Cablemas 3Q07 Net Revenue and Adjusted EBITDA Up 12.3% and 2.9% YoY
Cablemas 3Q07 Net Revenue and Adjusted EBITDA Up 12.3% and 2.9% YoY
MEXICO D.F., Nov. 27 /PRNewswire/ -- Cablemas, S.A. de C.V., (Cablemas), the second-largest cable television operator in Mexico based on number of subscribers and homes passed, today announced results for the three- and nine- month periods ending September 30, 2007.
Cablemas CEO Carlos M. Alvarez Figueroa commented, "Revenue growth this quarter remained strong as we continued to successfully increase market penetration across all services. This quarter, our subscriber base rose 14.0% in cable television, 33.5% in high-speed Internet and 67.0% in IP telephony on a year-on-year comparison."
"As anticipated, adjusted EBITDA margin declined to 35.8% from 39.0% in 3Q06, mainly reflecting the costs from the rollout of IP Telephony services. For the first nine-months of the year, adjusted EBITDA reached 37.7%, in line with expectations."
"We continue making progress with the roll out of IP telephony and to-date we provide service in Ciudad Juarez, Chihuahua, Merida, Cancun, Isla Mujeres, Playa del Carmen and Cozumel. By year-end we expect to be offering IP Telephony in nine cities and to expand the service to 3 additional cities during 2008," closed Mr. Alvarez Figueroa.
Financial and Operational Highlights(1) (in million Mexican Pesos) 3Q06 3Q07 %Chg. Financial Highlights Net revenue 595.1 668.2 12.3% Operating profit 140.2 117.7 -16.1% Adjusted EBITDA(2) 232.2 238.9 2.9% Net income 52.7 28.4 -46.1% Operating margin 23.6% 17.6% -595 bps Adjusted EBITDA margin(2) 39.0% 35.8% -326 bps Net income margin 8.9% 4.2% -460 bps Total Debt 1,987.6 2,218.0 11.6% Net Debt 1,827.5 2,180.3 19.3% Total Debt/ LTM Adj. EBITDA(2) 2.3x 2.3x Net Debt/ LTM Adj. EBITDA(2) 2.2x 2.2x EBITDA/ Net interest expense 4.3x 3.4x Operational Highlights Homes passed 1,940,785 2,194,662 13.1% Cable Television subscribers 675,695 770,213 14.0% High-speed internet subscribers 159,732 213,322 33.5% IP Telephony lines 20,616 34,435 67.0% Financial and Operational Highlights(1) 9M06 9M07 %Chg. Net revenue 1,715.7 1,974.2 15.1% Operating profit 398.9 401.3 0.6% Adjusted EBITDA(2) 673.9 745.1 10.6% Net income 119.9 193.0 61.0% Operating margin 23.3% 20.3% -292 bps Adjusted EBITDA margin(2) 39.3% 37.7% -154 bps Net income margin 7.0% 9.8% +279 bps Total Debt 1,987.6 2,218.0 11.6% Net Debt 1,827.5 2,180.3 19.3% Total Debt/ LTM Adj. EBITDA(2) 2.3x 2.3x Net Debt/ LTM Adj. EBITDA(2) 2.2x 2.2x EBITDA/ Net interest expense 3.9x 3.8x Operational Highlights Homes passed 1,940,785 2,194,662 13.1% Cable Television subscribers 675,695 770,213 14.0% High-speed internet subscribers 159,732 213,322 33.5% IP Telephony lines 20,616 34,435 67.0% (1) Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with generally accepted accounting principles in Mexico, expressed in millions of constant Mexican pesos as of September 30, 2007, and represent comparisons between the three-month period ended September 30, 2007, and the equivalent three-month period ended September 30, 2006. (2) Adjusted EBITDA is calculated by adding amortization and depreciation, net comprehensive financial results, net other income, special items, total income tax and asset tax, total employee statutory profit sharing, effects from associated companies and minority interest to net income/loss. THIRD QUARTER 2007 CONSOLIDATED RESULTS Net Revenues
Net revenues increased 12.3%, or Ps.73.1 million, during 3Q07 to Ps.668.2 million, as described below:
