NEW YORK, Nov. 11, 2020 /PRNewswire/ -- Atento S.A. (NYSE:
ATTO) ("Atento" or the "Company"), the largest provider of
customer-relationship management and business-process outsourcing
services in Latin America, and
among the top five providers globally, today announced its third
quarter operating and financial results for the period ending
September 30, 2020. All comparisons
in this announcement are year-over-year (YoY) and in
constant-currency (CCY), unless noted otherwise, and may differ
from the corresponding 6-K filing due to certain intra-group
eliminations.
Three Horizon
Plan continues driving profitable growth on higher mix of
Multisector sales and Next Generation Services
- Consistent
Multisector growth (+10.8% YoY) across all regions, driven by Next
Generation Services, Brazil and US clients
- Multisector now
represents 68% of consolidated revenues, with Born-digital
comprising 6% of revenue mix
- TEF revenues
increase 16.8% sequentially; reshaping the relationship, moving
into NextGen services and remaining the leader in CX share of
client's wallet;.
- EBITDA increases in
all regions, with total EBITDA rising 13.9% on continued
improvements in client and services mix as well as higher
efficiency levels
- EBITDA margin
expands 560 bps sequentially and 100 bps YoY to 12.7%, with Brazil
margin increasing 260 bps to 16.2%
Operational
improvements continue raising efficiency levels
- Approximately $65 million of $80 million in target
annualized cost savings implemented YTD through operations
rightsizing, shared services, strict cost controls, Atento@Home
operating model and ZBB
FCF generation
reduces net debt for third consecutive quarter, while cash position
remains healthy
- 9M FCF of $9
million versus negative $88 million in 9M19
- Net debt falls 9.0%
YoY to $514.2 million; Leverage remains under control at 3.2x when
excluding Argentina impairment in Q4 2019
- Solid cash position
of $196.6 million
Atento
maintains undisputed leadership in Latin
America*
- Market share nearly
three times greater than next-largest competitor in domestic
CRM/BPO segment
- 27.9% of market
share in Brazil, with 19.4 p.p. lead to country´s number
two
|
|
* Frost &
Sullivan: "Growth Opportunities in the Customer Experience
Outsourcing Services Market in Latin America and the Caribbean"
(2019)
|
Summarized
Consolidated Financials
|
($ in millions
except EPS)
|
Q3
2020
|
Q3 2019
|
CCY
Growth (1)
|
YTD
2020
|
YTD 2019
|
CCY
Growth (1)
|
Income
Statement
|
|
|
|
|
|
|
Revenue
|
352.7
|
412.3
|
2.2%
|
1,042.7
|
1,290.1
|
-4.3%
|
EBITDA
(2)
|
44.8
|
48.1
|
13.9%
|
107.8
|
132.7
|
-1.5%
|
EBITDA
Margin
|
12.7%
|
11.7%
|
1.0
p.p.
|
10.3%
|
10.3%
|
0.1
p.p.
|
Net Income
(3)
|
(13.1)
|
1.3
|
N.M
|
(38.9)
|
(51.1)
|
-18.0%
|
Recurring Net Income
(2)
|
(1.2)
|
1.6
|
-45.3%
|
(14.6)
|
(9.1)
|
-37.2%
|
Earnings Per Share in
the reverse split basis (2) (3) (5)
|
($0.93)
|
$0.09
|
N.M.
|
($2.75)
|
($3.53)
|
-15.8%
|
Recurring EPS in the
reverse split basis (2) (5)
|
($0.09)
|
$0.11
|
N.M.
|
($1.04)
|
($0.62)
|
-42.3%
|
Cash Flow, Debt
and Leverage
|
|
|
|
|
|
|
Net Cash Used In
Operating Activities
|
10.7
|
12.1
|
|
68.2
|
(1.6)
|
|
Cash and Cash
Equivalents
|
196.6
|
105.5
|
|
|
|
|
Net Debt
(4)
|
514.2
|
564.9
|
|
|
|
|
Net Leverage
(4)
|
4.0
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unless otherwise
noted, all results are for Q3 2020; all revenue growth rates are on
a constant currency basis, year-over-year.
