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Edited Transcript of ATTO earnings conference call or presentation 8-May-20 2:00pm GMT

Q1 2020 Atento SA Earnings Call

Grand Duchy Of Luxembourg May 9, 2020 (Thomson StreetEvents) -- Edited Transcript of Atento SA earnings conference call or presentation Friday, May 8, 2020 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Carlos López-Abadía

Atento S.A. - CEO & Director

* José Antonio de Souza Azevedo

Atento S.A. - CFO

* Shay Chor

Atento S.A. - IR Director & Corporate Treasurer

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Conference Call Participants

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* Beltran Palazuelo Barroso

SANTALUCÍA Gestión S.G.I.I.C., S.A. - Equity Analyst & Equity Portfolio Manager

* Beltrán Palazuelo

* Susana Salaru

Itaú Corretora de Valores S.A., Research Division - Sector Head, Telecommunications, Media & Technology

* Vincent Alexander Colicchio

Barrington Research Associates, Inc., Research Division - MD

* Vitor Tomita

Goldman Sachs Group Inc., Research Division - Associate

* Vitor Tomita

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to Atento's First Quarter 2020 Results Conference Call. My name is Gerald, and I'll be your operator. (Operator Instructions)

As a reminder, today's call is being recorded. Now I'd like to turn the call over to Mr. Shay Chor, Investor Relations. Please go ahead.

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Shay Chor, Atento S.A. - IR Director & Corporate Treasurer [2]

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Thank you, operator, and welcome, everyone, to our Fiscal First Quarter 2020 Earnings Conference Call. Here with us for today's call are Carlos López-Abadía, Atento's Chief Executive Officer; and José Azevedo, Atento's CFO. Following a review of Atento's financial and operating results, we will open the call for your questions.

Please turn to the next slide. 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. Certain 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 and (inaudible) that can be found at investors.atento.com.

Please note that unless otherwise noted, all growth rates are on a year-over-year and constant currency basis.

I will now turn the call over to Carlos.

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Carlos López-Abadía, Atento S.A. - CEO & Director [3]

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Thank you, Shay, and thank you, ladies and gentlemen for being with us today. I would like to take a few minutes to highlight the major business events at Atento in Q1. First, I would like to confirm to you that despite the worst factors around us, our transformation plan continues to gain traction. We are achieving strong growth in Multisector, with continued improvement in the sales quality. We're also beginning to see the results of the operational improvements that we launched last year. We were substantially ahead of plan during January and February, and it is thanks to this progress that we were able to respond rapidly to the crisis.

We are responding effectively to the crisis that is still developing in many of our markets. We have deployed more than 60,000 employees to work-at-home for maintaining health and safety standards in our centers, superior to all the demands of the relevant regulatory bodies. We have naturally prioritized maintaining a strong cash position through the crisis to ensure the viability of our operations. I'm happy to assure you that we have developed and are maintaining a cash position and playing up through rest of the crisis.

We have resolved an uncertainty regarding the position of our majority shareholders with (inaudible) MRI as independent investors in Atento of 3 world-class funds. Finally, despite the still unfolding humanitarian crisis and the uncertainty of the potential subsequent economic crisis, we are convinced for the strong future for our industry and our company.

Let me touch on each one of these points. Despite the impact of the COVID-19 crisis, we delivered significant year-on-year Multisector growth and EBITDA growth. What we have had in the month of March, an important impact in our ability to deliver services, and we have made investments in work-at-home capabilities and additional investments in health and safety measures to keep our employees safe. We have been able to continue to expand margins. And also through the process, simultaneously have improved sales, with 16% total annual value year-on-year growth and the type and quality of those sales. 55% of our sales are extremely generation services and the totality of our sales are 4 percentage points higher in contribution margins than last year over the same period.

All of our major markets have been significantly affected by the COVID-19 crisis. Initially, in many of these markets, there was the lack of clarity as to which services were [going to be affected]. There continues to be challenges in public transportation and, quite frankly, an element of concern and fears in the population. As a result, we have a severe immediate impact on our ability to serve the volumes demanded from us, while in some areas, we have additionally significant increase in demand.

