U.S. $9 million non-cash inventory devaluation charge,
mainly due to lower Px prices. Adjusting for inventory devaluation and one-time gains, Comparable 1Q16
Consolidated EBITDA was U.S. $179 million, U.S. $166 million, and U.S. $132 million in 1Q16, 4Q15 and 1Q15,
respectively. Growth in Comparable EBITDA was driven by record results in P&C, and improving performance amid
a volatile feedstock price environment in Polyester.
Profit (Loss) Attributable to Controlling Interest Consolidated Net Profit Attributable to Controlling Interest for the first quarter 2016 was U.S. $72 million,
compared to U.S. $25 million and U.S. $29 million profits in 1Q15 and 4Q15, respectively. A combination of higher
operating results in both business segments and lower foreign exchange losses supported this quarter’s Net Profit
increase.
Capital Expenditures (Capex) 1Q16 Capex was U.S. $32 million, compared to U.S. $69 million and U.S. $168 million in 1Q15 and 4Q15
respectively. Although this figure was lower than previous quarters, Capex is expected to reach U.S. $320 million by
year-end driven by scheduled strategic project payments. 1Q16 Capex also included asset replacements and other
minor capital projects.
Net Debt Consolidated Net Debt as of March 31, 2016 was U.S. $904 million, up 17% year-on-year and 25% quarter-on-
quarter. On an absolute basis, Net Debt increased U.S. $182 million year to date as strong EBITDA generation was
more than offset by this quarter’s Dividends, investment in Net Working Capital and Taxes. Consolidated Dividends
include U.S. $110 million paid to shareholders and U.S. $25 million to the Non-Controlling interest. Net Working
Capital largely reflects a decrease in Suppliers driven by lower polyester feedstock prices, and 1Q16 Taxes that
include one-time payments related to fiscal year 2015 and to the sale of Polioles’ expandable polystyrene and
polyurethane businesses. Gross Debt as of March 31, 2016 was U.S. $1.146 billion, up 4% and 3% when compared
to 1Q15 and 4Q15, respectively. Cash and Cash equivalents totaled U.S. $243 million as of March 31, 2016.
Financial ratios as of March 31, 2016 were as follows: Net Debt to LTM EBITDA of 1.4 times and Interest Coverage
of 11.3 times.
First Quarter 2016 (1Q16) |
www.alpek.com 5
Appendix A - Tables
TABLE 1 | VOLUME (KTONS)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Total Volume 988 967 989 2 -
Polyester 755 733 757 3 -
Plastics and Chemicals 234 235 232 - 1
TABLE 2 | PRICE CHANGES (%)
(%) 1Q16 vs.
4Q15 1Q15
Polyester
Avg. Ps. Prices
(1) 9
Avg. U.S. $ Prices
(8) (10)
Plastics and Chemicals
Avg. Ps. Prices
11 6
Avg. U.S. $ Prices
3 (12)
Total
Avg. Ps. Prices
2 8
Avg. U.S. $ Prices
(5) (10)
TABLE 3 | INCOME STATEMENT (U.S. $ Millions)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Total Revenues 1,182 1,219 1,321 (3) (11)
Gross Profit 185 162 122 14 51
Operating expenses and others (47) (62) (21) 24 (125)
Operating income 138 100 101 37 36
Financial cost, net (16) (37) (28) 57 44
Share of losses of associates - - (1) (5) 75
Income Tax (17) (20) (24) 15 29
Consolidated net income 105 43 48 142 118
Controlling Interest 72 29 25 150 190
First Quarter 2016 (1Q16) |
www.alpek.com 6
TABLE 4 | REVENUES
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Total Revenues
Ps. Millions 21,292 20,411 19,721 4 8
U.S. $ Millions 1,182 1,219 1,321 (3) (11)
Domestic Revenues
Ps. Millions 8,242 7,512 7,796 10 6
U.S. $ Millions 458 449 522 2 (12)
Foreign Revenues
Ps. Millions 13,050 12,899 11,925 1 9
U.S. $ Millions 724 770 799 (6) (9)
Foreign / Total (%) 61 63 60
TABLE 5 | OPERATING INCOME AND EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Operating Income
Ps. Millions 2,484 1,681 1,524 48 63
U.S. $ Millions 138 100 101 37 36
EBITDA
Ps. Millions 3,089 2,393 2,049 29 51
U.S. $ Millions 171 143 137 20 25
TABLE 6 | COMPARABLE EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
EBITDA
Ps. Millions 3,089 2,393 2,049 29 51
U.S. $ Millions 171 143 137 20 25
Adjustments
Ps. Millions 131 395 (80) (67) 264
U.S. $ Millions 7 24 (5) (69) 253
Comparable EBITDA
Ps. Millions 3,220 2,788 1,969 15 64
U.S. $ Millions 179 166 132 7 35
First Quarter 2016 (1Q16) |
www.alpek.com 7
TABLE 7 | FINANCIAL COST, NET (U.S. $ Millions)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Financial Expenses (19) (19) (18) 2 (6)
Financial Income 5 5 3 1 42
Net Financial Expenses (14) (15) (15) 3 2
Fx Gains (Losses) (2) (22) (14) 92 88
Financial Cost, Net (16) (37) (28) 57 44
TABLE 8 | NET INCOME (U.S $ Millions)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Consolidated Net Income 105 43 48 142 118
Non-Controlling Interest 32 14 23 127 40
Controlling Interest 72 29 25 150 190
Earnings per Share (U.S. Dollars) 0.03 0.01 0.01 150 190
Avg. Outstanding Shares (Millions)* 2,118 2,118 2,118
*For comparability are considered the same number of equivalent shares in the periods presented.