|
(2)
|
EBITDA, Recurring Net
Income/Recurring Earnings per Share (EPS) are Non-GAAP
measures.
|
(3)
|
Reported Net Income
and Earnings per Share (EPS) include the impact of non-cash foreign
exchange gains/losses on intercompany balances.
|
(4)
|
Includes IFRS 16
impact in Net Debt and Leverage
|
(5)
|
Earnings per share
and Recurring Earnings per share in the reverse split basis is
calculated by applying the ratio of conversion of 5.027090466672970
used in the reverse split into the previous weighted average
number of ordinary shares outstanding
|
Message from the CEO and CFO
Carlos López-Abadía, Atento's Chief Executive Officer,
commented, "As we promised in our Q2 earnings call, our business
continued to recover significantly on still improving market
conditions, with revenue growing over 10% sequentially, EBITDA
doubling and our margin expanding almost 600 basis points, all
three of which are above pre-crisis levels. The strong and
broad-based recovery in our performance, which continues today,
reflects consistent and disciplined execution of our Three Horizon
Plan, which drove Multisector sales higher across all three of
Atento's geographic markets during the quarter. Our multisector
clients now represent almost 70% of revenues, up from 60% when we
started to implement the strategic plan. Moreover, we have been
expanding into fast-growing verticals, such as born digital, tech,
e-commerce and media, which are businesses that demand more digital
and tech enabled solutions and therefore carry higher margins. We
are also reshaping the relationship with Telefónica by selling more
of these higher margin services to them, helping solidify Atento's
position as the company's Partner of Choice and driving revenues
17% sequentially higher with this client.
With the recent inauguration of innovation centers in
Brazil and Spain, we intend to strengthen our culture of
innovation as well as Atento's leadership in fundamentally
transforming and substantially improving the Customer Experience
delivered by our industry. This year alone, 10% of Atento's new
sales were for next generation services developed within the last
12 months. Atento's governance has also been strengthening, with
the appointment of two additional independent directors in the last
six months, one of whom brings substantial experience managing and
governing technology companies.
As we approach the end of the year, we are operating at
significantly higher performance levels and from a position of
relative strength, one that enables us to continue effectively
addressing the many challenges of today's still complex and highly
dynamic operating environment, while seizing more of the
opportunities emerging among high-growth verticals in Brazil and the Americas and from ever-growing
demand for innovative next-generation CX and BPO services. We
remain confident in our ability to successfully execute in both
regards, given the proven effectiveness of our Three Horizon Plan,
Atento's growing technology progress, and our commanding market
position in Latin America. We
therefore expect to end 2020 with EBITDA levels similar to last
year's in current currency, which is a remarkable result
considering the significant crisis and an adverse BRL devaluation
of 35%. This means a 200 basis points margin expansion versus 2019
and the implied exit rate we forecast to Q4 gives us confidence to
continue delivering improved results in 2021 and puts us on track
to deliver the 2022 targets that we communicated last November in
our Investor Day. We expect the market to recognize the track
record we have created in the last couple of quarters and, as we
continue to deliver better results, our share price will reflect
the solid fundamentals of our business."
José Azevedo, Atento's Chief Financial
Officer, said, "Our third quarter financial and operating
results make clear that we continue to improve operationally. The
fundamental changes we have been making within our business, in
terms of sustainable top line growth, a more diversified and
profitable revenue stream, and more efficient delivery, are now
driving operating and free cash flow higher. We generated
$9 million free cashflow in the first
nine months of the year, an increase of almost $100 million when compared to the same period of
2019, and we accomplished this despite the impact of COVID-19
across our markets. This allowed for a decrease in our net debt for
the third consecutive quarter, which combined with increasing
EBITDA,makes us confident towards our target of 2.0 to 2.5 times
net debt-to-EBITDA. In the meantime, we are comfortable with our
current level of leverage and remain committed to refinancing
Atento's 2022 bond, with the aim of improving our debt profile and
capital structure as another means to unlock shareholder
value."
