Q4 2021 Atento SA Earnings Call
Okay.
Good morning, and welcome to <unk> 2021, fourth quarter and full year results conference call.
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I would now like to turn the conference over to Mr. Fernand then waiver in Investor Relations director for attention. Please go ahead.
Thank you operator, and welcome everyone to our fiscal fourth quarter 2021 earnings call to discuss <unk> financial and operating results.
Here with us for today's call are Carlos Lopez, Abadia, I tend to Chief Executive Officer, and close yesterday, though chief financial Officer.
Following their review of a turn towards financial and operating results. We will open the call for your questions.
Before proceeding. Please note that certain comments made in this call will contain financial information that has been presented.
Third 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.
<unk> results may differ materially from those in the forward looking statements.
As a result of various factors, we encourage you to review our publicly available disclosure documents.
Filled with the relevant securities regulators and we invite you to read the complete disclosure included here in the second slide of our earnings call presentation.
Our public filings and earnings presentation can be found at <unk>.
Investors tend to the com.
Please be advised that unless noted otherwise all growth rates are on year over year on constant currency basis.
I will now turn the call over to Carlos.
Thank you, Matt and good morning, ladies and gentlemen.
I want to discuss with you the results of 2021 hour perspective for 2022.
Our 'twenty to 'twenty one results show continued improvement of our recurring operations when excluding the one off several events that impacted our results significantly and beyond our initial estimates.
As a result, we have made significant investments in our cyber security partner.
Both from a technology and operational perspective, and we expect we're assuming 2020 to be improvements to our business and results.
The continued improvement showed in the first three quarters and in the fourth quarter on a recurring basis gave us the confidence that we're on the right track to continue to improve.
On a recurring basis, we have grown our revenue was 10.9% and EBITDA by 23, 7%, while expanding operations in key markets and sectors with a strong sales growth and record customer satisfaction.
When these sales by 20% with the vast majority of those sales coming from me strategic high growth sectors, such as technology Fin Tech E Commerce health care.
While expanding relationships with traditional clients.
A very important example of the lotteries Telefonica, we completed the extension of the MSA to corporate the totality of our geographic footprint with them.
It is my belief that as important as Emma says are we need to earn the business of our clients every single day.
In that spirit, we have expanded our relationship with Telefonica in Spain with 800 workstation with a contract that extends beyond the Emerson.
We continue to build our U S business, taking the high currency share of our EBITDA to 26%.
What sort of growth and margin expansion in both markets. The U S has grown 34%, reaching a 16, 6% EBITDA margin, while EMEA has reached at 14.2% EBITDA margin.
We have opened two new centers in the U S. One of them co branded with our customer Gamestop.
These are important results for us not only because I've been hitting the attractiveness of the markets, but also because it allows us to slowly but surely produce our foreign exchange exposure.
Well the topical effects.
I need to point out that we're working with our bankers to address the financial costs of our foreign exchange exposure.
We expect some news from us on this one.
We continue to drive efficiencies across our organization, while we believe in the importance of our regional organization, which enables us to stay close to our clients. We continue to drive implementation of shared service centers and global operating models.
We expect to start delivering these year significant efficiencies and lowering our cost structure, while providing better more consistent service quality to our customers.
We continue to innovate and expand our portfolio of next generation solutions.
Winning profession partnerships not only as technology sources, but also as a go to market partners.
We have started a new partner.
I'm sorry.
Partner Channel organization in the U S that we expect to materially contribute to our growth in 2022 growing eat out to the rest of it was in the second half of the year.
I would be remiss, if I do not comment on our server plans given our recent experience.
Making virtual out of necessity, we have modified our cyber strategy, adding the lessons learned it includes three components prevention.
And of course, particularly in the area of recovery, we are establishing joint protocols with our customers to accelerate service restoration in the event of future cyber attacks.
This is something we have learned to be a paramount importance to others the seller.
Last but not least we keep on delivering on our ESG commitments.
We have reduced scope one emissions by 16% continued to be a leader in diversity and inclusion have achieved a new record in customer M. P. S. While also improving employee satisfaction.
Finally, our outlook for 2022 we see some of the impacts from the cyber attack affecting us in Q1 results, but we also see an acceleration of resorts and a resumption of our transformation predictably thereafter, thus improving on our 2021 recorded EBITDA and revenue numbers.
