Q2 2020 Atento SA Earnings Call
Good day, ladies and gentlemen, and welcome to <unk>.
On Florida, 20 trading results conference call.
For all parties, that's I noticed an old later, well conduct a question and answer session and instructions to participate okay given that that's fine.
I would require assistance during the call lease rising sparky followed by deal.
Following our you all have both financial and operating results well open the call for your question.
Proceedings. Please note that certain comments made on these calls real close on trade national information that has to brickyard under international financial reports they spend that.
In addition, this call may contain information that constitute forward looking statement, which are not guarantees our future performance and involve risks and uncertainties.
The only gel.
Maybe for much of it didn't from those into forward looking statements as always outbox navios functions.
Encourage you to review our publicly available disclosure documents shield.
With that but one of unsecured like glaciers regulators and invite you to lead the company disclosure equal did here on the second slide of how are you fly for your patience.
Our public filings and mornings presentation can be found at that first though I think the dot com.
Please note that unless noted otherwise all girls right are on the year over year and calls that's going to keep them.
We'll now turn the call I looked a lot because nobody else CEO of I think.
Good day, ladies and gentlemen, and welcome to update the second partner, claiming 20 <unk> results conference call.
At this time, all participants I noticed a known in loan later, we'll conduct a question and answer session and instructions to participate in services and monetize really even at that time, we should require assistance during the call. Please press the star.
Followed by zero.
Following our review of update those financial and operating results.
We will open the call for your question.
Before proceeding. Please note that certain comments made on this call will contain financial information that has been prepared under international financial reporting standards.
In addition, this call may contain information that constitutes forward looking statements, which are not guarantees of future performance and involve risks and uncertainties.
Third the results may differ materially from those in the forward looking statements as our results of various factors. We encourage you to review our publicly available disclosure documents filed with the relevant security threats regulators and we invite you to read the complete disclosure included.
Here are the SEC applied of our new slide presentation.
Our publicly our public SEC filings and earnings presentation can be found.
I think good dot com.
Please note that unless noted otherwise all growth rates are on a year over year and constant currency basis.
I will now turn the call to kind of losses about the CEO of offensive.
Thank you, ladies and gentlemen, joining us today.
Automotive systems.
Because of all response with another however for the rest of the here on the pro reasonable we completed for.
But the into a strongly affected by the impact will be fully movies and let me repeat a little worse is behind us and we're optimistic about the recovery here.
The second half of March and April where were more suitable impact last may and June show significant services.
Recently during the profitability on volumes consistent with last year's run rate Elizabeth.
I want to their feedback the political season.
Most of the DPP sales in the order was to pick up the patients. The by many believe measures implemented late this year based on fiscal streaming our ability to deliver the volumes demand.
We reported results using a basis the combination of work at home related.
And very capacity management over the recent this.
We ended the quarter is more than 60% over the really since the employees working safely from home for December retaining open safety standards our scissors.
Repeatability quite a regulatory hurdle.
Yes.
As a result with back to full operating capacity latency.
I would hope everybody has either continues to grow the needs one increasing 7.1% over last year.
But the point of volumes declining much deeper we'll report solely in the answer.
So this is going to all the plasma.
Non performing business out there.
But sold into the reduction of non essential services during the peak of the crisis margin improvement.
It's a margin continued its positive trend.
That started in Q2 of last year.
The run rate of growth of 29% passport.
We'll bring.
81 days being listed on page 23, and marketing agency specific ones.
We have also good only operating free cash flow management.
Let me know breaking Cosco and turning it first depletion so early on meeting the board.
We have achieved one of the best vessel first half civilian business.
So we feel very comfortable work acquisition and our ability to manage the.
Classes.
So we do not know facility for the Covenant is unlimited data we are confident.
But it does fall victim.
The other humble workforce as they go home in terminal one for back on being deployed.
And safer present data centers in much better.
Yes.
Ultra Dutch more we see the there is a year so optimistic for the seven properties.
We see within our clients looking back to pre committed volume levels in some sectors showed a significant growth.
I would say slightly this increased 30% in Brazil. This particular strength is higher margin next generation services, which represents 50% those segments.
Okay, So with respect to double the share of advanced services.
Innovation Center.
So we expect these data here with the healthcare revenue mix within 23rd versus being less than 30 visibility.
When you get continues to be a very quickly.
We exceeded the midpoint and more avenues pharmaceutical bring additional programs and the wholesale extension of that.
Hi, good sectors.
Reprocessing last year.
The show significant strength.
The sectors, including more to be a company serves a 28% of our sales.
We have added three new clients in the first half of predicament.
Great and important extension in the U.S market.
57% growth in 15 years.
That's a possibility earlier the Brazilian.
Overall sales for the year not only decreased year on year.
We continue to exhibit both.
