NEW YORK, July 30, 2018 /PRNewswire/ -- Atento S.A. ATTO, 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 second-quarter 2018 operating and financial results. All comparisons in this announcement are year-over-year and in constant-currency (CCY), unless noted otherwise, and may differ from 6K due to certain intra-group eliminations.

Summary

 

Alejandro Reynal, Atento´s Chief Executive Officer, commented, "The second quarter reported good top and bottom line performance across Atento's footprint. Multisector clients remain our Company's growth engine across all regions with a 9% revenue increase. We continue to see a positive commercial evolution as we expand and roll out our value offer for digital customer experience and business process outsourcing solutions."

Mauricio Montilha, Atento´s Chief Financial Officer, said, "Second quarter results were very much aligned with our expectations and guidance. As seen in the last quarter, Americas performance drove consolidated margins to 10.4% in the quarter. In Brazil, we continued implementing the operational improvement plan, as highlighted in the first quarter, with positive impacts on margins expected for the second half of the year. The $37 million free cash flow generated in the quarter will help support our future growth."

Mr. Reynal concluded, "We are confident with the progress made in the first half of 2018 and the prospects of the business moving forward. Our strong balance sheet and solid cash flow generation allows us to continue executing on our capital allocation strategy that includes driving organic growth, pursuing accretive acquisitions and to initiate a share buyback program. Atento's share buyback program reflects our confidence in our Company's strategy to deliver profitable growth, the future prospects of our business and our ongoing commitment to shareholder value creation."

Second Quarter Consolidated Operating Results

All comparisons in this announcement, unless otherwise noted, are year-over-year and in constant-currency (CCY).

Consolidated revenues grew by 7.2% in the second quarter of 2018, driven by the continued growth from Americas and Brazil, particularly from revenue growth of Multisector clients across all regions. On a reported basis, total revenue was stable in the quarter.

Multisector continued to drive growth, with a revenue increase of 9.1% and now represents 60.9% of total revenue (+0.4 p.p. YoY), supported by gains in all regions and across several verticals. Revenues from Telefónica increased 4.4% in Q2, due to higher volumes in Brazil and Americas, partially offset by lower volumes in Spain. Revenues from higher value-added solutions represented 26.4% of total revenues in Q2, up 0.7 p.p. year-over-year.

EBITDA increased by 15.6% year-over-year, to $49.1 million. EBITDA margin improved by 70 basis points to 10.4% as a result of higher margins in Americas and EMEA, partially offset by lower margins in Brazil.

Recurring net income attributable to owners of the parent company totaled $14.8 million in Q2 2018, implying recurring EPS of $0.20, compared to $0.13 in 2017. The strong EPS expansion of 19.9% is a result of lower net interest expenses reflecting the debt refinance concluded in August 2017, as well as a lower effective tax rate in Q2 2018, with year-to-date ETR of 33%, in line with guidance.

Free cash flow generation was positive $37.3 million in the quarter, with FCF before interest and acquisitions of $43.3 million, driven by positive changes in working capital following the one-off negative impacts in Q1 2018. Capex payments represented 2.6% of revenues, compared to 2.1% in the previous year. Capex is expected to pick up in the second half of the year, with full-year capex as percentage of revenues expected to be in line with guidance.

At the end of June 2018, Atento's gross debt totaled $479.3 million, down 12.3% year-over-year and down 3.1% sequentially. Net debt fell to $372.9 million, 6.9% lower year-over-year and 5.4% lower quarter-over-quarter. Net leverage fell to 1.7x, down from 1.8x in Q1, reflecting higher cash position even after debt amortization.

Adjusted earnings, adjusted EBITDA and adjusted earnings per share are non-GAAP financial measures and are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

Segment Reporting

 

Brazil Region

Revenues in Brazil grew 6.3% in the quarter and 4.8% year-to-date. Multisector clients continue to drive growth, with revenue up 6.6% in Q2 2018 and 5.5% year-to-date. Operational performance was in line with expectations, and reflects Atento's solid conversion of the commercial pipeline in the quarter, with new client wins across several verticals. Revenues from Telefónica increased 5.4% in Q2 and 3.3% year-to-date. Multisector mix went up 0.2 p.p. to 60.9% of total revenues.

In Q2 2018, Adjusted EBITDA decreased to $19.1 million, with margin of 8.6%. Profitability is on track to expected improvements in H2 2018, and includes about 200 bps from costs related to operational adjustments to specific programs, and volume reduction due to truck drivers strike. We expect that most operational plans will be fully completed along Q3 2018.