You say it will now review our results with you in mortgage sale and then we'll take your questions. Thank you.
Thank you Carlos and good day everyone.
I will begin with a brief overview of our 2021 financial results on slide 14.
We want to make clear that the underlying performance of our business remains strong.
And that's our strategy.
Any friction.
So I will focus on the regarding numbers.
Which excluded Ford's partner impact of this hybrid attack that resulted in approximately 35 million of lost rent.
These are the 7 million of costs related to the attacks hats.
Now 42 million impact on ours.
Please turn to slide 14.
Guidance revenue grew nearly 8% to $1 5 billion at year end.
Regarding heavy DDA, increasing a strong 24%.
Yes to all of our improving operating leverage.
Also in line with the guidance was recurring margin of nearly 13%.
Recurring operating cash flow was $21 1 billion.
I will breakdown.
Leslie.
On these slides.
Our reported results led to negative equity.
Yes.
However.
I wanted to note that these coffee of 85 million of noncash items.
I will explain later in my presentation.
Slide 15 shows the cyber attacks impact on revenue <unk> Haswell.
Operating cash flow.
Lots of revenue.
And of course people from the attacks are fortunate to have ETP banks.
We think of recurring EBITDA and 192 million.
Its impact on <unk>.
Operating cash flow was 25 million or negative <unk> 4 million for 2020.
'twenty one.
On a recurring basis.
Cash flow was positive $21 1 billion as shown on the slide.
The bottom half of slide 16.
We gave a geographic breakdown of our record annual results.
Yeah.
Okay.
In the top left is light.
Funny care revenue drove more of our top line than in the past.
Net loss due to.
23% growth in Telefonica revenue in Brazil.
Hence we are capturing a greater share of wallet and we deliver it more high Def.
Next generation services to these key guidance.
At the same time.
The multi sector sales slow it's two 1% in vision Hasnt.
It has to be maintained discipline with contracts we are signing.
We continue to emphasize margin module.
It is reflected in Brazil, EBITDA, which increased 26% in 2021.
While the margin expanded 240 basis points to 15, 4%.
The Americas multi sector business drove more of our topline consistence with our strategy.
Sales in this category grew 14%.
Telefonica revenue increases of 7%.
In the Americas increased at five 5%.
We the margin up slightly to nine 5%.
The magazine last month's rate by increases very equal operating costs due to higher infusion rates, mainly in Argentina and Brazil.
For the year EMEA.
They ultimately contributed to our performance.
EBITDA increasing 73%.
And the margin expanded 410.
10 basis points to 10.6% a level, we expect to sustain going forward.
Slide 17 makes clear the impact of cyber attacks on our reported results for 2021.
As you can see Brazil revenue was flat.
With our multi sector business being the highest.
We paid down 3%.
Now the funny good things on the 100 million rules, 10% for the year.
The lost revenue in Brazil cockpit with the costs we incurred.
To deal with the timing, resulting in a 31% decrease in EBITDA.
In Brazil margins contracted 410 basis points to just under 9%.
18, a more focus and objective view of all our recurring performance in Brazil in the fourth quarter with.
With the cyber attack liquidity.
Brazil revenue grew 2% with Telefonica sales, increasing 11, 5%.
Regarding EBITDA, increasing eight 4% with Brazil margin expanding.
100 basis points to 19, 6%.
Slide 19.
Cash our reported results shows the impact of the cyber attacks yet on our bridge.
Fourth quarter sales decreased 22% in Brazil, with multi sector and done before you get revenue decreased 17% and 39% respectively.
The lost revenue as well.
With costs led to a 148% decrease in Brazil.
And as we age maintenance point, what direction you need as much.
Revenue increased seven 5% right in the margin contracted 100 basis points.
Due to the higher absent these rates did not understand you.
EMEA sales.
Great.
90% in the quarter.
Although the margin expanded a strong too.
Basis points, 13% on cost cutting and improvements in margins.
On Slide 20, we also show 2021 free cash flow on a recurring basis, which was.
10 five.
In addition to the 25 million impact of the cyber attack.
Other one offs last year.
This included the 20 million in payroll related taxes that had been pushed bonds in the breeder ear.
But they need relief programs.
Well, it's half the cost.
That we encourage we and refinancing our debt in early 2021.
