Revenue decreased 2.3% to $356.6 million in seasonally slow first quarter,
due to residual impact of cyberattack and absenteeism related to
Omicron spike
Secured 19 high-quality new clients
representing 58.2% of $53.3 million
in Total Annual Value of sales and with 19.1% EBITDA margin, up
300bps
Sales in E-Commerce, Fintech and Travel
sectors accounted for 67.1%, 9.8% and 13.4% of new wins in the
quarter
Hard currency revenues expanded 310 bps to
28.1% of consolidated revenue
EBITDA decreased 10.1% to $35.0 million on lingering effects of
cyberattack, one-time costs related to absenteeism and higher
inflation, partially offset by accrued cyber insurance recovery in
Brazil and inflation
pass-through
Healthy exit rate in March, with sales,
EBITDA and operating cash flow expected to accelerate in second
half of year
High levels of inflation and interest rate
hikes increased financing costs
Company enhances sales organization and
advances cost-saving initiatives
2022 guidance reiterated
NEW
YORK, May 11, 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 first quarter operating and financial results for the
period ending March 31, 2022. All
comparisons in this announcement are year-over-year (YoY) and in
constant-currency (CCY), unless otherwise noted.
"As previously announced, our first quarter was a challenging
one. However, we saw month-to-month improvements and exited
the quarter strongly. Current run-rate and sales trends have
increased our confidence in our growth trajectory and meeting our
year-end targets for sales, EBITDA margin and leverage,"
commented by Carlos Lopez-Abadía, Chief Executive Officer.
Residual impact of cyberattack and absenteeism lower volumes,
while new client wins improve revenue mix
- Total Annual Value of sales (TAV) deceased 26% to $53.3 million, growing 59% in US, with 19 new
clients carrying strong margins
- New In-Year revenue for new business down slightly to
$100.0 million
- Revenue decreased 2.3% to $356.6
million, due to residual impact of October cyberattack and
substantially higher absenteeism related to Omicron spike in
January and February, both impacting volumes in Brazil and Americas
- Brazil Multisector sales declined 7.7% as some clients shifted
volumes to other CX suppliers and Company declined to renew low
margin contracts
- Telefónica (TEF) sales declined 1.5%, mainly due to global cost
reduction program implemented by client, while previously announced
consolidation of CX suppliers benefited Atento's TEF business in
EMEA
- Sales in E-commerce, Fintech and Travel growth sectors
accounted for 67.1%, 9.8% and 13.4% of new wins, respectively
- US revenues increased 0.4% to $35.8
million, excluding a in-time Covid-19 services contract
signed in the first quarter of 2021
- Hard-currency revenues expanded 310 bps to 28.1% of total
revenue
EBITDA impacted by cyber expenses, one-time costs related to
elevated absenteeism and higher inflation
- EBITDA decreased 10.1% on aforementioned decreases in
Multisector and TEF sales, coupled with one-time costs related to
elevated absentee rates stemming from Omicron spike in region,
severance costs, higher inflation, as well as residual impact of Q4
cyberattack
- Decrease in EBITDA and 70 bps margin contraction partially
offset by accrued cyber insurance and improved inflation
pass-through
- US EBITDA margin at 15.6%
- Hard currency EBITDA represented 23.0% of total EBITDA, down
900 bps, mainly due to one-time severance costs in EMEA and cyber
insurance on Brazil
- Net loss of $70.6 million, or
negative EPS of $4.99, mainly due to
net financial expenses of $79.8
million, $63.3 million of
which was non-cash items
- Negative Free cash flow of $65.4
million, stemming from negative operating cash flow of
$39.6 million and net financial
expenses of $25.8 million, which rose
16.7% due to higher interest expenses on new credit lines and to
the impact of BRL fluctuation and higher CDI rate on Company's
currency hedge
- Healthy exit rate at end of quarter, with revenue, EBITDA and
operating cash flow forecasted to accelerate during second half of
year
Healthy cash position
- Healthy cash position of $97.0
million, including $89.4
million from existing credit revolvers
- At the end of 1Q22, LTM net debt-to-EBITDA was 4.5x, up
sequentially due to seasonally low EBITDA and impact of cyberattack
in 4Q21 and 1Q22, and expected to reach target level by
year-end
- Shareholders' equity was negative $78.8
million at March 31, 2022,
principally due to balance sheet and P&L conversions as well as
changes in fair value of derivatives
New revenue growth initiatives implemented
- Commercial team reorganized, including formation of dedicated
local and global account teams
- Inflation pass-through adjustments ahead of internal plan and
on track to reach 80% target level
Update on cybersecurity measures
- Investments in improved cyber defenses completed
Summarized Consolidated Financials
($ in millions except EPS)
|
Q1 2022
|
Q1 2021
|
CCY
Growth
(1)
|
Income Statement (6)
|
|
|
|
Revenue
|
356.6
|
370.6
|
-2.3%
|
EBITDA
(2)
|
35.0
|
39.1
|
-10.1%
|
EBITDA
Margin
|
9.8%
|
10.5%
|
-0.7 p.p.
