NEW YORK, May 5, 2021 /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 first quarter
operating and financial results for the period ending March 31, 2021. All comparisons in this
announcement are year-over-year (YoY) and in constant-currency
(CCY), unless otherwise noted.
A strong start for 2021
- Q1 revenues grew 8.0% on a CCY basis, with consistent growth in
Multisector across all regions, driven by Next Generation
Services
- Multisector revenues increased 11.0%, reaching 68.1% of total
revenues, 0.7pp higher YoY
- TEF resuming growth following new program wins
- US revenues increased 52.0%, with EBITDA increasing 91%
YoY
- Consolidated EBITDA expanded 6.7% to $39.1 million YoY, with corresponding margin of
10.5%, in line with management expectations and reflecting
historical seasonality for Q1
- Continued solid improvement in Cash Flow: operating cashflow
+$11.9M vs Q1 2020, totaling $5.5M in
Q1 2021, the first positive number for a first quarter since
2017
Building a track record in operating efficiency
- First stage implemented in 2019 and 2020 focused on structural
opex, with $60 million in annualized
savings carried to 2021
- Second stage to focus on contract profitability, with
annualized savings expected to reach additional $25 million
Debt refinancing resolved uncertainty related to capital
structure
- Successfully concluded debt refinancing in Q1 2021, extending
average debt life to 4.3 years
- Healthy balance sheet with solid cash position of $176.1 million
- Net debt reduction of 6.9% versus Q1 2020, with leverage at
3.3x
- USD debt hedged for Principal and Coupons
Avenues for Growth
- Remain focused on expanding NGS for multisector and US
business, aiming at increasing revenue and EBITDA in hard
currencies.
Summarized Consolidated Financials
($ in millions
except EPS)
|
Q1
2021
|
Q1 2020
|
CCY
Growth (1)
|
Income
Statement (6)
|
|
|
|
Revenue
|
370.6
|
375.4
|
8.0%
|
EBITDA
(2)
|
39.1
|
40.8
|
6.7%
|
EBITDA
Margin
|
10.5%
|
10.9%
|
-0.4
p.p.
|
Net Income
(3)
|
(20.2)
|
(7.4)
|
N.M.
|
Recurring Net
Income (2)
|
(9.9)
|
(3.5)
|
-116.3%
|
Earnings Per Share in
the reverse split basis (2) (3) (5)
|
($1.43)
|
($0.52)
|
N.M.
|
Recurring EPS in
the reverse split basis (2) (5)
|
($0.70)
|
($0.25)
|
-117.4%
|
Cash Flow, Debt
and Leverage
|
|
|
|
Net Cash Used in
Operating Activities
|
(0.6)
|
4.4
|
|
Cash and Cash
Equivalents
|
176.1
|
162.8
|
|
Net Debt
(4)
|
525.4
|
564.3
|
|
Net Leverage
(4)
|
3.3x
|
3.7x
|
|
|
(1) Unless otherwise
noted, all results are for Q1; 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. (6) The
following selected financial information are unaudited.
|
Message from the CEO and CFO
Atento delivered solid Q1 2021 results, on the back of strong
Next Generation services sales throughout the regions in which we
operate, especially in the US and EMEA. Our revenues in the quarter
went up 8.0% YoY on a constant currency basis, while EBITDA growth
was 6.7%, with a 10.5% margin, despite implementation costs of new
projects whose revenues will be fully accounted for from Q2 2021
onward and wage adjustments in Brazil. We are pleased to report that, for the
first time since 2017, we generated positive operating cash flow in
a first quarter.
The implementation of our Three Horizon Plan in 2019
successfully allowed us to convert our commercial pipeline,
consistently increasing our sales as measured by Total Annual
Value: new wins in this quarter surpassed $80 million, 4 times more than what we sold in
the same period in 2018, and 50% more than Q1 2020. More than half
of these revenues came from the U.S. We are proud to report that
one of these wins is a contract with the State of Maryland where we assumed a
front-line position in the fight against COVID by launching
Atento's Equitable Vaccination Distribution and Scheduling system
using the Atento@home remote work solution, implemented in just two
weeks.
A year ago, we said we wanted to serve the right clients, with
the right services, and that's what we have been delivering. We
have been able to attract born-digital and tech brands that, along
with media, now comprise more than 10% of our total revenues. When
we add US and EMEA revenues hard currencies account for 25% of
total revenues, mitigating the impact of foreign exchange
variations from our Latin American businesses. More importantly,
these clients demand more sophisticated services, allowing for
better margins.
