StevieV Posted February 4, 2020 Share Posted February 4, 2020 Meeting was early today, right? 10 am Eastern European? Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 4, 2020 Author Share Posted February 4, 2020 Meeting was early today, right? 10 am Eastern European? Yup. They got approval at 98% is my understanding. Expecting a 6-K filing after the close. I continue to be confused by all of the selling at these prices. It will be interesting to see how quick they move (if at all). Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 8, 2020 Author Share Posted February 8, 2020 Finally filed the 6-K. No idea why it took so long. https://www.sec.gov/Archives/edgar/data/1606457/000119312520028318/d878992d6k.htm Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 14, 2020 Author Share Posted February 14, 2020 Q4 results scheduled for March 3 after the market close with the conference call on March 4 at 10am. This is a few weeks earlier than last year. I’m hopeful we get news around Bain, debt refinancing and a tender for the shares around the same time. Even if we don’t get any other news, the results should show strong FCF which will reduce net debt meaningfully. That could be a catalyst. http://www.atento.com/news-room/press-releases/atento-sets-date-for-fiscal-2019-fourth-quarter-results/ Link to comment Share on other sites More sharing options...
StevieV Posted February 14, 2020 Share Posted February 14, 2020 Who knew that announcing an earnings release date could be worth 9%. I think the earlier earnings date is a good thing, but trying to glean info from the date of an earnings call is pretty speculative. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 14, 2020 Author Share Posted February 14, 2020 Who knew that announcing an earnings release date could be worth 9%. I think the earlier earnings date is a good thing, but trying to glean info from the date of an earnings call is pretty speculative. Yeah, I agree on that. Although, I bet there are lots of quant models who have that as a factor. It’s possible, there was a plan by an institutional holder to buy X per day until the expected earnings date and now its 2X. Link to comment Share on other sites More sharing options...
StevieV Posted February 19, 2020 Share Posted February 19, 2020 Safety, I like how your stock is trading. Up big most days and some volume coming in. About 3x normal volume yesterday and already good volume again today. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 19, 2020 Author Share Posted February 19, 2020 Safety, I like how your stock is trading. Up big most days and some volume coming in. About 3x normal volume yesterday and already good volume again today. I thought it was your stock too! Hopefully the improving technicals foreshadow strong earnings, a resolution to the Bain ownership and a partial tender offer for the shares. Link to comment Share on other sites More sharing options...
StevieV Posted February 20, 2020 Share Posted February 20, 2020 Safety, I do own a small position, but I think I'll continue to call it your stock in view of the work you've done on this thread. At least so far, my timing has been unusually good. It's important that the company actually deliver with a good report on March 3rd. I'd like some good news on a tender, but for me the number one thing are the business results. Show good results and then build on that with tender and Bain news. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted February 20, 2020 Author Share Posted February 20, 2020 Yeah, I agree. The report should show intrinsic value going higher and increase our margin of safety. I’m not a technician but apparently this $3.45 level is important. It will be interesting if we can clear it before we get any news. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 2, 2020 Author Share Posted March 2, 2020 A reminder that earnings are out tomorrow night after the close and the conference call is on Wednesday morning. Also, the company had some more RSUs vest yesterday so we might see some pressure this week as they sell a portion to pay taxes. That seems like a good set up to buy today and tomorrow ahead of earnings, but with this market volatility, it’s hard to say how shares will react. I expect we will also get some sort of announcement about the PIK note which may clear the overhang which is probably just as important for sentiment as earnings. Link to comment Share on other sites More sharing options...