TABLE 9 | CASH FLOW (U.S. $ Millions)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
EBITDA 171 143 137 20 25
Net Working Capital & Others (114) 12 (79) (1,061) (44)
Capital Expenditures & Acq. (32) (168) (69) 81 54
Financial Expenses (5) (17) (22) 71 77
Income tax (75) (14) 4 (447) (2,077)
Dividends (135) (10) (27) (1,265) (400)
Payment affiliated companies 12 - - 100 100
Other Sources / Uses (5) (13) (2) 62 (105)
Decrease (Increase) in Net Debt (182) (66) (59) (177) (208)
First Quarter 2016 (1Q16) |
www.alpek.com 8
TABLE 10 | STATEMENT OF FINANCIAL POSITION & FINANCIAL RATIOS (U.S. $ Millions)
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Assets
Cash and cash equivalents 243 387 331 (37) (27)
Trade accounts receivable 512 476 599 8 (14)
Inventories 660 702 707 (6) (7)
Other current assets 343 333 337 3 2
Total current assets 1,758 1,898 1,973 (7) (11)
Investment in associates and others 27 23 22 16 24
Property, plant and equipment, net 1,824 1,820 1,849 - (1)
Goodwill and intangible assets, net 509 512 429 (1) 19
Other non-current assets 96 99 54 (2) 79
Total assets 4,213 4,353 4,326 (3) (3)
Liabilities & stockholders' equity
Current debt 102 39 33 158 205
Suppliers 483 553 541 (13) (11)
Other current liabilities 208 275 263 (24) (21)
Total current liabilities 793 868 838 (9) (5)
Long term debt 1,038 1,062 1,064 (2) (2)
Employees´ benefits 65 64 66 1 (1)
Other long term liabilities 349 354 336 (1) 4
Total liabilities 2,246 2,348 2,304 (4) (3)
Total stockholders' equity 1,968 2,005 2,023 (2) (3)
Total liabilities & stockholders' equity 4,213 4,353 4,326 (3) (3)
Net Debt 904 722 774 25 17
Net Debt/EBITDA* 1.4 1.1 1.7
Interest Coverage* 11.3 10.7 7.1
* Times: last 12 months.
First Quarter 2016 (1Q16) |
www.alpek.com 9
Polyester
TABLE 11 | REVENUES
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Total Revenues
Ps. Millions 15,087 14,806 13,888 2 9
U.S. $ Millions 837 884 930 (5) (10)
Domestic Revenues
Ps. Millions 3,940 3,942 3,463 - 14
U.S. $ Millions 219 235 232 (7) (6)
Foreign Revenues
Ps. Millions 11,147 10,864 10,425 3 7
U.S. $ Millions 618 649 698 (5) (11)
Foreign / Total (%) 74 73 75
TABLE 12 | OPERATING INCOME AND EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Operating Income
Ps. Millions 847 643 485 32 75
U.S. $ Millions 47 38 32 22 45
EBITDA
Ps. Millions 1,322 1,182 901 12 47
U.S. $ Millions 73 70 60 4 22
TABLE 13 | COMPARABLE EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
EBITDA
Ps. Millions 1,322 1,182 901 12 47
U.S. $ Millions 73 70 60 4 22
Adjustments
Ps. Millions 199 387 222 (49) (10)
U.S. $ Millions 11 23 15 (52) (27)
Comparable EBITDA
Ps. Millions 1,521 1,568 1,123 (3) 35
U.S. $ Millions 84 94 75 (10) 12
First Quarter 2016 (1Q16) |
www.alpek.com 10
Plastics & Chemicals
TABLE 14 | REVENUES
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Total Revenues
Ps. Millions 6,205 5,605 5,833 11 6
U.S. $ Millions 345 335 391 3 (12)
Domestic Revenues
Ps. Millions 4,302 3,570 4,333 20 (1)
U.S. $ Millions 239 213 290 12 (18)
Foreign Revenues
Ps. Millions 1,903 2,034 1,500 (6) 27
U.S. $ Millions 106 122 101 (13) 5
Foreign / Total (%) 31 36 26
TABLE 15 | OPERATING INCOME AND EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
Operating Income
Ps. Millions 1,654 1,040 1,020 59 62
U.S. $ Millions 92 62 68 48 35
EBITDA
Ps. Millions 1,784 1,214 1, 129 47 58
U.S. $ Millions 99 72 75 37 32
TABLE 16 | COMPARABLE EBITDA
(%) 1Q16 vs.