We are seeing opportunities to extract additional operating
efficiencies throughout the year. After accomplishing annualized
cost savings of $85 million in 2020,
of which $60 million is being carried
forward to 2021, we started the year focusing on contract
profitability. There are important factors that impact the
profitability of each program and we have a delivery group
currently implementing initiatives to best balance these factors so
that we can improve our returns while improving service range and
quality to our clients.
As we said in our 2019 Investor Day, improving the capital
structure of Atento is a key element for generating value to
shareholders. This quarter we successfully completed our debt
refinancing, issuing new $500 million
Senior Secured Notes that mature in February
2026, extending the average life of our debt to 4.3 years
from 1.5 years and paving the way to improve our capital structure.
Fulfilling the commitment made to investors, the new notes are
protected by hedging instruments consisting mainly of
cross-currency swaps in BRL, PEN and Euro, with the coupons hedged
through maturity, while the principal is hedged for a period of 3
years.
The demand for our CX services remains strong and Atento is more
than prepared to serve this demand. The combination of top line
growth, expansion of revenues in hard currencies and additional
operational efficiencies coupled with the success of our debt
refinancing strengthens our confidence in achieving our guidance
for EBITDA margins and leverage targets for 2021 and
2022.
Carlos López-Abadía
José Azevedo
Chief Executive
Officer
Chief Financial Officer
First Quarter Consolidated Financial Results
Atento's revenue increased 8.0% YoY in Q1 2021, to $370.6 million, mainly driven by an 11.0% growth
in Multisector sales, which expanded across all regions, reflecting
the company's effort to continue improving revenue mix into
fast-growing and more profitable verticals. Media, Tech and
Born-digital already represent more than 10% of total revenues,
with revenues in hard currencies already totaling 25% of total
revenues.
Sales of Atento@home solutions have also increased. We are now
serving more than 300 clients with this solution while maintaining
our employees safely working from home, complying with all the
security standards and reinforcing the culture of taking care of
our people.
Telefónica revenues are stabilizing, with an increase of 2.2%
YoY, mainly from higher volumes in Brazil and EMEA. It is worth highlighting that
the initial impacts from the pandemic were already felt
mid-March 2020, with the closing of
centers that directly impacted TEF revenues for that period. We
continue to improve our relationship with Telefónica and remain the
leader in the share of wallet for CX services.
Multisector revenues reached 68.1% of total sales, up from 67.5%
in Q1 2020 and from 62.4% two years ago, as a result of higher
sales of Next Generation Services, such as high-value voice,
integrated multichannel and automated back-office services, demand
for which is even stronger with the change in consumer habits. NGS
represented 30% of our new sales in this quarter.
Consolidated EBITDA expanded 6.7% to $39.1 million YoY, while the corresponding margin
reached 10.5%, diminishing 40 basis point year-over-year. This
slight decline reflects an impact of $6.6M from wage adjustments in Brazil, which we expect to recover as we pass
it through to prices in the next quarters and of $1.3M implementation costs of new client programs
in Brazil and the US. This EBITDA
margin was in line with management expectations and reflects the
historical first quarter seasonality.
Atento continued to maintain a comfortable level of financial
liquidity, with net debt decreasing 6.9% to $525.4 million YoY. Operating Cash Flow was
R$5.5 million in the quarter, the
first positive OCF we registered in a Q1 since 2017. Free cash flow
was $16.1M negative, the same level
registered in Q1 2020, and includes around $10 million of one-time costs related to the debt
refinancing and $11.7 million of
interest payment net of hedge gains.
Segment Reporting
Brazil
($ in
millions)
|
Q1
2021
|
Q1 2020
|
CCY
growth
|
Brazil
Region
|
Revenue
|
148.9
|
172.0
|
6.7%
|
Adjusted
EBITDA
|
17.9
|
24.4
|
-9.5%
|
Adjusted EBITDA
Margin
|
12.0%
|
14.2%
|
-2.2 p.p.
|
Profit/(loss) for the
period
|
(4.9)
|
(8.2)
|
28.2%
|
|
|
|
|
Revenue in Brazil, Atento's
flagship operation, increased 6.7% during the quarter to
$148.9 million, fueled by 5.6% growth
in multisector, due to Next Generation Services expansion with
Born-Digital companies. Telefonica revenue went up by 10.5%,
reflecting the partial impact of the new program implemented in
March and also the weaker Q1 2020 that was impacted by the pandemic
in the last two weeks of March 2020.