-- Cable Television: The 8.0% growth in cable television revenues, from Ps.466.3 to Ps.503.7 was principally due to a 14.0% YoY increase in the number of subscribers to 770,213 with a penetration rate of 34.3%. This was achieved despite a 5.5% decline in average monthly cable television revenues per subscriber (ARPU) to Ps.220.4. This decline in ARPU was primarily the result of a 35.0% increase in Minibasic subscribers, who pay lower monthly fees, while Basic subscribers increased 6.9%. The average monthly net churn rates for cable television declined 20 bps to 2.5% for 3Q07 from 2.7% in 3Q06. -- High Speed Internet: The 31.2%, or Ps.29.1 million, rise in high-speed Internet revenues to Ps.122.5 million resulted mainly from a 33.5% increase in the number of subscribers to 213,322, with a penetration rate of 11.8%. This was partially offset by a 4.5% decline in high-speed Internet ARPU to Ps.195.7, as lower price/ lower-speed Internet (128 Kbps) subscriptions increased at a faster rate than those of higher-speed Internet (512 Kbps). Average monthly net churn rates for high-speed Internet rose 50 bps to 4.3% for 3Q07 from 3.8% in 3Q06, due to an aggressive competing service offer from Telmex and a slow client recovery process in the Mayan Riviera following service quality issues resulting from damages to the network by the passing of Hurricane Wilma. -- IP Telephony: IP telephony revenues for the quarter rose 43.0%, or Ps.9.1 million, to Ps.30.4 million. As of September 30, 2007, there were 34,435 IP telephony lines in service, up from 20,616 as of September 30, 2006. IP telephony ARPU for 3Q07 was Ps.296.9. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps.313.4 for 3Q07. Table 1. Revenues by Service Offering 3Q06 3Q07 %of %of Total Total Revenue Revenue Revenue Revenue % Chg. Cable Television 466.3 78.4% 503.7 75.4% 8.0% High-Speed Internet 93.4 15.7% 122.5 18.3% 31.2% IP telephony 21.3 3.6% 30.4 4.5% 43.0% Advertising 13.2 2.2% 11.1 1.7% -16.4% Other(1) 0.9 0.2% 0.5 0.1% -43.6% Total Net Revenue(2) 595.1 100.0% 668.2 100.0% 12.3% (1) Includes revenue relating to rental and sale of cable decoders and charges relating to customers' change of residence. (2) All net revenue figures are net of value-added taxes and other taxes on sales. Table 2. Number of Subscribers per Service Offering % Chg. in 3Q06 3Q07 Subscribers Minibasic 172,517 232,906 35.0% Basic(1) 486,834 520,463 6.9% Superbasic(1) 44,134 43,230 -2.0% Premium (1) 28,173 30,117 6.9% Hotel 16,344 16,844 3.1% Total Cable Television 675,695 770,213 14.0% High-Speed Internet 159,732 213,322 33.5% IP Telephony lines 20,616 34,435 67.0% (1) The number and percentage of Basic subscribers includes Basic, Superbasic and Premium subscribers due to the fact that all Superbasic and Premium subscribers must also be Basic subscribers. Table 3. ARPUs and Churn Per Service Offering 3Q06 3Q07 % Chg. Homes passed 1,940,785 2,194,662 13.1% Cable Television - Revenue 466.3 503.7 8.0% - Subscribers 675,695 770,213 14.0% - ARPU 233.2 220.4 -5.5% - Avg. Monthly Churn 2.7% 2.5% -20 bps High-Speed Internet - Revenue 93.4 122.5 31.2% - Subscribers 159,732 213,322 33.5% - ARPU 205.0 195.7 -4.5% - Avg. Monthly Churn 3.8% 4.3% +50 bps IP Telephony - Revenue 21.3 30.4 43.0% - Lines 20,616 34,435 67.0% - ARPU (without migration fee) 290 296.9 2.2% Operating Profit
Operating profit for 3Q07 declined by 16.1%, or Ps.22.5 million, to Ps.117.7 million, driven mainly by a 0.5% reduction in gross profit and an 11.3% increase in SG&A. Operating margin fell 595 bps to 17.6% from 23.6% in 3Q06.