1Q16 4Q15 1Q15 4Q15 1Q15
EBITDA
Ps. Millions 1,784 1,214 1,129 47 58
U.S. $ Millions 99 72 75 37 32
Adjustments
Ps. Millions (68) 8 (302) (906) 78
U.S. $ Millions (4) 1 (20) (850) 81
Comparable EBITDA
Ps. Millions 1,717 1,222 827 40 108
U.S. $ Millions 95 73 55 31 72
First Quarter 2016 (1Q16) |
www.alpek.com 11
Appendix B – Financial Statements
Mar 16 Dec 15 Mar 15 Dec 15 Mar 15
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 4,222 6,650 5,010 (37) (16)
Trade accounts receivable 8,914 8,196 9,074 9 (2)
Other accounts and notes receivable 2,397 2,234 1,876 7 28
Inventories 11,482 12,086 10,712 (5) 7
Other current assets 3,570 3,498 3,230 2 11
Total current assets 30,585 32,664 29,902 (6) 2
Investment in associates and others 466 397 328 17 42
Property, plant and equipment, net 31,740 31,322 28,018 1 13
Goodwill and intangible assets,net 8,850 8,812 6,500 - 36
Other non-current assets 1,679 1,699 814 (1) 106
Total assets 73,320 74,894 65,562 (2) 12
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Debt 1,772 678 506 161 250
Suppliers 8,404 9,521 8,200 (12) 2
Other current liabilities 3,625 4,729 3,985 (23) (9)
Total current liabilities 13,801 14,928 12,692 (8) 9
NON-CURRENT LIABILITIES:
Debt (include debt issuance cost) 18,062 18,276 16,121 (1) 12
Deferred income taxes 4,643 4,707 4,076 (1) 14
Other liabilities 1,436 1,376 1,021 4 41
Employees´ benefits 1,133 1,108 998 2 14
Total liabilities 39,075 40,395 34,908 (3) 12
STOCKHOLDERS´ EQUITY:
Controlling interest:
Capital stock 6,049 6,052 6,052 - -
Share premium 9,071 9,071 9,071 - -
Contributed capital 15,120 15,123 15,123 - -
Earned surplus 14,417 14,831 11,481 (3) 26
Total controlling interest 29,537 29,954 26,604 (1) 11
Non-controlling interest 4,708 4,545 4,050 4 16
Total stockholders´equity 34,245 34,499 30,654 (1) 12
Total liabilities and stockholders´ equity 73,320 74,894 65,562 (2) 12
ALPEK, S.A.B DE C.V. and Subsidiaries
(%) Mar 16 vs.
STATEMENT OF FINANCIAL POSITION
Information in Millions of Mexican Pesos
First Quarter 2016 (1Q16) |
www.alpek.com 12
ALPEK, S.A.B DE C.V. and Subsidiaries
Information in Millions of Mexican Pesos
1Q16 4Q15 1Q15 4Q15 1Q15
Revenues 21,292 20,410 19,721 4 8
Domestic 8,242 7,512 7,796 10 6
Export 13,050 12,898 11,925 1 9
Cost of sales (17,957) (17,693) (17,892) (1) -
Gross profit 3,335 2,717 1,829 23 82
Operating expenses and others (851) (1,036) (305) 18 (179)
Operating income 2,484 1,681 1,524 48 63
Financial cost, net (290) (625) (425) 54 32
Share of losses of associates (5) (4) (14) (14) 70
Profit (loss) before income tax 2,189 1,052 1,085 108 102
Income tax (317) (337) (361) 6 12
Consolidated net income 1,872 715 724 162 159
Profit attributable to Controlling interest 1,282 478 376 169 241
Profit attributable to Non-controlling interest 590 237 348 148 70
STATEMENT OF INCOME
1Q16 vs.(%)
April 14, 2016 1
Nemak posts 6% EBITDA1 growth in 1Q16
Monterrey, Mexico. April 14, 2016. - Nemak, S.A.B. de C.V. (“Nemak”) (BMV: NEMAK), a leading provider of innovative lightweighting solutions for the global automotive industry, announced today its operational and financial results for the first quarter of 2016.
For the first quarter of 2016, EBITDA increased 6%. This result was mainly driven by an improved mix of higher value-added products, currency effects, and efficiency gains.
Key Figures
Message from the CEO
This quarter, we remained on track to meet our targets for the year. We continued benefiting from the strength of our core powertrain business and made further progress with the implementation of strategic investments. Our key drivers of EBITDA growth included improved profitability in North America and top- and bottom-line growth in Europe. Revenues decreased mainly due to lower aluminum prices and the depreciation of the euro.
At the same time, we took important steps to reinforce our foundation for future growth. These included winning new contracts across our product lines worth approximately US$250 million in annual revenues, half of which represented incremental business.
In addition, we are pleased to announce that construction has begun on a new, state-of-the-art plant in Slovakia dedicated to the production of structural components. We plan to invest US$55 million, and expect to begin operations in 2017.
2016 2015 D%
Volume (M. Equivalent units) 12.9 13.1 (1.5)
Net Sales 1,076 1,172 (8.2)
Operating Income 134 129 3.9
EBITDA1 209 197 6.1
EBITDA1 / Eq. Unit 16.2 15.0 7.7
Net Income 97 72 34.7
CAPEX 131 101 29.7
Net Debt2 1,327 1,267 4.7Expressed in millions of US Dollars
(1) EBITDA = Operating Income + Depreciation, Amortization & other non-Cash Charges
(2) Net Debt = Total Debt - Cash
First Quarter
April 14, 2016 2
Automotive Industry
During 1Q16, the seasonally adjusted annual rate (SAAR) for vehicle sales in the United States was up 3% from 1Q15, mainly due to favorable credit conditions, low unemployment, and lower gas prices. Meanwhile, in North America, vehicle production and Nemak customers’ vehicle production increased 5% and 3%, respectively.
In Europe, vehicle sales SAAR in 1Q16 was up 4% compared to 1Q15 as lower sales in Russia were more than offset by Western Europe’s recovery which was supported by credit availability. Vehicle production and Nemak’s customer production both increased 2% from 1Q15 due to Western Europe's recovery.
Recent Developments
Nemak’s operation in Europe received the Volvo Cars Quality Excellence (VQE) award for 2015. The VQE award distinguishes suppliers who achieve continuous improvement and excellence in systems, processes, and performance.