Third Quarter and Nine Months 2020 Consolidated Financial
Results
Atento's revenue grew 10.5% sequentially and 2.2% YoY to
$352.7 million, based on strong
Multisector sales, which increased 7.8% and 10.8%, respectively, to
$238.0 million. While the pandemic
demanded a flexible business model and fast decisions, such as a
rapid transition to a work at home model, the dynamics of the
crisis has accelerated positive demand, mainly in the digital
space, as consumers shift more of their purchases online.
Capitalizing on these trends, Atento increased Multisector revenue
during the third quarter, mainly driven by the Americas, which
increased sales in this category 13.1% YoY, and by Brazil, where these sales grew 5.3% during
this period. US and Nearshore sales continued contributing to
Multisector growth, rising 20% YoY. Atento's base of Born-Digital,
Tech and Media & Entertainment clients continued expanding
during the quarter, with 20 new clients and new next gen sales
increasing 23% YoY. Within the Company's 9M revenue mix, sales to Born-digital Companies
expanded from 2.7% to 6.0%.
Growth in total revenue was partially offset by an 11.9%
decrease in Telefónica's, although a greater proportion of TEF
sales during the third quarter already comprised next-generation
services and Atento increased share of wallet with this client.
More importantly, TEF revenue increased 16.8%
sequentially.
Consolidated EBITDA increased 13.9% to $44.8 million, based on higher sales,
continued improvements in the client and services mix, as well as
higher efficiency levels. The corresponding margins expanded 560
basis points sequentially and 100 basis points YoY, with
Brazil's margin expanding 260
basis points YoY to 16.2%.
During the quarter, the Company continued making operational
improvements under the Three Horizon Plan, with approximately
$65 million of annualized cost
savings implemented YTD of the $80
million targeted. Ongoing efficiency initiatives include the
rightsizing of Atento's operations, maintaining strict cost
controls, increasing use of the Atento@home operating model,
implementing Zero-Based Budgeting, as well as expanding the use of
shared services, among other initiatives to reduce SG&A
expenses.
Recurring net income improved sequentially to a loss of
$1.2 million from a loss of
$10.2 million in 2Q 2020, or a YoY
decrease of $3.2 million compared to
3Q 2019. Recurring EPS was a negative $0.09 in 3Q 2020 versus positive $0.11 in last year's quarter and negative
$0.72 in 2Q 2020.
Atento maintained a comfortable level of financial liquidity at
the end of the quarter, with net debt decreasing for the third
consecutive quarter to $514.2
million, representing a YoY decrease of 9%, and a cash
position of $196.6 million, including
revolvers. During 9M 2020, the
Company generated $9.3 million in
FCF, a $97.4 million increase
compared to negative $88 million in
YTD 2019, on client contracts that generate higher levels of
profitability and on further improvements in working capital that
stem from rigorous financial controls that have been
implemented.
Segment
Reporting
|
|
Brazil
|
|
($ in
millions)
|
Q3
2020
|
Q3 2019
|
CCY
growth
|
YTD
2020
|
YTD 2019
|
CCY
growth
|
Brazil
Region
|
|
|
|
|
|
|
Revenue
|
145.2
|
203.8
|
-3.4%
|
452.5
|
632.5
|
-7.5%
|
Adjusted
EBITDA
|
23.5
|
27.7
|
15.4%
|
58.5
|
82.0
|
-7.2%
|
Adjusted EBITDA
Margin
|
16.2%
|
13.6%
|
2.6 p.p.
|
12.9%
|
13.0%
|
0.0 p.p.
|
Operating
Income/(loss)
|
(5.2)
|
(4.4)
|
53.6%
|
(21.4)
|
(13.3)
|
105.2%
|
In Brazil, Atento's flagship
business, Multisector sales grew 4.5% sequentially and 5.3% YoY to
$112.4 million. The growth was due to
an increase in sales to Born-digital companies, which have been
purchasing more-next generation services, including high value
voice, integrated multichannel and automated back office services.
Multisector sales accounted for 77.7% of total revenue in this
market, 610 basis points higher than year-end 2019.
