Demanding quarter, but management believes
positive inflection point has been reached with strong 2H trend
underway
Record June sales of $34 million, growing to 60% in hard currency, and
Total Annual Value of Sales in Q2 increasing 16.4% to $54.7 million
Accelerated 2022 cost efficiency program,
realizing $15 million cost reductions
by year-end, or $25 million on an
annualized basis.
Cash position rose 6.1% to healthy $103
million, with strong free cash flow turnaround to positive
$5 million, versus negative
$26 million in 2Q21 and negative
$65 million in 1Q22
Working capital improved to positive
$9 million in 2Q22, versus negative
$25 million in 2Q21
Due to uncertain macroeconomic conditions, annual guidance revised
to flat revenue growth, EBITDA margin of 11.5% to 12.5%, and
leverage ratio of 3.0x to 3.5x
Strong year-end exit rate forecasted, based
on sales momentum and improving cost structure
NEW
YORK, Aug. 3, 2022 /PRNewswire/ -- Atento S.A.
(NYSE: ATTO) ("Atento" or the "Company"), one of the five largest
providers of Customer Relationship Management and Business Process
Outsourcing (CRM / BPO) services worldwide and sector leader in
Latin America, announced today its
second quarter operating and financial results for the period
ending June 30, 2022. All comparisons
in this announcement are year-over-year (YoY) and in
constant-currency (CCY), unless otherwise noted.
Volume recovery slower than expected
- Total Annual Value of sales (TAV) increased 16.4% to
$54.7 million, growing 88.7% in hard
currencies that accounted for 60.2% of TAV
- Excluding the effect of a large one-time Covid-19 services
contract signed with State of
Maryland in first quarter 2021, TAV would have increased
27.7% in first-half 2022
- Revenue decreased 4.0% to $363.8
million, with Multisector and Telefónica (TEF) sales
decreasing 3.3% and 5.5%, respectively, due to lower client
volumes, mainly in Brazil and the
US, partially offset by inflation pass-through
- Hard-currency revenues expanded to 26% of total revenue
- Brazil TEF sales declined 14.7%, due to the cost-cutting
program that this client implemented in the first quarter, which
requires reduced CX volumes
EBITDA impacted by reduced volumes, additional
one-time severance costs and higher inflation
- EBITDA decreased 44.2% to $28.5
million on aforementioned declines in Multisector and TEF
sales, coupled with high severance costs related to new cost
efficiency initiatives, ramp up of new client programs and higher
inflation, as well as positive one-offs in second quarter of
2021
- Decrease in EBITDA and 543 bps margin contraction were
partially offset by improved inflation pass-through
- Net loss of $12.1 million, or
negative EPS of $0.83, mainly due to
net financial expenses of $12.9
million, $8.7 million of which
was non-cash items related to change in fair value of hedges
- Cash financial costs were $29.6
million, of which $20.9
million was a bond interest payment and other interest
expenses, primarily those related to the Company's hedges and bank
credit facilities
- Free cash flow of $4.5
million
- Despite decreased EBITDA, improved working capital management
and lower Capex resulted in positive operating cash flow of
$7 million
- Healthy exit rate at quarter-end, with revenue, EBITDA and
operating cash flow forecasted to accelerate during second half of
year
Healthy cash position
- Healthy cash position of $102.9
million, including $75 million
from existing credit revolvers
- At the end of 2Q22, LTM net debt-to-EBITDA was 5.3x, or 3.8x
when excluding EBITDA impact of cyberattack in Q4 2021
- Shareholders' equity was negative $130.9
million at June 30, 2022,
mainly due to $108.5 million in
financial items consisting of $68.8
million in balance sheet and P&L conversion,
$39.7 million in financial costs and
a negative net $7.1 million change in
fair value of hedging instruments
Additional cost reduction initiatives
- Cost reduction initiatives began in April 2022, focused on two areas: SG&A
efficiencies, Labor Cost/Headcount and 360° Vendor Revision
- Reduction of fixed costs expected to reach $25 million on an annualized basis ($15 million realizing through July)
Summarized Consolidated Financials
($ in millions
except EPS)
|
Q2
2022
|
Q2 2021
|
CCY
Growth (1)
|
YTD
2022
|
YTD 2021
|
CCY
Growth (1)
|
Income Statement
(5)
|
|
|
|
|
|
|
Revenue
|
363.8
|
382.7
|
-4.0 %
|
720.4
|
753.3
|
-3.2 %
|
EBITDA
|
28.5
|
50.7
|
-44.2 %
|
63.5
|
89.8
|
-29.5 %
|
EBITDA
Margin
|
7.8 %
|
13.3 %
|
-5.4
p.p.