This includes the 10 26 challenging year for us.
Incidentally either open submission on sale.
I would like to make a broken within our gross.
The first of all with sales and messaging services. The submission so really mean, reflecting the resource business.
We have the busy in the sanctions, but technically we may complicate the year surfaces.
Let me touch on a couple of or Leverages, both of our completion operations ecosystem.
Our precious efforts needed for some of the year heavily focused on those aspects that are most meaningful for the response to complement the related searches.
For example, we have developed.
These two record too.
During the course and manage Asians and Supervisors is really the model.
Social networks Division builders vision and those analysis in the new integrated process.
We have already thousands of agents using this ability.
Participating in the process candidates with Barclays. Please.
Nothing remotely.
We continue to advance improvement of our cost structure.
Yes, everything an improvement of 80 million in on our run rate cost this year.
Also in this area, we have significantly improved.
Capital management impact already reflected in each one hour 18 vessels.
Let's say, we look forward response for the presentation.
As a result of the progress of our transformation, we have meaningful delivered EBITDA growth every quarter is studying Q2 last year and to meet the necessary investments in transformation.
On safety and workable.
Near the end of the order, we welcome HTS DCM problem as new shareholders and door work.
Increasing diversity with a shareholder base and achieving a structure more consistent.
As a standard publicly traded company.
New shareholders, having those the company's history busy working with US we probably look at those steps.
We believe that ended the year year.
Recurring volumes solid sales results and is still the shareholder investment position. This compares with David challenges on a per bit is facing us in this in however, we've made earlier.
With that I'll, let facing annual license.
Second our CFO. Thanks.
Hi, guys as NCCN guideline, we delivered strong multi sector alone in the fiber, especially in our flagship operation in Brazil, as well the less rich.
Seth did a great in telecom revenues across all regions.
Sales were strongest in Brazil.
Over 11% consolidated revenues decreased 12%, mainly reflected disintegration of unprofitable over nope.
Corporate development.
Our broadly bode well for Reeves County.
So well below the lower telefonica volumes related to compete nine impacts monthly make rail and our cost mix like Brazil economies, Argentina, Peru were also it's hard.
However, our margin, 50% year over year, increasing use movies across segments in the quarter lesson as the revenue in Americas region, mainland Europe, where an inflection point for business countries, including a telephonic and volumes.
As of today.
I would mention when the volumes beginning to recover during my engine, we sold for constant improvements and navigate model. After mall during the quarter, we do typically a back to normalized levels.
Second quarter, EBTDA declining, 33% with yet maintain margin at just over 7% result from 9.6% last year Americas marketing fared better due to effective cost management as well as an improvement in the revenue mix later in the presentation, we don't expect.
Our underlying.
Good day performance was when setting aside the very recently in backup copies 19 on volumes during this very inquiries.
Our next slide who have broken down into the second growth among the hydro verticals that we have been increasing finished breaking under our classic messy black.
Over the last six months, thanks double digit operating room expanded 450 basis points to 6.6% off with offerings.
Perfect protecting media and entertainment companies ingredient, 245%, 68% respectively.
This includes sales within the us markets, which rose 23% year to date paying 54 in Q2 20, only when covering Q2 Q2 19.
Yes, I just mentioned.
Brian in each of these segments have been beneficiaries of ships in spending patterns. During the financing many of which are likely to be permanent changes synergies at higher levels of offline for shades and Hong consumption.
In addition to the growth that we have clean safety.
Into these clients our contract with them are more profitable and therefore, I expected to drive EBTDA higher as business conditions as normal.
Slide 11 shows where the growth in multi sector phase is coming from Brazil remains our largest sellers of multi sector revenue, which is nearly 78% off revenue in that business at 680 basis points increase year to date vessels to last night.
Moving to record revenues expanded 360 basis points in the Americas, and 840 basis points in EMEA.
Also contributing to overall 440 basis points increase in our consolidated sector SEC.
Please turn to slide 12 hour and EBITDA growth.
29% on a run rate basis in the second part.
Within weeks during.
The impact of Kobi was 30 million in EBITDA in the second quarter marked opting in April and 43 million year to date.
Setting aside the impact of our mining expanded 360 basis points to 14.3% for the first half of this year, we the run rate EBITDA, increasing 36% during this period.
Overall the expenses.
In our undermine managing one due to improving revenue mix in terms of sites offline.
We are tracking and serving and to a greater proportion of next generation set.
Let's now move to slide second.
Operational improvements are integral to our three or is on plan and we have began implementing a new cost savings program to expand that grow Haswell fair accelerate.
We are tightening the 80 million in realizing cost savings under the program 47 million of which has already been achieved on I run the royalty rates.
Yes, we will be a combination of reductions in fixed and variable operating costs Haswell has asked DNA expensive debt we project Neil.