Table 4. Operating Profit 3Q06 3Q07 Million % of Million % of Ps. Revenues Ps. Revenues %Chg. Service revenues 595.1 100.0% 668.2 100.0% 12.3% Cost of services 269.8 45.3% 344.6 51.6% 27.7% Gross Profit 325.2 54.7% 323.6 48.4% -0.5% SG&A 185.0 31.1% 205.9 30.8% 11.3% - Selling 64.1 10.8% 62.3 9.3% -2.9% - Administrative 104.2 17.5% 125.2 18.7% 20.1% - Amortization and depreciation 16.7 2.8% 18.5 2.8% 10.5% Total operating profit 140.2 23.6% 117.7 17.6% -16.1% Cost of Services
Cost of Services for 3Q07 rose 27.7%, or Ps.74.7 million. The increase in cost of services was primarily due to:
-- A Ps.8.2 million increase in programming costs, principally the result of the 14.0% increase in cable television subscribers; -- A Ps.11.0 million increase in payroll due to a rise in the number of technical employees from 895 people in September 30, 2006 to 1,009 in September 30, 2007; -- A Ps.16.3 million increase in Internet costs related to the incremental cost for bandwidth as the company began offering higher Internet speeds at the same price to make its service more attractive. The increase also reflected the 33.5% growth in the number of Internet subscribers; -- A Ps.27.5 million increase in depreciation & amortization resulting from the investment in fixed assets and a reduction in the useful life of distribution lines from 25 years in 3Q06 to 15 years in 3Q07; and -- A Ps.12.5 million increase in telephony costs resulting from the investment in infrastructure and technology to roll out IP telephony in new cities. Selling, General and Administrative Expenses Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.20.9 million, or 11.3% YoY to Ps.205.9 million. As a percentage of sales, however, SG&A declined 30 basis points to 30.8%, from 31.1% in 3Q06. The absolute increase in SG&A principally reflected the following changes: -- Administrative expenses increased 20.1% to Ps.125.2 million. As a percentage of revenues, administrative expenses rose to 18.7% in 3Q07 from 17.5% in 3Q06. The rise in administrative expenses was principally due to: -- A Ps.9.4 million increase in salaries and fees principally due to the increase in the number of administrative employees, and a higher outsourcing of administrative tasks; -- The impact from the capitalization in 3Q06 of Ps.4.4 million in software investments made in 1H06 that at the time were recorded as an expense; and -- An increase of Ps.4.5 million in communications and travel expenses, due to more activity resulting from operational controls and the rollout of IP telephony. -- Amortization and depreciation rose 10.5%, or Ps.1.8 million, to Ps.18.5 million for 3Q07, principally due to the increase in office equipment.
These increases were partially offset by a 2.9%, or Ps.1.8 million, decline in selling expenses to Ps.62.3 million, principally due to lower fees and advertising expenses. The Company employed 1,401 salespersons as of September 30, 2007 compared to 1,137 as of September 30, 2006.
Adjusted EBITDA
Adjusted EBITDA for 3Q07 increased 2.9%, or Ps.6.8 million, to Ps.238.9 million. The adjusted EBITDA margin fell 326 bps to 35.8%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 5. Adjusted EBITDA 3Q06 3Q07 % Chg. Net income (loss) 52.7 28.4 -46.1% Add (subtract): Amortization and depreciation 92.0 121.2 31.8% Comprehensive financial results, net 25.9 53.0 104.9% Other (income) expense, net (1.6) (5.8) 274.5% Special items 26.5 0.3 -99.0% Total income tax and asset tax 42.1 35.5 -15.5% Employee profit sharing 1.1 0.0 -100.0% Effects from associated companies (6.2) 6.3 -202.7% Minority interest (0.3) 0.0 -100.0% Adjusted EBITDA 232.2 238.9 2.9% -- Depreciation and amortization increased 31.8%, or Ps.29.3 million, to Ps.121.2 million, principally due to an increase in fixed asset investments and a change in the estimate of the useful life of distribution lines. -- Special items in 3Q06 included Ps.12.6 million of accelerated depreciation associated with the costs of cleanup, removal and rehabilitation of the portion of the network affected by Hurricane Wilma and Ps.13 million related to an impairment of goodwill. -- Net comprehensive financial results were an expense of Ps.53.2 million compared with an expense of Ps.25.9 million in 3Q06, principally reflecting lower gains from financial instruments and monetary position as well as lower interest income. -- During the quarter the company recorded a Ps.35.5 million provision for income taxes and asset taxes, compared to Ps.42.1 million in 3Q06 as a result of a lower taxable income base. Comprehensive Financial Results, Net
Net comprehensive financial results were an expense of Ps.53.0 million for the three-months ended September 30, 2007, an increase of Ps.27.1 million over the expense of Ps.25.9 million for 3Q06. The increase primarily reflected higher interest expenses that resulted from the 11.6% increase in debt, lower interest income as a result of the lower cash balance and a higher financial instrument gain in 3Q06, which more than offset the slight increase in gains from monetary position during that period.
Table 6. Comprehensive Financial Results, Net 3Q06 3Q07 % Chg. Interest income -5.4 -1.3 -75.0% Interest expense 60.0 71.4 19.1% Financial instruments (gain) -18.4 0.0 -100.0% Foreign-exchange (gain) loss, net 8.1 1.5 -81.3% Monetary position loss (gain) -18.2 -18.6 2.2% Comprehensive financial results, net 26.2 53.0 102.5% Net Income
For 3Q07, Cablemas posted a net gain Ps.28.4 million, a 46.1%, or Ps.24.3 million, decline from a net gain of Ps.52.7 million in 3Q06. Net income margin fell to 4.2% from 8.9% for 3Q06.