We had initiated preparations ahead of the crisis and have increased health and safety preparedness instead of planning well ahead. As a result, we've managed to deliver from the various lots of numbers in excess of 60,000 work-at-home employees in a matter of 2 weeks. We continue to increase this number and are working hard to ensure a stable production to make this an ongoing area of our business.

We have made financial liquidity a priority of the business. We have delivered $4.4 million in key operational cash flow during this traditionally negative cash flow quarter. To put this into perspective, last year, we had negative $40 million in cash flow -- operating cash flow, that is in Q1. We have developed a cash position with the safety margin substantially higher than what we have historically had, which we intend to maintain in [the future].

I am very happy to announce to you that we have changed qualitatively our shareholder base. We no longer have a majority shareholder, but we have introduced 3 new independent strategic investors: HPS, GIC and Farallon. The 3 of them are world-class investors and will also participate in the Board of Directors. All 3 investors support improvisation and transformation plan and join us with a long-term investment for us.

I would like to finish my summary with our view of the future. We all know that we still have to see the end of the humanitarian crisis unleashed by COVID-19. We also expect a slowing in economic crisis, bu it's still unclear in scope and line. But we are very positive about the prospects of our industry and our company. The early results of our transformation have allowed us to avoid a crisis of considerable proportions while investing in work at home and the safety of employees. We see the segments and services that we have prioritized in our transformation plan, growing faster, not slower as a result of the current crisis. We still have a lot of work to do and a lot of problems to resolve, but we see a bright future ahead and great opportunities. Thank you.

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José Antonio de Souza Azevedo, Atento S.A. - CFO [4]

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Thank you, Carlos. We drove Multisector sales across all 3 regions during the first quarter. The combination of higher-margin, higher growth Multisector business and a much lower proportion of Telefónica revenues expanded our EBITDA margin by 130 basis points. In other words, we generated more profitable growth.

As a percentage of total revenue, Multisector sales increased 510 basis points year-over-year, as Telefónica sales declining 20% mainly because we return additional unprofitable programs we disclaim. Although we have not completed this process as a big ticket were already done, we will continue to assess the profitability of this and other client programs on an ongoing basis, but probably with less impact.

We also performed well in terms of cash flow, a combination of operational improvements under our transformation plan and since most of the countries improved working capital management. These included onetime collections of ordinary receivables, which was -- substantially reduces our DSO and help us increase our cash position, stood at 76% of consolidated revenue at the end of the quarter.

As you can see, Brazil is where we discontinued most of the unprofitable Telefónica programs during these 2 quarters. This alone accounted for 130 basis points of Brazil margin improvement. The other 20 basis points resulted from an improvement to revenue mix.

Please move to Slide 11. In the Americas, financials along with Tech and Born digital companies drove Multisector sales up by 8.4%. As a percentage of revenue, Multisector expanded 360 basis points to just over 65%. Mexico and Colombia finally drove the improved revenue mix, which expanded the EBITDA margin by 60 basis points. It is important to highlight where that profitability improves in almost all countries within this segment.

Please move to Slide 12. EMEA is where we saw the strongest Multisector growth, at 16.5%. As part of total sales, Multisector increases, 840 basis points to 48%. Although Telefónica revenues represented a smaller percentage of the revenue mix, lower volumes resulted in a 360 basis points, declining EMEA's EBITDA margin. This was partially offset by better control of our indirect costs in this business segment, among others.

Please move to Slide 13 for more on our cash flow. Our operational improvements continued getting closer to the right cost structure, although there is still more work to do. This and better control of working capital and cash management significantly improved operating cash flow in the quarter, which as a reminder, is a structurally weak one. During the quarter, we launched a new cost and expense reduction program, which will include the implementation of utilized budget. We will also recited our company with regards to both operational and administrative financial stabilization share service centers that will serve the whole company. We have adhered to the remaining program along that to the sale and diluted settlements for the next 10 months with a positive impact of around $20 million in our cash flow.