Well below our view.
In addition, we expected reductions in our pizza sauce to be sustainable as we grow revenue.
We believe that if we increased sales by 15% our data processing Roadmaps rise under this scenario.
Three is of interest costs director, we have been Rightsizing more of our operations, which has included shifting more on them to the Wagner model.
At the corporate level, we have been implementing shrimp Sally.
As well.
Adopting some of our automation technology search air BA or robotic process automation to reduce internal costs, including winning our finance department.
With the hiring of protecting our margins gains we have also centralized pricing with a focus on Android IC initiating optimal capital allocation through our recoveries we operate.
And innovative budget season realism drive greater cost efficiencies, which we expected to be fully implemented by year end.
Hello.
A combination of these structural improvements.
We expect to 200 2021 with a much lower costs director and therefore, driving operating leverage as volumes grow, particularly among the multi sector flights.
Please turn to slide 14.
We're also becoming more efficiency with capital additional working capital improvements drove 44 million of free cash flow during the second quarter, we obtain an hour and median.
An overview collections is Parker, bringing the total to 30 million year to date.
But lower our dsos by falling while new procurement program extender, our video by 30 days.
Both on a six month basis.
At the same time, we remain disciplined with capital expenditures.
We have the rates to relate to survive in 19 are well behind.
Capex was 2.7% of phase in the first half of this year, including the processes the associated with safety measures and transitioning agents to this was somewhat.
Please move to slide 15.
Better management of working capital in doing on most of our credit lines accounted for 27% sequentially, increasing our cash position.
Level, that's right back to hand off to Eightysixty.
Given when excluding the 80 million in new revolvers, our cash position increased 9% during the five.
During stronger liquidity and giving us the financial flexibility, we need in the current operating environment.
Net debt declined 8.2% to 424 million, we had our leverage ratio at four times EBITDA, we consider and managerial level based on current W. Olivier brands and our cash position.
Long term, we expected to reach.
Our twentytwenty two targets of between two and 2.5 times EBITDA.
We are already initiated the brokers to refinance our 500 million Twentytwenty do loan with a high mark improving our debt profile and fading.
Away by improving our spreads.
We expected these measures to unlock additional value to shareholders.
This concludes our review of our second quarter performance.
Now we are fcr disposal to answer any questions.
Thank you.
Ladies and gentlemen, we'll now move the class.
Actual.
Next question by how your comments.
Okay and shown by the one time thats pumps on now.
It had an annual I'd like to remove yourself from the question NGL price sorry, Jim.
Yes. Good question via webcast. Please try to our message in the facts swaps and take on shabby question.
Hi.
Please wait Twilight zone for questions.
Our first question comes from new tank car nature bearing.
Yes Carlos.
I wasn't sure on the pipeline. It's is 52% is next generation services is that the total of the total pipeline.
And if so.
What portion of the incremental business was next generation.
It is.
52% all the total pipeline and what was the second part of your question.
What portion of the.
Business added.
The pipeline was next generation.
What portion of the business added to the pipeline would I know you mean on the doesn't move.
No business added to the pipeline this quarter.
What portion was that ill have look we can we can get it we can get it to you I only margins will be very different from the depressed. The overall percentage when you get the total percentage of the only by blunt with 52 Prolia issues are similar or higher I think is we're growing our our percentage of next generation services, but we can get you adding.
Formation I don't know I couldn't tell you that Obama ahead, I imagine you see similar to 52.
The new business added to the pipeline.
The incremental growth in the pipeline is there any.
Pricing pressure on that business.
I would assume it's better margin if a lot of next generation.
But anyway is there any pricing yeah.
Yes.
Your your assumption are you hypothesis is correct it's.
Turning to answer what is the question hand, the question, but the question, yes, if I answer the question is absolutely yes.
But as a recent is there we've done a lot of work since last year as you know to focus both the type of business on the segments that we target.
And so we put a lot of emphasis on natale, while we sell but but the quality of what we sell and part of that obviously one of the metrics is contribution margin of the of the new business that we get another some other criteria are or is there.
The nature of the business is it more you'd said that will decline in business or is it the type of services on business that will we see three 510 years all sorts of potential. So so we put a lot of emphasis on the qualities. So yes on average we get the higher contribution margins on all day.
The new leases that were getting so pricing pressure from that perspective.
Now we've not seen.
In other pricing pressures.
Part of it probably is because we are focusing on different segments of the market and different types of services.
Okay.
And then and the second half for the year well do you expect to discontinue any additional telefonica program.
Yes.
Indeed.
The strength.
Let me try to answer the question and the question as well as you know and I'd say I made in my in my prepared remarks, we.
We disclosed last year, the second half of last year that we will discontinuing a number of.
Of contracts not only with telefonica another areas as well Telefonica was.