|
Net Loss (3)
|
(70.6)
|
(20.2)
|
N.M.
|
Earnings Per Share on the reverse split basis (2) (3)
(5)
|
($4.99)
|
($1.44)
|
N.M.
|
Cash Flow, Debt and Leverage
|
|
|
|
Net Cash Used in Operating
Activities
|
(31.0)
|
(0.5)
|
|
Cash and Cash
Equivalents
|
97.0
|
176.0
|
|
Net Debt
(4)
|
650.7
|
589.5
|
|
Net Leverage
(4)
|
4.5x
|
4.0x
|
|
|
(1) Unless otherwise
noted, all results are for Q4; all revenue growth rates are on a
constant currency basis, year-over-year; (2) Recurring EBITDA,
Recurring Net Income/Recurring Earnings per Share (EPS) are
Non-GAAP measures adjusted only for the cyberattack impact; (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 with weighted average number of ordinary shares
outstanding. (6) The following selected financial information are
unaudited.
|
Message from Management
With the passing of the first quarter, we are pleased to report
that the adverse effects of the pandemic and the recent cyberattack
are largely behind us, and that we now look ahead with greater
optimism.
In January and February, which are seasonally slow months,
Covid-related illnesses spiked and drove absenteeism substantially
higher in many markets, affecting our ability to serve clients and
raising costs temporarily. Also, some clients chose to diversify
and shift portions of their business to other CX providers,
following the disruptions caused by the cyberattack, although the
shifts were less pronounced than expected and some volume is
recovering. This also impacted our profitability, with the decrease
in first quarter EBITDA partially offset by accrued cyber insurance
as well as improved inflation pass-through, which is well ahead of
plan and expected to reach our target level of 80% this year.
Atento's client base remains solid and our exit rate at the end
of the quarter was healthy, both of which speak once again to the
strength of our client relationships and the trust we have built
through consistently improving service levels. Atento's strong
reputation is also why our pipeline is growing in key markets and
in the sectors that are improving our revenue mix.
During the quarter we continued transforming the core of our
business and recently took steps to improve the effectiveness of
our sales organization. With the aim of capturing greater share of
wallet, we have established local and global account teams that
will enable us stay closer to our clients and better understand
their evolving CX needs. This new structure will also help us
further penetrate the US market as well as the higher growth,
higher margin verticals that we continue targeting across our
markets. On the cost front, we have consolidated some facilities to
reduce structural costs and we are extending zero-based budgeting
to other areas of the business to achieve additional annual
savings.
As we regain the momentum built during most of last year, we
expect revenues and margins to improve and to meet our performance
targets for this year, which we still plan to exit with strength.
Soon we will communicate a date for our postponed Investor Day,
when we will have the opportunity to provide greater details about
the various growth initiatives under our Three Horizon Plan and to
unveil our strategy for the next phase of Atento's growth.