Regarding our operations, we have followed operations at some of our call centers due to reduced volumes, and plan to close others as we position more of our employees to the work-at-home model. Cloud-based operations will rapidly replace our current operating model.

Cash CapEx fell to 3% in the first quarter and still reflects supplier payments carryover from projects in the first half of last year. Given the impact of COVID-19 on our business to date and what we currently know about its economic effects in the Americas, we are being prudent and postponing nonessential CapEx. However, we are still investing in our business for the long-term and in support of our growth strategy. We are now working hard in that reducing the cost of our CapEx.

Please move to Slide 14. In terms of balance sheet, during the quarter, we significantly [strained] our cash position to nearly $163 million. Of this amount, $77 million was drawn from existing credit facilities. In April, we paid down a value revolver and initiated a new 12-month credit line of $21.7 million. We subsequently drew up in these lines, further bolstering our financial flexibility.

Net debt stood at $564 million at the end of the quarter with high short-term debt, reflecting the growth credit lines, which can be rolled over if used. Sequentially, our leverage improved to 3.7x from 3.9x on lower net debt and [deviated employee] improved EBITDA.

Lastly, given the economic uncertainty surrounding COVID-19, we are withdrawing our 2020 guidance. When we have sufficient information that will allow us to really forecast our business again, we will be able to share our performance outlook at that time.

That concludes our review of our first quarter results. Operator, please open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question come from the line of Vincent Colicchio of Barrington Research.

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Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [2]

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Yes. Carlos, my first question is, can you talk about your sales pipeline? Are you seeing cancellations? And then the second question is on Telefónica. Are you comfortable with where we are? Or do you expect to see additional discontinuation of programs over the next 6 to 12 months?

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Carlos López-Abadía, Atento S.A. - CEO & Director [3]

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Okay. Let me address the first one first. On pipeline. So frankly, at the moment, our limitation is supply not demand. The problem we have, becasue of the crisis has been one of ability to serve the demand that we have. It is true that some of the -- some campaigns, in particular campaigns that make lot of sense during the crisis, of all these magnitudes, were put on hold. But a lot other type of services and sectors, all the digital business, food delivery, entertainment particularly, et cetera, the growth has been [spectacular]. So our problem during the crisis has been the ability to serve demand.

So from a pipeline perspective, we see a strong pipeline coming up. Obviously, as I mentioned in my remarks and all of you know, is nobody knows exactly how the economic crisis is going to develop. But from what I see right now, there is a very strong demand from, let's call it, the new economy sectors. That by far offsets the decline of the sector. In terms of the strength that we couldn't hold in the crisis, we've already seen in some of the countries like for example, Spain, that is already ahead of the curve of the COVID-19 with respect to, let's say, Brazil. So when you see the return of those volumes of those campaigns that we make center during the crisis. So from a pipeline perspective, we have seen some significant problems.

Your second question was on Telefónica. You shouldn't expect anything of the magnitude that we discussed in the second half last year. Clearly, we will always continue to look at the business that we have in the portfolio for the concurrent year. And those things that do not perform well, obviously, they will be made to perform or discontinued in -- together jointly in partnership with our customers, right? That should be the normal way of operating. Your specific question is, do we see anything significant? The answer is no. We continue doing that kind of work on an ongoing basis, but nothing of material importance.

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Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [4]

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And then how do you see the competitive landscape playing out, assuming this is a tough couple of quarters here. The setting in Telefónica's aside, do you see some of your smaller competitors struggling to transition? And do you think some of the financial headwinds will maybe put some of the amount of business and results in opportunity for you guys?

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Carlos López-Abadía, Atento S.A. - CEO & Director [5]

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Well, yes the feedback -- the early feedback we've gotten -- received from our -- some of our largest customers, and they are with we normally compete, we think those customers will recover for the firms. And the people I talk to, discuss that we are outperforming better than the competition necessarily. That's the feedback, for whatever it's worth. Do I expect the possibility of taking over other biggest businesses? Look, I don't take anything for granted. I expect to earn every bit of business in front of us. We expect to have opportunities to do so the best, okay? I don't take anything for granted. And I'm not banking on the misery of others. So -- but we're competing aggressively every day and whatever -- one of our customers or customers that we don't have, and know what's up, we compete aggressively with the thing. And I do expect to have those opportunities.