StevieV Posted March 3, 2020 Share Posted March 3, 2020 I took a refresher look at the VIC write-up in advance of this afternoon's earnings release. Had forgotten how high the price was when that was written and how high the targets were. Will be interesting to see what they report. Stock has been trading strong today, but not the volume or moves of a couple weeks ago. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 4, 2020 Share Posted March 4, 2020 Results are out: https://s3.amazonaws.com/mz-filemanager/89e54f51-9039-43b3-9c2c-45e55fab990c/c6fbad5c-6fd4-4685-ba41-9d3e69e5806a_ATTO%20Fiscal%202019%20Q4%20earnings%20release%2003.03.20.pdf I hear a sucking sound. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 4, 2020 Author Share Posted March 4, 2020 Results are out: https://s3.amazonaws.com/mz-filemanager/89e54f51-9039-43b3-9c2c-45e55fab990c/c6fbad5c-6fd4-4685-ba41-9d3e69e5806a_ATTO%20Fiscal%202019%20Q4%20earnings%20release%2003.03.20.pdf I hear a sucking sound. I’m assuming “a sucking sound” is bad for the share price? The results were a lot better than they looked in my view but I agree the share price could be under pressure. - Revenues came in at $417m beating consensus of $412m. - Adjusted EBITDA was $63m vs the $21m reported and the consensus of $43m. To get the adjusted number, I added back the transformation plan spending ($11.9m) and non-cash impairment charges ($30.9m). IFRS 16 rule changes also added $17.9m to EBITDA which should be included going forward since the related net debt includes the related leases. - Free cash flow was $44m - Net debt went up to $596m from $565m because of a $47m increase in leases which offset a $15m decline in non lease related debt. - Margin guidance for 2020 is 12-13% vs consensus of 11.7%. Q4 adjusted EBITDA margins were 15% so the guidance doesn’t seem aggressive but there is seasonality to account for (back half generally has stronger margins). They also expect low single digit constant currency revenue growth in 2020 which is in line consensus without adjusting for currency. - Share buyback of $30m (15% of current market cap and about half of the free float at current share price) was announced without any information on the PIK note. It’s probably best for long term shareholders (who are predominantly the PIK note holders post May 31) for the company to buyback stock after a messy quarter when there is a high degree of uncertainty. I am long and biased, however, so take my analysis with a grain of salt. Net net, I thought it was an ok quarter with the strong adjusted EBITDA offset by the higher than expected net debt. A lot of investors (especially quants) may react negatively to the higher than expected net debt and the low reported EBITDA numbers so I wouldn’t be surprised if the stock is weak. Conference call is at 10am. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 4, 2020 Share Posted March 4, 2020 Thanks for the walkthrough. I guess I didn’t take into account all those adjustments. I wasn’t aware of consensus numbers either. Of course doing a ton of adjustment such that you canneries truck between the GAAP and the adjusted results isn’t necessarily a great thing either. At least the price of the stock reflects the troubles. We will see. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 4, 2020 Author Share Posted March 4, 2020 Thanks for the walkthrough. I guess I didn’t take into account all those adjustments. I wasn’t aware of consensus numbers either. Of course doing a ton of adjustment such that you canneries truck between the GAAP and the adjusted results isn’t necessarily a great thing either. At least the price of the stock reflects the troubles. We will see. No problem. I would take the consensus numbers for EBITDA with a grain of salt too. I'm not sure how many analysts are including IFRS 16 and how many are not. Now that we have a year in the books with the IFRS changes, I don't know if ATTO will continue to break those numbers out going forward. Their EBITDA margin guidance includes the IFRS impacts going forward. Link to comment Share on other sites More sharing options...
StevieV Posted March 4, 2020 Share Posted March 4, 2020 Thanks for the comments Safety and Spek. Two things stood out to me at first glance. The first is the continuing shift away from the Telefonica business. From a business perspective, it seems to me as though this is important for improving the margins in this low margin industry. Not to mention the customer diversity. I think a successful transition means growing revenue at some number (doesn't have to be high), while increasing the margin significantly. The margin improvement should be more impactful, but I think you want to accomplish it with positive revenue numbers. Second was the size of the buyback. Even though not a tender, 15% of the market cap at today's pricing is an aggressive buyback. I say aggressive and not good or bad, as I guess that will depend on what happens going forward. At very first glance, I thought it was mixed. Company is still turning (or trying to turn). Doesn't seem like Q4 was the turn or sealed the turn, which is what was necessary for a good or great report. Link to comment Share on other sites More sharing options...
StevieV Posted March 4, 2020 Share Posted March 4, 2020 Even though not a tender, 15% of the market cap at today's pricing is an aggressive buyback. I say aggressive and not good or bad, as I guess that will depend on what happens going forward. Well, it looks like they'll get the opportunity to purchase a lot of shares under the plan. Link to comment Share on other sites More sharing options...
