Hot Stock Alert: Atento S.A. (NYSE: ATTO)

Sandra Davis

I am Sandra Davis and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets.

I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

Address: 1611 Hiddenview Drive, Plymouth Meeting, PA 19462, USA
Phone: (+1) 215-962-8358
Email: sandra.davis@seekingreview.com
Sandra Davis

NEW YORK, September 13, 2019 – Shares of Atento S.A. (NYSE: ATTO) surged 5.92% to $3.04. The stock traded total volume of 92.758K shares lower than the average volume of 126.56K shares.

Atento S.A. (ATTO) reported 2.0% increase in consolidated revenues to $436.70M in the first quarter of 2019, mainly driven by 6.1% sales growth in Brazil and a 4.6% increase in Multisector sales. While America’s revenues declined 2.7%, EMEA sales increased 5.2%.

Reported EBITDA reduced 2.8% to $42.00M and includes a $13.70M positive effect related to the initial application of IFRS 16. Also impacting EBITDA was $8.10M 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 a boost 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.

Cash Flow and Capital Structure

During the first quarter, operating cash flow before interest and acquisitions totaled negative $38.10M, with a negative Free Cash Flow of $56.40M, 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 $77.90M and existing revolving credit facilities of $88.00M, of which $68.00M were available, implying total liquidity of $145.90M.

Atento’s net debt was $390.10M, excluding the $175.10M effect of IFRS 16, or $565.20M under IFRS 16.  Excluding the effect of the initial application of IFRS 16, net leverage ratio would be 2.4 times. The higher leverage contrast 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.

ATTO has the market capitalization of $216.90M and its EPS growth ratio for the past five years was 30.20%. The return on assets ratio of the Company was -2.00% while its return on investment ratio stands at 8.20%. Price to sales ratio was 0.10 while 90.00% of the stock was owned by institutional investors.

Sandra Davis

Sandra Davis

I am Sandra Davis and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking. Address: 1611 Hiddenview Drive, Plymouth Meeting, PA 19462, USA Phone: (+1) 215-962-8358 Email: sandra.davis@seekingreview.com