Nemak´s operation in Mexico received the General Motors Supplier Quality Award for 2015. This award is granted to manufacturing locations that have delivered outstanding quality performance.
Nemak announced the construction of a new plant in Slovakia dedicated to the production of structural components. The plant requires an investment of approximately US$55 million and will begin operations in 2017.
Financial Results
Volume in 1Q16 was 12.9 million equivalent units, a 2% decrease from 1Q15. Higher volumes in Europe partially offset lower volumes in RoW and North America.
Total revenues were US$1.1 billion, an 8% decrease from 1Q15 mainly due to lower aluminum prices and the depreciation of the euro compared to the US dollar. Revenues in North America accounted for 59% of the total, while Europe contributed with 32%.
Gross profit in 1Q16 was US$202 million, a 2% increase compared to 1Q15, driven by improved mix, currency effects, and efficiency gains. Gross margins in 1Q16 increased 190 basis points compared to the same period in 2015 to 18.8% of total revenues.
Operating income in 1Q16 was US$134 million, a 4% increase compared to 1Q15 mainly due to an increase in gross profit. Operating margin in 1Q16 increased 150 basis points compared to 1Q15, to 12.5% of total revenues.
2016 2015 % Var.
U.S. Vehicle Sales SAAR(1) 17.2 16.8 2.9
North America Vehicle Production 4.5 4.3 5.0
North America Nemak Customer Production 3.1 3.0 3.1
Europe Vehicle Sales SAAR(1) 19.5 18.8 4.2
Europe Vehicle Production 5.5 5.4 1.8
Europe Nemak Customer Production 3.8 3.7 2.0(1) SAAR = Seasonally Adjusted Annual Rate
Millions of Units
For the first quarter of:
April 14, 2016 3
EBITDA in 1Q16 rose to US$209 million, a 6% increase compared to 1Q15 mainly due to an increase in operating income. EBITDA margin in 1Q16 increased 260 basis points compared to 1Q15, to 19.4% of total revenues.
EBITDA per equivalent unit increased 8% compared to 1Q15, to US$16.2 in 1Q16.
Net income increased 35% compared to 1Q15, to US$97 million in 1Q16, driven by a foreign exchange gain and higher operating income.
Capital expenditures totaled US$131 million during 1Q16. Investments were made to expand capacity, update existing production equipment, and improve operational efficiency. Furthermore, Nemak continued to develop initiatives to maximize asset utilization and to reduce investment per unit of installed capacity.
Nemak’s balance sheet as of March 31, 2016 recorded a cash balance of US$101 million. Short-term debt was US$173 million, while long-term debt was US$1.3 billion. The consolidated net debt balance was US$1.3 billion. Financial ratios in 1Q16 were: Net Debt to EBITDA of 1.7 times and Interest Coverage of 10.8 times, which compare to 1.8 times and 10.0 times, respectively, reported in 1Q15.
Regional Results
North America
In 1Q16, revenues in North America decreased 11% compared to 1Q15 mainly due to lower aluminum prices and lower volumes. EBITDA in North America increased 8% in 1Q16 compared to 1Q15 mainly due to an improved sales mix, currency effects, and efficiency gains.
Europe
In 1Q16, revenues increased 2% and EBITDA in Europe increased 5% compared to 1Q15 mainly due to higher volumes and a better mix of higher value-added products which more than offset the devaluation of the euro compared to the US dollar. Excluding the translation effect of the euro, in 1Q16 revenues and EBITDA grew 6% and 9% respectively, compared to 1Q15.
Rest of the World (RoW)
In 1Q16, revenues in RoW decreased by 23% compared to 1Q15 mainly due to lower volumes in South America, the devaluation of local currencies, and lower aluminum prices. EBITDA in RoW remained stable in 1Q16 compared to 1Q15 as higher profitability in Asia compensated for lower volumes in South America.
April 14, 2016 4
Conference call information
Nemak’s First Quarter 2016 Conference Call will be held on: Friday, April 15th, 2016, 11:30 a.m. Eastern Time (10:30 a.m. Mexico City Time). To participate in the conference call, please dial: Domestic US: (877) 407-0784; International: (201) 689-8560; Mexico Toll Free 01-800-522-0034. The conference call will be webcast live through streaming audio. If you are unable to connect, the conference call audio and script will be available on our website. For more information, please visit www.nemak.com/investors
About Nemak
Nemak is a leading provider of innovative lightweighting solutions for the global automotive industry specializing in the development and manufacturing of aluminum components for powertrain and body structure applications. As of year-end 2015, the company employed more than 21,000 people at 35 facilities worldwide and generated revenues of US$4.5 billion. For more information about Nemak, visit www.nemak.com
Forward-looking statements
This report may contain certain forward-looking statements concerning Nemak’s future performance that should be considered as good faith estimates made by us. These forward-looking statements reflect management’s expectations and are based upon currently available data and analysis. Actual results are subject to future events and uncertainties, which could materially impact Nemak’s actual performance and results.
Methodology for presentation of results
The report presents unaudited financial information figures in Mexican pesos or US dollars, as indicated. For income statements, peso amounts were translated into US dollars using the average exchange rate of the months during which the operations were recorded. For balance sheets, peso amounts were translated into US dollars using the end of period exchange rate of the period. Financial ratios are calculated in US dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to another.
Three pages of tables to follow
April 14, 2016 5
2016 % of rev. 2015 % of rev. % Var.