Carlos López-Abadía
José Azevedo
Chief Executive Officer
Chief Financial Officer
First Quarter Consolidated Financial Results
Atento's first quarter consolidated revenue decreased 2.3% to
$356.6 million, with Multisector and
Telefónica (TEF) sales decreasing 2.7% and 1.5%, respectively. The
decline in Multisector sales was mainly due to a 7.7% decrease in
Brazil, where certain clients
shifted a portion of volumes to other CX providers, following the
October cyberattack that temporarily disrupted Atento's operations.
The residual effects of the cyberattacks resulted in lost revenue
and expenses totaling $25 million.
The decrease in revenue also reflects contracts that the Company
did not renew in Brazil due to
insufficient profitability. In addition, substantially higher
absenteeism rates stemming from a spike in the Omicron variant
across Latin America hindered the
Company's ability to deliver services in January and February.
TEF revenue decreases in Brazil
as well as the Americas were mainly due to this client implementing
a company-wide cost-cutting program that resulted in lower service
volumes. In EMEA, Atento benefited from TEF consolidating the CX
services it receives, as previously announced.
US revenues increased 0.4% to $35.8
million, with hard-currency revenues expanding 310 bps to
28.1% of total revenue.
TAV reached $53.3 million, with 19
new clients carrying strong margins of 19.1%. Decrease was mainly
due to a big one time Covid-19 services contract signed with
State of Maryland in first quarter
2021.
New In-Year revenue for new business down slightly to
$100.0 million
Sales in fast-growing E-Commerce, Fintech and Travel sectors
accounting for 67.1%, 9.8% and 13.4% of new wins, with EBITDA
margin in this category increasing 160 bps to 18.7%.
Atento's first quarter consolidated EBITDA decreased 10.1% to
$35.0 million, due to the 2.3%
decrease in revenue. In addition to lost revenue, the
aforementioned increase in absenteeism also impacted EBITDA due to
paid sick leave as well as the need to temporarily hire replacement
workers and pay overtime in certain instances. Also, significantly
higher inflation impacted contracts that had not yet been subject
to periodic price adjustments. During the quarter, the Company also
incurred additional expenses related to strengthening cyber
defenses. The decline in EBITDA and a 70-basis point decline in the
corresponding margin were partially offset by accrued cyber
insurance in Brazil and by
improved inflation pass-through.
US EBITDA decreased 1.8% to $2.9
million, representing 8.3% of consolidated EBITDA, with an
EBITDA margin of 15.6%. Hard currency EBITDA represented 23.0% of
the Company's total EBITDA, down from 32% in the first quarter of
2021, mainly due to one-time severance costs in EMEA and to the
accrued cyber insurance in Brazil.
The Company reported a recurring net loss of $70.6 million in the first quarter, partially
offset by the aforementioned cyber insurance reimbursement,
compared to a net loss of $20.2
million in the prior year period. First quarter reported EPS
was negative $4.99 compared to
negative $1.44 in last year's
comparable quarter. The first quarter 2022 losses were mainly
due to net financial expenses of $79.8
million, of which $63.3
million was non-cash items comprised of a change in fair
value of derivative instruments of $60.1
million and $3.2 million in
IFRS 16 financial costs. Cash financial costs were $25.8 million, which consisted of a semiannual
$20.0 million bond interest payment
and $5.8 million in other interest
expenses, primarily those related to the Company's hedge and bank
credit facilities.
Free cash flow was negative $65.4
million, due to negative operating cash flow of $39.6 million that primarily stemmed from
residual revenue and cost impacts of the cyberattack, capex that
had been postponed in 2021, and higher net financial expenses,
which totaled of $25.8 million in the
quarter.
On March 31, 2022, Atento held
$97.0 million in cash, including
$89 million drawn from existing
credit facilities. Net debt was $650.7
million at the end of the quarter, with sequentially higher
LTM net debt-to-EBITDA of 4.5x, mainly due to increased gross debt,
a lower cash position, seasonally low EBITDA and the fourth quarter
impact of the cyberattack.