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Operator [6]

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Our next question is coming from the line of Susana Salaru of Itaú.

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Susana Salaru, Itaú Corretora de Valores S.A., Research Division - Sector Head, Telecommunications, Media & Technology [7]

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We have two. The first one, you mentioned that the revenue mix improved significantly with more Multisector being invaluable. If you could elaborate more, or could you just list the 2 main factors that are being the key ones for this growth? That would be our first question.

And second question, if you could elaborate what are the segments that are bringing the Q1's growth? We know that we have finance that has been key for Atento. But after finance, what are the other key segments of the company is focusing to support the top line growth?

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Carlos López-Abadía, Atento S.A. - CEO & Director [8]

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I just take the second question, but there was a lot of -- at least, maybe I was on my line, look at distortion on the line. I couldn't get your first question only. But let me answer the second question. And please, I'll ask you to repeat the first one. So on the segment. So as I said in my prepared remarks, some of the sites we were prioritizing as part of our transformation have turned out to be the best-performing through the crisis and we're expecting them to be best performing after the crisis. Surely, there's no secret here is that what we've seen here is that the current crisis is fundamentally crystallizing, accelerating and crystallizing trends that were already in place in the society. The trends to more online services, the more -- all the food delivery, streaming, all the bond digital companies were already having a significant success. And if anything, the current crisis is accelerating and crystalizing that success. So as a result, preparation we have taken is proving to be the correct one. Those sectors are as to what we call the new digital bond companied, the FinTech, streaming media, the Facebooks of the world, et cetera, right?

In addition to that, you can also see a lot of new ones in the sense that new ones for us perhaps for example, yes, close to $30 million deal in the U.S. It's a senior deal with an online grocery company. So those are the fastest growing, obviously.

Is this very fast-growing for us as well? Can you repeat your other question?

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Susana Salaru, Itaú Corretora de Valores S.A., Research Division - Sector Head, Telecommunications, Media & Technology [9]

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Maybe that seems to be the follow-up on your explanation. In these new contracts, are you guys being able to pass-through? What percentage of the inflation? Because remember that in the past, Atento used to pass-through 2/3 of the inflation to the contract. Just also wondering what kind of level of inflation pass-through you are working now.

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Carlos López-Abadía, Atento S.A. - CEO & Director [10]

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Yes, we're just sticking to the practices to improve our investment on how inflation pass-through metrics from years before. But I think that we will -- some of these things equal through the year. So we'll see the results better when we have this in the balance. But now is the business to improve on crisis from sequential numbers.

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Operator [11]

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Our next question comes from the line of Akshay Shah of IMA.

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Unidentified Analyst, [12]

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Quite a lot to applaud in this report. Carlos, question for you around the Telefónica development coming up on Vincent's question. Clearly, a big declined, 20% down overall, 30% in Brazil. I guess, what might have been the subtext to the earlier question was, is there a baseline level of revenues that will continue to persist at the end of this? And how should we think about that...

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Carlos López-Abadía, Atento S.A. - CEO & Director [13]

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I apologize. Maybe my line is having some difficulty. Can you repeat the question? I apologize.

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Unidentified Analyst, [14]

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Absolutely. Is this better? Can you hear me now?

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Carlos López-Abadía, Atento S.A. - CEO & Director [15]

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Yes. So there could be some clicking, probably in my line, which doesn't happens. I don't know it maybe across the board. It can be my guess, it was around revenues. I didn't get the question.

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Unidentified Analyst, [16]

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Yes. Given the -- the last 2, 3 quarters...

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Carlos López-Abadía, Atento S.A. - CEO & Director [17]

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Akshay, I lost you completely. Maybe...