9M07 CONSOLIDATED RESULTS Net Revenues
Net revenues increased 15.1%, or Ps.258.5 million, during 9M07 to Ps.1,974.2 million.
-- Cable Television: The 10.5%, or Ps.142.7 million, growth in cable television revenues was principally due to a 14.0% YoY increase in the number of subscribers to 770,213, with a penetration rate of 34.3%. This was achieved despite a 4.7% decline in average monthly cable television revenues per subscriber (ARPU) to Ps.226.0. This decline in ARPU was primarily the result of a 35.0% increase in Minibasic subscribers, who pay lower monthly fees, while Basic subscribers increased 6.9%. The average monthly net churn rates for cable television declined 22 bps to 2.5% for 9M07 from 2.7% in 9M06. -- High Speed Internet: Revenues rose 33.1%, or Ps.86.9 million, to Ps.349.1 million. The rise in high-speed Internet revenues resulted mainly from a 33.5% increase in the number of subscribers to 213,322, with a penetration rate of 11.8%. This was partially offset by a 6.4% decline in high-speed Internet ARPU to Ps.199.2, as lower price/lower- speed Internet (128 Kbps) subscriptions increased at a faster rate than those of higher-speed Internet (512 Kbps). Average monthly net churn rates for high-speed Internet rose to 4.3% for 9M07 from 3.8% in 9M06 due to an aggressive competing service offer from Telmex, service quality limitations in the Mayan Riviera during the reconstruction of the network damaged by Hurricane Wilma, and a slow client recovery following the hurricane. -- IP Telephony: IP telephony revenues for the period rose 68.5%, or Ps.34.2 million, to Ps.84.1 million. As of September 30, 2007, there were 34,435 IP telephony lines in service, up from 20,616 as of September 30, 2006. IP telephony ARPU for 9M07 fell 17.6% to Ps.290.7. This does not include migration fees paid to Cablemas by Axtel for new subscribers, which, if included, would increase IP telephony ARPU to Ps.313.4 for 9M07. Table 7. Revenues by Service Offering 9M06 9M07 % of % of Total Total Revenue Revenue Revenue Revenue % Chg. Cable Television 1,362.0 79.4% 1,504.7 76.2% 10.5% High-Speed Internet 262.2 15.3% 349.1 17.7% 33.1% IP telephony 49.9 2.9% 84.1 4.3% 68.5% Advertising 38.9 2.3% 33.5 1.7% -13.9% Other(1) 2.7 0.2% 2.8 0.1% 5.9% Total Net Revenue(2) 1,715.7 100.0% 1,974.2 100.0% 15.1% (1) Includes revenue relating to rental and sale of cable decoders and charges relating to customer's change of residence. (2) All net revenue figures are net of value-added taxes and other taxes on sales. Table 8. Number of Subscribers per Service Offering % Chg. in 9M06 9M07 Subscribers Minibasic 172,517 232,906 35.0% Basic(1) 486,834 520,463 6.9% Superbasic(1) 44,134 43,230 -2.0% Premium (1) 28,173 30,117 6.9% Hotel 16,344 16,844 3.1% Total Cable Television 675,695 770,213 14.0% High-Speed Internet 159,732 213,322 33.5% IP Telephony lines 20,616 34,435 67.0% (1) The number and percentage of Basic subscribers includes Basic, Superbasic and Premium subscribers due to the fact that all Superbasic and Premium subscribers must also be Basic subscribers. Table 9. ARPUs and Churn Per Service Offering 9M06 9M07 % Chg. Homes passed 1,940,785 2,194,662 13.1% Cable Television - Revenue 1,362.0 1,504.7 10.5% - Subscribers 675,695 770,213 14.0% - ARPU 237.1 226.0 -4.7% - Avg. Monthly Churn 2.7% 2.5% -22 bps High-Speed Internet - Revenue 262.2 349.1 33.1% - Subscribers 159,732 213,322 33.5% - ARPU 212.8 199.2 -6.4% - Avg. Monthly Churn 3.8% 4.3% +56 bps IP Telephony - Revenue 49.9 84.1 68.5% - Lines 20,616 34,435 67.0% - ARPU (without migration fee) 353 290.7 -17.6% Operating Profit
Operating profit for 9M07 increased by 0.6%, or Ps.2.4 million, to Ps.401.3 million, driven mainly by an 8.4% increase in gross profit, that offset the 14.4% rise in SG&A. Operating margin declined to 20.3% from 23.3% in 9M06, principally due to higher cost of services as a percentage of sales.
