Revenue flat YoY, with sales record in 2Q
compensating for current macroeconomic challenges
Total Contract Value of Sales up 10.3%,
with strong pipeline, particularly in hard currencies, supporting
revenue growth in Q4
EBITDA margin increased 3.3p.p. from
previous quarter, reaching 11.1% in 3Q22 coming from 7.8% in
2Q22
Cost efficiency efforts accelerated, mainly
encompassing indirect costs and as well as operational
improvements, increasing EBITDA by $10m million. Expecting to keep on
generating further efficiencies
Strong Operating Cash Flow of $8mm,
building on the positive trend in 2Q22. Free Cash Flow of negative
$38 million, mainly due to
$19.6 million bond coupon payment,
$22.5 million cross currency swap
expenses and $4.0 million in other
interest expenses
Ending cash balance of $66 million, with no other significant payments
expected for remainder of 2022 and cash position forecasted to
increase in Q4
Successfully renewed all revolving
credit facilities in Brazil
Reached lock-up extension with major
shareholders committed to growing the Company
Due to challenging macroeconomic
conditions, management revising 2022 EBITDA margin guidance range
to 10.5% to 11.0% from 11.5% to 12.5% and Leverage Ratio range to
4.0x to 4.5x from 3.0x to 3.5x
NEW
YORK, Nov. 15, 2022 /PRNewswire/ -- Atento
S.A. (NYSE: ATTO) ("Atento" or the "Company"), the largest provider
of customer relationship management and business process
outsourcing ("CRM BPO") services in Latin
America and among the top providers globally, announced
today its third quarter operating and financial results for the
period ending September 30, 2022. All
comparisons in this announcement are year-over-year (YoY) and in
constant-currency (CCY), unless otherwise noted.
On track for another great year in TCV sales
- Total Contract Value of sales (TCV) increased 10.3% YoY to
$86.8 million
- Revenue decreased 0.4% to $346.8
million, mainly due to lower-than-expected volumes related
to deteriorating economic conditions in Brazil and Telefónica's (TEF) cost-cutting
program in these challenging macro-economic conditions; all
partially offset by inflation pass-through
- Multisector revenue decreased 1.4%, mainly due to a 6.0%
decrease in Brazil on volumes
below internal forecasts and corporate decision of terminating low
margin contracts, partially offset by strong Multisector growth in
EMEA
- TEF revenue increased 1.7% on 11.9% and 7.6% increases in the
Americas and EMEA, respectively, while decreasing 13.6% in
Brazil
EBITDA margin increased 3.3 p.p. sequentially on improved
operational efficiency
- On a sequential basis, EBITDA increased 42.1% to $38.4 million in constant currency, mainly due to
higher operating efficiencies related to Atento's cost reduction
program as well as to lower severance and ramp-up costs.
Year-over-year (YoY), EBITDA decreased 22.7%, mainly due to
aforementioned factors in Brazil,
partially offset by Multisector growth in EMEA
- EBITDA margin increased 3.3 p.p. sequentially to 11.1%, while
contracting 2.8% YoY
- Net profit improved $13.2 million
YoY to $1.5 million, or EPS of
$0.10, on operating profit of
$7.9 million, a $32.4 million improvement in net financial
expenses resulting from the appreciation of the US dollar against
the Euro, and a $2.7 million change
in fair value of currency hedges
- Cash financial costs were $46.1
million, $19.6 million of
which was a bond interest payment, $22.5
million in payments related to currency hedges and
$4.0 million in other interest
expenses
- Operating cash flow was $8.1
million, up sequentially from $7.7
million on lower operating costs and down from $25.9 million in 3Q21
- Free cash flow was negative $38.0
million, down from $6.7
million in 3Q21, mostly due to aforementioned financial
costs related to bond and currency hedges
Renewed all revolving credit facilities and active cross
currency management
- Quarter-end cash position of $66
million that includes $76
million drawn from existing credit facilities
- At the end of 3Q22, LTM net debt-to-EBITDA was 6.1x, or 4.3x
when excluding one-time impact of cyber costs on EBITDA. LTM
leverage ration
- Shareholders' equity was negative $164.1
million at September 30, 2022,
mainly due to $47.4 million in
financial items consisting of $20.5
million in balance sheet and P&L conversion,
$7.1 million in net financial costs,
partially offset by a positive $2.7
million change in the fair value of currency hedges and
$1.2 million related to accounting
treatment of hedges
- On July 27, 2022, Atento Luxco 1
S.A. unwound the full PEN/USD cross-currency swap entered with
Morgan Stanley on March 10, 2021. The
proceeds were used to decrease the % CDI with Morgan Stanley BRL
swap. The floating leg was reduced from 142.25% to 133.45% CDI
(Brazilian Interbank Market Rate).