|
8.8 %
|
11.9 %
|
-3.1
p.p.
|
Net Loss
(2)
|
(12.1)
|
(14.7)
|
-19.0 %
|
(82.6)
|
(34.9)
|
-134.7 %
|
Earnings Per Share on
the reverse split basis (2) (4)
|
($0.83)
|
($1.05)
|
N.M.
|
($5.66)
|
($2.48)
|
N.M.
|
Cash Flow, Debt and
Leverage
|
|
|
|
|
|
|
Net Cash Used in
Operating Activities
|
(15.6)
|
14.4
|
|
27.5
|
14.9
|
|
Cash and Cash
Equivalents
|
102.9
|
153.8
|
|
102.9
|
153.8
|
|
Net Debt
(3)
|
633.1
|
589.5
|
|
633.1
|
589.5
|
|
Net Leverage
(3)
|
5.3x
|
4.0x
|
|
5.3x
|
4.0x
|
|
Net Leverage (w/o
Cyber Q4-2021) (3)
|
3.8x
|
4.0x
|
|
3.8x
|
4.0x
|
|
(1) Unless otherwise
noted, all results are for Q2; all revenue growth rates are on a
constant currency basis, year-over-year; (2) Reported Net Loss and
Earnings per Share (EPS) include the impact of non-cash foreign
exchange gains/losses on intercompany balances; (3) Includes IFRS
16 impact in Net Debt and Leverage; (4) Earnings per share on the
reverse split basis is calculated with weighted average number of
ordinary shares outstanding. (5) The following selected financial
information are unaudited.
|
Message from Management
The second quarter was a challenging one, as the recovery in
volumes was slower than our expectations, with continued higher
inflation across our markets and one-off costs on accelerating
structural efficiency programs.
However, based on strong sales in June and July and a growing
pipeline, we are expecting 2022 to be the fourth consecutive year
of record sales. Moreover, with the investments that we made in
further reducing Atento's cost structure, we expect to reap the
benefits of $25 million in annualized
cost savings, as revenues rise and we continue ramping up new
client programs during the remainder of the year and into 2023.
A new account management structure combined with expanding
partnerships and effective channel marketing are enabling us to
sell more, sell better and sell what we want, namely delivering
higher-value services to higher-growth, higher-margin clients. A
more effective sales organization also means increasing hard
currency revenues, which represented 60% of sales in Q2, versus 37%
last year.
Also encouraging was the nearly $5
million in free cash flow that we generated in the quarter,
which allowed us to finish with healthy cash position. The cash
flow reflects not just a leaner cost structure, but also greater
efficiencies, including significantly better working capital
management, thanks to new processes and systems that have been
implemented to improve the core of our organization. After passing
the halfway mark, we remain ahead of plan with regard to inflation
pass-through, which we still expect to be approximately 80% of
total contract value by year-end.
Given the uncertain macroeconomic conditions, annual guidance
was revised to flat revenue growth, EBITDA margin of 11.5% to
12.5%, and a leverage ratio of 3.0 to 3.5x. Although we have
revised guidance downward, we still forecast a healthy exit rate at
the end of the year, in terms of revenue growth and EBITDA margin,
putting us back on a course for much-improved cash flow and debt
leverage in 2023.
Carlos
López-Abadía
|
Sergio
Passos
|
Chief Executive
Officer
|
Chief Financial
Officer
|
Second Quarter Segment Reporting
Brazil
($ in
millions)
|
Q2
2022
|
Q2 2021
|
CCY
growth
|
YTD
2022
|
YTD 2021
|
CCY
growth
|
Brazil
Region
|
|
|
|
|
|
|
Revenue
|
156.3
|
156.0
|
-6.9 %
|
302.6
|
304.9
|
-6.5 %
|
EBITDA
|
15.0
|
22.7
|
-38.6 %
|
36.7
|
41.4
|
-17.1 %
|
EBITDA
Margin
|
9.6 %
|
14.5 %
|
-5.0 p.p.