Big Chunky.
Piece of that.
Concerns that were not.
We're now given the asset performance that we need it and as a result, we had an exit with clients to exit. So so good chunk of that was.
Was telefonica.
As we expect something of that the significance now.
Do we examined.
Constantly the performance of our contracts our lines of business et cetera, we do so right now we are in business as usual every month, we review performance of clients contracts lines of business et cetera, and we will discontinue those that you now in the short or long term that we don't see as performing but there is on anything anything.
Meaningful in the in the Horizon now I just business as you suggest.
Good practice.
All the time people looking at your business into it.
Thank you I'll go back in the Q.
Okay.
Thanks.
Yes.
Yes.
Shaded when do you have any more questions.
Yes, we do I'm waiting to see if we have.
Hello.
Yes.
Sorry, we had her question, yes audio offerings from deep dark meat Goldman Sachs.
Pretty good.
Hello, Good morning, everyone. So thank you for your time and apologies. If my question was already answered there had some larger issues during the interim portion of the call. So our question if you'd be able to provide some more detail on the performance in America like especially if you ask multifactor, where according to the earnings.
These there was significant growth.
And one that related to a specific contracts are attributed to give us some more color on that thank you.
Sure sure return I hope.
This time, the all the problems where I'm not on my side I understand last time was my all of US horrendous I could hear everybody well, but appealing nobody could hear me.
So.
To address that we're very happy with the performance of the U.S.
Yes.
You probably know we now have we have not focus on the U.S. historically in CMBS Company announced are you guys at from a geographical perspective, one of the market we were going to start putting some.
Focus was.
He is the U.S. I'm happy to tell you that we've grown since then.
Since the beginning of last year at 50% level, including last quarter. So you know just last quarter, but we are we are relatively small footprint.
Hi, good margins and quite frankly, the right type of of mix of.
Sectors that we interested in and the.
Services, so from that perspective is.
It is one of the.
Bright spots states. They are you asking our multi sector the us essentially multi sector we have.
Much of that Telefonica business as you know for as multi sector is non telefonica.
We don't have modular not of Telefonica business there is so.
Multi sector, so very happy with the there was so they're not only on the growth that the quality under the direction of.
The business in the U.S.
Very clear thank you very much.
Thanks.
Our next question comes from steel knowing shareholder.
Hello, Thanks for taking my question.
First one relates to what you just said about refinancing has anything been done apart from the investor call. So whats the latest here on the program.
And then on your cash will save man.
Also with them and I wonder if that was due to discontinued business. So youre operating cash on hand from.
Thanks, 41.8 million as reported previously for 2019 to 26.5 million.
If you could shed some light on that please.
Okay I'm going to.
The first of all my colleagues, particularly for San shy, but let me answer the high level there.
Your first question.
We are.
We are planning and the refinancing we as I mentioned.
Briefly in my remarks, we were frankly.
Very satisfied to two to tell you that we're working with our new shareholders and more members.
How many hands for San shy working with them.
On that refinancing and we were quite a bond advance on the planning, but I'm going to let them too to tell you that is specifics. It seems they can tell the first hand and that will be telling you.
Hearsay.
So just sanjay.
Thank you guys.
I want our financing I will let Jay and talk about it is there our leader in our project from a refinancing, but the guys, though I have a pleasure to talk about it in there in a simple way to explain and what we have then last week was a greater lots to recover our cash flow.
And we have an opportunity.
It means we have some overuse from from the last two years, we can say on Wednesday, 18, and 29 team that we can recovers parts of it.
And.
In terms of working capital we approval.
Even that we will start some.
Programs and alike, we have arista during the procurement departments that allow us to renegotiate or contract ends with as we increase our lithium.
In terms of the so we we have airports to not only the overdue debt we have.
Of course, the El Paso last week.
We still ongoing add up to now I can tell neo watts wheel happening is we implement the finance shared service center Thats allow us to grow up to date add to give an idea we control today.
Our.
Accounts receivable and day by day I received the rewards we discussed at Enzo one, but the focus is exactly be upturn agents in our that we can add a financing our growth and where ideally QD.
Okay Czeisler August.
And just a complement a few on the on your question, we are already engaging with which banks and just for the benefit of all everybody here not only do.
We've got six questions on the webcast above the debt refinancing so it's a very hot topic.
As as.
As you know two will be the non deal road show in early July the idea was to collect feedback from new investors as we've been discussing.
Doing the best way friendly way disease, and negotiation and that there is no.
Well from our side to put their anybody against a wall. So it should be negotiation. Good terms are both companies shareholder.
And the bondholders.
We have engaged the banks ideally I will be ready for the next hour window, let's see how September comes.
Also labor day, but they did it will be ready for for the next window.
We have.