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Unidentified Analyst, [18]

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When do you expect that decline to continue until at what point do we reach that core Telefónica service provision that is valuable to you and valuable to them?

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Carlos López-Abadía, Atento S.A. - CEO & Director [19]

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Okay. In other (inaudible), I only could hear, very clearly though, the last 5 seconds of your question. When do I (inaudible) some line in Telefónica, but you disappeared completely at the beginning. Can I ask you again, please?

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Unidentified Analyst, [20]

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So let me try one more time. Otherwise, I'll hang up and dial back in for you.

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Carlos López-Abadía, Atento S.A. - CEO & Director [21]

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Now we can hear you. Go ahead.

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Unidentified Analyst, [22]

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So the question is, so for the Telefónica revenue, conclude and reach that baseline level of revenues that makes sense for you and makes sense for them. Because over the last few quarters, well, you've been vocal. You're quite happy to walk away from business that doesn't make sense for you and doesn't make sense for the customer, right?

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Carlos López-Abadía, Atento S.A. - CEO & Director [23]

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Yes. So although there were some bits missing, let me repeat and tell me whether I got the question. You asked me for a baseline business with Telefónica. What do I think that baseline business is? Is that correct?

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Unidentified Analyst, [24]

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Exactly.

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Carlos López-Abadía, Atento S.A. - CEO & Director [25]

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Yes. Sorry, I've got difficulty. Look, let's put aside Telefónica for a second, right? Telecom as a sector, it's not a growth sector in our industry. Some companies have even stepped out of that sector. So our growth, as I said many times in this call is that we have a very, very healthy growth in other sectors. In many ways, this is good because that diversified our revenue base. But we continue to have very good relationship with Telefónica. We continue to do well with them. Now would I see that baseline? I expect to continue to be [one of the major] provider if not the major provider to Telefónica. Every day, we compete to make sure that we are the best, in my views, to present a Multiyear agreement that's 20 years at least for certain volumes. So one high answer to that question is at the very least, the volume (inaudible), and we can give you that -- those numbers. So I expect, at all times, to be above that number. Because I don't believe it's a good practice to just rely on a volume commitment. I believe in turning every business that any client give us. So does that make sense? We can give you a specific number. It's in -- maybe offline.

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Operator [26]

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Our next questions come from the line of Beltran Palazuelo of SANTALUCÍA.

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Beltran Palazuelo Barroso, SANTALUCÍA Gestión S.G.I.I.C., S.A. - Equity Analyst & Equity Portfolio Manager [27]

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I would like to thank you for the hard work. I would also like to thank all the employees attending for the hard work in these difficult times. I have a couple of questions. I think you commented that you were over the business plan into, let's say, mid of March. Constant currency growth was minus 2.8% at the end of the quarter, and margins were 10.9%. If you could give us a little color to what exactly was your margin profile and your constant currency growth since COVID happened? Then if you could give us a little color exactly -- you're telling us optimization rates are around 80%, and probably they were lower. So let's say, currently, revenues are minus 20%. Would that be a good guess? And then if you could also give us exactly -- more or less, what costs are you incurring? More or less, what margins are we going to find ourselves if the situation improves or maintains all through the second quarter?

Another question I have. I know this is a difficult one because ForEx is always very tricky. But of course, you have all your debt in dollars. So the rationale was because even though maybe the real and other currencies fell, the cost is much more competitive or more developed in the dollar in the financial markets. But you were -- maybe what interest rates are in Brazil? At what moment, it makes sense that you change part of your debt to real when your revenues there do not lose every time? Your revenue is in reals is lower and the debt is in hard currency. So is there a possibility of that?

And then maybe if you could give us -- a little question, you're saying you're cutting CapEx and you're cutting costs. What is the free cash flow generation profile of, let's say, these 40 days? Or are you able not to improve on that?

And then maybe for -- I know it's complex for the rest of the year. Do you think that Atento will be able not to burn cash during the 2020? So thank you, Over to you, Carlos, for answers.

