Atento Reports Fiscal 2021 First Quarter Results

• Commercial wins, revenue growth and efficiencies led to record positive operating cash flow;
• Revenues in hard currencies already at 25% of total, on strong US growth;
• On track to delivering guidance for FY 2021

NEW YORK, May 5, 2021 – 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 for the period ending March 31, 2021. All comparisons in this announcement are year-over-year (YoY) and in constant-currency (CCY), unless otherwise noted.

A strong start for 2021

• Q1 revenues grew 8.0% on a CCY basis, with consistent growth in Multisector across all regions, driven by Next Generation Services
• Multisector revenues increased 11.0%, reaching 68.1% of total revenues, 0.7pp higher YoY
• TEF resuming growth following new program wins
• US revenues increased 52.0%, with EBITDA increasing 91% YoY
• Consolidated EBITDA expanded 6.7% to $39.1 million YoY, with corresponding margin of 10.5%, in line with management expectations and reflecting historical seasonality for Q1
• Continued solid improvement in Cash Flow: operating cashflow +$11.9M vs Q1 2020, totaling $5.5M in Q1 2021, the first positive number for a first quarter since 2017

Building a track record in operating efficiency

• First stage implemented in 2019 and 2020 focused on structural opex, with $60 million in annualized savings carried to 2021
• Second stage to focus on contract profitability, with annualized savings expected to reach additional $25 million

Debt refinancing resolved uncertainty related to capital structure

• Successfully concluded debt refinancing in Q1 2021, extending average debt life to 4.3 years
• Healthy balance sheet with solid cash position of $176.1 million
• Net debt reduction of 6.9% versus Q1 2020, with leverage at 3.3x
• USD debt hedged for Principal and Coupons

Avenues for Growth

• Remain focused on expanding NGS for multisector and US business, aiming at increasing revenue and EBITDA in hard currencies.

Summarized Consolidated Financials

(1) Unless otherwise noted, all results are for Q1; all revenue growth rates are on a constant currency basis, year-over-year; (2) EBITDA, Recurring Net Income/Recurring Earnings per Share (EPS) are Non-GAAP measures; (3) Reported Net Income and Earnings per Share (EPS) include the impact of non-cash foreign exchange gains/losses on intercompany balances; (4) Includes IFRS 16 impact in Net Debt and Leverage; (5) Earnings per share and Recurring Earnings per share in the reverse split basis is calculated by applying the ratio of conversion of 5.027090466672970 used in the reverse split into the previous weighted average number of ordinary shares outstanding. (6) The following selected financial information are unaudited.

Message from the CEO and CFO

Atento delivered solid Q1 2021 results, on the back of strong Next Generation services sales throughout the regions in which we operate, especially in the US and EMEA. Our revenues in the quarter went up 8.0% YoY on a constant currency basis, while EBITDA growth was 6.7%, with a 10.5% margin, despite implementation costs of new projects whose revenues will be fully accounted for from Q2 2021 onward, and wage adjustments in Brazil. We are pleased to report that, for the first time since 2017, we generated positive operating cash flow in a first quarter.

The implementation of our Three Horizon Plan in 2019 successfully allowed us to convert our commercial pipeline, consistently increasing our sales as measured by Total Annual Value: new wins in this quarter surpassed $80 million, 4 times more than what we sold in the same period in 2018, and 50% more than Q1 2020. More than half of these revenues came from the U.S. We are proud to report that one of these wins is a contract with the State of Maryland where we assumed a front-line position in the fight against COVID by launching Atento’s Equitable Vaccination Distribution and Scheduling system using the Atento@home remote work solution, implemented in just two weeks.    

A year ago, we said we wanted to serve the right clients, with the right services, and that’s what we have been delivering. We have been able to attract born-digital and tech brands that, along with media, now comprise more than 10% of our total revenues. When we add US and EMEA revenues hard currencies account for 25% of total revenues, mitigating the impact of foreign exchange variations from our Latin American businesses. More importantly, these clients demand more sophisticated services, allowing for better margins.

We are seeing opportunities to extract additional operating efficiencies throughout the year. After accomplishing annualized cost savings of $85 million in 2020, of which $60 million is being carried forward to 2021, we started the year focusing on contract profitability. There are important factors that impact the profitability of each program, and we have a delivery group currently implementing initiatives to best balance these factors so that we can improve our returns while improving service range and quality to our clients.   

As we said in our 2019 Investor Day, improving the capital structure of Atento is a key element for generating value to shareholders. This quarter we successfully completed our debt refinancing, issuing new $500 million Senior Secured Notes that mature in February 2026, extending the average life of our debt to 4.3 years from 1.5 years and paving the way to improve our capital structure. Fulfilling the commitment made to investors, the new notes are protected by hedging instruments consisting mainly of cross-currency swaps in BRL, PEN and Euro, with the coupons hedged through maturity, while the principal is hedged for a period of 3 years.

The demand for our CX services remains strong and Atento is more than prepared to serve this demand. The combination of top line growth, expansion of revenues in hard currencies and additional operational efficiencies coupled with the success of our debt refinancing strengthens our confidence in achieving our guidance for EBITDA margins and leverage targets for 2021 and 2022. 

Carlos López-Abadía                                                   José Azevedo

Chief Executive Officer                                               Chief Financial Officer