The questions, we have far more on the cost side and structure, what our intentions. So again it will depend on market conditions.
But the idea is that tied to it should be friendly negotiation for for both sides and good day and generates value for all the stakeholders of the company.
Ill.
Let me, let me take advantage there I have different sorry to do you have any follow up questions. So some of that.
Not on that topic, but perhaps on your guidance can you give an indication as you provided ranges as well if you see yourself at the top off the bottom of the guidance okay.
For the year and.
There is some potential for overshooting on the shooting.
Yes, we are clear, we now going to provide the.
For my guidance.
Hopefully you got the message from my remarks offices in March that we feel that the would feel confident that the worst of the of the prices behind us we feel very confident in terms of our ability to handle the index.
Whatever comes in the next few months of the crisis. We also see very good signs in the pipeline in sales in the market in general that and the recovery of volumes from customers, including Telefonica.
That makes us feel.
Optimistic about their second half of the year, but in the year that we'd all leaving is very very unique year, probably we saw precedents definitely mycareer personally.
Anybody's Courier is.
I think it will be imprudent to two to provide formal guidance beyond beyond what we've shared with you.
Alright.
Thank you.
Well I have I have a question here on the webcast.
This is addressed to those are there.
[music].
You guys see that you were able to continue declining and improve India. So.
You expect any continued improvement any big digits, how do you see via so going forward.
And then the DSO add the Benson.
Lastly, and bidding contracts everybody knows that it's not so easy and so to negotiate the DSO.
But in terms of multi sector business jets.
We improve all off now and we have some opportunities and our expectation is.
Turing use a bit more now it's not possible the saying that I can reduce 20 days something like that it's impossible, but our intention is to target about.
Dan 10 days. It means we have already achieved four days, we expanded suite Braemar and six days I think that he is a reasonable.
Level.
So to operate in terms of GDP, all only to accomplish.
We expect it's too to improve more than three part of days. So it means.
We can have.
Very very good position dems of working capital and we talk about between 25 to 30 million more only with these.
Just meant spuds Pascal mentioned and we don't know exactly how it's going to pandemic. Yes. We then everybody and the first the request has we have done is.
Paying later has you again.
That is why everybody not only for us, but our expectation is is so going forward. It means next year end. The one we there are a better we can have a better working capital more some days not locked the loss, but something.
And just to complement that just say is being.
Modest we've introduced the idea so policy for any annual contract of 60 days or less than any deviation from that requires process approval, which I know, it's very hard to to get.
Having said that in the short term.
We in the middle of a crisis in which some of our.
Customers have problems and and within reason, we tried to be good partners with.
With our partners with our customers partners et cetera. So.
We as you can see we've reduced via saw as well, but I think as the situation normalize.
I think we can probably continue improving but right now we try to we.
Reasonable with our partners and.
Dick customers.
Okay. There's a question here on the.
Webcast about.
Congratulations on the excellent quarter, given the circumstances in the strong fully we see for.
I was encouraged to see some share buy backs in the quarter, where you will you continue to pursue the buyback even liquidity position extremely low valuation.
Hi.
The question seems like okay.
This is a question how other stock buybacks in every in every call.
Look my my point of view has not changed from the beginning a thing a stock buyback is set you said.
It's a good instrumental to return.
Value to shareholders.
So we will continue using that especially having said that our number one priority. It's obviously in particularly during the crisis has been although it seems like it was itself it's behind that but it was another long ago. When you now we were were very.
Very prudent with liquidity, let's put it that way.
We feel much more comfortable now as we've described in terms of liquidity, but thats, obviously number one priority number two priority, which is the investments required to grow the company continue that.
Transformation plan.
And then obviously, we I mean, the company access and we are hired to provide returns to shareholders. So they they clearly the share buyback is an instrumental to.
So both dividends in most efficient instrument to return value to the shareholders. So we'll continue to use that but being very clear of data sets. The priority. One you know they continue on so the business entry to the growth of business.
The next one here.
Thank you for clarifying the payback on different Amy most investors would view this as a one off.
Event as such it has really encouraging to focus on the fixed cost base of the business going into Q1.
Given all these cost saves you have implemented where do you anticipate twentytwenty EBITDA will be relative to 2019.
Should we expect this 14% recurring or our run rate sorry, EBITDA that led to publish.
Going forward.
I'll, let jose give amplify on on the answer but the.
I would like to highlight that four as some of the effects of these one off costs TV will and certainly we expect that.
We don't have a pandemic of this magnitude in there in the near future.
Although you can never know you can never say never but.
Clearly, we would expect it to be one off costs, having said that.
Some of these one off costs.
And now are.
Good day will be significant investments in the let me explain what I mean by that.
For example, some of investments that we've made in work at home.