At the end of the first quarter, shareholders' equity was
negative $78.8 million, principally
due to $104.3 million in financial
items consisting of $33.9 million in
financial costs, $15.2 million in
balance sheet and P&L conversion and a negative net
$70.4 million change in the fair
value of hedging instruments
Segment Reporting
Brazil
($ in
millions)
|
Q1
2022
|
Q1 2021
|
CCY
growth
|
Brazil
Region
|
|
|
|
|
Revenue
|
|
146.3
|
148.9
|
-6.1%
|
EBITDA
|
|
21.7
|
18.7
|
9.2%
|
EBITDA Margin
|
|
14.8%
|
12.6%
|
2.3 p.p.
|
Profit/(loss) for
the period
|
|
0.9
|
(4.9)
|
-119.2%
|
Brazil revenue decreased 6.1%
in the fourth quarter to $146.3
million, mainly due to a 7.7% decline in Multisector sales.
The decrease in Multisector sales was mostly related to the
October 2001 cyberattack, subsequent
to which certain clients shifted some of their volumes to other CX
providers. Declines in Multisector volumes also stemmed from the
Company's decision not to renew service agreements that were
insufficiently profitable, as well as from elevated absenteeism
related to the spike in the Omicron variant during January and
February. Multisector sales accounted for 74.2% of revenue in the
quarter, down 130 bps compared to last year's comparable quarter.
TEF revenue decreased 1.4%, as this client implemented a
company-wide cost-cutting program that called for lower CX service
volumes.
EBITDA in Brazil increased 9.2%
to $21.7 million, with the margin
expanding 230 bps to 14.8%, both due to accrued insurance covering
lost revenue and costs related to the cyberattack. EBITDA was
otherwise impacted by substantially higher costs related to sick
leave, the hiring of temporary workers and overtime payments, all
of which were related to the Omicron variant affecting existing
employees in January and February. EBITDA was also affected by
additional expenses related to upgrades of the Company's cyber
defenses.
Americas Region
($ in
millions)
|
Q1
2022
|
Q1 2021
|
CCY
growth
|
Americas
Region
|
|
|
|
|
Revenue
|
|
146.7
|
154.1
|
0.3%
|
EBITDA
|
|
9.2
|
12.8
|
-24.0%
|
EBITDA Margin
|
|
6.3%
|
8.3%
|
-2.1 p.p.
|
Profit/(loss) for
the period
|
|
(8.3)
|
(1.6)
|
N.M.
|
Fourth quarter revenue rose slightly to $146.7 million in the Americas region.
Multisector sales increased 2.5% to 71.4% of revenue, a 220 bps
increase that was also due to a 5.0% decrease in TEF sales stemming
lower volumes related to the higher absentee rates and this
client's new cost-cutting program. Most volume reductions were in
Argentina, Chile and Peru. US revenues increased 0.4% to
$35.8 million, excluding a large
one-time Covid-19 services contract signed in the first quarter of
2021.
Americas EBITDA decreased 24.0% to $9.2
million, due to a 210 bps contraction in the corresponding
margin. The margin decline stemmed from the aforementioned volume
and cost impacts of the pronounced spike in Covid related
illnesses. US EBITDA decreased 1.8% to $2.9 million, with a margin of 15.6%, and
represented 8.3% of the Company's consolidated EBITDA at the end of
the quarter.
EMEA Region
($ in
millions)
|
Q1
2022
|
Q1 2021
|
CCY
growth
|
EMEA
Region
|
|
|
|
|
Revenue
|
|
64.3
|
69.1
|
0.0%
|
EBITDA
|
|
3.6
|
6.6
|
-41.8%
|
EBITDA Margin
|
|
5.5%
|
9.5%
|
-4.0 p.p.
|
Profit/(loss) for
the period
|
|
(0.1)
|
0.9
|
-107.2%
|
Fourth quarter EMEA revenue was unchanged at $64.3, with Multisector sales decreasing 3.3% and
TEF sales rising 3.5%. Sales in the latter category benefited from
TEF shifting volumes to Atento as this client recently consolidated
the number of CX providers it utilizes.