TEF revenues, in turn, decreased 24.8%, which resulted in a 3.4%
YoY decline in total Brazil
revenue to $145.2 million. The
decrease was mainly related to the unprofitable client programs
that had been returned in Q4 2019. On a sequential basis, TEF
revenue increased 20.8% in Brazil.
Brazil's profitability improved
significantly during the quarter. Adjusted EBITDA increased 15.4%
to $23.5 million, with the
corresponding margin expanding 260 basis points YoY to 16.2% on a
greater proportion of new next-generation services with margins
above 20%. Adjusted EBITDA also benefited from the discontinuation
of unprofitable programs in Q4 2019, which has had an estimated
recurring positive impact of 100bps since Q1 2020.
Americas
Region
|
|
($ in
millions)
|
Q3
2020
|
Q3 2019
|
CCY
growth
|
YTD
2020
|
YTD 2019
|
CCY
growth
|
Americas
Region
|
|
|
|
|
|
|
Revenue
|
148.8
|
159.6
|
4.0%
|
426.1
|
493.1
|
-2.1%
|
Adjusted
EBITDA
|
17.1
|
17.5
|
9.1%
|
45.3
|
50.2
|
-0.2%
|
Adjusted EBITDA
Margin
|
11.5%
|
11.0%
|
0.5 p.p.
|
10.6%
|
10.2%
|
0.5 p.p.
|
Operating
Income/(loss)
|
(0.8)
|
(1.8)
|
44.5%
|
(8.0)
|
(9.2)
|
24.7%
|
Americas revenue increased 4.0% to $148.8
million on a 17.5% increase in Multisector revenues. S and
Nearshore revenues increased 20%. In South America, Multisector sales were strong
in Colombia, a country that is
expect to continue delivering growth, as it is a hub for Atento's
EMEA and US nearshore businesses. We continue to expand our
business in the hard currency, with Multisector revenues growing
20% in the US & Nearshore region. As a percentage of total
revenue in the Americas, Multisector sales expanded 370 basis
points to 65.9% versus year-end 2019.
Growth generated from Multisector clients was partially offset
by a 14.9% decrease in TEF sales in the Americas, primarily due to
persistent volume declines in Peru, where the pandemic continued to have a
severe economic impact. Sequentially, TEF revenue increased 15.5%
in the region.
Such performance, coupled with increased operating efficiency
contributed to margin improvement. The region's Adjusted EBITDA
increased 9.1% to $17.1 million,
while the corresponding margin expanded 50 basis points to
11.5%.
EMEA
Region
|
|
($ in
millions)
|
Q3
2020
|
Q3 2019
|
CCY
growth
|
YTD
2020
|
YTD 2019
|
CCY
growth
|
EMEA
Region
|
|
|
|
|
|
|
Revenue
|
60.5
|
52.1
|
10.7%
|
168.5
|
175.4
|
-3.7%
|
Adjusted
EBITDA
|
7.3
|
5.9
|
18.7%
|
10.8
|
17.8
|
-38.9%
|
Adjusted EBITDA
Margin
|
12.1%
|
11.4%
|
0.7 p.p.
|
6.4%
|
10.1%
|
-3.7 p.p.
|
Operating
Income/(loss)
|
2.6
|
(0.1)
|
N.M
|
(1.3)
|
0.1
|
N.M
|
In EMEA, Atento continued to diversify its revenue base through
expanded Multisector sales, which grew 6.1% to 48.2% of total
revenue, up 600 basis from the same period in 2019. Driving growth
in this category were higher volumes and new business at current
customers, in addition to new clients.
A 15.4% increase in TEF revenue also contributed to the 10.7%
increase in total revenue of $60.5
million, due to higher volumes, although this compares with
an unusually low volume base in the prior year's quarter. On a
sequential basis, TEF revenues increased 14.0% in the region.
EMEA's Adjusted EBITDA increased 18.7% to $7.3 million on sales growth, a greater
proportion of Multisector sales and next-generation services in the
revenue mix, as well as improved efficiency levels under the
Company's transformation plan, with the corresponding margin
increasing 70 basis points to 12.1%.