Volume (million equivalent units) 12.9 13.1 (1.5)
Total revenues 1,076 100.0 1,172 100.0 (8.2)
Gross profit 202 18.8 198 16.9 2.0
Sales & administrative expenses (69) (6.4) (69) (5.9) 0.0
Other income (expenses) net 1 0.1 0 0.0 NA
Income from operations 134 12.5 129 11.0 3.9
Interest Expenses (16) (1.5) (18) (1.5) (11.1)
Interest Income 1 0.1 1 0.1 0.0
Foreign exchange gain (loss) 14 1.3 (9) (0.8) NA
Financing expenses net (1) (0.1) (26) (2.2) (96.2)
Participation in associates results 0 0.0 0 0.0 0.0
Income Tax (37) (3.4) (30) (2.6) 23.3
Net Income 97 9.0 72 6.1 34.7
2016 % of rev. 2015 % of rev. % Var.
Income from Operations 134 12.5 129 11.0 3.9
Depreciation, Amortization & Other non-Cash items 75 7.0 68 5.8 10.3
EBITDA1 209 19.4 197 16.8 6.1
CAPEX 131 12.2 101 8.6 29.7(1) EBITDA = Operating Income + Depreciation, Amortization & other non-Cash items
Nemak
Income Statement
Millions of Dollars
For the first quarter of:
15.568 14.718Assets Mar-16 Dec-15 % Var
Cash and cash equivalents 101 104 (2.9)
Accounts receivable 684 584 17.1
Inventories 605 562 7.7
Other current assets 32 74 (56.8)
Total current assets 1,423 1,324 7.5
Investments in shares 21 17 23.5
Property, plant and equipment, net 2,318 2,224 4.2
Other assets 641 621 3.2
Total assets 4,404 4,186 5.2
Liabilities & stockholders' equity Mar-16 Dec-15 % VarBank loans 143 13 NA
Current maturities of long-term debt 26 27 (3.7)
Interest payable 4 13 (69.2)
Operating liabilities 1,002 1,038 (3.5)
Total current liabilities 1,175 1,091 7.7
Long-term debt 1,263 1,265 (0.2)
Labor liabilities 48 45 6.7
Other long term liabilities 175 161 8.7
Total liabilities 2,661 2,562 3.9
Total stockholders’ equity 1,743 1,624 7.3
Total liabilities & stockholders' equity 4,404 4,186 5.2
Nemak
Balance Sheet
Millions of Dollars
April 14, 2016 6
Volume (million equivalent units) 2016 2015 % Var. North America 8.0 8.2 (2.4)
Europe 4.0 3.7 8.1
Rest of World 0.9 1.2 (25.0)
Total 12.9 13.1 (1.5)
Total Revenues* 2016 2015 % Var. North America 639 719 (11.1)
Europe 363 357 1.7
Rest of World 73 95 (23.2)
Total 1,075 1,171 (8.2)
EBITDA1 2016 2015 % Var.
North America 143 133 7.5
Europe 62 59 5.1
Rest of World 5 5 0.0
Total 210 197 6.6(1) EBITDA = Operating Income + Depreciation, Amortization & other non-Cash items
* To external customers
Nemak Regional Results
Millions of Dollars
For the first quarter of:
April 14, 2016 7
Assets Mar-16 Dec-15 % VarCash and cash equivalents 1,758 1,793 (2.0)
Accounts receivable 11,900 10,048 18.4
Inventories 10,533 9,667 9.0
Other current assets 563 1,272 (55.7)
Total current assets 24,754 22,780 8.7
Investments in shares 374 288 29.9
Property, plant and equipment, net 40,345 38,263 5.4
Other assets 11,162 10,687 4.4
Total assets 76,635 72,018 6.4
Liabilities & stockholders' equity Mar-16 Dec-15 % VarBank loans 2,496 227 NA
Current maturities of long-term debt 450 462 (2.6)
Interest payable 77 223 (65.5)
Operating liabilities 17,431 17,859 (2.4)
Total current liabilities 20,454 18,771 9.0
Long-term debt 21,979 21,758 1.0
Labor liabilities 830 779 6.5
Other long term liabilities 3,049 2,772 10.0
Total liabilities 46,312 44,080 5.1
Total stockholders’ equity 30,323 27,939 8.5
Total liabilities & stockholders' equity 76,635 72,019 6.4
Nemak
Balance Sheet
Millions of Pesos
2016 % of rev. 2015 % of rev. % Var. Volume (million equivalent units) 12.9 13.1 (1.5)
Total revenues 19,382 100.0 17,518 100.0 10.6
Gross profit 3,640 18.8 2,968 16.9 22.6
Sales & administrative expenses (1,233) (6.4) (1,036) (5.9) 19.0
Other income (expenses) net 10 0.1 (2) (0.0) NA
Income from operations 2,417 12.5 1,930 11.0 25.2
Interest Expenses (289) (1.5) (269) (1.5) 7.4
Interest Income 26 0.1 8 0.0 NA
Foreign exchange gain (loss) 245 1.3 (136) (0.8) NA
Financing expenses net (18) (0.1) (397) (2.3) (95.5)
Participation in associates results (1) (0.0) (3) (0.0) (66.7)
Income Tax (659) (3.4) (449) (2.6) 46.8
Net Income 1,739 9.0 1,081 6.2 60.9
2016 % of rev. 2015 % of rev. % Var. Income from Operations 2,417 12.5 1,930 11.0 25.2
Depreciation, Amortization & Other non-Cash items 1,356 7.0 1,017 5.8 33.3
EBITDA1 3,773 19.5 2,947 16.8 28.0
CAPEX 2,371 12.2 1,505 8.6 57.5(1) EBITDA = Operating Income + Depreciation, Amortization & other non-Cash items
Nemak
Income Statement
Millions of Pesos
For the first quarter of:
Investor Relations:
Adrian de los Santos [email protected] +52(81) 8114-1128
1st 2016 Quarter
Media Relations:
Julio Salinas [email protected] +52(81) 8114-1144
Nancy Llovera [email protected] +52(81) 8114-1128
San Pedro Garza Garcia, Mexico, April 14, 2016 - Axtel, S.A.B. de C.V. (“Axtel” or “the Company”), a Mexican information and communications technology company, announced today its unaudited first quarter results ended March 31, 2016. Results presented on this report reflect figures consolidated under Alfa S.A.B. de C.V. The complete unaudited first quarter results of Axtel have been filed with the Mexican Stock Exchange; and are also available at the Company’s website, www.axtelcorp.mx .