Broeb22 Posted March 4, 2020 Share Posted March 4, 2020 Net net, I thought it was an ok quarter with the strong adjusted EBITDA offset by the higher than expected net debt. A lot of investors (especially quants) may react negatively to the higher than expected net debt and the low reported EBITDA numbers so I wouldn’t be surprised if the stock is weak. Conference call is at 10am. What quants? Isn’t ATTO the kind of stock a quant wouldn’t touch with a 10 foot pole, purely due to liquidity? A cursory look at 13-F filings does not uncover any quant funds that I’m aware of, but there are names I don’t recognize. Sometimes it feels like value investors yell to the heavens “damn you quants” without really understanding what they do or how they do it. I’m not saying I do either but I don’t use quants as a rationalization for why my idea isn’t working at a given point in time. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 4, 2020 Author Share Posted March 4, 2020 Net net, I thought it was an ok quarter with the strong adjusted EBITDA offset by the higher than expected net debt. A lot of investors (especially quants) may react negatively to the higher than expected net debt and the low reported EBITDA numbers so I wouldn’t be surprised if the stock is weak. Conference call is at 10am. What quants? Isn’t ATTO the kind of stock a quant wouldn’t touch with a 10 foot pole, purely due to liquidity? A cursory look at 13-F filings does not uncover any quant funds that I’m aware of, but there are names I don’t recognize. Sometimes it feels like value investors yell to the heavens “damn you quants” without really understanding what they do or how they do it. I’m not saying I do either but I don’t use quants as a rationalization for why my idea isn’t working at a given point in time. You might be right on the quants. I use that term more broadly for those that might weight a factor highly like debt/EBITDA without necessarily making all of the adjustments to normalize the results. I’m not surprised it’s down given the reported numbers but the reactions from investors might be different if they highlighted the adjusted EPS of $0.21/share or the adjusted EBITDA of $63.2m in Q4. I’m not saying the one off items should be ignored but they should have less impact on the prospects of the business and thus the go forward valuation. This idea definitely isn’t “working” yet and I am wearing it. Link to comment Share on other sites More sharing options...
Broeb22 Posted March 4, 2020 Share Posted March 4, 2020 I just don’t see the value. Even if you get back to $40 MM FCF from 2018, and I don’t if that’s a good baseline or not, but even if you do, this trades at 5x FCF with 10 years worth of debt if 100% of FCF were used towards debt pay down. I can name a half dozen companies with similar FCF multiples and debt profile. I’ve owned some of them and I have the grey hairs to prove it. For posterity, some of those names are ETM, NXST, DISCA, Viacom, FTD before BK, MOD, HBI, REZI, STKL, PBH, THS, SRCL, COMM, BIG, BDC. Link to comment Share on other sites More sharing options...
Broeb22 Posted March 4, 2020 Share Posted March 4, 2020 I’m not trying to be so negative on this, I just get VERY suspicious when PE sponsors begin playing both sides of the capital structure. Sometimes I think these folks know they overleveraged the entity so they lend unsecured money so they get another bite at the equity in a restructuring. Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 4, 2020 Author Share Posted March 4, 2020 I’m not trying to be so negative on this, I just get VERY suspicious when PE sponsors begin playing both sides of the capital structure. Sometimes I think these folks know they overleveraged the entity so they lend unsecured money so they get another bite at the equity in a restructuring. I don’t think that applies here. PE firms (Bain) aren’t involved with the senior secured notes of the company. It’s fine that you are negative. That’s what makes a market. Link to comment Share on other sites More sharing options...
valuedontlie Posted March 4, 2020 Share Posted March 4, 2020 Where are we getting $40m FCF from? 2020 guide was LSD rev growth ~$850m? 12-13% EBITDA margin $106m? $37.5m interest exp 4-4% cash capex $36m Bake all that together and I get $32.5m before working capital and income taxes, no? What's the PIK debt situation again? Any idea why debt jumped by $200m+ from FY18 to FY19? At $700m (gross) and ~$46.5m in op cash flow that seems a bit lopsided... Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 4, 2020 Author Share Posted March 4, 2020 Where are we getting $40m FCF from? 2020 guide was LSD rev growth ~$850m? 12-13% EBITDA margin $106m? $37.5m interest exp 4-4% cash capex $36m Bake all that together and I get $32.5m before working capital and income taxes, no? What's the PIK debt situation again? Any idea why debt jumped by $200m+ from FY18 to FY19? At $700m (gross) and ~$46.5m in op cash flow that seems a bit lopsided... They did 1.7bn in revenue last year. The debt jumped because IFRS 16 changes brought leases onto the balance sheet. If you want more background on the PIK note, it's probably best to read the SA article attached a little while ago. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now