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

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.   

• 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 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 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

• 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)

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.

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.

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.

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.

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.

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.

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.

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 

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.