Note: First quarter 2016 results shown throughout the document include the unaudited consolidated results for Alestra S. de R.L. de C.V. and its subsidiaries (“Alestra”) from January 1st to February 14th, 2016; and for Axtel and its subsidiaries (including Alestra) from February 15th to March 31st, 2016. Results for the first and fourth quarters of 2015 correspond to Alestra.
Highlights: v On February 15th, the merger of Axtel and Alestra became effective, creating a new entity with stronger
capabilities to serve the enterprise, government and mass market segments with an ample portfolio of telecommunications and information technology solutions. Through this merger, Axtel became a subsidiary of ALFA and Alestra a subsidiary of Axtel.
In millions 1Q16 1Q15 4Q15 1Q15 4Q15Revenues (Ps.) 2,646 1,391 1,660 90% 59%
In USD 147 93 99 58% 49%Costs (Ps.) 544 292 251 86% >100%
In USD 30 20 15 55% >100%Operating Expenses (Ps.) 1,174 584 611 >100% 92%
In USD 65 39 37 66% 78%Other income / (expense) (Ps.) -64 12 6 n.a. n.a.
In USD -4 1 0 n.a. n.a.EBITDA (Ps.) 864 527 804 64% 7%
In USD 48 35 48 36% 0%Net (loss) Income (Ps.) 175 108 337 62% -48%
In USD 11 7 20 46% -48%
Capital Expenditures (Ps.) 1,294 290 551 >100% >100%In USD 71 19 33 >100% >100%
Net Debt / EBITDA 4.1x 1.3x 1.3x
(%) 1Q16 vs.
2
Sources of Revenues
Total Revenues:
Total revenues increased 58% in the quarter compared to the same period in 2015, mostly explained by the consolidation of Axtel revenues since February 15th. In peso terms, revenues increased 90%.
Mass Market:
FTTH. FTTH revenues totaled $13 million in the first quarter of 2016 explained by the consolidation of Axtel revenues since February 15th. Alestra revenues in the first quarter of 2015 did not record revenues from customers connected with FTTH technology.
Wireless. Revenues from mass-market segment connected with WiMAX and other legacy technologies totaled $9 million in the first quarter of 2016 explained by the consolidation of Axtel revenues since February 15th. Alestra revenues in the first quarter of 2015 did not record revenues from customers connected with wireless technologies.
Telecom:
Quarterly revenues totaled $105 million, compared to $82 million in the same period in 2015, a 28% increase. The year-over-year growth is mostly explained by the consolidation of Axtel revenues since February 15th. The positive contribution from Managed Networks as well as Data and Internet revenues helped to compensate the secular underperformance of Voice revenues. In peso terms, Telecom revenues increased 54% during the quarter.
IT:
IT revenues amounted to $21 million in the first quarter of 2016, compared to $11 million in the same period in 2015, an 87% increase driven by systems integrations, hosting and security services, as well as the benefit of consolidating Axtel revenues since February 15th. In peso terms, IT revenues increased 125% during the quarter.
In millions 1Q16 1Q15 4Q15 1Q15 4Q15MASS MARKET (Ps.) 389 - - n.a. n.a.
In USD 22 - - n.a. n.a.FTTH 13 - - n.a. n.a.Wireless 9 - - n.a. n.a.
TELECOM (Ps.) 1,886 1,226 1,262 54% 49%In USD 105 82 75 28% 39%
Voice 31 26 19 16% 66%Data and Internet 39 35 34 12% 14%Managed Networks 35 20 22 71% 56%
IT (Ps.) 371 165 398 125% -7%In USD 21 11 24 87% -13%
TOTAL (Ps.) 2,646 1,391 1,660 90% 59%In USD 147 93 99 58% 49%
(%) 1Q16 vs.
35
35
48
48
39
39
65
65
20
20
30
30
15 15 16 16 YTD QTR
15 15 16 16 YTD QTR
15 15 16 16 YTD QTR
3
Cost of Revenues (in Mdlls.)
Operating Expenses (in Mdlls.)
EBITDA (in Mdlls.)
Cost of revenues, operating expenses and EBITDA
Cost of Revenues. For the three month period ended March 31,
2016, the cost of revenues represented $30 million, an increase of 55% or $11 million, explained by the increase in revenues related to the consolidation of Axtel results since February 15th. In peso terms, Cost of Revenues increased 86% year-over-year.
Operating Expenses. In the first quarter of year 2016, operating expenses totaled $65 million, 66% higher than the $39 million recorded in the same period in year 2015. This increase is mostly explained by the consolidation of Axtel results since February 15th. Additionally, more maintenance expenses related to IT projects also influenced this quarter’s number. In peso terms, Operating Expenses increased 101% year-over-year.