This included 10 million in insurance costs, and an 11 million premium to bundle. This.
Slide 21, we reached EBITDA free cash flow to be good sectors being changes in working capital.
42 3 million.
Mainly the type of costs and the tax payments.
Capex.
51 million and the net financial expenses of 46.
Capex was much higher in 2021 task, we have closed one cash capex into every year to year due to defense.
The increase also reflects that Microsoft licenses that we Britons tweaks as leases from an accounting perspective.
Please turn to slides 22.
Now, let's look at leverage on a recurring pictures.
It was two nine times 78 up slightly both sequentially and year over year.
On the basis leverage models within our guidance range of two five to three times.
On a reported basis it was three nine times.
We finished the year with us.
Healthy cash position of 129 million, which includes 79 million in existing revolvers.
We have gone to <unk>.
<unk>.
As you can see on the bottom of the slides our maturity profile is a comfortable.
Following the refinancing of the bonds next year Leslie on deck.
As we can continue to generate more hard currency revenues.
We are building in our nature Ross hedged against our dollar denominated debt.
On Slide 23, we believe 2020 in 2021 equity.
Items, where the biggest equity factor, which we have broken down in the box on the slide.
Of the 134 million in financial items 21 million was one off times.
And related to our debt refinancing.
71 million consists of a recurring annual financial costs and important dominion in accounting for changes in the fair value of derivatives.
As you can see in the breach downward household 43 meeting of balance sheet and P&L condition.
To summarize yes.
85 million of noncash items that affected our 2021 equity.
That's helpful and just my review of our results.
We are now happy to take your questions operator, please open the call.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone Sop, if youre using a speakerphone. Please pick up your handset before pressing the keys.
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At this time, we will pause momentarily to assemble our roster.
I would like to turn the call over to Mr. Hernan, then waiver and so the questions received via webcast.
Thank you operator.
So we have a question from our webcast.
First can you reconcile the recurring EBITDA to the actual EBITDA from the quarter and also provide some more detail on the expected residual impacts that are driving the reduction in guidance for 2022.
Secondly, can you add any detail to recent press reports that youll sponsors are considering selling the company. Thank you.
Okay, I am I always say, hey, multipart questions, except them to forget.
The second pilot.
First wanted to shake it was reconcile three parts reconcile there.
EBITDA recorded very simple the only thing we've done in recurring EBITDA, we've taken out the impact of this of the cyber because he is such a big.
Impact it makes the comparison of numbers are very difficult.
As is our habit to do everything else the good the bad the angle definitely it's it's it's all in.
You know things that come to mind things like that yeah.
Lingering effects during 2001 of that well there and that make that you know had a in the order of 30 million 35 million in debt in there that we don't consider those so we don't separate those as one offs. So if you think about it just.
The only difference between whatnot, sorry, recurring and and and the actual EBITDA as it is the cyber impact the second part.
I think it was can you was there.
The Q1.
Again reconcile between recurring.
I that I got that.
So for.
Fundamentally in that Q1 for a couple of year with falling asleep Martin as after they.
After we realize how are how we are underestimated the impact of it of the cyber at the beginning we became a microbe culture on our forecast going forward.
We don't think that's going to be any significant long lasting effects, but we do expect some in Q1 potentially keep to fundamentally Q1, which is a.
We expect some or at least with forecasting that some customers that have very high.
And now 80, 9100% in a particular line of business.
They would naturally.
Diversify that with other providers that may or may not happen, but we are forecasting that and each included in these factor in our guidance.
We do have some extraordinary expenses in Q1.
Specifically around all the things that we're doing on fiber so we.
We got onto the improvement immediately so a lot of those impacts happen during Q4.
And as Phil if you get one I don't think we have much of those in Q2 other than what we can see their business as usual, but again all these factor.
In the guidance Q1 O. So we are we have had.
Impact of Omicron Ah you know, obviously a pandemic.
There's always a bad thing, but on the good on the good side has been relatively low impact in terms of a serious cases are much less than it used to be and from a financial perspective.
That the bulk of the impact was in January decreasing rapidly in February .
By the end of March with back to normal. So we expect that to be you know Jess just a blip.
In Q1.
We don't expect major impacts us the rest of the year.
And I would say there was a third part of the question.
I forgot the third part.