Planned annualized cost savings increased to $45 million from $25
million under expanded cost reduction program
- Year-to-date, achieved approximately $10
million of $15 million in
targeted 2022 cost reductions, resulting from consolidation of
service delivery centers, lower headcount, rationalization of
third-party services and improved procurement efficiency
- Targeting an additional $20
million in annualized cost savings by reducing additional
corporate overhead and further increasing operational efficiency of
service delivery
- Inflation pass-through (IPT) at 88% year-to-date
Opening new call center in Philippines
- Major contract won with a global fintech and payments company,
following opening of new call center in Philippines
Summarized Consolidated Financials
($ in millions
except EPS)
|
Q3
2022
|
Q3
2021
|
CCY Growth
YoY (1)
|
Q2
2022
|
CCY
Growth
QoQ (1)
|
YTD
2022
|
YTD
2021
|
CCY Growth (1)
|
Income
Statement
|
|
|
|
|
|
|
|
|
Revenue
|
346.8
|
368.6
|
-0.4 %
|
363.8
|
1.3 %
|
1067.2
|
1122.0
|
-2.3 %
|
EBITDA
(2)
|
38.4
|
51.3
|
-22.7 %
|
28.5
|
42.1 %
|
101.9
|
141.1
|
-27.0 %
|
EBITDA
Margin
|
11.1 %
|
13.9 %
|
-2.8
p.p.
|
7.8 %
|
3.3
p.p.
|
9.5 %
|
12.6 %
|
-3.1
p.p.
|
Net Loss
(3)
|
1.5
|
(11.7)
|
-113.3 %
|
(12.1)
|
-112.3 %
|
(81.5)
|
(46.6)
|
-75.3 %
|
Earnings Per Share
on
the reverse split basis
(2) (3) (5)
|
$0.10
|
($0.83)
|
N.M.
|
($0.83)
|
N.M.
|
($5.58)
|
($3.31)
|
N.M.
|
Cash Flow, Debt and
Leverage
|
Net Cash Used in
Operating Activities
|
(13.6)
|
26.7
|
-
|
27.5
|
-
|
(16.9)
|
41.1
|
-
|
Cash and Cash
Equivalents
|
66.3
|
145.6
|
-
|
102.9
|
-
|
66.3
|
145.6
|
-
|
Net Debt
(4)
|
649.2
|
589.5
|
-
|
633.1
|
-
|
649.2
|
589.5
|
-
|
Net Leverage
(4)
|
6.1x
|
4.0x
|
-
|
5.3x
|
-
|
6.1x
|
4.0x
|
-
|
Net Leverage (w/o
Cyber Q4-21) (4)
|
4.3x
|
4.0x
|
-
|
3.8x
|
-
|
4.3x
|
4.0x
|
-
|
|
(1) Unless otherwise
noted, all results are for Q3; 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
In the face of a more challenging economic environment across
the Americas, we have accelerated and expanded the scope of our
revenue and cost initiatives to hasten the transformation of
Atento's operational core beyond what we had considered under
our growth plan. In addition to another $20
million in annual cost savings that we are targeting, our
new sales strategy continues gaining traction, driving high TCV
growth in the third quarter that will support Atento's top line
going into 2023 as new clients are onboarded and volumes begin
kicking in. And as revenues with existing clients pick up in the
seasonally strong fourth quarter, we expect to see a strong
sequential quarterly improvement in EBITDA and cash flow.
Besides adopting a global account model that has greatly
enhanced our ability to sell across markets and more of Atento's
expanding portfolio of solutions, we have become even more
aggressive commercially in key growth sectors such as Tech,
E-commerce, Healthcare and Travel. These businesses tend to
grow faster than many of our traditional Blue-Chip clients, as they
need to begin outsourcing many of their CX and back-office
functions. Notably, 63% of 2022 sales through September came from
new logos.
Our challenges are rooted in the LATAM markets that we serve,
with some of these more in our control than others. We are
mitigating the impact of inflation through significantly better IPT
management, and price competition through a retooled offering. Even
adverse political developments can be managed by creating a more
agile organization. In the long-term, focusing on our developed
market growth objective and particularly US Nearshore will be key
to our success. Today, we are truly selling more, selling
better and selling what we want. At the same time, we are further
reducing Atento's cost structure. 2022 has been a transformational
year during which we have been evolving into a stronger and more
resilient company, enabling us to resume our profitable growth
trajectory next year as well as establishing a solid foundation for
longer-term growth.