EBITDA. For the first quarter of 2016, EBITDA totaled $48 million, a 36% increased compared to the same period in year 2015. In peso terms, EBITDA increased 64% year-over-year, mostly explained by the consolidation of Axtel results since February 15th. For the three month period ended March 31, 2016, non-recurring other expenses totaled $4 million, compared to a net non-recurring income of $1 million in the same quarter of 2015.
4
Interest Expense
Debt. At the end of the first quarter 2016, total debt increased $849 million in comparison with first quarter 2015, explained by (i) a $877 million increase due to Axtel’s debt, mostly related to the Syndicated Bank Facility used to prepay Axtel’s 2017, 2019 and 2020 Senior Notes, (ii) a $17 million increase mainly related to a bank loan, (iii) a $2 million increase related to accrued interests, and (iv) a $47 million non-cash decrease caused by the 13% depreciation of the Mexican peso.
Capital Investments. In the first quarter of 2016, capital investments totaled $71 million, compared to $19 million, in the year-earlier quarter, explained by the consolidation of Axtel’s results since February 15th and by the incurrence of certain non-recurring intangible capital investments related to the merger transaction.
Total Debt and Net Debt
Net interest expense increased from $2 million in the first quarter 2015 to $28 million in 2016, explained by the consolidation of Axtel results effectively February 15th until the end of the quarter, which included the non-recurring payment to redeem Axtel’s Senior Notes. These Notes were successfully refinanced with a lower-rate syndicated bank loan in February. In peso terms, net interest expense increased from Ps. 32 million in the first quarter of 2015 to Ps. 511 million this quarter.
Million dollars 1Q16 1Q15 4Q15Syndicated Credit Facility 774 - - Long-term loan 190 190 190 Other loans 95 65 66 Other financing obligations 48 4 1 Accrued Interest 3 2 2 Total Debt 1,110 261 258 (-) Cash and cash equivalents (49) (46) (48) Net Debt 1,061 215 211
5
Axtel, S.A.B. de C.V. and Subsidiaries Unaudited Consolidated Balance Sheet March 31, 2016 and 2015 and December 31, 2015 (in Thousand Mexican pesos)
Mar-16 Dec-15 Mar-15 Dec-15 Mar-15ASSETSCurrent assets:Cash and equivalents 695,882 675,575 549,172 3 27Accounts receivable 3,928,409 1,253,659 1,112,430 213 253Related parties 21,060 35,477 10,284 (41) 105Refundable taxes and other accounts receivable 1,045,777 140,866 71,212 642 1,369Advances to suppliers 693,447 251,416 186,391 176 272Inventories 111,412 38,800 36,879 187 202Financial Instruments (Zero Strike Call) 368,538 - - n.a. n.a.Total current assets 6,864,526 2,395,793 1,966,367 187 249
Non current assetsRestricted cash 149,285 148,291 146,217 1 2Property, plant and equipment, net 19,872,296 6,523,246 6,011,214 205 231Long-term accounts receivable 102,565 - - n.a. n.a.Intangible assets, net 1,982,381 1,121,870 915,740 77 116Deferred income taxes 2,898,399 177,175 258,709 1,536 1,020Investment in shares of associated co. & other 18,131 9,919 9,924 83 83Other assets 183,207 69,331 70,026 164 162Total non current assets 25,206,265 8,049,832 7,411,831 213 240
TOTAL ASSETS 32,070,791 10,445,625 9,378,198 207 242
LIABILITIESCurrent liabilitiesAccount payable & Accrued expenses 3,006,107 915,523 553,661 228 443Accrued Interest 60,343 26,876 25,274 125 139Short-term debt 609,053 624,029 530,397 (2) 15Current portion of long-term debt 1,364,590 574,348 30,992 138 4,303Taxes payable 1,359,447 248,207 216,827 448 527Deferred Revenue 529,975 40,279 39,581 1,216 1,239Provisions 205,187 160,000 - 28 n.a.Other accounts payable 705,504 486,854 411,149 45 72Total current liabilities 7,840,206 3,076,116 1,807,881 155 334
Long-term debtLong-term debt 17,075,414 3,210,041 3,348,712 432 410Employee Benefits 406,971 228,682 176,654 78 130Long-term provisions - - 407,268 n.a. (100)Other LT liabilities 350,150 452,349 1,764 (23) 19,747Total long-term debt 17,832,535 3,891,073 3,934,398 358 353
TOTAL LIABILITIES 25,672,741 6,967,188 5,742,278 268 347
STOCKHOLDERS EQUITYCapital stock 10,364,785 1,181,346 1,181,346 777 777Additional paid-in capital 644,710 - - n.a. n.a.Cumulative earnings (losses) (4,582,465) 2,306,969 2,479,060 (299) (285)Other (28,980) (9,879) (24,487) 193 18
TOTAL STOCKHOLDERS EQUITY 6,398,051 3,478,437 3,635,919 84 76
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 32,070,791 10,445,625 9,378,198 207 242
(%) March vs.
