SafetyinNumbers Posted November 11, 2020 Author Share Posted November 11, 2020 Earnings out. https://www.prnewswire.com/news-releases/atento-reports-fiscal-2020-third-quarter-results-301171370.html Actual Consensus EBITDA 44.8m $34.4m Revenue 352m 326m Margins were a bit lower than I was hoping for but revenue beat is probably more important as margins will catch up. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted November 12, 2020 Author Share Posted November 12, 2020 Based on $45m in EBITDA just annualized for 2021 gives $180m which is $30m above consensus. With only 14m shares outstanding at 4.5x EBITDA adds about $10 to the share price which is a double from here. As the market cap is lower than EBITDA, multiple expansion would also have a huge impact to the share price. Each multiple point of EV/EBITDA adds an additional $13/share to the share price. It trades at 3.6x EV/EBITDA based on the run rate EBITDA of $180m noted above and current net debt of $515m. Link to comment Share on other sites More sharing options...
StevieV Posted November 12, 2020 Share Posted November 12, 2020 They have room for some EBITDA margin improvement. 1% improvement in EBITDA margin improvement is $14 million in EBITDA/year. I think there is a a reasonable path to $200+ in 2021. Refinancing and currency remain the big risks I think. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted November 12, 2020 Author Share Posted November 12, 2020 They have room for some EBITDA margin improvement. 1% improvement in EBITDA margin improvement is $14 million in EBITDA/year. I think there is a a reasonable path to $200+ in 2021. Refinancing and currency remain the big risks I think. Yeah, I agree. They reiterated the EBITDA margin guidance for 2022 of 14-15%. Dare to dream we get multiple expansion on top. That’s what multibaggers are often made of but we’ll see what happens. Link to comment Share on other sites More sharing options...
StevieV Posted November 12, 2020 Share Posted November 12, 2020 Wow, even a little bit of volume today. Typically I think the daily moves don't mean much given the anemic volumes associated with the trading. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted November 12, 2020 Author Share Posted November 12, 2020 Biggest volume in 3 months, when it last got to these price levels. Link to comment Share on other sites More sharing options...
irnovo Posted December 11, 2020 Share Posted December 11, 2020 I am a shareholder and believe that ATTO is mispriced. It is trading above volume today. Maybe market knows something that I don't. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted December 11, 2020 Author Share Posted December 11, 2020 I am a shareholder and believe that ATTO is mispriced. It is trading above volume today. Maybe market knows something that I don't. Wouldn’t that mean the market could be starting to see what you see? Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted December 16, 2020 Author Share Posted December 16, 2020 New SeekingAlpha article https://seekingalpha.com/article/4395037-atento-turnaround-in-progress-100-potential-upside-and-catalyst Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted December 16, 2020 Author Share Posted December 16, 2020 A new article on Concentrix CNXC from a different author. https://seekingalpha.com/article/4394996-concentrix-interesting-spin-off#comments_header I think CNXC buys ATTO in 2022 because it would be accretive in many ways even at multiples of the current ATTO price. Link to comment Share on other sites More sharing options...
StevieV Posted December 18, 2020 Share Posted December 18, 2020 I don't think the Ex-Goldman consensus EBITDA of $183m in 2021 and $212m in 2022 makes sense. Q3 EBITDA was $44.8. The 2021 estimate projects almost no improvement to that run-rate. The 2022 estimate then projects a 15% improvement versus 2021. Why no improvement in 2021 and then a big improvement in 2022? I don't think that will play out. I think 2021 estimate is too low. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted December 19, 2020 Author Share Posted December 19, 2020 I don't think the Ex-Goldman consensus EBITDA of $183m in 2021 and $212m in 2022 makes sense. Q3 EBITDA was $44.8. The 2021 estimate projects almost no improvement to that run-rate. The 2022 estimate then projects a 15% improvement versus 2021. Why no improvement in 2021 and then a big improvement in 2022? I don't think that will play out. I think 2021 estimate is too low. I agree. Morgan Stanley was the broker that update their EBITDA estimates for 2021 ($191m) and 2022 ($212m) that pulled the consensus up a bit earlier in the week. The weird thing is that their target is $10.50 based on a multiple of 3x EV/EBITDA which they describe as a 75% discount to peers. Meanwhile Goldman has a $114m EBITDA estimate and have a 6x EV/EBITDA multiple for their target. Both are just bizarre especially as someone who used to work in equity research and helped determine estimates/targets/ratings. Using Goldman's multiple on MS's estimates spits out a target of $47. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted January 1, 2021 Author Share Posted January 1, 2021 Reproduced from this board: https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/favorite-stock-for-2021/ I’m doubling down on Atento (ATTO) for 21. I think Covid obscured the operational improvements in 2020. Net debt has declined materially in 2020 ($595m to $515m) to make the stock relatively cheaper and safer in my opinion. I held on (and added early unfortunately) through the volatility and feel better about the business than a year ago. Management did a great job managing through Covid and the decline in the BRL but the hit to headline EBITDA was hard in Q1 and Q2 especially. EBITDA margins bounced back to 12.7% in Q3 and I’m expecting improvement in 2021 to 14%. USDBRL has been stable for three quarters @5.4 and is currently below that average (which is good!). If oil rallies as many expect, ATTO could be an indirect beneficiary through its emerging market currency exposure. At current exchange rates, ATTO could put up north of $200m in EBITDA in 2021, at 8x EBITDA which is a low end multiple, my intrinsic value estimate is $67 using $500m in net debt which accounts for dilution of options and RSUs. Lots of risk in that estimate of course but too much in the price of ATTO, in my opinion. Street estimates for 2021, are very deceptive. The “street” is expecting $160m in EBITDA (11.4% EBITDA margin) but that’s made up of three estimates: Barrington $174m Goldman $114m Morgan Stanley $192m To the extent there are active managers left, I have been in the room when a PM asks an analyst what came up on the quant screen. In this case, Atento screens at 4.6x consensus EV/EBITDA. The PM will ask the analyst who covers it, he’ll ask what the multiple is on Goldman’s estimates and the analyst will correctly answer 7.8x. You see Goldman’s net debt ($686m vs $515m) is way higher because it’s EBITDA estimate is way lower. The PM will then look the analyst directly in the eye and say “Can we short it or buy puts?” and the analyst will say “No, it has no listed options and it’s illiquid.” That’s the end of the discussion. What the PM doesn’t know is that Goldman has not updated their estimates since before ATTO reported $45m in EBITDA in Q3. In fact, their 2020 EBITDA estimate is $94.9m while ATTO has already reported $107.8m 9MTD. Goldman will eventually drop coverage or change their estimate if ATTO decides to pursue refinancing the 2022 debt in January forcing them to update the street on Q4 preliminary estimates which will likely improve on Q3. If consensus moves to Morgan’s $192m in EBITDA, even at the current EV/EBITDA multiple of 4.6x that would result in an ATTO price of $25. If the active funds don’t come, maybe the quant funds will. If there is a lot of variation in estimates, it makes sense for low volatility quant strategies (most of them!) to avoid those stocks. ATTO’s estimates will become significantly less variable if Goldman updates or removes it’s estimates although the former is better as more estimates are helpful. Recently spun out peer Concentrix (CNXC) trades at around 9x EV/EBITDA.and has very strong free cash flow. Their business strategy (growth by acquisition) and market position (big in Asia and smaller in LATAM) makes them seem like the perfect dance partner for Atento in 2022 when ATTO has achieved 15% EBITDA margins and has grown sales for a couple of years (assuming stable exchange rates). At 8x 2023E EBITDA of $270m (assumes 16% EBITDA margin expectations with 5% CC revenue growth) which CNXC would pay in the summer of 2022, ATTO would fetch ~$100/share give or take. ATTO would still be accretive to CNXC even if paying a fair multiple because of synergies and CNXC has a much lower cost of capital and would save on refinancing the bonds. It’s possible, CNXC wants to buy ATTO now but the three controlling shareholders of ATTO, GIC, HPS and Farallon (~70% ownership) will want a fair price and I think they recognize it’s a lot higher than here. I don’t know what’s going to happen but with the stock less than $14 and a recently incentivized management team and BOD (1.7m options with an 8 handle in August), I like the odds. Next week should see some stock for sale as RSUs vest today and there is some forced selling to pay taxes next week by the RSU trustee. I'm estimating about 150k shares for sale. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted January 13, 2021 Author Share Posted January 13, 2021 It looks like Goldman updated its estimates for $ATTO yesterday because consensus changed dramatically although I haven’t seen the note. Consensus EBITDA has raced higher to $186.5m and $207.8m for 2021E and 2022E, respectively. Now trading at 3.9x 2021E EV/EBITDA. The thread below shows the changes in EBITDA Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 1, 2021 Author Share Posted February 1, 2021 Big beat for $ATTO on Q4. I put my preliminary analysis on Twitter. Link to comment Share on other sites More sharing options...