With deploying their permanent platform for they are working home with additional capabilities and functionality that in some cases, we don't have in the word from the centers that is going to be ongoing forward basis.
As part of our product mix so.
There is a silver lining you'd be willing there in the one off costs clearly certainly one of course are one often and they're dead set on things that are related to.
[music].
Very specifically too so.
Ill safety et cetera, and the sentence answer for that some like that their work at home or two investments. If we can and we believe that we'll be able to.
Out of the flexibility that the work at home will give us to get efficiencies on there.
Going forward basis, there will be a great upside.
We also believe that they are the work at home give us a lot of flexibility not just cost efficiencies better fit to meet the flexibility in terms of hiring.
Different skill sets from why their areas et cetera. We also can offers.
Additional capabilities to two customers. So if we expect in the long term too to give us a number of advantage is not just potential.
Cost savings. So so my really one off some other one offs are interesting can open interest in possibilities and efficiencies.
So you want to comment.
Yes, no varying ray increasingly Carlos.
The most important thing, whereas in store to maintain an equilibrium between growth and and costs. Yes that is what we want to do in terms of costs and when you talk about 80 million that we we.
In terms of opportunities, we have about 50 million in stroke rock costs.
Debts, we believe that will be ongoing it means that is like a rightsizing that we we have them.
Even knowing we increased the revenue ends.
Hi, Deleo then the relationship between both.
It's we can grow more or less 15% in terms of revenue and maintaining the same egg cost structure that we knew about strength as we.
<unk> costs I talk about our was once that is like names we wickets every month.
But we cannot scads without intelligentsia, because if we look for our capex in the last years and we compare against the peers.
We see that we when we can we can see that we have invested.
50% that they have in that yes, and yes that makes a difference in terms of digital in what do we want to do it was up new products into one.
And that is what you once a month is equally yes. The main thing year and that is a matter that we do everything is.
First of all implementing the margins that is very important maintain an increase of course and that is our expectation on Boeing.
But we cannot samples and here we have kept guidance we stayed the same.
Level in terms of products and all things remaining is exactly that is.
So increased profitability that is what we want.
And that is what we're building ongoing.
Okay.
We have.
Or questions on the on cash flow tried to summarize and bundle them for margins there.
Actions are related to.
How sustainable is this cash flow.
I see that are there are some one offs coming from the improve the DSO.
And from the improve the deep deal how much of this woo become cash burn in the second half if you have delayed some payments and what are the risks of of.
Receivables increased if youre clients get into financial trouble, how do you see.
This trend.
Yes.
So the first one.
Our our cash flow.
On going.
The strategy was more.
What we have dinis.
We want to guarantee the liquidity first the hall and that is why we work a lots to do recover.
In the meantime, reestablish improve deputy beginning in the in the second semester.
And we that we will have an equilibrium.
In terms of ongoing free cash flow our intention is.
To have between 30 to 40 million in.
In the next year.
This year, we have some some.
Commitments to to achieve by we're responsible some payments and taxes is not the loss.
I can telling about 25 million that we of course on but we are responding in a way that's a weekend 10 year with a very very carefully.
Yes that is what we have them and we extend that gets to the next year, but that is to gain some side.
So.
Recover the BTD has recovered LPTA, we are very very comfortable.
With with the cash flow as I mentioned, we implemented a lot of as Ross. We we are up to date of course, we have some ranges in terms of some clients.
In our games again I can give you some some insight on that we have maybe two three clients debts and they are not able to pay us and we talk about one in up to two three U.S. dollar.
We havent noticed that but we have already included in the bad debt.
But in fact, we are very very close to our clients in some of them. We can anticipate some revenue again.
We work very well on them and very close to two hour.
Clients and that is why we I can tell we're very comfortable with and we are very close.
To to our clients and the risk is is minimal if we compare our bad debt reserves again.
Our revenue, it's very very low you talk about 1%.
Nick it's very low.
Okay. Carlos a question for you on the.
New shareholders vendor relationships.
Basically to provide the overall view on how things are going well, how the dynamics have been.
And then how do you see there are there plans for the next two years given that they have a lock up around these three.
Yes.
Very good.
So far and very good and I had to tell you that sometimes when I get this question I think the implicit is implicit assumption.
Can be that we sort of met recently the reality of some of fast, particularly you a nice shape share she and I have.
Have been interacting with the shareholders for over a year so.
They did not unknown to us.
When we.
We communicated to all of you that the shareholder supported their study if strategy of the company and the management team. He was not as Don in one meeting with Hanover.
Over a year of of getting to know each other so there's no particular.
No new news for so some of tasks.
The board these has a new composition, so like any any collection of human beings.
I need to get to know each other and not everybody knows everybody in person now we know everybody on on video conference. So I'm looking forward to our first leaner and happy hour together so from that perspective.