Americas Region

Once again, and similarly to the recent performance, revenue growth was strong in Americas, up 11.0% in Q2 and 10.4% year-to-date. Revenues from Multisector increased by 14.0% in Q2 and 14.9% year-to-date, supported by higher volumes across several verticals in Argentina, Chile and Mexico. Likewise, revenue from Telefónica increased by 6.9% in Q2 and 4.3% year-to-date, driven by higher volumes in Argentina, Mexico and Chile. The strong performance continued to push Multisector up another 1.2 p.p. versus Q2 2017 to 59.6% of revenues (up 2.1 p.p. to 59.2% year-to-date).

In the quarter, Adjusted EBITDA reached $26.1 million, with margins up 1.8 p.p. to 13.5%, driven by higher volumes from Multisector. Year-to-date, Adjusted EBITDA totaled $47.1 million, with margins up 1.4 p.p. to 12.3%. Americas benefited from insurance reimbursement of cumulative losses related to Puerto Rico hurricane, offsetting lower volumes from domestic operations not totally restated to prior year levels.

EMEA Region

Revenue in EMEA increased by 2.9% in Q2, remaining stable year-to-date. This is the first year-over-year revenue growth since Q1 2017 and the third consecutive sequential quarter-over-quarter growth. Revenues from Multisector increased by 12.3% in Q2 2018 and 10.0% year-to-date, mostly driven by higher volumes from non-TEF telco clients, which more than offset the 2.3% drop in revenues from Telefónica on lower volumes. Revenue mix from Multisector was up 3.2 p.p. to 38.9% of total in the quarter and stable sequentially.

Adjusted EBITDA in EMEA increased by 49.7% to $ 6.0 million, reflecting improved mix from Multisector clients, with Adjusted EBITDA margin increasing by 2.8 p.p. to 9.7%. Year-to-date, Adjusted EBITDA margins were up 1.5 p.p. to 8.8%.

Cash Flow and Capital Structure

Free cash flow totaled $37.3 million in Q2, while free cash flow before interest and acquisitions was $43.3 million. Year-to-date, free cash flow before interest and acquisitions reached $6.9 million, up from $5.8 million in the same period of 2017.

This strong result can be traced to positive changes in working capital, reversing the one-off negative impact in Q1 2018. Capex totaled 2.6% of revenues, versus 2.1% in Q2 2017. Capex is expected to pick up in the second half of the year, with full-year capex as a percentage of revenue expected to be in line with guidance.

At the end of June 2018, Atento held cash and cash equivalents of $106 million and revolving credit facilities of $101 million, of which $96 million were undrawn, implying total liquidity of $202 million. Total gross debt dropped 3.1% sequentially to $479.3 million, while third-party total net debt decreased 5.4% to $372.9 million compared to Q1 2018. Net leverage, measured by Adjusted LTM EBITDA to net debt ratio, was 1.7x, down from the 1.8x in both Q2 2017 and Q1 2018, reflecting higher cash position even after debt amortization.

Capital Allocation: up to $30 million share buyback program approved

We believe that our robust Balance Sheet and Cash Flow generation, combined with expectations for H2 2018, will allow the Company to focus on accretive growth opportunities, by continuing to deploy higher value-added solutions in all regions, and pursuing opportunities for capability building.

Additionally, as part of our capital allocation strategy, we believe the share buyback program approved by the Board of Directors demonstrates confidence in our business prospects. We expect the program to be concluded in up to 12 months.

Conference Call

The Company will host a conference call and webcast on Tuesday, July 31, 2018 at 10:00 am ET to discuss its financial results. The conference call can be accessed by dialing: +1 (877) 407-0784 toll free domestic, UK: (+44) 0 800 756 3429 toll free, Brazil: (+55) 0 800 891 6221 toll free, or Spain: (+34) 900 834 236 toll free. All other international callers can access the conference call by dialing: +1 (201) 689-8560 toll free. 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. A web-based archive of the conference call will also be available at the above website.

About Atento

Atento is the largest provider of customer relationship management and business process outsourcing (CRM BPO) solutions in Latin America, and among the top five providers globally, based on revenues. 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 150,000 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 2016, Atento was named one of the World´s 25 Best Multinational Workplaces by Great Place to Work® for a fourth consecutive year. For more information visit www.atento.com

Investor Relations

Shay Chor

+ 55 11 3293-5926

shay.chor@atento.com

Felipe Joaquim Martins de Souza

+ 55 11 3779-8053

felipe.souza@atento.com

Media Relations

Maite Cordero

+ 34 91 740 74 47

atento.media@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. 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.

SELECTED FINANCIAL DATA

The following selected financial information should be read in conjunction with the interim consolidated financial statements and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" presented elsewhere in the Form 6-K.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Atento S.A.