6
Axtel, S.A.B. de C.V. and Subsidiaries Unaudited Consolidated Income Statement Periods ended March 31, 2016 and 2015 (in Thousand Mexican pesos)
2016 2015 Δ%
Rental. Installation, service and other income 2,645,921 1,391,189 90%
Operating cost and expensesCost of sales and services (543,891) (292,058) 86%Selling and administrative expenses (1,174,275) (584,346) >100%Other income (expenses), net (64,242) 11,752 n.a.Asset impairment (204) (762) -73%Depreciation and amortization Cost (513,932) (196,263) >100%Depreciation and amortization Expenses (94,124) (37,008) >100%
(2,390,668) (1,098,685) >100%
Operating income (loss) 255,253 292,504 -13%
Comprehensive financing result:Interest expense (515,239) (35,106) >100%Interest income 3,951 3,406 16%Foreign exchange gain (loss), net 394,653 (112,865) n.a.Change in the fair value of financial instruments 23,438 - n.a.
Comprehensive financing result, net (93,197) (144,565) -36%
Equity in results of associated company - (155) n.a.
Income (loss) before income taxes, 162,056 147,785 10%
Income taxes: Current (37,293) (56,493) -34% Deferred 50,265 16,706 >100%
Total income taxes 12,972 (39,787) n.a.
Net Income (Loss) 175,029 107,998 62%
First Quarterended March 31
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 36
NEWPEK
Natural gas and hydrocarbons | 1% AND 0% OF ALFA´S REVENUES AND EBITDA IN 1Q16
Industry comments Oil prices remain volatile: they trended sharply down early in the quarter and recovered slightly towards the end. As a result, 1Q16 prices were only 9% lower than the 4Q15 average. Natural gas prices also declined significantly, mainly due to a warmer winter. Henry Hub gas prices declined 31% in 1Q16 on a year-‐on-‐year basis. The uncertainty surrounding the mid-‐to-‐long term sustainable oil price level is causing oil companies to reduce output and/or reconsider exploration work plans for 2016 and beyond.
Operations in the U.S. During 1Q16, 15 new wells were connected to sales at the Eagle Ford Shale play (“EFS”) in South Texas. This brought wells in production at EFS to 625 by the quarter’s end, 22% over the 513 wells in production at the end of 1Q15. Sales volume in the U.S. averaged 7.5 MBOED during 1Q16, down 12% from 1Q15. Liquids and oil represented 57% of the total sales volume for the quarter, down from 61% a year ago. Three additional wells are planned to come online during 2Q16. Subsequent to that, Newpek and its partners will halt drilling and completion activities at EFS until the price environment for hydrocarbons improves. With respect to prospects in other areas within the U.S., Newpek has also put them on hold.
At the Wilcox formation in South Texas, Newpek finished the first phase of the Gas Lift project, which together with a water flood recovery, will help increase production of the existing wells. Further stages of the Gas Lift and the water flood projects will be dependent on better pricing environment.
Operations in Mexico In Mexico, production averaged 3.6 MBOED during 1Q16, down 34% from 1Q15. The San Andrés field represented 68% of the total production for the quarter, down from 76% in the same period of the previous year. There were 68 wells in production in Mexico by the quarter’s end, a 55% decrease from the 150 wells in production at the end of 1Q15. As a result of the low oil price environment many wells have been shut in.
Financial results; capital expenditures and acquisitions; net debt Oil prices continued to fall, averaging U.S. $33 per barrel during 1Q16, a decline of U.S. $9 per barrel from the previous quarter, and U.S. $16 per barrel below the average for 1Q15. Gas prices were also affected during 1Q16, primarly due to a warmer winter. Henry Hub prices averaged U.S. $2.00 per million BTU during 1Q16, down 6% from the previous quarter, and 31% below the average for 1Q15. As a result, and taking into account lower production, 1Q16 revenues totaled U.S. $25 million, down 35% year-‐over-‐year, while 1Q16 EBITDA decreased 121% to negative U.S. $1.5 million. 1Q16 Capital expenditures amounted to U.S. $9 million, while net debt was U.S. $86 million at the end of the quarter.
ALFA, S.A.B. de C.V. – 1Q16 Financial Report 37
NEWPEK TABLE 1 | REVENUES (%) 1Q16 VS. 1Q16 4Q15 1Q15 4Q15 1Q15 TOTAL REVENUES Ps. Millions 460 527 587 (13) (22) U.S. $ Millions 25 32 39 (19) (35)
DOMESTIC REVENUES Ps. Millions 220 208 245 6 (10) U.S. $ Millions 12 12 16 (2) (26)
FOREIGN REVENUES Ps. Millions 240 319 342 (25) (30) U.S. $ Millions 13 19 23 (30) (42) Foreign / Total (%) 52 60 58 (13) (10)
VOLUME Thousands of Barrels of Oil Equivalent Per Day (MBOEPD) 7.5 8.3 8.5 Liquids & others as % of total sales volume 57 57 61
TABLE 2 | OPERATING INCOME AND EBITDA (%) 1Q16 VS.
1Q16 4Q15 1Q15 4Q15 1Q15 OPERATING INCOME Ps. Millions (292) (1,100) (767) 73 62 U.S. $ Millions (16) (64) (51) 75 68 EBITDA Ps. Millions (27.9) 619.4 107.4 (105) (126) U.S. $ Millions (1.5) 37.2 7.3 (104) (121)
TABLE 3 | SELECTED BALANCE SHEET INFORMATION & FINANCIAL RATIOS (U.S. $ MILLIONS)
1Q16 4Q15 1Q15 Assets 546 482 537 Liabilities 325 243 574 Stockholders’ Equity 221 239 (37) Net Debt 86 77 75 Net Debt/EBITDA* 1.5 1.2 0.7 Interest Coverage* 4.2 3.8 4.6 * Times: LTM = Last 12 months