Table 10. Operating Profit 9M06 9M07 Million % of Million % of Ps. Revenues Ps. Revenues % Chg. Service revenues 1,715.7 100.0% 1,974.2 100.0% 15.1% Cost of services 800.5 46.7% 982.4 49.8% 22.7% Gross Profit 915.3 53.3% 991.8 50.2% 8.4% SG&A 516.4 30.1% 590.5 29.9% 14.4% - Selling 171.3 10.0% 184.9 9.4% 7.9% - Administrative 301.7 17.6% 360.2 18.2% 19.4% - Amortization and depreciation 43.3 2.5% 45.5 2.3% 4.9% Total operating profit 398.9 23.3% 401.3 20.3% 0.6% Cost of Services
Cost of Services for 9M07 increased by 22.7%, or Ps.181.9 million. The increase in cost of services was primarily due to:
-- A 12.0% increase in programming costs derived from a 14.0% growth in cable television subscribers; -- A 29.0% increase in wages and salaries reflecting a lower capitalization of technical labor costs, as well as an increase in the number of technical employees as a result of the growth in video subscribers; -- A Ps.40.3 million increase in Internet costs, of which Ps.31.8 million are related to the incremental cost for bandwidth. Higher internet costs also reflect the 33.5% increase in the number of internet subscribers during the period; and -- A Ps.66.6 million increase in depreciation & amortization related to an increase in fixed asset investments and a change in the estimate of the useful life of distribution lines. During 9M06 the useful life of these assets was estimated at 25 years compared with 15 years in 9M07. Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.72.2 million, or 14.4% YoY to Ps.590.5 million. As a percentage of sales, SG&A declined 20 basis points to 29.9%, from 30.1% in 9M06. The absolute increase in SG&A principally reflected the following factors:
-- A 7.9%, or Ps.13.6 million, increase in selling expenses to Ps.184.9 million principally related to the expansion of the company's sales force (1,401 salespersons as of September 30, 2007 as compared to 1,137 as of September 30, 2006), an increase in commissions paid as well as the number of call centers; -- A 19.4%, or Ps.58.4 million, increase in administrative expenses, including Ps.23.8 in wages and salaries, Ps.12.0 million from the increase in office expenses, mainly software maintenance and renewal of licenses, Ps.5.0 million from higher professional fees, insurance and travel expenses, and Ps.9.6 million from increased communication activities and travel expenses; and -- Amortization and depreciation rose 4.9%, or Ps.2.1 million, to Ps.45.5 million for 9M07, principally due to an increase in office equipment. Adjusted EBITDA
Adjusted EBITDA for 9M07 increased 10.6%, or Ps.71.2 million, to Ps.745.1 million. The adjusted EBITDA margin declined 154 bps to 37.7% from 39.3%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 11. Adjusted EBITDA 9M06 9M07 % Chg. Net income (loss) 119.9 193.0 61.0% Add (subtract): Amortization and depreciation 274.7 344.3 25.4% Comprehensive financial results, net 117.9 136.3 15.6% Other (income) expense, net 7.2 (13.5) -289.4% Special items 74.8 (23.8) -131.8% Total income tax and asset tax 80.1 105.0 31.1% Employee profit sharing 3.7 5.2 39.4% Effects from associated companies (3.4) (1.1) -68.3% Minority interest (0.8) (0.3) -65.9% Adjusted EBITDA 673.9 745.1 10.6% -- Depreciation and amortization rose 25.4%, or Ps.69.6 million, to Ps.344.3 million, principally due to an increase in fixed asset investments and a change in the estimate of the useful life of distribution lines; -- Special items in 9M07 mainly included funds received from the insurance company for damages incurred by Hurricane Wilma. Special items in 9M06 included IPO expenses, extraordinary charges related to Hurricane Wilma, expenses related to the purchase of the financial partners' equity stake, and consulting fees related to the search for a new strategic partner; -- Net comprehensive financial results were an expense of Ps.136.3 million compared with an expense of Ps.117.9 million in 9M06 as explained below; and -- During the period the company recorded a Ps.105.0 million provision for income and asset taxes, compared to Ps.80.1 million in 9M06 as a result of a higher taxable income base. Comprehensive Financial Results, Net
Net comprehensive financial results was an expense of Ps.136.3 million for 9M07, an increase of Ps.18.4 million from an expense of Ps.117.9 million for 9M06. The increase mainly reflected a decline in interest income, higher interest expense and a loss from monetary position, which more than offset the higher gain from financial instruments and monetary position.