Carlos
López-Abadía
|
Sergio
Passos
|
Chief Executive
Officer
|
Chief Financial
Officer
|
Third Quarter Segment Reporting
Brazil
($ in
millions)
|
Q3
2022
|
Q3
2021
|
CCY
growth
|
YTD
2022
|
YTD
2021
|
CCY
growth
|
Brazil
Region
|
|
|
|
|
|
|
Revenue
|
139.6
|
152.4
|
-8.0 %
|
442.2
|
457.3
|
-7.0 %
|
EBITDA
|
15.1
|
22.7
|
-33.4 %
|
51.8
|
64.1
|
-22.7 %
|
EBITDA
Margin
|
10.8 %
|
14.9 %
|
-4.1 p.p.
|
11.7 %
|
14.0 %
|
-3.3 p.p.
|
Profit/(loss) for the
period
|
(10.4)
|
(1.2)
|
N.M.
|
(10.1)
|
0.5
|
N.M.
|
Third quarter Brazil revenue
decreased 8.0% to $139.6 million,
with Multisector and TEF revenues decreasing 6.0% and 13.6%,
respectively. Multisector revenues declined on terminated low
margin client contracts as well as volumes that were lower than
internal projections and related to weakening economic conditions
in this market. At the end of the quarter, Multisector revenue
accounted for 74.7% of total revenue in Brazil, up 0.9 p.p. compared to the same
nine-month period in 2021. The decrease in TEF revenues was mainly
due to this client's cost-cutting program in Brazil, which included renegotiated prices.
The decrease in Brazil's total
revenue in the third quarter was partially offset by inflation
pass-through.
The Company's EBITDA in Brazil
decreased 33.4% to $15.1 million,
with the corresponding margin contracting 4.1 p.p. to 10.8%. The
decrease was mainly due to i) lower volumes and pricing; and ii)
terminated low margin client contracts.
Americas Region
($ in
millions)
|
Q3
2022
|
Q3
2021
|
CCY
growth
|
YTD
2022
|
YTD
2021
|
CCY
growth
|
Americas
Region
|
|
|
|
|
|
|
Revenue
|
151.7
|
157.8
|
3.4 %
|
448.1
|
476.2
|
-0.2 %
|
EBITDA
|
14.7
|
15.9
|
-3.8 %
|
31.4
|
45.2
|
-27.5 %
|
EBITDA
Margin
|
9.7 %
|
10.1 %
|
-0.4 p.p.
|
7.0 %
|
9.5 %
|
-2.5 p.p.
|
Profit/(loss) for the
period
|
(2.4)
|
2.3
|
N.M.
|
(3.3)
|
(0.1)
|
N.M.
|
In the Americas region, third quarter revenue increased 3.4% to
$151.7 million, driven by an 11.9%
increase in TEF revenues. The increase in TEF revenues was
mainly due to strong volumes in Colombia and Peru, and reflects hyperinflation in
Argentina. Despite challenging
economic conditions in the region, Multisector revenues decreased
only slightly, as reductions in client volumes were limited.
Multisector revenues accounted for 68.4% of the region's
total revenue, 0.3 p.p. higher compared to the first nine months of
2021.
Americas EBITDA decreased 3.8% to $14.7
million, with the corresponding margin declining 0.4 p.p. to
9.7%. Although TEF accounted for a higher proportion of revenue in
the third quarter, the effect of hyperinflation in Argentina would not translate into higher
EBITDA. However, the EBITDA margin in the Argentina business became positive in the
third quarter, due to improved operational efficiency.
EMEA Region
($ in
millions)
|
Q3
2022
|
Q3
2021
|
CCY
growth
|
YTD
2022
|
YTD
2021
|
CCY
growth
|
EMEA
Region
|
|
|
|
|
|
|
Revenue
|
57.9
|
59.4
|
14.1 %
|
181.6
|
192.2
|
6.0 %
|
EBITDA
|
5.0
|
5.6
|
4.2 %
|
10.7
|
18.9
|
-36.4 %
|
EBITDA
Margin
|
8.6 %
|
9.4 %
|
-0.8 p.p.
|
5.9 %
|
9.8 %
|
-3.9 p.p.
|
Profit/(loss) for the
period
|
2.4
|
2.3
|
25.5 %
|
1.9
|
0.9
|
146.4 %
|
Revenue in EMEA increased 14.1% to $57.9
million on a 19.8% increase in Multisector revenues and a
7.6% rise in TEF revenues. Volumes related to new clients in the
insurance and energy sectors primarily drove Multisector revenues.
TEF volumes were higher, as Atento continued to benefit from this
client's consolidation of service providers earlier in the year. On
a nine-month basis, Multisector revenue accounted for 52.0% of
total revenue, an increase of 0.5 p.p. compared to the
comparable nine-month period in 2021.
EMEA EBITDA increased 4.2% to $5.0
million, while the corresponding margin decreased 0.8 p.p.
to 8.6% as a greater mix of onshore volumes in the TEF business, as
compared to more profitable offshore business, remained during the
quarter. The forecast for 4Q22 projects a greater mix of offshore
revenue, which should increase EMEA's margin.