So Carlos could you expand a little bit on the current Bloomberg article.
I don't know, which one the references but I think I remember that the first part of the question.
Part of the question was about the.
Acquisition M&A.
Hey, guys. So they they are our policy is not to comment on market rumors.
We're public.
Company.
Of course, it's our obligation to look at different opportunities to maximize the value of the of the company, but it's our policy not to comment on whether.
Whether we're doing or not doing something we're not going to comment on that when we have something to a release or come into the market, we will do that.
Thank you.
You have another question from our webcast can you. Please give us more color about the impact of the cyber attack and why the impact should be much bigger than initially expected.
Very well.
So.
One thing as I mentioned in my remarks, there are a number of lessons learned I always believe that we're.
We're going to learn.
Something it's an investment if not it's absolute if an absolute loss.
There's a number of things that we learn.
One on the positive I think we took the we took the position I took the position that we wanted to be 100% transparent with our customers on how our clients and and in food.
Safety security and well being first.
So we were very transparent from day, one as you know you read the same articles in the press that I, though I mean, they seem to see but in general that is not necessarily there.
The common practice.
Oh, we have followed that and we'll continue to follow that.
As it turned out this dimension.
In previous calls.
The number of servers affected were very small.
Very very small and we were confident of that within hours.
One of the things that I learned on things, we learn is that although technically I think could be sound and the technology.
As I as anticipated.
There is a lot.
It'll happen when you work with.
Inks and now and.
Now one of the things I learned and companies have different levels of.
Structure protocols to deal with these situations so although some companies and we were working our way back up running with weight.
And in a couple of days.
Yeah. The vast majority of the other companies say they wanted to persuade themselves that things were satisfactory from that.
Glass technology perspective now.
Some companies have some but it was thought through protocols.
Did not and we got into a in some cases into a M XP.
Exploratory.
We can show that in in the return to service and that return to volumes very importantly, because you could turn up in our service, but in our volumes come through.
I had a completely different place that we can fix.
Debate it.
On this.
The conversations that we have been very young.
We asked for.
Fundamentally that was that.
Yeah.
Yeah.
The most important point and most importantly.
Part of it.
Part of that as we are updating we have updated our soccer.
Policy.
Dan.
Right.
That's probably the area, we get a kind of a call here hope hopefully it's not for everybody else.
We have one very important part of we have included is is working with our customers on the protocols to allow us to very rapidly and I'll get back to service. When we are as we were.
Certain that there was no no.
Sticking with the list.
Thank you <unk>. So now we'll open the microphone for Vincent Colicchio from Barrington Research.
Vincent.
Yes.
Good morning Carlos.
Yeah.
The what portion of the revenue that was lost in Q4 are you anticipating will return.
We know some mention.
I think my previous question the answered my first question.
Now we know.
You know, it's a pretty good certainty what half return.
We have built into into the Q1 Q2, and the full year, some anticipation that some volume reduction and in those cases, where we we see customers, having a very high dependence on us but.
But in terms of the volume.
Returning the vast majority of it has as we've done back to normal.
So so if I'm understanding you correctly for Q1 in Brazil.
Most of the volume will have returned.
As well.
Should be modeled into our expectations.
It has there's some not completely but the vast majority hash Richard and we've made allowance also for some potential down the road a impact again as I said, the indications where you know gasoline have a high dependency on as we try and we'd rather be.
On a recent experience we would rather be.
In a prudent and in in that.
And could.
Could you give us an update on your your your well your strategies around the world in the dressing wage inflation.
I know in Brazil, a lot of your contracts.
Have a.
Can be adjusted.
For wage inflation I assume in the Americas as well, but.
Just give us an update overall.
Sure.
They are.
Yeah.
Higher inflation is this is not a good thing for us, particularly in Latin America U S U.
U S Europe .
We have an unusual high wage inflation, we we have a so far a good ability to pass through that Oh breakfast.
Latin America as you know the market is a bit more complicated although we do have the ability in our contracts to to two.
To pass through the.
Inflation increase that happens through the year. So typically that's one of the reasons, we have very high seasonality Q1, being our worst quarter and Q4 being significantly better than the other so you can see there they are very clear trends through the year.
So.
We may now part of the reason that in are we.
Where.
Our cautious about the guidance, we're giving you for.
