Atento Reports Fiscal 2019 First-Quarter Results

  • Brazil revenue growth of 6.1% drives consolidated revenue up 2.0%
  • Multisector revenues increase 4.6%, reaching 62.4% of total sales
  • Sales of value-added solutions at 27.9% of total revenue
  • Profitability declines on lower Americas volumes and one-time severance costs

May 20, 2019 download Download in PDF

 

  • Revenue up 2.0% YoY in Q1, primarily driven by 6.1% sales growth in Brazil as well as 5.2% sales increase in EMEA, partially offset by a 2.7% decline in Americas revenues
  • Multisector revenue rises 4.6%, with Brazil increasing 8.4% and EMEA growing 7.5%
  • Higher value-added solutions revenues increase to 27.9% of total sales, a 2.9 p.p. expansion compared to Q1 2018 (25.0%)
  • Reported EBITDA margin of 9.6% including $8.1 million of one-off costs related to rightsizing in Americas and to agreements with unions in Chile and Argentina and a positive effect of $13.7 million related to the initial application of IFRS 16. Excluding these effects, EBITDA margin would have been 8.3% in Q1
  • Brazil profitability down to 10.2%, excluding one-off costs and effects of IFRS 16, a decrease of 0.9 p.p. YoY, due to higher labor expenses that are expected to be passed to prices throughout 2019
  • EPS of -$0.61 includes $0.51 from tax settlement in Spain; Recurring EPS of -$0.06
  • Free cash flow before interest and acquisitions of -$38.1 million, with FCF of -$56.4 million, reflecting seasonality and expected to normalize during the year
  • Net debt at $565.2 million, includes $175.1 million effect of IFRS 16, with net leverage at 3.2x. Excluding IFRS 16, net leverage was 2.4x reflecting lower EBITDA in last twelve months

 

NEW YORK -- Atento S.A. (NYSE: ATTO) (“Atento” or the “Company”), 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 first-quarter 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 6-K due to certain intra-group eliminations.

Summary

($ in millions except EPS)

Q1 2019

Q1 2018

CCY Growth

Income Statement

 

 

 

Revenue

436.7

490.4

2.0%

EBITDA (1)

42.0

49.8

-2.8%

   EBITDA Margin

9.6%

10.2%

-0.5. p.p.

Net Income (2)

(45.6)

(1.7)

N.M.

Recurring Net Income (2)

(5.0)

7.8

N.M

Earnings Per Share (2)

($0.61)

($0.02)

N.M

Recurring Earnings Per Share (2)

($0.06)

$0.10

N.M.

Cashflow, Debt and Leverage

 

 

 

Free Cash Flow (3)

(38.1)

(34.9)

 

Cash and Cash Equivalents

77.9

100.2

 

Net Debt

565.2

394.4

 

Leverage (x)

3.2

1.8

 

 

  • EBITDA is defined as profit/(loss) for the period from continuing operations before net finance costs, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude restructuring costs, site relocation costs and other items not related to our core results of operations. EBITDA and Adjusted EBITDA are not measures defined by IFRS. The most directly comparable IFRS measure to EBITDA and Adjusted EBITDA is profit/(loss) for the year/period from continuing operations.
  • Reported Net Income and Earnings Per Share and Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Earnings Per Share refer only to continuing operations. Reported and Adjusted Earnings Per Share, for the period ended March 31, 2019, were calculated considering the weighted average number of ordinary shares of 74,300,199. For the period ended March 31, 2018, the number of ordinary shares was 73,909,056. Recurring Earnings and EPS attributable to Owners of the parent company
  • We define Free Cash Flow before interest and acquisitions as operating cashflow minus Capex payments and income tax expenses.

 

 

Message of the CEO and CFO

Carlos López-Abadia, Atento´s Chief Executive Officer, commented, “Following an extensive review of Atento’s operations, we have begun implementing a transformation plan to substantially improve our company’s profit trajectory and cashflow. I remain confident in our ability to execute against near-term objectives as well as leverage Atento’s many clear strengths to capitalize on the myriad digital opportunities emerging in the CRM/BPO market. As we work toward optimizing Atento’s cost structure and driving operating efficiencies, we are investing more in our digital business, which is beginning to gain momentum with recent client wins in the educational, financial, retail and technology sectors. Investments include acquiring the remaining stakes in Interfile and RBrasil, as well as expanding Atento’s pool of digital talent. We are now systematically delivering end-to-end digital solutions which, coupled with the investments we are making, will strengthen Atento’s position in the increasingly sophisticated market for value-added sales and customer-care solutions.”