Multisector clients acquired in the last twelve months came mainly
from the Healthcare, Media and Born-Digital sectors.
EBITDA was impacted by $6.6
million in wage adjustments, which we expect will be largely
passed on to prices in the next couple of months, and $1.0 million of implementation costs related to
new client programs, thus decreasing 9.5% YoY and totaling
R$17.9 million. EBITDA margin, in
turn, diminished 220 basis points to 12.0%. Excluding these
impacts, EBITDA margin would have been 17.1%.
Americas Region
($ in
millions)
|
Q1
2021
|
Q1 2020
|
CCY
growth
|
Americas
Region
|
Revenue
|
154.1
|
147.4
|
8.6%
|
Adjusted
EBITDA
|
17.1
|
13.7
|
25.5%
|
Adjusted EBITDA
Margin
|
11.1%
|
9.3%
|
1.8 p.p
|
Profit/(loss)
for the period
|
(1.6)
|
(6.9)
|
77.0%
|
In the Americas, the Company recorded an increase in revenues of
8.6% YoY to $154.1 million, with
Multisector sales increasing 15.8% YoY, mainly in Central America, Colombia and the US, where we won a new
contract with the State of
Maryland to support Covid-19 vaccine appointments and
logistics. Telefónica revenues decreased 4.9% YoY, with the main
impact coming from Peru as this
country has been under a more severe lockdown to control the
pandemic when compared to other countries.
When compared to Q1 2020, US revenues went up 52%, while EBITDA
increased 91%, with EBITDA Margin reaching 15.8%, up by 3.2
percentage points. EBITDA was impacted by a $0.3 million implementation related cost for a
new client program, implying normalized profitability closer to
17%. Our US clients already represent 7% of Atento's total
consolidated revenues, in line with our strategy of strengthening
our revenues in hard currencies and expanding our presence in the
American market.
The region's Adjusted EBITDA was $17.1
million, increasing 25.5% YoY mainly due to higher revenue
from the US coupled with improved operational efficiencies. EBITDA
margin stood at 11.1%, an increase of 1.8 percentage points.
EMEA Region
($ in
millions)
|
Q1
2021
|
Q1 20210
|
CCY
growth
|
EMEA
Region
|
Revenue
|
69.1
|
57.5
|
9.8%
|
Adjusted
EBITDA
|
8.5
|
3.7
|
105.8%
|
Adjusted EBITDA
Margin
|
12.3%
|
6.5%
|
5.8 p.p.
|
Profit/(loss) for the
period
|
0.9
|
(0.6)
|
N.M
|
|
|
|
|
In EMEA, a 15.8% increase in Multisector sales, driven by Next
Generation Services, coupled with a 4.3% increase in TEF revenues,
led to a 9.8% increase in revenues during the quarter, totaling
$69.1 million.
EMEA's Adjusted EBITDA more than doubled to $8.5 million, while the EBITDA margin expanded
580 basis points to 12.3%. The region's profitability improved as a
result of better operational efficiencies coupled with revenue
growth.
Cash Flow
Cashflow Statement
($ in millions)
|
Q1
2021
|
Q1
2020
|
Cash and cash
equivalents at beginning of period
|
209.0
|
124.7
|
Net Cash from
Operating activities
|
(0.6)
|
4.4
|
Net Cash used in
Investing activities
|
(7.5)
|
(11.3)
|
Net Cash (used in)/
provided by Financing activities
|
(14.4)
|
58.8
|
Net
(increase/decrease) in cash and cash equivalents
|
(22.4)
|
51.9
|
Effect of changes in
exchanges rates
|
(10.5)
|
(13.9)
|
Cash and cash
equivalents at end of period
|
176.1
|
162.8
|
Despite historical seasonality for a first quarter, Atento
closed the period with $5.5M of
Operating Cash Flow, an $11.9 million
improvement YOY because of a solid EBITDA coming from increased
revenues and operational efficiencies. This was the first positive
OCF in a first quarter since 2017, attesting the improvement in the
Company's financial discipline.