The first half of the year is that we have higher impact of inflation, although we will pass through it.
For the year. The first are the first few months, where we are mostly impacted by inflation.
So other than the traditional markets that says.
<unk> Brasil.
Argentina of course.
The high inflation in the places where typically we don't have it is U S and in Europe , We don't anticipate and a big impact on that.
And the strong growth in the U S market is that.
Largely from existing.
Clients or is it a combination of existing and new clients.
It's a combination I'm happy to tell you that.
Now if it's a market. We just have started developing a last couple of years.
I'm happy to tell you that customer that we have been acquiring are growing very fast with us.
So we have a good component of a tailwind of all the customers in the REIT industry sent the right customers that you know increase their volumes are with us, but also we continue to be very aggressive in terms of acquiring new customers, who have a very active pipeline and we expect to continue to grow both from the crisp.
Paying customers and the new customers that that we have.
Okay. Thank you for answering my questions.
Thank you.
Oh, we have a question from our webcast.
Could you expand on your financial cost.
Your current cost of capital.
Yeah, Let me, let can make a comment and I'll.
I'll pass it onto a cassette to give you a much better answer.
We are.
In terms of our financing because we had a lot of one off costs associated with that with a resource of the won but also some of the instruments that we have put in place with.
Marathon has in at the beginning of last year, and particularly as we were putting these things in place in December 'twenty, 'twenty or or late 'twenty 'twenty. The war has changed quite a bit you know from from late 2020, then to today. So some of the things and including interest rate foreign exchange position et cetera have changed.
And what made sense at that time, it's much less sense right now and we are working to to restructure all of that so but Jose house.
Much better answer for you.
Thank you guys.
In fact, our financial costs I can I can give you a.
It very quick.
I'm sorry.
Information Novartis and what changes was first these risk rates from the bonds the previous bond and the new one that increased our.
Our interests.
And our cost of course.
That's worth a year 40 million yes.
All waste streams into high end.
In August and the hedge in the first year.
Gave us a positive effect in terms of cash not an MTM.
Market to market, but in terms of cash positive effect that we have around 6 million.
From the existence of a hole that we used during the year.
Extra costs, one off costs that affect differential.
He's basically.
The issuance of the new bonds the cautious we obviously wrong.
10 million plus the premium that we have paid for the bondholders around 11.
Thank you.
We have another question from our webcast.
When do you expect to finalize the Telefonica MSA and what is your level of confidence in bringing it to a successful conclusion.
I think just to repeat on my prepared remarks, we did complete the MSA.
The city of perhaps.
Unless familiar with the agreement we had.
Extended the Brazil piece, and the Spain piece and.
And we have concluded that the rest of the footprint before the end of the year. So now that we have extended the whole footprint, but more important than the than the MSA.
For us as I mentioned in my remarks, we I I do tell everyone. In my in my team that emphasis are great, but at the end of the day, we have to earn the business that we have with every customer every day and as proof of that and now I can tell you that they are our most important.
Taxed with Telefonica extend way beyond the MSA. So the the most important contracts in Brazil, and now in Spain. They extend to the end of a clinical in five so so and that's again.
Required by their by the MSA, but you know, it's something that I feel very proud of because that's the business that we earn and the confidence that our customers are.
Placements.
Thank you and we do have a question.
Our phone question next is from Ryan O'hagan with E. P. Please go ahead.
Thanks for taking the question on the presentation Super helpful. I know.
You guys have spent quite a bit of time on cyber attack already I just had a couple of follow ups.
Can you qualify if theres been any kind of impact on the goodwill and customer relationship spaced out what's happened I know you guys have some pretty big contracts and just wondering with the downtime and some of the comments you made about the dependence with you guys has that been impacted or could you give us maybe any more color on that and how you expect that to kind of drip through earnings this year.
And one thing that was mentioned I think on the streets you call was the insurance cover for some of the kind of costs associated with the cyber attack. It would be helpful. If you could kind of expand on that.
Finally.
The revenue guidance that you've given for the year I presume that that's on the actual number for FY 'twenty, one rather than the kind of expected number X type of stock.
Okay again.
Somebody who's going to have to remind me the different parts, let me start with the last first no.
The guidance is based on their recurring meaning you know ex cyber attack. It is but we are forecasting two to do better in 'twenty to 'twenty two than we would have gone into 'twenty, one without the cyber attack.