|
12.1 %
|
13.6 %
|
-1.5 p.p.
|
Profit/(loss) for the
period
|
(10.1)
|
0.5
|
N.M.
|
(9.2)
|
(4.4)
|
-114.0 %
|
Brazil revenue decreased 6.9%
in the second quarter to $156.3
million, mainly due to a 14.7% decline in TEF revenue, as
this client implemented a cost-cutting program in the first
quarter, which requires reduced CX volumes. Multisector revenues
decreased 3.8%, mostly related to volume reductions. Multisector
sales accounted for 74.7% of revenue in the quarter, down 237 bps
compared to last year's comparable quarter.
EBITDA in Brazil decreased
38.6% to $15.0 million, with the
corresponding margin declining 500 bps to 9.6%, mainly due to tax
credits that benefited 2Q21 profitability and to union agreements
signed in 1Q22, partially offset by inflation pass-through
negotiation and improved cost efficiencies.
Americas Region
($ in
millions)
|
Q2
2022
|
Q2 2021
|
CCY
growth
|
YTD
2022
|
YTD 2021
|
CCY
growth
|
Americas
Region
|
|
|
|
|
|
|
Revenue
|
149.7
|
164.2
|
-4.1 %
|
296.4
|
318.4
|
-2.0 %
|
EBITDA
|
7.8
|
16.5
|
-50.9 %
|
17.0
|
29.3
|
-39.3 %
|
EBITDA
Margin
|
5.2 %
|
10.0 %
|
-4.8 p.p.
|
5.7 %
|
9.2 %
|
-3.5 p.p.
|
Profit/(loss) for the
period
|
(3.3)
|
(0.1)
|
N.M.
|
(11.6)
|
(1.7)
|
N.M
|
Second quarter revenue declined 4.1% to $149.7 million in the Americas region.
Multisector sales decreased 5.0% to 67.9% of revenue, due to a
temporary Covid-19 contract, lower volumes related to the higher
absentee rates, and the loss of several client programs, partially
offset by volumes stemming from new client wins. Most reductions in
client volumes were in the US and Mexico, with the latter being impacted by
changes in Mexico's outsourcing
regulations, while South American countries had slight increases in
volumes.
Americas EBITDA decreased 50.9% to $7.8
million, due to a 480 bps contraction in the corresponding
margin. The margin decline was due to the aforementioned volume
reductions and to cost increases stemming mostly from
hyper-inflation in certain countries.
EMEA Region
($ in
millions)
|
Q2
2022
|
Q2 2021
|
CCY
growth
|
YTD
2022
|
YTD 2021
|
CCY
growth
|
EMEA
Region
|
|
|
|
|
|
|
Revenue
|
59.4
|
63.6
|
5.6 %
|
123.8
|
132.7
|
2.6 %
|
EBITDA
|
3.2
|
6.7
|
-46.2 %
|
6.8
|
13.3
|
-44.0 %
|
EBITDA
Margin
|
5.4 %
|
10.6 %
|
-5.2 p.p.
|
5.5 %
|
10.0 %
|
-4.5 p.p.
|
Profit/(loss) for the
period
|
1.9
|
0.9
|
146.4 %
|
1.8
|
1.8
|
-0.1 %
|
Second quarter EMEA revenue increased 5.6% to $59.4 million, with Multisector sales increasing
6.8% and TEF sales rising 4.3%. Sales in the latter category still
benefited from TEF shifting volumes to Atento, as this client
recently consolidated the number of CX providers it utilizes.
Multisector sales rose on new sales, mainly driven by the
insurance sector.
EBITDA decreased 46.2% in EMEA on a 520 bps margin
contraction stemming from offshore to onshore business
coverage mix. For the quarter, EMEA EBITDA accounted for 11.2% of
consolidated EBITDA.