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Carlos López-Abadía, Atento S.A. - CEO & Director [28]

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Okay. Thank you. It was great to hear from you and particularly for that long. I think you had like 24 questions there. Let me take a crack and you can (inaudible) some of those. And those that I have not addressed, at least as (inaudible). So some of the questions are about the prices going forward. Look, it's very difficult right now to do any predictions in the environmental we're in, right? I think most of us expect -- well, first of all, we're extremely looking for improving in Spain, I would say is coming out of the viral -- or the virus part of the (inaudible). Still, the volume is being lockdown, et cetera, right? Other countries are even early -- on the early (inaudible) points on that curve. It's very difficult to -- we all have different projections regarding the potential or likely economic crisis that is coming up on us after the virus crisis. So it's very -- I think we're very -- we have very low credibility for me to do -- to start making specific projections for the next few months. We're going to have to see, I can give you directional -- my directional views on that.

But what I can tell you is in terms of what we've seen so far, right? The impact -- the markets in which we operate, have had some of the largest impacts by the virus spreads in the world. At some point, our -- we're hit. Our capacity dropped to 54%. We've moved up the curve very quickly, managed both in the centers with a lot of work at home. We are increasing the capacity. We already had higher than 80% capacity. And moving to, in fact -- to regain 100% of capacity and hopefully, beyond.

But how the crisis will evolve in the next few months, I personally expect that in some countries, things are going to get worse from the virus -- from a biological perspective than -- getting worst before getting better. So I think, for example, I think in earlier stages. Having said that, the government, and (inaudible) have learned a lot from the last few weeks, right? And our ability to deal with the new set of circumstances has increased day-to-day, week to week. So still much, much, much more confident than a few weeks ago. So I know we'll come out of this crisis even stronger than we were. But to give you specific numbers of cash flow, which I can, at this point, I think I would do lack of credibility given where we are in the sector.

As I mentioned earlier, I still -- I feel confident, first of all, in our ability to -- our liquidity, our ability to get through the crisis and the potential of the market and our client base. Because we don't see a lot of declining in traditional business. The growth that we've seen in the digital realm is phenomenal. So I expect -- I see a bright future for the industry and for Atento. Over the next few months to give a specific macro guidance is extremely difficult.

But you had some questions there? Can you repeat anything that I have not answered for you?

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Beltrán Palazuelo, [29]

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Thank you for your explanation, Carlos for the future. I know that future is very, very difficult from -- with utilization rates, more or less, I have an idea of revenue where it was and where it is now and where you will move it forward. But just to see, because all the long-term plan that was put together, not -- do not suffice -- not many people believe it just to see exactly how on track we were on it before the crisis hit. For example, we were expecting low single-digit revenue growth and the margins between 12% to 13%. What has been the impact? What is the constant currency growth look like before the crisis hit it?

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Carlos López-Abadía, Atento S.A. - CEO & Director [30]

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Yes. So we were moving significantly ahead of plans in January and February. And as I mentioned in my remarks, part of that allowed us to make additional investments, which we have made in work at home in Guatemala, get 60,000 -- I mean we have officially know Guatemala to settle this, although we had already developed plans as part of our transformation. We didn't have -- unlike other players, we didn't have anything significant on work at home. We deployed very rapidly, very successfully, over 60,000 employees to work at home. So we made some investments there as well as we started even before March, making investments in additional health and safety measures in our centers.

So thanks to the fact that we were ahead on the plan, we have been able to make those investments and still improve margins.

In terms of impact, I'm sure José will correct me, if I'm wrong. I think for mainly, the month of March, we had an impact on the top line, as I mentioned to you. Fundamentally, there were supply constraint, right, in the low teens decline in terms of our ability to produce (inaudible) again, mostly on all capacity related, which had a single digit, a 3% or 4% for the quarter. Next few quarters, in terms of projections beyond that, although, again, in our year's forecast, that's probably as good as mine in terms of how much the crisis is going to affect Brazil or how things are going to get back to normal. It's equal to 4 count of space. But your's as good as mine. What I can tell you with confidence, is our ability to handle the situation, even if there is a societal deterioration in one or several of those countries, our ability to deal with that is much, much, much better than at the beginning of (inaudible). So I'm pretty confident to deal with what the world has to throw at us.