EBITDA decreased 41.8% in EMEA on a 400 pbs margin contraction
stemming from one-time severance payments related to rationalizing
a call center in this market. For the quarter, EMEA EBITDA
accounted for 10.3% of consolidated EBITDA.
Cash Flow
Cash Flow Statement ($ in
millions)
|
Q1 2022
|
Q1 2021
|
Cash and cash equivalents at beginning of
period
|
128.8
|
209.0
|
Net Cash from Operating
activities
|
(31.0)
|
(0.5)
|
Net Cash used in
Investing activities
|
(13.8)
|
(7.5)
|
Net Cash (used in)/
provided by Financing activities
|
4.6
|
(14.4)
|
Net (increase/decrease) in cash and cash
equivalents
|
(40.2)
|
(22.4)
|
Effect of changes in
exchanges rates
|
8.4
|
(10.5)
|
Cash and cash equivalents at end of
period
|
97.0
|
176.0
|
Free cash flow decreased during the fourth quarter to negative
$65.4 million, mainly due to negative
operating cash flow of $30.5 million
and $25.8 million in net financial
expenses. Operating cash flow was mainly impacted by the residual
effects of the cyberattack, which totaled approximately
$25.0 million in costs and lost
revenue, as explained above. Of the $13.8
million in capex, $6.3 million
had been postponed in 2021. Capex is expected to be between 3.5%
and 4.0% of revenue in 2022. Net financial expenses rose 16.7%,
primarily due to higher interest expenses on new credit lines as
well as the impact of the Brazilian reais' appreciation and higher
CDI rate on the Company's currency hedge.
Indebtedness & Capital Structure
US$MM
|
Maturity
|
Interest
Rate
|
Outstanding
Balance Q4 2021
|
SSN (1)
(USD)
|
2026
|
8.0%
|
494.1
|
Super Senior Credit
Facility
|
2021
|
4.5%
|
43.3
|
Other Borrowings and
Leases
|
2025
|
Variable
|
48.6
|
BNDES (BRL)
|
2022
|
TJLP + 2.0%
|
0.2
|
Debt with Third
Parties
|
|
|
586.2
|
Leasing (IFRS
16)
|
|
|
161.4
|
Gross Debt (Debt
with Third Parties + IFRS 16)
|
|
|
747.7
|
Cash and Cash
Equivalents
|
|
|
97.0
|
Net
Debt
|
|
|
650.7
|
(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 March 31, 2022, Gross debt
totaled $747.7 million, or
$586.2 million when excluding lease
obligations under IFRS 16. With cash and cash equivalents of
$97.0 million, net debt was
$650.7 million at the end of the
quarter. Approximately $101.4 million
in revolving credit facilities were available at quarter-end, of
which $89.4 million was drawn from
existing and new credit facilities.
At the end of the first quarter, LTM net debt-to-EBITDA was
4.5x, up sequentially from 4.0x on higher gross debt, a lower cash
position, seasonally low EBITDA and the impact of the cyberattack
in fourth quarter 2021. The Company finished the year with a
comfortable maturity profile going out to 2026.
Fiscal 2022 Guidance
|
1Q22
Reported*
|
2022
Guidance
|
Revenue growth (in
constant currency)
|
-2.3%
|
Mid-single
digit
|
EBITDA
margin
|
9.8%
|
13% - 14%
|
Leverage (x)
|
4.5x
|
2.7x - 3.0x
|
* First quarter is
seasonally slow each year
|
Share Repurchase Program
During the first quarter, Atento did not repurchase shares and
vested a total of 451,667 shares which were issued in relation to
management compensation programs. At the end of March 31, 2022, the Company held 951,957 Atento
shares in treasury.
Conference Call
Atento will host a conference call and webcast on Thursday, May 12, 2022, at 8:30 am ET to discuss the Company's fiscal first
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 is one of the five largest global providers for client
relationship management and business process outsourcing services
nearshoring for companies that carry out their activities in
the United States. Since 1999, the
company has developed its business model in 13 countries with a
workforce of 150,000 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.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/atento-reports-fiscal-2022-first-quarter-results-301545633.html
SOURCE Atento S.A.