Mauricio Montilha, Atento´s Chief Financial Officer, said, “Our flagship operation in Brazil continued to drive Atento’s revenue higher as well as a substantial increase in our mix of multisector business, which rose above 62% of total sales at the end of the first quarter, with sales of value-added solutions accounting for nearly 28% of revenues. Lower volumes in the Americas, where the business environment remains challenging, and $8.1 million in one-time costs related to the rightsizing of our operations in this region primarily led to negative $4.3 million in recurring net income. We are resuming annual fiscal guidance, forecasting flat to low single-digit revenue growth and an EBITDA margin of 11 to 12% for 2019, including the effects of IFRS 16 and one-offs related to growth initiatives. Our business is expected to begin normalizing in the third quarter of this year and achieve a healthy run rate going into 2020.”

 

First Quarter Consolidated Operating Results

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

Atento’s Consolidated revenues increased 2.0% to $436.7 million in the first quarter of 2019, primarily driven by 6.1% sales growth in Brazil and a 4.6% increase in Multisector sales. While Americas revenues declined 2.7%, EMEA sales increased 5.2%.

Revenue growth in the quarter was fueled by higher volumes with existing clients in Brazil and ramp ups of new clients in Spain, partially offset by lower volumes in Americas.

Total Multisector revenues increased 4.6%, further diversifying Atento’s revenue stream and reaching 62.4% of total sales. Growth in this product category was primarily driven by an 8.4% increase in Brazil sales, with a 7.5% increase in EMEA sales also contributing to growth.  In the Americas, Multisector sales were mixed, with higher volumes in Chile and Colombia, offset by a challenging business environment in Mexico.

Revenues from higher value-added solutions were 27.9% of total sales in the quarter, versus 25.0% in Q1 2018.

Revenues from Telefónica decreased 1.1% in the quarter, due to a decrease of 5.6% in Americas, mainly from lower revenues in Peru, partially offset by higher volumes in Brazil and EMEA. Atento remains Telefónica’s reference partner for CRM/BPO services.

Reported EBITDA decreased 2.8% to $42.0 million and includes a $13.7 million positive effect related to the initial application of IFRS 16. Also impacting EBITDA was $8.1 million in extraordinary costs related to the downsizing of the Atento’s operations in the America’s and to new union agreements in Argentina and Chile, as well as the impact of an increase in the minimum wage in Brazil. The EBITDA margin was 9.6%, a 53 basis point decrease. Excluding the positive effect of IFRS 16 and the one-off costs, the EBITDA margin would have been 8.3%, with Brazil and the Americas at 10.2% and 9.4%, respectively. In EMEA, the EBITDA margin would have been 8.1%, excluding the effects of IFRS 16.

Earnings per share was a negative $0.61, mainly from a $0.51 impact from a tax settlement in Spain, which was accounted for as non-recurring. Therefore, when adjusting for this effect and other non-recurring impacts, recurring EPS was negative $0.06. Adjusting for the $8.1 million pre-tax extraordinary costs, recurring EPS would have been positive $0.01.

In the context of a global Tax Audit of the periods 2013 to 2016, Atento Spain signed a tax agreement with the Spanish tax authorities. The criteria adopted by the Tax Administration was in connection with certain aspects, among others, of the deductibility of certain specific intercompany financing and operating expenses originated during the acquisition of Atento Spain, which was different from the tax treatment applied by the Company. As a result of this discrepancy, the amount of the tax credits carry-forward of the Spanish tax group, together with the corresponding effects in subsequent tax periods, was reduced in an amount equivalent to $37.8 million.

 

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

($ in millions)

Q1 2019

Q1 2018

CCY growth

Brazil Region

 

 

 

Revenue

218.3

238.9

6.1%

Adjusted EBITDA

27.8

26.4

19.2%

Adjusted EBITDA Margin

12.7%

11.1%

1.6 p.p.

Operating Income/(loss)

(5.9)

(1.2)

N.M.

