Atento Reports Fiscal 2020 Third Quarter Results

• Revenue growth accelerates 10.5% sequentially and rises 2.2% YoY on consistent Multisector growth
  across regions, driven by next-generation services, Brazil and US+Nearshore
• EBITDA up 102% sequentially and 13.9% YoY on 10.8% rise in Multisector sales,
  more profitable programs and higher operating efficiencies
• YTD free cash flow of $9 million, up approximately  $100 million YoY

NEW YORK, November 11, 2020 — 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 third quarter operating and financial results for the period ending September 30, 2020. All comparisons in this announcement are year-over-year (YoY) and in constant-currency (CCY), unless noted otherwise, and may differ from the corresponding 6-K filing due to certain intra-group eliminations.

Q3 Highlights

Three Horizon Plan continues driving profitable growth on higher mix of Multisector sales and Next Generation Services

• Consistent Multisector growth (+10.8% YoY) across all regions, driven by Next Generation Services, Brazil and US clients
• Multisector now represents 68% of consolidated revenues, with Born-digital comprising 6% of revenue mix
• TEF revenues increase 16.8% sequentially; reshaping the relationship, moving into NextGen services and remaining the leader in CX share of client’s wallet;.
• EBITDA increases in all regions, with total EBITDA rising 13.9% on continued improvements in client and services mix as well as higher efficiency levels
• EBITDA margin expands 560 bps sequentially and 100 bps YoY to 12.7%, with Brazil margin increasing 260 bps to 16.2%

Operational improvements continue raising efficiency levels

• Approximatelly $65 million of $80 million in target annualized cost savings implemented YTD through operations rightsizing, shared services, strict cost controls, Atento@Home operating model and ZBB

FCF generation reduces net debt for third consecutive quarter, while cash position remains healthy

• 9M FCF of $9 million versus negative $88 million in 9M19
• Net debt falls 9.0% YoY to $514.2 million; Leverage remains under control at 3.2x when excluding Argentina impairment in Q4 2019
• Solid cash position of $196.6 million

Atento maintains undisputed leadership in Latin America*

• Market share nearly three times greater than next-largest competitor in domestic CRM/BPO segment
• 27.9% of market share in Brazil, with 19.4 p.p. lead to country´s number two

* Frost & Sullivan: “Growth Opportunities in the Customer Experience Outsourcing Services Market in Latin America and the Caribbean” (2019)

Message from the CEO and CFO

Carlos López-Abadía, Atento’s Chief Executive Officer, commented, “As we promised in our Q2 earnings call, our business continued to recover significantly on still improving market conditions, with revenue growing over 10% sequentially, EBITDA doubling and our margin expanding almost 600 basis points, all three of which are above pre-crisis levels. The strong and broad-based recovery in our performance, which continues today, reflects consistent and disciplined execution of our Three Horizon Plan, which drove Multisector sales higher across all three of Atento’s geographic markets during the quarter. Our multisector clients now represent almost 70% of revenues, up from 60% when we started to implement the strategic plan. Moreover, we have been expanding into fast-growing verticals, such as born digital, tech, e-commerce and media, which are businesses that demand more digital and tech enabled solutions and therefore carry higher margins. We are also reshaping the relationship with Telefónica by selling more of these higher margin services to them, helping solidify Atento’s position as the company’s Partner of Choice and driving revenues 17% sequentially higher with this client.

With the recent inauguration of innovation centers in Brazil and Spain, we intend to strengthen our culture of innovation as well as Atento’s leadership in fundamentally transforming and substantially improving the Customer Experience delivered by our industry. This year alone, 10% of Atento’s new sales were for next generation services developed within the last 12 months. Atento’s governance has also been strengthening, with the appointment of two additional independent directors in the last six months, one of whom brings substantial experience managing and governing technology companies. 

As we approach the end of the year, we are operating at significantly higher performance levels and from a position of relative strength, one that enables us to continue effectively addressing the many challenges of today’s still complex and highly dynamic operating environment, while seizing more of the opportunities emerging among high-growth verticals in Brazil and the Americas and from ever-growing demand for innovative next-generation CX and BPO services. We remain confident in our ability to successfully execute in both regards, given the proven effectiveness of our Three Horizon Plan, Atento’s growing technology progress, and our commanding market position in Latin America. We therefore expect to end 2020 with EBITDA levels similar to last year’s in current currency, which is a remarkable result considering the significant crisis and an adverse BRL devaluation of 35%. This means a 200 basis points margin expansion versus 2019 and the implied exit rate we forecast to Q4 gives us confidence to continue delivering improved results in 2021 and puts us on track to deliver the 2022 targets that we communicated last November in our Investor Day. We expect the market to recognize the track record we have created in the last couple of quarters and, as we continue to deliver better results, our share price will reflect the solid fundamentals of our business.”

 José Azevedo, Atento’s Chief Financial Officer, said, “Our third quarter financial and operating results make clear that we continue to improve operationally. The fundamental changes we have been making within our business, in terms of sustainable top line growth, a more diversified and profitable revenue stream, and more efficient delivery, are now driving operating and free cash flow higher. We generated $9 million free cashflow in the first nine months of the year, an increase of almost $100 million when compared to the same period of 2019, and we accomplished this despite the impact of COVID-19 across our markets. This allowed for a decrease in our net debt for the third consecutive quarter, which combined with increasing EBITDA,makes us confident towards our target of 2.0 to 2.5 times net debt-to-EBITDA. In the meantime, we are comfortable with our current level of leverage and remain committed to refinancing Atento’s 2022 bond, with the aim of improving our debt profile and capital structure as another means to unlock shareholder value.”