Atento S.A. Ordinary Shares

Good morning and welcome to Attento's 2021 fourth quarter and full year results conference call. Today's call is being recorded. All participants will be in a listening mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. If you are at your computer, please use the submit a question box in your webcast viewer. I would now like to turn the conference over to Mr. Hernan Van Waveren, Investor Relations Director for Attento. Please go ahead.

Thank you, operator, and welcome everyone to our fiscal fourth quarter 2021 earnings call to discuss Atento's financial and operating results. Here with us for today's call are Carlos Lopez Abadía, Atento's chief executive officer, and Jose Acevedo, chief financial officer. Following their review of Attento's 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 and 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 filed 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 investors.attento.com Please be advised that unless noted otherwise, all growth rates are on year-over-year and constant currency basis. I will now turn the call over to Carlos.

Thank you, Hernán, and good morning, ladies and gentlemen. I want to discuss with you the results of 2021 and our perspectives for 2022. Our 2021 results show continued improvement of our recurring operations when excluding the one-off cyber event that impacted our results significantly and beyond our initial estimates. As a result, we have made significant investments in our cyber preparedness, both from a technology and operational perspective, and we expect to resume in 2022 the improvements to our business and results. The continued improvements showed in the first three quarters and in the fourth quarter on a recurring basis give us the confidence that we are on the right track to continue to improve Atento. On a recurring basis, we have grown our revenue 7.9% and EBITDA by 23.7% while expanding operations in key markets and sectors with a strong sales growth and record customer satisfaction. We increased sales by 20%, with the vast majority of those sales coming from strategic and high-growth sectors such as technology, fintech, e-commerce, healthcare, while expanding relationships with traditional clients. A very important example of the latter is Telefonica. We completed the extension of the MSA to cover the totality of our geographic footprint with them. It is my belief that as important as MSAs are, we need to earn the business of our clients every single day. In that spirit, we have expanded our relationship with Telefónica in Spain with 800 workstations with a contract that extends beyond the MSA. We continue to grow our U.S. and EMEA business, taking the hard currency share of our EBITDA to 26%. as a result of growth and margin expansion in both markets. The U.S. has grown 34%, reaching a 16.6% EBITDA margin, while EMEA has reached a 14.2% EBITDA margin. We have opened two nose centers in the U.S., one of them co-branded with our customer GameStop. These are important results for us, not only because of the inherent attractiveness of the market, but also because it allows us to slowly but surely reduce our foreign exchange exposure. On the topic of FX, I need to point out that we are working with our bankers to address the financial costs of our foreign exchange exposure. Expect some news from us on this front. 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 the implementation of shared service centers and global operating models. We expect to start delivering this year significant efficiencies, 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. We're emphasizing partnerships not only as technology sources, but also as go-to-market partners. We have started a new partner channel organization in the U.S. that we expect to materially contribute to our growth in 2022, rolling it out to the rest of the world in the second half of the year. I will be remiss if I do not comment on our cyber 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, detection, and recovery. 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 of paramount importance to address the cyber risk. Last but not least, we keep on delivering on our ESG commitments. We have reduced scope one emissions by 16%, continue to be a leader in the diversity and inclusions, and have achieved a new record in customer MPS while also improving employee satisfaction. Finally, our outlook for 2022. We see some of the impact from the cyber attack affecting us in Q1 results, but we also see an acceleration of results and a resumption of our transformation trajectory thereafter. thus improving on our 2021 recurring EBITDA and revenue numbers. Jose will now review our results with you in more detail, 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 growth strategy continues gaining traction. So I will focus on the recurring numbers, which exclude the forward quarter impacts of the cyber attack that resulted in approximately 35 million of lost revenue. These are the 7 million of costs related to the attack had a 42 million impact on our EBITDA. Please turn to slide 14. Guidance revenue grew nearly 8% to 1.5 billion at year end, with the recurring EBITDA increasing a strong 24%. That's to our improving operating leverage. Also in line with the guidance was recurring margin of nearly 13%. Recurring operating cash flow was 21.1 billion, which I will break down in a moment. Lastly, on these slides, our reported results led to negative equity of 10 million. However, it's important to note that this consists of 85 million of non-cash items, which I will explain later in my presentation. Slide 15 shows the cyber attack's impact on revenue, EBITDA, as well as operating cash flow. The lost revenue and costs stemming from the attack had a 42 billion EBITDA impact, putting the recurring EBITDA at 192 million. Its impact on operating cash flow was 25 million or negative 4 million for 2021. On a recurring basis, operating cash flow was positive 21.1 million as shown on the slide. In the bottom half of slide 16, we give a geographic breakdown of our recurring annual results. As you can see in the upper left of the slide, Telefónica revenue drove more of our top line than in the past. That was due to 23% growth in Telefónica revenue in Brazil, as we captured a great share