Americas Region

 

 

 

Revenue

161.7

190.6

-2.7%

Adjusted EBITDA

14.1

21.0

-25.6%

Adjusted EBITDA Margin

8.7%

11.0%

-2.3 p.p

Operating Income/(loss)

(7.6)

1.9

N.M.

EMEA Region

 

 

 

Revenue

62.1

63.9

5.2%

Adjusted EBITDA

6.3

5.0

32.6%

Adjusted EBITDA Margin

10.2%

7.8%

2.4 p.p.

Operating Income/(loss)

(4.0)

0.4

N.M.

 

 

 

Brazil

Atento’s flagship operation delivered 6.1% revenue growth during the first quarter to $218.3 million, mainly driven by an 8.4% increase in Multi-sector revenues, which expanded 1.5 p.p. to 70.5% of sales in Brazil.

Financial services clients were the largest source of Multisector sales in Brazil, mostly volume ramp ups of new contracts signed during 2018.

Brazil’s operations remain at the forefront of Atento’s growth strategy and digital transformation. Atento’s Brazilian business is helping accelerate the Group’s move into digital services and leading the standardization and roll out of digital solutions (Data Driven Digital Sales, Data Driven Customer Care, Digital Back Office, Digital Collections).

Revenues from Telefónica increased 0.9%, representing 29.5% of total revenue in Brazil in Q1 2019.

Reported Adjusted EBITDA margin was 12.7%. Excluding one-off costs and the effects of IFRS 16, profitability was 10.2%, due to higher labor expenses reflecting a 4.6% increase in minimum wage on January 1, 2019, compared to a 1.8% increase on January 1, 2018 and lower profitability in some client programs that will be addressed in the coming quarters.

 

Americas Region

In the Americas region, revenue decreased 2.7% YoY to $161.7 million. The decrease in the first quarter was driven by lower Telefónica volumes in Peru and due to a challenging business environment in Mexico and slower economic activity in Argentina. Performance in the Financial Services sector was driven primarily by higher volumes in Chile and Colombia, offset by weaker volumes in Mexico.

The mix of Multisector revenue in the Americas increased to 61.5%, a 1.9 p.p increase in share of total revenues in Q1 2019. Revenue from multisector clients was mixed, with higher volumes in Chile and Colombia, offset by a challenging environment in Mexico, decreasing 0.3% in total.

Telefónica revenue decreased 5.6% in the quarter, mainly in Peru, representing 38.4% of total Americas revenues in the period.

Reported Adjusted EBITDA decreased to $14.1 million, with the margin declining 2.3 p.p. to 8.7% in the first quarter. Excluding one-offs and the effects of IFRS 16, Adjusted EBITDA margin would have been 9.4% (-1.6 p.p. YoY).

 

EMEA Region

Revenue in the EMEA region grew 5.2% over first quarter 2018 to $62.1 million. The growth was driven by a 7.5% increase in Multisector revenues, reflecting new client programs in the quarter. As a percentage of total sales in the region, Multisector revenues increased 0.8 p.p. to 39.7%.  Revenues from Telefónica increased 3.8% YoY.

Reported Adjusted EBITDA for the EMEA region was $6.3 million, an increase of 32.6%, with the margin at 10.2%. Excluding the effect of IFRS 16, the EBITDA Margin would have been 8.1%, an increase of 0.3 p.p, at a normalized level of 8-9%. EBITDA Margin was limited by the ramp up of new client programs that were acquired during the quarter and by a low utilization rate that stemmed from lower volume in a single client program, with overcapacity to be reduced in coming quarters.

Atento was recognized as one of the Best Companies to Work by Great Place to Work and Forbes (click here for full details).

 

Cash Flow and Capital Structure

During the first quarter, operating cash flow before interest and acquisitions totaled negative $38.1 million, with a negative Free Cash Flow of $56.4 million, in line with expected seasonality in EBITDA combined with weaker working capital from higher revenue anticipation by clients in the fourth quarter of 2018.

Cash capex accounted for 3.8% of revenues in Q1 2019, in line with the expected range for the year and compares to 2.7% in Q1 2018.

At March 31, 2019, Atento held cash and cash equivalents of $77.9 million and existing revolving credit facilities of $88.0 million, of which $68.0 million were available, implying total liquidity of $145.9 million.