The number will be much higher in terms of increases what have you.
Ex <unk>.
If we we gave you that the numbers based on the actual so my objective my ambition is always still do better and whenever we have a bump on the road whether it is inside.
Cyber attack or a pandemic is to get back to the.
Overall multiyear trend that this company is demonstrated and we will continue to they want to trade that we did so so that was a third part you.
You asked the first part was something about they are they are first of all just on.
Goodwill and they're real.
<unk> chips.
Yeah.
Yeah look you know.
If I got it backwards should listen I. This is never a.
Great situation for us or our customers. So let me let me start without having said that in terms of our long term relationship with our with customers and the way I believe we have handled I think is it's demonstrating already and will continue to demonstrate that it is a positive not everyone is complete transpiring with these things.
I think you'll find that and I'm not talking about our industry I'm talking in general.
We can do is just read the paper if most of the time people, who aren't having a technical difficulty.
I will get back to you in whatever in a few hours and they may or may not be this brochure on on on the on the attack depending on the circumstances, we can read that constantly on the paper.
We took a different tack, we took the tack that.
It's it's our relationship with our customers there will be none of our customers our brand and the long term trust on where we are here to to help them protect them and that we can be a partner that is completely explained with them is of Paramount importance now that may have a cost I said it in the short term.
But I believe that in terms of the relationship the brand what we stand for is going to be a positive in the long term and I'm not talking about a long term you know 10 years from now, but we'd already seen it with many customers, but having said that let me be clear. This is not as not being a positive event for us or for our customers that may be.
That's crystal clear on that but in terms of the impact with the relationship.
I'm already seeing it in and will continue to be a M.
Expect it to be.
A very important long term positive.
Got it.
Hello.
The last question I had was just around the.
The insurance cover for the lost earnings is that something you guys expect to be a meaningful contributor this year.
I expect to collect it for sure.
M M.
And we actually the initially we thought it was possible to get it done in Q4.
Washington, and part of the reason is is.
Everybody wants that.
We ran a complicated business with you know to take a look at losses in all that we have to take a look at the volume seem voices et cetera, and and the accessories wanted to take a look at the results with the with the books.
So so that's in the works I expect too.
I don't know I don't anticipate.
A problem on that front.
So it will happen.
And in the in the course of the year.
I'm, sorry could you could you confirm what kind of quantum you were talking about there how much cash that's kind of equate it to the balance sheet or kind of loss of earnings.
We have a $11 million.
Self insurance that I would expect to collect.
Got it helpful. That's Super helpful and I had one last question I know you've kind of addressed it already but but obviously you go to the.
Minority investors I've made a couple of submissions to the SEC.
They were the river in Bloomberg about appointing bankers could you could you comment on the fact, whether or not it's true that the bankers had been appointed for any purpose be that run a sales process or look at further efficiency programs.
I I I.
I'll try to answer that question that.
They've made let me let me do it again and it is the same as before which is.
We don't comment on on on Umbro Morse.
Not an hour as a matter of policy.
And as I said earlier.
As a public company with a responsible company. We you know we look at any opportunity in it.
And I used the opportunity to work to increase shareholder value and we do that as a matter of course, we do that.
Part of what the business would run and we don't comment on what we're doing at any particular time are regarding to that so when we have something to disclose we'll do that we're not doing that at this time.
Got it now completely understood. Thanks, so much and I appreciate you taking my questions.
Thank you.
Thank you and the next question will be from Beltran Pellens Walo with D. L. T V. Please go ahead.
Hello, Good morning.
This is bill.
A couple of questions.
First of all regarding working capital.
In 2021 of course, it was a problem with the cyber attack.
I don't know why let's say the draining cash from working capital. This is <unk>.
Secondly, if you could give us more and more product of course, when thinking about wage inflation.
The first half.
If you could give us let's say more color on what is your ambition of mark to market.
Before it was 14% to 15%, but it was more is there still more ambitious than let's say, 15% to 60% and maybe we'll get a degree.
Regarding the guidance for 2022.
If you could give us a free cash flow what is the free cash flow guidance because at the end of the day, it's very important to change the.
The weak numbers I'm 2021 it's very good to see what is your ambition and then regardless if you get let's say, one 6 billion currency Taco Bell margins. It seems very very closely.