Table 12. Comprehensive Financial Results, Net 9M06 9M07 % Chg. Interest income -22.5 -3.7 -83.5% Interest expense 197.1 201.9 2.4% Financial instruments (gain) -24.2 -28.0 15.8% Foreign-exchange (gain) loss, net -11.8 2.9 -124.5% Monetary position loss (gain) -20.8 -36.9 77.5% Comprehensive financial results, net 117.9 136.3 15.6% Net Income
For 9M07, Cablemas posted a net gain Ps.193.0 million, a 61.0%, or Ps.73.1 million, improvement compared to a Ps.119.9 million gain in 9M06. Net income margin improved to 9.8% from 7.0% for 9M06.
CAPEX
Capital expenditures for 9M07 declined 5.9%, or Ps.57.4 million, to Ps.907.4 million from Ps.964.8 million in 9M06. Capital expenditures
principally related to investments incurred in connection with the roll out of IP telephony and to expand and upgrade Cablemas' network.
As of September 30, 2007, Cablemas had a network of 13,882 km, of which 83% was bidirectional, 88% was operating at or greater than 550 MHz and 75% was operating at or greater than 750 MHz.
DEBT STRUCTURE AND CASH FLOW
Consolidated gross debt as of September 30, 2007, totaled Ps.2,218.0 million, of which Ps.1,906.9 million was long-term and Ps.311.0 million was short term. Consolidated gross debt rose YoY by 11.6%, from Ps.1,987.6 million as of September 30, 2006.
Net debt, which is calculated as total debt minus cash and cash equivalents, increased YoY by 19.3% to Ps.2,180.3 million, from 1,827.5 million as of September 30, 2006. As of September 30, 2007, Cablemas had a cash balance of Ps.37.7 million.
Table 13. Debt Indicators 9M06 9M07 % Chg. Total Debt 1,987.6 2,218.0 11.6% Short-Term Debt - 311.0 N/A Long-Term Debt 1,987.6 1,906.9 -4.1% Cash and Cash Equivalents 160.1 37.7 -76.5% Total Net Debt 1,827.5 2,180.3 19.3% Leverage Total Debt/ LTM Adjusted EBITDA 2.3x 2.3x Total Net Debt/ LTM Adjusted EBITDA 2.2x 2.2x Interest Coverage Adjusted EBITDA / Net Interest Expense 3.9x 3.8x
Cash flow from operations during 9M07 increased 68.4%, or Ps.235.6 million, to Ps.580.2 million. Net borrowings rose Ps.300.3 million to Ps.270.9 million. CAPEX for 9M07 decreased Ps.57.4 million to Ps.907.4 million. Investments were principally related to the upgrade and expansion of Cablemas' network, customers' premises equipment investments and the roll out of IP telephony.
Table 14. Cash Flow 9M06 9M07 Change Cash at the beginning of the year 815.1 55.1 (760.0) Net Income 119.9 193.0 73.1 + Depreciation and amortization 276.0 348.4 72.4 + Change in Working Capital (93.0) 30.8 123.8 + Other 41.8 8.0 (33.7) Cash Flow from Operations 344.6 580.2 235.6 - Capex (964.8) (907.4) 57.4 - Other (5.4) 38.9 44.3 Net Investing Activities (970.2) (868.6) 101.6 + Debt (29.3) 308.7 337.9 + Other (0.2) (37.8) (37.6) Net Financing Activities (29.5) 270.9 300.3 Cash at the end of the year 160.1 37.7 (122.5) RECENT DEVELOPMENTS Acquisition of Comunicacion por Cable de San Buenaventura
In September 2007 Cablemas acquired Comunicacion por Cable de San Buenaventura, a cable TV operator located in Ixtapalupa for a total of US$5.6 million. With this acquisition, Cablemas has added around 5,000 new subscribers and 120 kilometers to its network. The acquisition was financed with current lines of credit.
THIRD QUARTER 2007 EARNINGS CONFERENCE CALL Date: Wednesday, November 28, 2007 Time: 11:30 AM US ET- 10:30 AM Mexico City Time Dial information: 866-202-4367 (U.S.) or 617-213-8845 (international) Passcode: 90930122 Replay: Starting Wednesday, November 28, 2007, at 1:30 PM US ET, ending at midnight US ET on Wednesday, December 5, 2007, 888-286-8010 (U.S.) or 617-801-6888 (international). Passcode: 20958501. About Cablemas
Cablemas is the second-largest cable television operator in Mexico based on number of subscribers and homes passed. As of September 30, 2007, Cablemas' cable network served over 770,213 cable television subscribers, 213,322 high-speed internet subscribers, and 34,435 IP telephony lines, with 2,194,662 homes passed.