Cash Flow
Cash Flow Statement
($ in millions)
|
Q2
2022
|
Q2
2021
|
YTD
2022
|
YTD
2021
|
Cash and cash
equivalents at beginning of period
|
97.0
|
176.1
|
128.9
|
209.0
|
Net Cash from Operating
activities
|
27.5
|
14.9
|
(15.6)
|
14.4
|
Net Cash used in
Investing activities
|
(8.6)
|
(18.0)
|
(18.4)
|
(25.5)
|
Net Cash (used in)/
provided by Financing activities
|
(10.7)
|
(28.9)
|
2.0
|
(43.4)
|
Net
(increase/decrease) in cash and cash equivalents
|
8.2
|
(32.0)
|
(32.0)
|
(54.5)
|
Effect of changes in
exchanges rates
|
(2.3)
|
9.7
|
6.0
|
(0.7)
|
Cash and cash
equivalents at end of period
|
102.9
|
153.8
|
102.9
|
153.8
|
Although EBITDA decreased during the second
quarter, improved working capital management as well as lower Capex
and tax payments resulted in $7.7
million of operating cash flow and $4.5 million of free cash flow. The free cash
flow was partially offset by $3.2
million in net financial expenses., which were primarily due
to the impact of the Brazilian Reais' appreciation and a higher CDI
rate on the Company's currency hedge.
Indebtedness & Capital Structure
US$MM
|
Maturity
|
Interest
Rate
|
Outstanding Balance
Q2 2022
|
SSN (1)
(USD)
|
2026
|
8.0 %
|
504.5
|
Super Senior Credit
Facility
|
2023
|
4.5 %
|
43.7
|
Other Borrowings and
Leases
|
2025
|
Variable
|
48.4
|
BNDES (BRL)
|
2022
|
TJLP + 2.0%
|
0.1
|
Debt with Third
Parties
|
|
|
596.7
|
Leasing (IFRS
16)
|
|
|
139.3
|
Gross Debt (Debt
with Third Parties + IFRS 16)
|
|
|
736.0
|
Cash and Cash
Equivalents
|
|
|
102.9
|
Net
Debt
|
|
|
633.2
|
(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.
|
At June 30, 2022, Gross debt
totaled $736.0 million, or
$596.7 million when excluding lease
obligations under IFRS 16. With cash and cash equivalents of
$102.9 million, net debt was
$633.2 million at the end of the
quarter. Approximately $89.2 million
in revolving credit facilities were available at quarter-end, of
which $74.6 million was drawn from
existing and new credit facilities.
At the end of the second quarter, LTM net debt-to-EBITDA was
5.3x, or 3.8x when excluding the one-time EBITDA impact of the
cyberattack in Q4 2021. The Company finished the quarter with a
comfortable maturity profile going out to 2026.
Fiscal 2022 Guidance
|
YTD22
Reported
|
2022
Guidance
|
Revenue growth (in
constant currency)
|
-3.2 %
|
Flat
|
EBITDA
margin
|
8.8 %
|
11.5% -
12.5%
|
Leverage (x)
|
3.9x
|
3.0x - 3.5x
|
Conference Call
Atento will host a conference call and webcast on Thursday, August 04, 2022, at 8:30 am ET to discuss the Company's fiscal second
quarter 2022 operating and 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; Spain: (+34) 80 030-0687; or International:
(+1) 412 317 5415. No passcode is required. Individuals who
dial in will be asked to identify themselves and their
affiliations. A 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 one of the largest CRM / BPO providers worldwide and
sector leader in Latin America and
global provider for client relationship management and business
process outsourcing services. Since 1999, the company has developed
its business model in 13 countries with a workforce of 131,000
employees. Atento has over 400 clients for which it provides a wide
range of CRM/BPO services through multiple channels. Its clients
are leading multinational companies in the technology, digital,
telecommunications, finance, health, consumer and public
administration sectors, amongst others. Atento trades under ATTO on
the New York Stock Exchange. In 2019, Atento was recognized by
Great Place to Work® as one of the 25 World's Best Multinational
Workplaces and as one of the Best Places to Work in Latin America. For more
information www.atento.com
Media Relations
press@atento.com
Investor and analyst inquiries
Hernan van Waveren
+1 979-633-9539
hernan.vanwaveren@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. These statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
contained in the forward-looking statements. In particular, the
COVID-19 pandemic, and governments' extraordinary measures to limit
the spread of the virus, are disrupting the global economy and
Atento's industry, and consequently adversely affecting the
Company's business, results of operation and cash flows and, as
conditions are recent, uncertain and changing rapidly, it is
difficult to predict the full extent of the impact that the
pandemic will have. 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 comp any 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.