Cash Flow and
Capital Structure
|
|
($ in
millions)
|
Q3
2020
|
Q3
2019
|
YTD
2020
|
YTD
2019
|
Cash and cash
equivalents at beginning of period
|
207.2
|
116.6
|
124.7
|
133.5
|
Net Cash (used in)
from Operating activities
|
10.7
|
12.1
|
68.2
|
-1.6
|
Net Cash used in
Investing activities
|
-8.7
|
-10.6
|
-27.4
|
-48.7
|
Net Cash provided by
Financing activities
|
-21.1
|
-4.7
|
36.2
|
29.6
|
Net
(increase/decrease) in cash and cash equivalents
|
-19.1
|
-3.2
|
77.0
|
-20.7
|
Effect of changes in
exchanges rates
|
8.5
|
-7.9
|
-5.1
|
-7.3
|
Cash and cash
equivalents at end of period
|
196.6
|
105.5
|
196.6
|
105.5
|
At the end of Q3 2020, Atento's cash and cash equivalents
totaled $196.6 million, down
$10.6 million sequentially due to
payments of interest on the 2022 bond, partial pre-payment of
higher cost revolvers and payments of certain taxes deferred in Q2
due to the pandemic. This amount includes approximately
$80 million of existing
revolvers.
Cash capex was 2.6% in YTD 2020, flat compared to YTD 2019, as
the Company emphasized cash preservation and limited investments to
essential capex during the second quarter, due to the pandemic. For
the year, the company expects cash capex to be approximately 3% of
revenues.
Total debt was $710.8 million,
including $123.3 million related to
IFRS16, with an average maturity of 1.7 years and an average LTM
cost of 6.3%.
Net debt decreased 9.0% YoY to $514.2
million at the end of the quarter, the third consecutive
quarterly decrease.
LTM net-debt-to-EBITDA was 4.0 times, mainly due to COVID-19's
impact on EBITDA in Q2 2020, the $30.9
million impairment charge in Argentina in Q4 2010 and 16% FX impact on LTM
EBITDA. Leverage remains under control due to the Company's current
debt maturity profile and EBITDA generation during the third
quarter. Excluding the aforementioned impairment charge, the
leverage ratio was 3.2 times, down from 3.3 times at the end of
September 2019, an improvement that
was achieved during a period when the value of the Brazilian real
declined 35%. The Company continues to focus on refinancing the
$500 million 2022 notes, in order to
extend the maturity of this debt and to improve Atento's capital
structure, as another means to unlock shareholder values.
($ in millions) as
of June 30, 2020
|
Maturity
|
Interest
Rate
|
Outstanding
Balance 3Q20
|
Indebtedness
|
|
|
|
Senior Secured
Notes
|
2022
|
6.125%
|
497.0
|
Super Senior Credit
Facility
|
2020
|
5.223%
|
50.1
|
Other Credit
Facilities
|
2020
|
CDI + 2.40
|
25.0
|
Other borrowings and
leases
|
2023
|
Variable
|
14.9
|
BNDES
(BRL)
|
2022
|
TJLP +
2.0%
|
0.6
|
Debt with third
parties
|
587.6
|
Leasing
(IFRS16)
|
123.3
|
Gross Debt (third
parties + IFRS16)
|
710.8
|
Cash and Cash
Equivalents
|
196.6
|
Net
Debt
|
514.2
|
Resuming 2020
Guidance
|
|
|
FY
2020
|
Revenue growth (in
constant currency)
|
~ -5%
|
EBITDA
margin
|
~ 11%
|
Cash Capex (as % of
revenues)
|
~ 3%
|
Leverage
(x)
|
~ 4x
|
Share Repurchase Program
In the quarter, the Company repurchased 42,237 shares under its
Share Repurchase Program, at a cost of $0.4
million, an average price of $8.75. At the end of September 2020, Atento held 973,138 shares in
treasury.
Reverse Share Split
As of July 28, Atento SA announced
a reverse share split that converted the Company's entire share
capital of 75,406,357 into 15,000,000 shares.