Atento's net debt was $390.1 million, excluding the $175.1 million effect of IFRS 16, or $565.2 million under IFRS 16.  Excluding the effect of the initial application of IFRS 16, net leverage ratio would be 2.4 times. The higher leverage compared to Q1 2018 reflects lower twelve-months EBITDA as a result of the adjustments we did in Q2 2018 and the extraordinary costs incurred in Q1 2019.

As previously announced, Atento closed, on April 4, 2019, a private offering of an additional US$100 million in aggregate principal amount of its 6.125% Senior Secured Notes due 2022. The Company used the net proceeds from this offering to repay all its outstanding Brazilian debentures and part of its outstanding BNDES credit facilities in the total amount of $35 million, as well as to repay approximately $25 million in revolving credit facilities in Brazil and Mexico.

 

Introducing Fiscal 2019 Guidance

Atento forecasts flat to low single-digit revenue growth in 2019, in constant-currency terms. Sales growth is expected to come from the acceleration of the Company’s digital business, while baseline volumes are expected to decline, particularly in the more massive CRM. EBITDA margin is expected to be in the range of 11% to 12%, including the extraordinary costs related to the transformation of the business and the effects of IFRS 16. Interest expenses are estimated to be between $35 million and $45 million, already reflecting the previously announced private offering of US$100 million in aggregate principal amount of Senior Secured Notes. For the year, cash capex is expected to be 3.5% to 4.5% of revenues.

 

Guidance 2019

 

Consolidated Revenue Growth (CCY)

flat to low single-digit

EBITDA Margin Range (CCY)

11.0% - 12.0%

Interest Expenses (1)

($35 MM – $40 MM)

Cash Capex (as % of Revenues)

3.5% - 4.5%

 

 

 

Conference Call

The Company will host a conference call and webcast on Tuesday, May 21, 2019 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

Fernando Schneider

+ 55 11 3779-8119

fernando.schneider@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.

 

Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss):

 

 

 

 

 

 

 

For the three months ended March 31,

($ in millions)

 

2018

 

2019

 

 

(unaudited)

 

 

 

 

 

(Loss) for the period

 

(1.7)

 

(45.6)

Net finance expense

 

19.6

 

17.3

Income tax expense

 

5.5

 

(2.9)

Write-off of deferred tax assets

 

-

 

37.8

Depreciation and amortization

 

26.3

 

35.3

EBITDA (non-GAAP) (unaudited) (*)

 

49.8

 

42.0

Adjusted EBITDA (non-GAAP) (unaudited) (*)

 

49.8

 

42.0

 

(*)       In 2019, the EBITDA was impacted in $13.7 millions due to the first application of IFRS 16. Excluding IFRS 16 impact, 2019 EBITDA was $28.3 million. Depreciation and finance costs impacted in $11.8 million and $4.7 million respectively due to the application of the IFRS 16.

 (a)   In May 2019, in the context of a global Tax Audit of the periods 2013-2016, Atento Spain, as the representative company of the tax group comprised of the Spanish direct subsidiaries of Atento S.A., signed a tax agreement with the Spanish tax authorities. The criteria adopted by the Tax Administration was in connection with certain aspects, among others, of the deductibility of certain specific intercompany financing and operating expenses originated during the acquisition of Atento Spain, which was different from the tax treatment applied by the Company. As a result of this discrepancy, the amount of the tax credits of the Spanish tax group, together with the corresponding effects in subsequent tax periods, has being reduced in an amount of $37.8 million. 

       Accordingly, the tax credits for losses carryforward in our financial statements for the first quarter of 2019, was negatively affected by $37.8 million. Also, the agreement negatively impacted our EBITDA in the first quarter of 2019 by $0.5 million and financial expenses of $0.1 million, due to the other adjustments made by the tax authorities. The agreement’s cash impact of $1.1 million will impact our cash flow for the period ended June 30, 2019.