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Beltran Palazuelo Barroso, SANTALUCÍA Gestión S.G.I.I.C., S.A. - Equity Analyst & Equity Portfolio Manager [31]

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Carlos, sorry for the last question. Maybe you can't -- I just say I'm sorry can't mention because it looks clear that the plan you laid that you're clearly hitting the above target is clearly -- it's a difficult situation. And then -- and clearly, the company is tackling the problems and being stronger. But the thing is, of course, a currency ForEx, no one -- well, no one controls this. So the thing is, all your debt is in -- the majority percent of your debt is in the 2022 bond. And it seems -- and we can see that the banks will support you. So what are -- when you see that and you see more possible risks that come, maybe imagine, of course, that the real has been the worst currency in the whole world. It looks like Brazil doesn't have the reserves. It's plunging every day. Is there a possibility that you repurchase part of the bond and put part of your hedging in reals to try and mitigate the possible downturn of more of the real? Because clearly, the revenue was nearly $2 billion. Or more years past, it was more than $2 billion. And then we are seeing that the revenue due to the currency is going down. So it would be good to, I don't know, to maybe, of course, you have had this for the interest. But is there a possibility of doing something to mitigate part of that currency risk of the debt?

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Carlos López-Abadía, Atento S.A. - CEO & Director [32]

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Well, look, everything is possible opportunistically. But our -- we're not concerned with -- on the bond. We have that fully hedged. Clearly, having -- clearly, foreign exchange has not been kind to us. But my concern on the point since it's not from angle of the candid and not a -- that is not a concern to us. José would you like to comment on Beltran's question?

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José Antonio de Souza Azevedo, Atento S.A. - CFO [33]

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Yes. Thank you, Beltran and thank you, Carlos. You have to remember and also understand, we always think of the debt in local currency. So it's a matter of being opportunistic. We look all the time into market opportunities to check what is available to us. So -- and while it was just the local currency because when we're looking for a debt in U.S. dollars, as we did, we always look into a combination of how much costs to swap to local currency. So at the time that we issued the debt, was way better from a maturity perspective that we have a bullet 5-years sourced to real, which was not available to us in Brazil.

Now once we get out the crisis, and there are new windows, and if the market allows us to go for a long-term in Brazil. The problem we had with issuing debt in Brazil is that for the past couple of years, it was not available a lot.

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Operator [34]

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(Operator Instructions) Our next question comes from the line of Vitor Tomita of Goldman Sachs.

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Vitor Tomita, Goldman Sachs Group Inc., Research Division - Associate [35]

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Some of my questions are already answered at some point, because I got disconnected for a few minutes.

So first question on our side is whether you could elaborate a bit more on how operating metrics trended in April and in May? And what percentage of their size or what solutions are active currently?

And our second question, following up on segment is that since (inaudible) relevant improvements in volumes from digital and some on online clients in the first quarter when COVID was not yet that much of an issue. Do you see a relevant further improvement in volumes from these type of clients in the second quarter with some digital services growing due to social isolation measures, and that's it from our side.

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Carlos López-Abadía, Atento S.A. - CEO & Director [36]

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Vitor, let me answer the second question. I'm going to ask you in a second to repeat the first. I don't know your line unwind again. I couldn't understand very well. So your second question, which I think I understood to be about the sectors -- segments that where we see growth. I mentioned earlier that what we call them these are companies, the companies that are very happy individual -- digital economy is one of our largest growth technology as well. Some of their retail that, again, are more on the online type of retailers, significant growth. I mentioned taking it into our -- the deal that we've done with -- in the U.S. -- with an online grocery retailer of the U.S. Those type of companies, FinTechs, are really, really demanding very highly our services, streaming media, et cetera.