Cash Flow
Cash Flow Statement
($ in millions)
|
Q3
2022
|
Q3
2021
|
YTD
2022
|
YTD
2021
|
Cash and cash
equivalents at beginning of period
|
102.9
|
153.8
|
128.9
|
209.0
|
Net Cash from Operating
activities
|
(13.6)
|
26.7
|
(16.9)
|
41.1
|
Net Cash used in
Investing activities
|
(11.0)
|
(10.3)
|
(29.4)
|
(34.0)
|
Net Cash (used in)/
provided by Financing activities
|
(13.4)
|
(14.7)
|
(16.5)
|
(59.8)
|
Net
(increase/decrease) in cash and cash equivalents
|
(38.0)
|
1.7
|
(62.8)
|
(52.7)
|
Effect of changes in
exchanges rates
|
1.4
|
(9.9)
|
0.4
|
(10.6)
|
Cash and cash
equivalents at end of period
|
66.3
|
145.6
|
66.3
|
145.6
|
Third quarter operating cash flow was $8.1 million, up sequentially from $7.7 million and reflecting capex expenditures
during this period. Free cash flow was negative $38.0 million, down from $4.5 million in 2Q22, mostly due to a
$19.5 million bond interest payment,
$22.5 million in payments related to
currency hedges, $3.5 million in
other interest expenses primarily related to bank credit
facilities.
Indebtedness & Capital Structure
US$MM
|
Maturity
|
Interest
Rate
|
Outstanding Balance
Q3 2022
|
SSN (USD)
|
2026
|
8.0 %
|
495.1
|
Super Senior Credit
Facilities
|
2023
|
LIBOR + 3.3%
|
43.0
|
Other
borrowings
|
2022-2023
|
Variable
|
45.7
|
Debt with Third
Parties
|
|
|
583.8
|
Leasing (IFRS
16)
|
|
|
131.7
|
Gross Debt (Debt
with Third Parties + IFRS
16)
|
|
|
715.6
|
Cash and Cash
Equivalents
|
|
|
66.3
|
Net
Debt
|
|
|
649.3
|
|
|
(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.
|
At September 30, 2022, Gross debt
totaled $715.6 million, or
$583.9 million when excluding lease
obligations reported under IFRS 16. With cash and cash equivalents
of $66.3 million, net debt was
$649.3 million at the end of the
quarter.
At the end of the third quarter, LTM net debt-to-EBITDA was
6.1x, or 4.3x when excluding the one-time impact of cyber costs on
EBITDA in 4Q21, which will not be reflected in 4Q22 LTM EBITDA.
Management regularly assesses the Company's level of
indebtedness and evaluates its liquidity profile as well as various
financing, refinancing and other alternatives to enhance its
capital structure and address maturities under existing debt
arrangements. In addition, from time to time, management has
explored opportunities to obtain financing from third parties,
including through a receivables financing facility or other debt
facilities permitted to be incurred under the terms of the
documents governing Atento's existing debt arrangements.
Earnings /(Loss) Per Share
As of September 30, 2022, the
Company's shares outstanding represented a total amount of
15,451,667 shares. On September 30, 2022, Atento S.A. held a
total of 951,957 own shares.
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to equity owners of the Company by the
weighted average number of ordinary shares outstanding during for
the three and nine months ended September
30, 2021 and 2021 are as below:
|
For the three
months
|
For the three
months
|
Result attributable
to equity owners of the Company
|
2021
|
2022
|
2021
|
2022
|
Atento's Profit/(loss)
attributable to equity owners of
the parent (in thousands of U.S. dollars)
|
(11,676)
|
1,486
|
(46,602)
|
(81,512)
|
Weighted average number
of ordinary shares
|
14,103,757
|
14,600,859
|
14,090,577
|
14,600,859
|
Basic Profit/(loss)
per share (in U.S. dollars)
|
(0.83)
|
0.10
|
(3.31)
|
(5.58)
|
Fiscal 2022 Guidance
|
YTD22 Reported
|
2022 Guidance
|
Revenue growth (in
constant currency)
|
(2.3 %)
|
Flat
|
EBITDA
margin
|
9.5 %
|
10.5% -
11.0%
|
Leverage (x)
|
6.1x
|
4.0x - 4.5x
|
Conference Call
Atento will host a conference call and webcast on Wednesday, November 16, 2022, at 8:30 am ET to discuss the Company's fiscal third
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) 91 414-9260; 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 the largest provider of customer relationship
management and business process outsourcing ("CRM BPO") services in
Latin America and among the top
providers globally. Since 1999, the company has developed its
business model in 14 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. In 2021, Everest named Atento a
Star Performer, while in 2022 Gartner named the Company a leader
fin the Gartner Magic Quadrant for the second consecutive year.
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.