Ben.
Two last questions. Okay. That's good give us more detail and then regarding the results for 2020. It seems up you changed a couple of things in that man Americans from elimination because of it.
Basically they.
They are not the same figures as you reported in 2020, when she that'd be that margin.
If you could give us give me more detail in.
It looks like things.
Okay, well first of all in.
It's great to hear your voice again.
And you have a ton of questions right. There I don't even remember them can I make a suggestion.
This is something you want me to others right now I'm happy to do that can we set up.
Session with you to go through all your financial questions one by one.
Okay got it.
Thank you thank.
Thank you for your answer and thank you, but maybe just maybe add to.
It's good.
The free cash flow generation guidance for 2020 do of course is in place of an unopposed.
It's very very good to hear what this ambition on free cash flow generation in 2022, and then we got the mortgage it seems about 40% to 50% was going to be active but suddenly you take 100 basis points, so what that.
Reflecting that at some point, you will get to that target or even higher.
No cultural ports on the management markets.
Yes, let me tackle that Oh, Stuart and unless it up at a proper session. You said and I will be more than happy to particularly your assertion is that lot of your questions. I think I am more it just says department will be very happy to.
That in detail so on those two.
Particularly let me start with that.
The margin targets. We you know we continue to to our work and we continue to be committed to the plan that we discussed with you guys two years ago.
As you know we had a dip in in in.
'twenty 'twenty because of the pandemic, we had a problem with the with the cyber will have other problems through our lifetime.
It's a complicated market, but we are committed to to come back in and continue the long term trend. So let me be very clear.
Expectations to get that I think.
The 20th anyone has put us behind a few months I would expect to get back to the to the targets that we discussed with you three years ago.
Probably in the in the in the first half of the next Oh.
I don't expect more than you know a few months of Oh.
My.
In fact with that timeline my my ambition is to exit two.
2022 with a very strong exit rate in now demonstrated that yes, you know we got.
We got a problem with our cyber and Q4 are authentic only one but we are.
Strong and continue to to showing that.
That trend beyond there.
But that you are remember ambien.
Okay, Okay got it.
Thank you and thank you for all the theme on platelet production.
Thank you.
We have a question from our webcast.
Congress what is the reasonable expectation for the percentage of hard currency EBITDA going forward.
We're increasing our hard currency EBITDA in 2020 , one was 26% which might have been helped by the decline in Brazil, EBITDA owning to the cyber attack could you expand there be.
Sure we continue to grow the percentage of our hard currency is part of our strategy and policy.
We are as I mentioned number of times you guys said that the I find that the U S market European market is not only theyre very attractive.
And he handedly, but but also it.
It helps it helps this company one of the challenges that we have which is the FX exposure.
I'm fluctuation. So we continue to we will continue as a target to increase our outwear.
Hard currency or something.
What do we expect for 2022.
Expect something in the order of 30%. So we expect to continue growing the them.
Hum they the percentage the fraction off of high currency in our cash and EBITDA.
Thank you Carlos So we have one more question from our webcast.
Are they a result of ongoing negotiation with clients to adjust contract prices to inflation.
Are they mostly completed could there still be pressure on guided margins for 'twenty two coming from this front.
And that frankly is currently tractable, so that all the things Unfortunately.
The environment that we work.
That's part of what we do.
So it's our costs from that perspective, we're gonna be higher this year, because the inflation is higher.
But the the impact is fundamentally a the first half.
The the way it works is every.
Every contract that we have signed in the last.
A few years and I've seen by now the majority if not the totality of our context.
The inflation a clause adjustment clauses.
It tends to happen is that that the wage inflation happens in in in the.
Beginning of the year in many countries. This is driven by our government or an all unions and it happens immediately and then the adjustment on the prices of the existing contracts.
It happens through the year.
We achieved very high rates of.
Of a pass through I think a week and we expect to continue to be at the higher high end, 80% plus for example.
So it's something we do every year and each factor in the higher the higher inflation.
Inflation. This year is factor in that they are the guidance that we've given you.
Thank you Carlos Thank you for your time and this concludes our call operator please.
You can finalize it.
Thank you Sir the conference has now concluded we thank you all for attending today's presentation. You may now disconnect. Your phones at this time take care.
Okay.
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