Reconciliation of Adjusted Earnings to profit/(loss):

 

 

 

 

 

 

For the three months ended March 31,

 

($ in millions)

2018

 

2019

 

 

(unaudited)

(Loss) for the period

(1.7)

 

(45.6)

 

Amortization of acquisition related intangible assets (a)

5.7

 

5.1

 

Change in fair value of financial instruments (b)

3.1

 

-

 

Net foreign exchange gain/(loss)

2.8

 

1.8

 

Other

-

 

0.6

 

Tax effect (c)

(2.4)

 

33.5

 

Total of add-backs

9.2

 

41.0

 

Adjusted Earnings (non-GAAP) (unaudited)

7.5

 

(4.6)

 

Adjusted Earnings per share (in U.S. dollars) (**) (unaudited)

0.10

 

(0.06)

 

Adjusted Earnings attributable to Owners of the parent (non-GAAP) (unaudited)

7.8

 

(5.0)

 

Adjusted Earnings per share attributable to Owners of the parent (in U.S. dollars) (**) (unaudited)

0.10

 

(0.06)

 

 

(*) We define non-recurring items as items that are limited in number, clearly identifiable, unusual, are unlikely to be repeated in the near future in the ordinary course of business and that have a material impact on the consolidated results of operations. Non-recurring items can be summarized as demonstrated below:

  1. Amortization of acquisition related intangible assets represents the amortization expense of customer base, recorded as intangible assets. This customer base represents the fair value (within the business combination involving the acquisition of control of Atento Group) of the intangible assets arising from service agreements (tacit or explicitly formulated in contracts) with Telefónica Group and with other customers.
  2. Since April 1, 2015, the Company designated the foreign currency risk on certain of its subsidiaries as net investment hedges using financial instruments as the hedging items. As a consequence, any gain or loss on the hedging instrument, related to the effective portion of the hedge is recognized in other comprehensive income (equity) as from that date. The gains or losses related to the ineffective portion are recognized in the statements of operations and for comparability, and those adjustments are added back to calculate Adjusted Earnings.
  3. The tax effect represents the impact of the taxable adjustments based on tax nominal rate by country. For the three months ended March 31, 2018 and 2019, the effective tax rate after moving non-recurring items was 51.3% and 48.8% respectively.
  4. In May 2019, in the context of a global Tax Audit of the periods 2013-2016, Atento Spain, as the representative company of the tax group comprised of the Spanish direct subsidiaries of Atento S.A., signed a tax agreement with the Spanish tax authorities. The criteria adopted by the Tax Administration was in connection with certain aspects, among others, of the deductibility of certain specific intercompany financing and operating expenses originated during the acquisition of Atento Spain, which was different from the tax treatment applied by the Company. As a result of this discrepancy, the amount of the tax credits of the Spanish tax group, together with the corresponding effects in subsequent tax periods, has being reduced in an amount of $37.8 million. 

Accordingly, the tax credits for losses carryforward in our financial statements for the first quarter of 2019, was negatively affected by $37.8 million. Also, the agreement negatively impacted our EBITDA in the first quarter of 2019 by $0.5 million and financial expenses of $0.1 million, due to the other adjustments made by the tax authorities. The agreement’s cash impact of $1.1 million will impact our cash flow for the period ended June 30, 2019.

(**) Adjusted Earnings per share is calculated based on the weighted average number of ordinary shares outstanding (that exclude the treasury shares) of 73,909,056 and 74,300,199  as of March 31, 2018 and 2019, respectively.

 

Financing Arrangements

Net debt with third parties As of March 31, 2018 and 2019 is as follow:

 

 

As of March 31,

($ in millions, except Net Debt/Adj. EBITDA LTM)

2018

 

2019

 

(unaudited)

Cash and cash equivalents

100.2

 

77.9

Debt:

 

 

 

     Senior Secured Notes

392.2

 

394.5

     Brazilian Debentures

21.5

 

15.0

     BNDES

44.7

 

19.0

     Finance Lease Payables (3)

9.3

 

179.9

     Other Borrowings

26.9

 

34.8

Total Debt

494.6

 

643.2

Net Debt with third parties (1) (unaudited)

394.4

 

565.2

   Adjusted EBITDA LTM (2) (non-GAAP) (unaudited)

217.1

 

177.0

Net Debt/Adjusted EBITDA LTM (non-GAAP) (unaudited)

1.8x

 

3.2x

 

  1. In considering our financial condition, our management analyzes Net debt with third parties, which is defined as total debt less cash and cash equivalents. Net debt with third parties is not a measure defined by IFRS and it has limitations as an analytical tool. Net debt with third parties is neither a measure defined by or presented in accordance with IFRS nor a measure of financial performance, and should not be considered in isolation or as an alternative financial measure determined in accordance with IFRS. Net debt is not necessarily comparable to similarly titled measures used by other companies.
  2. Adjusted EBITDA LTM (Last Twelve Months) is defined as EBITDA adjusted to exclude restructuring costs, site relocation costs and other items not related to our core results of operations.
  3. Impact in March 31, 2019 of application of IFRS 16 (former operating leases not related to short-term or low-value leases are now shown as debt) was $175,1 million.

Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2019

 

 

 

 

 

 

 

 

 

 

($ in millions, except percentage changes)

For the three months ended March 31,

 

Change (%)

 

Change excluding FX (%)

 

2018

 

2019

 

 

 

 

(unaudited)

 

 

 

 

 

Revenue

490.4

 

436.7

 

(10.9)

 

2.0

 

Other operating income

2.0

 

0.6

 

(68.0)

 

(66.2)

 

Operating expenses:

 

 

 

 

 

 

 

 

Supplies

(17.6)

 

(16.8)

 

(4.4)

 

(12.0)

 

Employee benefit expenses

(367.5)

 

(339.3)

 

(7.7)

 

5.8

 

Depreciation (2)

(11.3)

 

(21.8)

 

92.9

 

114.2

 

Amortization

(15.0)

 

(13.5)

 

(9.8)

 

1.3

 

Changes in trade provisions

(0.3)

 

-

 

(99.0)

 

(99.0)

 

Other operating expenses (3)

(57.1)

 

(39.2)

 

(31.4)

 

(21.3)

 

Total operating expenses

(468.9)

 

(430.6)

 

(8.2)

 

4.1

 

Operating profit

23.5

 

6.7

 

(71.4)

 

(59.0)

 

Finance income (4)

0.9

 

2.4

 

N.M.

 

N.M.

 

Finance costs (5)

(14.6)

 

(18.0)

 

23.1

 

31.9

 

Change in fair value of financial instruments

(3.1)

 

-

 

(100.0)

 

(100.0)

 

Net foreign exchange loss

(2.8)

 

(1.8)

 

(37.3)

 

3.3

 

Net finance expense

(19.6)

 

(17.3)

 

(11.5)

 

(1.8)

 

Profit before income tax

3.9

 

(10.6)

 

N.M.

 

N.M.

 

Income tax benefit/(expense)

(5.5)

 

(35.0)

 

N.M.

 

N.M.

 

(Loss)/profit for the period

(1.7)

 

(45.6)

 

N.M.

 

N.M.

 

(Loss)/profit attributable to:

 

 

 

 

 

 

 

 

Owners of the parent

(2.0)

 

(46.0)

 

N.M.

 

N.M.

 

Non-controlling interest

0.3

 

0.4

 

21.4

 

40.9

 

(Loss)/profit for the period

(1.7)

 

(45.6)

 

N.M.

 

N.M.

 

Other financial data:

 

 

 

 

 

 

 

 

EBITDA (1) (unaudited)

49.8

 

42.0

 

(15.8)

 

(2.8)

 

Adjusted EBITDA (1) (unaudited)

49.8

 

42.0

 

(15.8)

 

(2.8)

 

 

 

 

 

 

 

 

 

 

 

  • For the reconciliation of these non-GAAP measures to the closest comparable IFRS measure, see section "Summary Consolidated Historical Financial Information - Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss)".
  • Due to the initial application of IFRS 16 the depreciation was negatively impacted in $11.8 million.
  • Due to the initial application of IFRS 16 the other operating costs was positive impacted in $13.7 million.
  • The three months ended in March 31, 2019 contains a negative impact of $1.5 million due to the application of the IAS 29 Financial Reporting in Hyperinflationary Economies in Argentina. This impact is mainly explained by the effects of monetary correction of the goodwill generated on December 1, 2012 from the acquisition of the Customer Relationship Management (“CRM”) business from Telefónica, S.A.
  • Due to the initial application of IFRS 16 the finance costs was negatively impacted in $4.7 million.