Cablemas is the concessionaire with the broadest coverage in Mexico, operating in 46 cities throughout the country's oil, maquiladora and tourist regions as of September 30, 2007. Cablemas has consistently introduced innovative products in Mexico and is the first cable operator in the country to provide a "Triple Play" bundled service package of cable television, high speed internet and IP telephony. More information about Cablemas can be found at www.cablemas.com.
This document may contain certain forward-looking statements concerning Cablemas' operations, performance, business, financial condition and growth prospects. These statements are based upon beliefs of management as well as a number of assumptions and estimates, which are inherently subject to significant uncertainties, many of which are beyond Cablemas' control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the Mexican economy, including changes in inflation rates or exchange rates, changes in political conditions and government policies in Mexico, increased competition, regulatory developments and customer demand. These statements are made as of the date of this press release and Cablemas undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise in light of these risks and uncertainties, there can be no assurances that the events described or implied in the forward-looking statements contained in this document will in fact transpire.
- Unaudited Financial Tables to Follow - CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS Consolidated Balance Sheets September 30, 2007 and 2006 (Constant Mexican pesos as of September 30, 2007) (Unaudited) Assets 2007 2006 Current assets: Cash and equivalent $37,651,753 $160,113,392 Accounts receivables, less estimate for past due accounts for $9,088,552 in 2007 and $6,656,733 in 2006 48,432,898 33,237,572 Other accounts receivables, net 177,160,575 274,002,026 Associated companies 341,150 29,003,300 Prepaid expenses 34,600,433 31,083,200 Total current assets 298,186,809 527,439,490 Financial Instruments 383,330,143 435,442,549 Inventory of components of signal distribution systems, net 352,619,938 348,438,910 Investment in associated companies 105,689,033 81,069,927 Property, signal distribution systems, and equipment, net 3,611,186,565 2,987,477,080 Deferred employee statutory profit sharing 8,981,619 6,666,377 Goodwill, net 1,009,599,497 1,010,690,395 Intangible asset from pension and seniority premium plans and severance compensation for reasons other than restructuring 19,220,763 22,809,298 Other non-current assets, net 212,937,896 171,670,431 $6,001,752,263 $5,591,704,457 Liabilities 2007 2006 Current liabilities: Current installments of: Bank loans $311,049,163 $0 Obligations under capital leases 6,221,294 507,037 Notes 67,185,440 70,124,083 Financial instruments 0 0 Accounts payable 211,003,796 230,692,209 Accruals 118,862,752 84,634,362 Accrued liabilities 15,188,740 14,311,959 Taxes payable 4,657,678 7,448,183 Employee statutory profit sharing 7,454,868 5,739,150 Productora y Comercializadora de Television, S. A. de C. V. (associated company) 37,944,614 46,567,824 Subscriber deposits and advances 24,484,097 27,166,452 Total current liabilities 804,052,442 487,191,259 Financial instruments 344,915,399 478,241,062 Corporate bond 1,906,940,001 1,987,603,562 Bank loans, excluding current installments 60,000,000 0 Obligations under capital leases, excluding current installments 10,464,583 554,491 Pension and seniority premiums plans and severance compensation for reasons other than restructuring 52,732,386 44,066,772 Income tax 8,668,349 10,919,762 Deferred income tax 417,347,916 320,943,813 Total liabilities 3,605,121,076 3,329,520,721 Stockholders' equity Majority stockholders' equity: Capital stock 739,939,845 734,455,067 Additional paid-in capital 1,181,974,635 1,144,916,343 Retained earnings 552,124,676 490,549,436 Valuation effects of financial instruments (71,431,651) (101,519,571) Effect for labour obligations (1,540,119) (1,398,530) Cumulative effect on deferred taxes 3,395,343 3,395,343 Result from holding non monetary assets (10,140,444) (10,140,444) Total majority stockholders' equity 2,394,322,285 2,260,257,644 Minority stockholders' equity 2,308,902 1,926,092 Total stockholders' equity 2,396,631,187 2,262,183,736 Commitments and contingent liabilities $6,001,752,263 $5,591,704,457 CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS Consolidated Statements of Income Nine-month period ending September 30, 2007 and 2006 (Constant Mexican pesos as of September 30, 2007) (Unaudited) 2007 2006 Service revenues $1,974,219,539 $1,751,250,788 Cost of services 982,398,376 824,327,038 Gross profit 991,821,163 926,923,750 Operating expenses: Selling 184,853,692 180,865,197 Administrative 360,170,054 301,673,700 Amortization and depreciation 45,486,931 43,515,678 Total operating expenses 590,510,677 526,054,575 Operating profit 401,310,486 400,869,175 Comprehensive financial results: Interest income 3,705,731 22,510,790 Interest expense (201,924,170) (197,109,388) Foreign exchange (loss) gain, net (2,897,765) 11,811,331 Financial instruments 27,973,301 24,164,957 Monetary position gain 36,862,996 20,763,460 Comprehensive financial results, net (136,279,907) (117,858,850) Other income (expenses), net 13,539,618 (7,150,521) Special Items 23,801,396 (74,775,693) Income before income taxes, employee statutory profit sharing, 302,371,593 201,084,111 Income taxes: Current 40,952,982 61,475,600 Deferred 64,048,208 18,634,393 Total income taxes 105,001,190 80,109,993 Employee statutory profit sharing Current 7,392,592 6,091,786 Deferred (2,225,440) (2,386,368) Total employee statutory profit sharing 5,167,152 3,705,418 Income before effects from associated companies and minority interest 192,203,251 117,268,700 Effects from associated companies 1,083,924 3,415,900 Income before minority interest 193,287,175 120,684,600 Minority interest (279,843) (819,946) Majority interest net income $193,007,332 $119,864,654 CABLEMAS, S.A. DE C.V.Y SUBSIDIARIAS Consolidated Statements of Changes in Financial Position Nine-month period ending September 30, 2007 and 2006 (Constant Mexican pesos as of September 30, 2007) (Unaudited) 2007 2006 Operating activities: Net income $193,007,332 $119,864,654 Add charges (deducted credit) to operations not requiring (providing) funds: Depreciation and amortization 348,414,764 276,039,441 Increase in allowance for inventory of components of signal distribution systems - 2,719,920 Effects from associated companies (1,192,510) (3,415,900) Goodwill deterioration - 13,549,900 Goodwill cancellation - 8,072,825 Accruals for pensions and severance packages 5,462,447 2,515,311 Deferred income taxes 64,048,208 18,634,393 Deferred employee statutory profit sharing (2,225,440) (2,386,368) Financial instruments (58,369,020) 1,241,797 Minority interest 279,843 819,946 Funds provided by operations 549,425,624 437,655,921 Net financing from (investing in) operating accounts: Trade and other accounts receivable, net 60,032,654 (107,013,092) Prepaid expenses (15,067,518) (5,537,424) Accounts payable (39,748,824) 65,881,610 Accruals and accrued liabilities 25,560,632 11,607,445 Taxes payable (19,553,707) (8,723,136) Subscriber deposits and advances (20,338,615) (39,313,883) Employee statutory profit sharing 494,081 2,314,080 Related parties 39,377,236 (12,255,729) Funds provided by operating activities 580,181,563 344,615,791 Financing activities: Proceeds from (payments of) bank loans, net 283,260,161 - Proceeds from corporate bond 9,614,644 (30,336,209) Income tax (139,413) (188,913) Dividends Paid (37,628,272) - Proceeds from financial leases 15,779,258 1,061,528 Funds provided by financing activities 270,886,378 (29,463,594) Investing activities: Acquisition of distribution systems and equipment (78,228,492) (202,439,709) Inventory of components of signal distribution systems (774,767,996) (714,990,006) Other assets, net (54,445,726) (47,366,110) Investment in associated companies (5,669,587) (5,367,082) Insurance 44,557,404 - Funds used in investing activities (868,554,397) (970,162,907) Decrease (increase) in cash and cash equivalents (17,486,455) (655,010,710) Cash and cash equivalents: At beginning of year 55,138,208 815,124,102 At end of year $37,651,753 $160,113,392
First Call Analyst:
FCMN Contact:
Source: Cablemas
CONTACT: In Mexico, Sebastian Castro Brotto, Budget and IR Manager of
Cablemas, (5255) 24-54-58-84, sebastian.castro@admCablemas.com.mx; or in the
United States, Susan Borinelli, +1-646-452-2332,
sborinelli@breakstone-group.com, or Maura Gedid, +1-646-452-2335,
mgedid@breakstone-group.com, both of Breakstone Group for Cablemas
Web site: http://www.cablemas.com/
Profile: International Entertainment
posted by EntertainmentNews @ 1:42 PM
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