Conference Call
The Company will host a conference call and webcast on
Thursday, November 12, 2020 at
10:00 am ET to discuss its financial
results. The conference call can be accessed by dialing:
USA: +1 (412) 717-9627; UK: (+44)
20 3795 9972; Brazil: (+55) 11
3181-8565; or Spain: (+34) 91 038
9593. It can also be accessed by web phone (Click here). No
passcode is required. Individuals who dial in will be asked to
identify themselves and their affiliations. The live webcast of
the conference call will be available on Atento's Investor
Relations website at investors.atento.com (Click here). A
web-based archive of the conference call will also be available at
the above website.
About Atento
Atento is the largest provider of customer relationship
management and business process outsourcing (CRM BPO) services in
Latin America, and among the top
five providers globally, based on revenues. Atento is also a
leading provider of nearshoring CRM/BPO services to companies that
carry out their activities in the United
States. Since 1999, the company has developed its business
model in 13 countries where it employs 150,000 people. Atento has
over 400 clients to whom it offers a wide range of CRM/BPO services
through multiple channels. Atento's clients are mostly leading
multinational corporations in sectors such as telecommunications,
banking and financial services, health, retail and public
administrations, among others. In 2019, Atento was named one of the
World's 25 Best Multinational Workplaces and one of the Best
Multinationals to Work for in Latin
America by Great Place to Work®. Atento is also the world's
first CRM company to be ISO 56002 certified in Innovation
Management. Atento's shares trade under the symbol ATTO on the New
York Stock Exchange (NYSE). For more information visit
www.atento.com.
Investor
Relations
Shay Chor
+ 55 11 3293-5926
shay.chor@atento.com
|
Investor
Relations
Fernando
Schneider
+ 55 11
3779-8119
fernando.schneider@atento.com
|
Media
Relations Pablo Sánchez Pérez
+34 670031347
pablo.sanchez@atento.com
|
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements can be identified by the use of words
such as "may," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "intends," "continue" or
similar terminology. These statements reflect only Atento's current
expectations and are not guarantees of future performance or
results. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain, such as statements about
the potential impacts of the Covid-19 pandemic on our business
operations, financial results and financial position and on the
world economy. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those contained in the forward-looking statements. These risks
and uncertainties include, but are not limited to, competition in
Atento's highly competitive industries; increases in the cost of
voice and data services or significant interruptions in these
services; Atento's ability to keep pace with its clients' needs for
rapid technological change and systems availability; the continued
deployment and adoption of emerging technologies; the loss,
financial difficulties or bankruptcy of any key clients; the
effects of global economic trends on the businesses of Atento's
clients; the non-exclusive nature of Atento's client contracts and
the absence of revenue commitments; security and privacy breaches
of the systems Atento uses to protect personal data; the cost of
pending and future litigation; the cost of defending Atento against
intellectual property infringement claims; extensive regulation
affecting many of Atento's businesses; Atento's ability to protect
its proprietary information or technology; service interruptions to
Atento's data and operation centers; Atento's ability to retain key
personnel and attract a sufficient number of qualified employees;
increases in labor costs and turnover rates; the political,
economic and other conditions in the countries where Atento
operates; changes in foreign exchange rates; Atento's ability to
complete future acquisitions and integrate or achieve the
objectives of its recent and future acquisitions; future
impairments of our substantial goodwill, intangible assets, or
other long-lived assets; and Atento's ability to recover consumer
receivables on behalf of its clients. In addition, Atento is
subject to risks related to its level of indebtedness. Such risks
include Atento's ability to generate sufficient cash to service its
indebtedness and fund its other liquidity needs; Atento's ability
to comply with covenants contained in its debt instruments; the
ability to obtain additional financing; the incurrence of
significant additional indebtedness by Atento and its subsidiaries;
and the ability of Atento's lenders to fulfill their lending
commitments. Atento is also subject to other risk factors described
in documents filed by the company with the United States Securities
and Exchange Commission.
These forward-looking statements speak only as of the date on
which the statements were made. Atento undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/atento-reports-fiscal-2020-third-quarter-results-301171370.html
SOURCE Atento S.A.