Free Cash Flow was negative $16.1
million, as one-time impact of approximately $10 million costs related to the debt refinancing
(call premium to redeem previous outstanding bond and other
issuance costs such as underwriter fees, lawyers and auditors) led
to net financial expenses of $21.6
million. It is important to highlight that Q1 and Q3 are
impacted by bond interest payment, which amounted to $11.7 million from interest payments net of hedge
gains in this quarter.
Cash Capex was 2% of revenues in Q1 2021, compared to 3% in Q1
2020. While Q1 2021's number was below guidance for the year, we
believe this is a phasing effect as we have been deploying new
projects, especially growth related, in line with our expectations.
Therefore, we expect cash capex as a percentage of revenues to be
aligned with our guidance of 4-4.5% for the entire year.
Indebtedness & Capital Structure
US$MM
|
Maturity
|
Interest
Rate
|
Outstanding
Balance 1Q2021
|
SSN (1)
(USD)
|
2026
|
8.0%
|
493.6
|
Super Senior Credit
Facility
|
2021
|
4.5%
|
30.0
|
Other Revolving
Credit Facilities
|
2021
|
CDI + 3.40
|
31.3
|
Other Borrowings and
Leases
|
2025
|
Variable
|
15.2
|
BNDES
(BRL)
|
2022
|
TJLP +
2.0%
|
0.5
|
Debt with Third
Parties
|
|
|
570.6
|
Leasing (IFRS
16)
|
|
|
130.9
|
Gross Debt (Debt
with Third Parties + IFRS 16)
|
|
|
701.5
|
Cash and Cash
Equivalents
|
|
|
176.1
|
Net
Debt
|
|
|
525.4
|
|
(1) Notes are
protected by certain hedging instruments, with the coupons hedged
through maturity, while the principal is hedged for a period of 3
years. The instruments consist mainly of cross-currency swaps in
BRL, PEN and Euro.
|
On February 19, 2021, Atento
successfully completed its $500M bond
refinancing. The new $500 million
Senior Secured Notes matures on February 10,
2026 and will pay interest at a rate of 8.0% per annum. With
this transaction, the Company's average debt life increased from
1.5 years to 4.3 years.
Fulfilling the commitment made to investors in the refinancing
process, the new notes are protected by certain hedging
instruments, with the coupons hedged through maturity, while the
principal is hedged for a period of 3 years. The instruments
consist mainly of cross-currency swaps in BRL, PEN and Euro. As a
reference, the BRL cost for principal and coupon is approximately
180% of CDI, equivalent to circa 5.0% p.a. with the current CDI,
compared to 7% p.a. cost of the previous bond for coupons only.
At end of Q1 2021, gross debt was $701.5
million, which included $130.9
million in leasing obligations under IFRS 16. Atento
finished the quarter with cash and cash equivalents of $176.1 million, a YoY increase of $13.3 million (+8.2%). At the end of March, we
had approximately $80 million in
available revolving credit facilities, of which $50 million were drawn down. Net debt, in
turn, decreased 6.9% when compared to Q1 2020.
Fiscal 2021 Guidance
|
FY
2021
|
Q1 2021
Reported
|
Revenue growth (in
constant currency)
|
Mid-single
digit
|
8.0%
|
EBITDA
margin
|
12.5%-13.5%
|
10.5%
|
Leverage
(x)
|
2.5x-3.0x
|
3.3x
|
Cash Capex as % of
Revenues
|
4.0-4.5%
|
2.0%
|
Share Repurchase Program
In the quarter, the Company repurchased 18,555 shares under its
Share Repurchase Program, at a cost of $369
million. On February 24, 2021,
the Board of Directors approved the extension of the current
program for additional 12 months, with the new expiration date on
March 10, 2022. At the end of
March 2021, Atento held 918,350
shares in treasury.
Conference Call
The Company will host a conference call and webcast on
Thursday, May 6, 2021 at 10:00 am ET to discuss its financial results. The
conference call can be accessed by dialing: USA: +1 (866) 807-9684; UK: (+44) 20 3514
3188; Brazil: (+55) 11 4933-0682;
or Spain: (+34) 91 414 9260.
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
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. 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 approximately 140,000 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. Atento's shares trade under the
symbol ATTO on the New York Stock Exchange (NYSE). 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®. Also,
in 2021 Everest named Atento as a star performer Gartner named the
company as a leader in the 2021 Gartner Magic Quadrant. 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.
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SOURCE Atento S.A.