Looking forward to two to that that upside, but from the perspective of the support of the shareholders working with us.
Fantastic, it's been there before they join officially and as I mentioned right now that the first the various Pacific very specific and very important for us.
Project that we working very closely shareholders isn't there refinancing some I'm very happy I'm very pleased.
Okay.
Two questions for the there on the cost savings.
First of all very impressive.
Cost savings.
How much.
Do you expect to or are there any specific one off costs.
Such a severance to deliver that 80 million cost savings you are seeing for.
20 to 21.
No what we only to be clear the the severance as that we have done yes. They are.
I will not include in our.
Cost savings program.
Basically we we have.
So on the missiles that we have done already dems and I speak about walk.
And we were the cost inside the work we do not.
Good.
On the site on the 80 million.
Program that is what we we have that and Thats. The reason is to be conservative on that because.
The walk if we increase the revenue in the future. Some of these costs for example.
People cost will come back because we need operator so.
That is why we.
We we was very very clear on that end, we separate the war programs.
In terms of.
Rightsizing in the company and we.
Start the project is zero based budgeting.
We.
Have done that pays one because the gabi coming sand, we anticipate some some work on that but in fact.
We work in the CBB for Twentytwenty one budget.
Of course, we expected to have some adjustments.
Like we have for example in finance area, we expect to extend to another areas but.
It will be not nothing so so be because almost off day opportunities, we have implemented and we expect it to implement the other.
Amounts that we that we have and we talk about 34 million in us dollars in age add to it means ongoing as hard when it went you analysts as I mentioned, we'll have about 50 million in terms of cost reductions, maybe we have some opportunities with some improvement once so.
Implementing the zero based budgeting, but I don't see it.
Hi.
Relevance on that at the big improvement for Us will be desktop revenues, there will still be growth operational.
Excellence with steel implementations on maybe we have some summary parts on that but in fact in terms of costs.
Ongoing it will be more or less 50 million.
Okay and.
Two additional questions actually here is a mix for carloadings is there on on cost savings but related to.
Carlos can you tell us about what's the level of a what happens you have around 60% now of your agents working from home what the expected level post crisis, and and then to do there how much you expect to save in cost such as levy in our utilities.
And other costs by implementing a permanent why our model.
So.
With 60% now we could increase that.
Right now, 60% gives us a very good mix between the people have at home and also low density in the centers.
And also given that that flexibility wondering long the densities reloading city of people, particularly on the day the current.
And then makes it very important to maintain as you now safe distances also we do a lot of monitoring of employees and and all kinds of health and safety measures. So it's a it's a good mix. We believe it's a good mix right now we could increase it is not.
Our that complicated for asks also some of our.
Some of our customers house.
A specific needs, particularly in the area, particularly in some of the financing finance.
Sector applications that security and other considerations required to do it from a secure location in the center and interestingly enough we found out that.
More cases than I would've thought our employees have requested actually two to two work from the center. So we are trying to balance all the needs of the business, our employees and and and our customers. So.
We feel it's it's a good mix right now going forward when thats going to depend on a couple of factors as you said earlier.
After the crisis, we I expect a number of sectors, particularly those customers that have started with us.
During this crisis.
I mentioned, having this lives.
80% of today of the business that we have taken on have been slowly slowly digital onboarding. When I mean is being completely at home completely online.
Completed each hotel.
Recruiting training Onboarding.
And deployment and management, so I expect that quite a number of the new customers that have started in these model will continue on that.
I expect that some of the customers that are now on a on how mall.
Our main return are partially sort of variety of reasons. We're one of one of them, but very importantly is the source of having to what is more comfortable.
Yes, so although it's difficult to predict they it's the level of will have in say at end of the pandemic whenever that is.
I would expect to be north of 20% and I expect that also that.
Percentage to increase overtime Thats a mid term.
Why because they are and how model provides a lot of value to all parties involves employees customers and Atlanta.
But those numbers, obviously, our might my Crystal ball.
It's very difficult to to see where the trend sorry, the trends easy to say the trend is to increase but it's very difficult to see what.
The specific number will be.
Our next year to year over year after.
What was there a bunch of the question Jay It was on the on the on the rewards cost savings. We expect from these permanent while hamada in terms of a leases and our utilities are fixed cost that are related to the sites.
Yes.
Jose comment on that but we are looking we have different model, saying, it's difficult to to predict exactly but we have already here Mike in number of.
Centers areas, where.
If we get additional flexibility, we could consolidate and and the number we trying to be very conservative the numbers in the low double digit.
A number of centers.
But is it'd be premature to now as I mentioned depends on the uptake that the services have post crisis and the regulatory environment that we get into in the different countries.
So that comes to pass it would be.
Very good very good upsides to our forecast and the numbers that we've been sharing with you.