StevieV Posted February 1, 2021 Share Posted February 1, 2021 Great news! As you note, Q4 mid-point annualized would mean 2021 EBITDA of $210 million. As I posted earlier in the thread, I thought the adjusted analysts expectations of $183 were too low. Almost certainly will be. I also think $210 is going to turn out to be lower than actual 2021 EBITDA. I don't think we are near the top in EBITDA margins or quarterly results. If Q4 2020 run-rate is $210, I'd expect 2021 to be higher, perhaps by a decent bit depending on currency. I know the $210 number wasn't a prediction. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 1, 2021 Author Share Posted February 1, 2021 Great news! As you note, Q4 mid-point annualized would mean 2021 EBITDA of $210 million. As I posted earlier in the thread, I thought the adjusted analysts expectations of $183 were too low. Almost certainly will be. I also think $210 is going to turn out to be lower than actual 2021 EBITDA. I don't think we are near the top in EBITDA margins or quarterly results. If Q4 2020 run-rate is $210, I'd expect 2021 to be higher, perhaps by a decent bit depending on currency. I know the $210 number wasn't a prediction. I think you are right. Consensus EBITDA margins are 12.8% for 2021E with revenue estimates just below annualized Q4. Annualizing Q4 revenue (mid point) and adding 3% growth and using 14.5% margins gives us ~$220m in EBITDA. The growth and margins might be low with that estimate but it’s still easy to underwrite the investment at these prices. The stock might actually be cheaper than it was before we got confirmation of the results despite the stock being up 14% today. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 1, 2021 Author Share Posted February 1, 2021 Nice article by Atento’s CEO. https://www.fastcompany.com/90599103/next-generation-is-the-new-generation-in-customer-experience I don’t think it’s a coincidence that this article, the debt refinancing and the customer event tomorrow for Atento are all happening the same week. This is about narrative change and ultimately multiple expansion when analysts/investors recognize that this new digital growth is expanding margins. Link to comment Share on other sites More sharing options...
StevieV Posted February 2, 2021 Share Posted February 2, 2021 Well, another go at the debt offering. They pulled their attempt last fall. No way they do that a second time, right? If this goes correctly, they should do a follow-up announcing with the pricing in a day or two. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 24, 2021 Author Share Posted February 24, 2021 Posted the below yesterday on different thread. Added a touch more ATTO. A full position for me but I trade around the edges. I can't see a specific reason for the sell off but it is up a lot this year and some fund might be looking to take profits. They report next Wednesday night with the conference call on Thursday morning (Mar 4) at 10 am. At the very least we should have analyst estimates increased post report as all of the analysts have been restricted because of a debt refinancing since they pre-reported better than expected revenues and EBITDA. Consensus 2021 EBITDA is $186.5m and they reported an EBITDA range of $50-55m for Q4. That should lift consensus above $200m. At 5% cc revenue growth and 14% margins, 2021E EBITDA would be $217m. They pre-reported margins of 14-14.5% for Q420 so it doesn't seem like a big stretch to assume that for the full year. Each point of margin adds ~$15m to EBITDA. At $22.50, the company is trading at 4.6x EV/EBITDA on current consensus 2021E EBITDA. If consensus jumps to $217, at 4.6x, the stock would trade at $30.50. The beauty of leverage and only 16.3m shares outstanding on a fully diluted basis. I am a valueHODLer here until the strategic sale of the company in 2022 or 2023. Peers trade 8-15x EBITDA. If a sale could be based on 2023E estimates, assuming the same sales growth and a lift of EBITDA margins to 14.5% or the half way point of guidance. We could have a selling price of $90+ based on the low end of the comp range at 8x. Still a long way to go from here of course but I think it's important to understand the roadmap. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 29, 2021 Author Share Posted March 29, 2021 New Seeking Alpha article on Atento highlighting the lower risk now that debt has been refinanced/hedged and consensus estimates are below guidance.I would add that the lock up expiring May 2022 for the 60%+ shareholders and the high cost of debt makes Atento a natural candidate for a strategic sale in the next few years. The sale, in my view, will likely be between the big shareholders (HPS, GIC, Farallon) break even price between $45-50 (~6x EV/EBITDA) or closer to my low end of intrinsic value $80 (~8x EV/EBITDA).https://seekingalpha.com/article/4416562-atento-stock-still-100-percent-upside-now-less-risk Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted April 4, 2021 Author Share Posted April 4, 2021 I went on a podcast and talked about ATTO a bit near the end (1:06:00). https://twitter.com/BrownMarubozu/status/1378157840049782784?s=20 Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted April 9, 2021 Author Share Posted April 9, 2021 We could see GS/MS update their numbers ahead of $ATTO's Q1 results (first week of May). Neither of them updated their estimates based on guidance post the Q4 earnings release. Presumably estimates would be going up but I am consistently surprised. Last quarter, Goldman waited until January to update its numbers after results in November and the stock responded strongly. Volume has been light lately so it doesn’t take a lot of volume to move the stock (either direction). Link to comment Share on other sites More sharing options...
StevieV Posted April 9, 2021 Share Posted April 9, 2021 On 4/4/2021 at 10:48 AM, SafetyinNumbers said: I went on a podcast and talked about ATTO a bit near the end (1:06:00). https://twitter.com/BrownMarubozu/status/1378157840049782784?s=20 Nice podcast appearance Safety. Link to comment Share on other sites More sharing options...
StevieV Posted April 9, 2021 Share Posted April 9, 2021 On GS/MS estimate updates, is there a pattern to when they have updated their estimates in the past? Link to comment Share on other sites More sharing options...
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