N.M. means not meaningful

 

 

 

ASSETS

 

 

 

 

 

 

 

December 31,

 

March 31,

 

 

2018

 

2019

 

 

 

(audited)

 

(unaudited)

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

716,886

 

829,843

 

 

 

 

 

 

Intangible assets

 

 

211,202

 

195,211

Goodwill

 

 

154,989

 

152,329

Property, plant and equipment

 

 

123,940

 

293,414

Non-current financial assets

 

 

95,531

 

88,800

Trade and other receivables

 

 

19,148

 

18,758

Other non-current financial assets

 

 

65,070

 

60,255

Derivative financial instruments

 

 

11,313

 

9,787

Other taxes receivable

 

 

6,061

 

6,063

Deferred tax assets

 

 

125,163

 

94,026

 

 

 

 

 

 

CURRENT ASSETS

 

 

496,467

 

505,647

 

 

 

 

 

 

Trade and other receivables

 

 

342,075

 

404,114

Trade and other receivables

 

 

315,654

 

377,783

Current income tax receivable

 

 

26,421

 

26,331

Derivative financial instruments

 

 

-

 

257

Other taxes receivable

 

 

19,975

 

22,309

Other current financial assets

 

 

891

 

1,037

Cash and cash equivalents

 

 

133,526

 

77,930

 

 

 

 

 

 

TOTAL ASSETS

 

 

1,213,353

 

1,335,490

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

December 31,

 

March 31,

 

 

2018

 

2019

 

 

 

(audited)

 

(unaudited)

 

 

 

 

 

 

TOTAL EQUITY

 

 

340,092

 

277,817

EQUITY ATTRIBUTABLE TO:

 

 

 

 

 

NON-CONTROLLING INTEREST

 

 

8,541

 

7,845

OWNERS OF THE PARENT COMPANY

 

 

331,551

 

269,971

 

 

 

 

 

 

Share capital

 

 

49

 

49

Reserve for acquisition of non-controlling interest

 

 

(23,531)

 

(23,531)

Share premium

 

 

615,288

 

615,288

Treasury shares

 

 

(8,178)

 

(8,178)

Retained losses

 

 

(16,325)

 

(62,299)

Translation differences

 

 

(257,122)

 

(264,716)

Hedge accounting effects

 

 

8,404

 

4,565

Stock-based compensation

 

 

12,966

 

8,793

NON-CURRENT LIABILITIES

 

 

528,869

 

652,622

 

 

 

 

 

 

Deferred tax liabilities

 

 

30,221

 

27,060

Debt with third parties

 

 

408,426

 

532,927

Derivative financial instruments

 

 

682

 

1,296

Provisions and contingencies

 

 

51,174

 

52,249

Non-trade payables

 

 

14,391

 

15,208

Option for the acquisition of non-controlling interest

 

 

20,830

 

20,710

Other taxes payable

 

 

3,145

 

3,172

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

344,392

 

405,051

 

 

 

 

 

 

Debt with third parties

 

 

51,342

 

110,268

Trade and other payables

 

 

274,000

 

276,872

Trade payables

 

 

76,912

 

72,383

Income tax payables

 

 

10,615

 

10,301

Other taxes payables

 

 

78,511

 

78,290

Other non-trade payables

 

 

107,962

 

115,898

Provisions and contingencies

 

 

19,050

 

17,911

TOTAL EQUITY AND LIABILITIES

 

 

1,213,353

 

1,335,490

 

Free Cash Flow:

 

 

For the three months ended March 31,

 

($ in millions)

2018

 

2019

 

 

(audited)      (unaudited)

 

Operating Cash Flow (1)

(17.0)

 

(17.7)

 

Cash Capex (2)

(13.4)

 

(16.7)

 

Income Tax Paid

(4.5)

 

(3.7)

 

Free Cash Flow before interest and acquisitions

(34.9)

 

(38.1)

 

Acquisitions

0.0

 

0.0

 

Net Financial Expenses (3)

(20.2)

 

(18.3)

 

Free Cash Flow (FCF)

(55.1)

 

(56.4)

 

           

 

  • We define Operating Cash flow as Net Cash flow from/(used in) operating activities (as per 6K) adding back net interest and income tax expenses.
  • Does not consider acquisitions
  • Interest payments related to the 2022 SSN are done every February and August, until Bond maturity in August 2022. Therefore, settlement of hedging instruments will impact Q1 and Q3 Net Financial Expenses cashflow of each year.

 

 

 


Source: Atento

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