Correct.
Yes only to accomplish.
We separate into.
The variable costs, we have already in the first model of the new wagon to can say we have.
Savings, we expect it's between two and 3% in terms of variable costs.
In terms of fixed costs like rentals for example.
If we can go as all centers, we will say between 55 and succeed.
That is what we can do.
But of course, we know we cannot do that we cannot was 100% off of the centers.
And when we cannot give updates for that because we still.
All using data centers.
Because the pandemic, who yes, so to use all of them and we have to respect instances and so one and say what we see is in the next 12 months, it's very hard to close.
Big Big amount offset but in fact is that.
Variable cost between two and 3% in the first step.
And the reason is as you know and in the center. We have for example, one computer we can operate with three agents more or less.
If we have their map on winning three desktop threed laptops and that is why.
We we think we have an equilibrium.
On that it's not.
People cutting and that's it and the variable as I get it depends a lot always going first.
And second which clients allow us to.
We're from Daniel mentioned, we have some claims.
Example, banks and it's also easing yes.
Log cost challenges.
To operate by 10 point, Brazil, Cyber security and what you have a lot of things that we still study on butts to resume is.
We know that is that a super model.
Can give us a better margin in future.
The question is timing.
We have two to steal a work on its very hands on in terms of pricing and so on and we expected that to give you more guidance on that next week.
Yes.
Okay, Carlos we have three questions about our telefonica.
The drop in revenues based on the programs that you decided to discontinue.
So do we continue expecting this to happen.
You mentioned.
Essentially renegotiating the MSC do you can you elaborate on any expected changes and the impact.
And finally, how do you see.
The relationship with Telefonica, assuming some news that revving, the better telefonica would be willing to divest from its Latin America business.
Well, let me start with them with the last first adolescents in relation with Telefonica is very good and we expected to two to continue to be very good.
The in terms of the volumes.
As you mentioned.
I mentioned, a new reflected back there.
We chose to two this continues on businesses last year.
I don't see US I also mentioned earlier, Alan Tse anything significant in the future I think we have.
We have very good understanding goals.
Telefonica or what.
Our perspective on the business and as all of our client in Telefonica.
So from that perspective, they conversation with handily telefonica after the they as we both or everybody is coming out of there. There was part of the crisis is on on additional.
Lines of business has grown to additional lines of business.
With Telefonica.
Too early to.
To disclose anything or too.
To see where that is going to to go and also too early to give you any specifics about any potential extension of them to say other than we are discussing those.
Possibilities, but quite frankly, those are more the reflection of a relationship that by the way.
We are.
We continue to two to grow as a percentage of.
Telefonica share wallet today, we are higher than that a couple of years ago.
Which is a reflection of what I said as beginning.
Very good relationships that my expectation is that will last way beyond the EMEA.
Any MSL any contract I fully believe that relationship is based.
Maybe reflected in a contract but is based on providing value to your partners and Thats, where we strive to do with every customer and obviously with telefonica being one of our most important customers.
Okay, and I have a final question here, which I'll take my cell phone the refinancing.
Asking if our goal is.
And in the maturity or go you for a cheaper cost.
And again what structure or are you are you looking as.
We have not decided yet what is the structure.
What what is the right.
Way to go again, it will depend a lot on market conditions, where I can tell you is that.
The main objective at this point is to extend the maturity.
It's a very important to us.
So we can.
Gain side.
In order to continue improving our capital structure.
And the final go is always.
Aimia to unlocking value for shareholders.
Obviously, there is a cost two to roll to refinance at that but in no way. The company will go into into increasing at a lot the financial expenses. The again it should be something that.
Should add value or the bondholders company under shareholders. So it has to be done in a better way between extending the maturity at what cost.
We have no further questions on the webcast I'll turn back to the operator to see if we have additional questions on the line.
Our any further questions.
On the line.
I am assuming no so.
Carlos I'll turn back to you for your.
Final remarks.
Only and to think everyone. This has been.
Quite there for the first half of the year for all of us not only for us not dental but for everyone.
We are very happy in there.
The trajectory and as I mentioned to all of you we feel at the worst is behind us, but clearly we still have a lot.
And at the work ahead of us.
I want to thank you guys for be here today I want to wish everyone. The best and I want to take the opportunity to same called my whole.
At entertain Meanwhile has been pulling out.
Very difficult.
Very typical set of circumstances in the country, where we operate a.
Hey, Jim Tredegar results, keeping our employees save the business operating and continuing the transformation of Atlanta. So thank you to the whole team and thinking to use to you guys, ladies and gentleman for being here today and your very thoughtful questions. Thanks a lot.
Thank you all but.
Hi.
That concludes.
Overall, we are comfortable okay. Thank you very much higher but also have a good call on Oahu.
Scott.
No.
[music].