Health care is another sector. Technology is another sector. Those sectors are -- we've seen very, very significant growth and demand. Some of them, you could see that it could be a bit of a spike on the -- because of the COVID-19 crisis. But to be honest, a lot of these were already happening before the crisis. Some of these companies, they're seeing a spike right now, but I think our anticipation, I think the company's anticipation and probably everybody's, I think, is that they have a bright future after the spike. In other words, they're going to continue to grow. If anything, these are going to accelerate as the behaviors of consumers probably -- they were changing already, and this practice probably is just accelerating and crystallizing those behavioral changes. Those are the sectors where we see the fastest growth and the highest mark.

I'd say -- I already mentioned that U.S. -- on the slide. And the -- a lot of the sales that we're having, happen to be the write-back of sales in a sense, right? Not only we're seeing higher growth in sales, total in our annual revenue of 16% growth over the same period last year. But 30% of those sales tend to be in these hydro sectors. And 55% of the sales seems to be in the next-generation services rather than our traditional services. When you think that it means from having a, let's say, a $1 million sale in a high-growth company versus the segment that's maybe shrinking. You can get a very large contract in a traditional or strengthening segment than -- and 5 for the next 5 years, both the prices and volume declines for just a smaller deal in the high growth segment and grow with your clients, both in volumes and in margin. Let's not factor, those sectors are not just were the demand is and it tend to be not much active in (inaudible) product.

And if you can repeat the first question, I couldn't get it at all.

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Vitor Tomita, Goldman Sachs Group Inc., Research Division - Associate [37]

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All right. So on the first question is, if you could elaborate a bit more on how operating metrics extended in April. And on what percentage of your sites or workstations are active currently?

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Carlos López-Abadía, Atento S.A. - CEO & Director [38]

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Okay, what -- operating -- what margins in April? Sorry, I didn't...

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Vitor Tomita, Goldman Sachs Group Inc., Research Division - Associate [39]

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Yes. It was slow operating margin and then metrics.

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Carlos López-Abadía, Atento S.A. - CEO & Director [40]

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I see. For the business initials, again, obviously, we don't have the results of -- we don't have the results of April. They're not still closed. What I can tell you is what I've said before, right? The result that we see is continued -- we (inaudible) operationally in March. The crisis hit us very suddenly. I don't know if you recall, I forget -- to give you an answer is, in market, everything started to impact in multiple countries at the same time. And I'm talking about at a society level, starting with Spain and many of others, et cetra.

The -- from that low point, we have had a continued improvement in terms of our ability to manage the situation. But quite frankly, I think it's a continued improvement in the management of the situation in other countries. We obviously depend on public transportation and many of the things in the societies that we operate. So look, the credit is (inaudible) at the beginning, though there was a lot of chaos. And things that have now much more structured. So although we have not seen the worst of it in some countries, my expectation is that our impact is going to continue to decline from a level of time. At that point, I don't know if you were really -- when I mentioned we were -- when things hit us with full force, we were in the 50-some-percent of capacity, all of a sudden. Since then, we've recovered through better management of all the centers, keeping -- we have essentially all the centers open, managing better the centers as well as 60,000 people work at home. We've managed to increase steadily that capacity. We're better than 80% at the moment, and we continue to improve every day. So although we haven't seen the worst yet, I feel that we are much, much better able to manage what comes from (inaudible).

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Operator [41]

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(Operator Instructions) That concludes the question and answer session of today's conference call. I would like to turn the call back over to Mr. López-Abadía for closing remarks.

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Carlos López-Abadía, Atento S.A. - CEO & Director [42]

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I wanted to thank you that fact for being here today. I apologies for the technical difficulties. I think most of us are probably at home and on slow lines. I know I am, and I'm sorry, I haven't been able to understand you guys as clearly as I would have liked to understand the difficulties. In the current situation, I wish everyone the best. And let's stay safe. And I know that the same thing I said about Atento, I say about our societies and for all of us. I know that we're all living in difficult times, but there's a bright future ahead and stay very safe and looking forward to talking with you over the next few weeks and a few months. Thank you.

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Operator [43]

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Thank you so much. This does conclude today's conference. You may disconnect your lines at this time.