of wallet and we delivered more high value. next-generation services to these key clients. At the same time, growth in multi-sector sales slowed to 1% in Brazil. As we maintained discipline with contracts we are signing, we continue to emphasize margin, not growth. That is reflected in Brazil's EBITDA, which increased 26% in 2021, while the margin expanded 240 basis points to 15.4%. In the Americas, multi-sector business drove more of our top line, consistent with our strategy. Sales in this category grew 14%, while Telefónica revenue increased at 7%. In the Americas, it increased at 5.5%, with the margin up slightly to 9.4%. The margin was constrained by increased variable operating costs due to high absenteeism rates, mainly in Argentina and Peru. For the year, EMEA was a healthy contributor to our performance, with ABTDA increasing 73%, and the margin expanding 410 basis points to 10.6%, a level we expect to maintain going forward. Slide 17 makes clear the impact of cyber attack on our reported results for 2021. As you can see, Brazil revenue was flat, with our multi-sector business being hit the hardest, with sales down 3%. Telefónica sales, on the other hand, rose 10% for the year. The lost revenue in Brazil, coupled with the costs we incurred to deal with the attack resulted in a 31% decrease in EBITDA. In turn, Brazil's margin contracted 410 basis points to just under 9%. Point 18 gives a more focused and objective view of our recurring performance in Brazil in the fourth quarter when the cyber attack occurred. Brazil revenue grew 2%, with telephonic assets increasing 11.5%. Recurring EBITDA increased 8.4%, with Brazil's margin expanding nearly 100 basis points to 19.6%. Slide 19, which has our reported results, shows the impact the cyber attack had on our Brazilian business. Fourth quarter, sales decreased 22% in Brazil, with multi-sector and telephonic revenue decreasing 17% and 39%, respectively. The loss of revenue, as well as the cyber costs, led to a 148% decrease in Brazil's EBITDA and a 3.8 basis point contraction in its margin. revenue increased at 7.5%, while the margin contracted 100 basis points due to the higher absenteeism rates that I noted earlier. EMEA sales decreased nearly 9% in the quarter, although the margin expanded a strong 200 basis points, 13% on cost-cutting and improved sales margins. On slide 20, we also show 2021 free cash flow on a recurring basis, which was 10.5 million. In addition to the 25 million impacts of the cyber attack, there were other one-offs last year. This included the 20 million in payroll-related taxes that had been postponed in the prior year. Under pandemic relief programs, as well as the costs that we incurred when refinancing our debts in early 2021. This included $10 million in insurance costs and an $11 million premium to bondholders. Slide 21. We breached EBITDA and free cash flow, the biggest factors being changes in working capital. $42.3 million, mainly the cyber costs and the tax payments. CapEx of $51 million and the net financial expenses of $46 million. CapEx was much higher in 2021 as we had postponed cash CapEx in the prior year due to the pandemic. The increase also reflects the Microsoft licenses that we previously treat as leases from an accounting perspective. Let's turn to slide 22. Now let's look at leverage on a recurring basis. Net debt was 2.9 times EBITDA, up slightly both sequentially and year over year. On the basis, leverage was within our guidance range of 2.5 to 3 times. On a reported basis, it was 3.9 times. We finished the year with a healthly cash position of 129 million, which includes 79 million in existing revolvers, of which we have grown 56 million. As you can see on the bottom of these slides, our maturity profile is a comfortable one, following the refinancing of the bond last year. Lastly, on debts, as we continue to generate more hard currency revenues, we are building in a natural hedge against our dollar-denominated debt. On slide 23, we reach 2020 and 2021 equity. Items were the biggest equity factor, which we have broken down in the box on this slide. Of the 134 million in financial items, 21 million was one of times related to our debt refinancing. 71 million consists of recurring annual financial costs and 42 million in accounting for changes in the fair value of derivatives. As you can see in the bridge, there was also 43 million of balance sheet and P&L conversion. So to summarize, there were 85 million of non-cash items that affected our 2021 equity. That concludes my review of our results. We are now happy to take your questions. Operator, please open the call.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone thumb. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. If you're at your computer, please use the submit a question box in your webcast viewer. At this time, we will pause momentarily to assemble our roster. I would like to turn the call over to Mr. Hernan VanWaveren for 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 your sponsors are considering selling the company? Thank you.

Okay, I always hate multi-part questions because I tend to forget, you know, the second part. Let me, there's the first one, I think it was reconcile, I think it's three parts. Reconcile the EBITDA, recurring EBITDA, very simple. The only thing we don't in recurring EBITDA, we've taken out the impact of this, of the cyber, because it's such a big impact, it makes the comparison of numbers very difficult. As is our habit to do everything else, the good, the bad, the ugly, it's all in. You know, things that come to mind are things like the... lingering effects during 2021 of the pandemic that had the order of 30 million, 30, 35 million. 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 one, sorry, recurring and actual EBITDA is the cyber impact. The second part, I think it was, can you, Hernan, was the Q1? Yes, could you reconcile between recurring a bit? No, no, I got that. The second part. So fundamentally in Q1, first half of the year, we expect the following. As you can imagine, after we realized how we underestimated the impacts of the cyber at the beginning, we became pessimistic. much more cautious on our forecast going forward. We don't think there's going to be any significant long-lasting effects, but we do expect some in Q1, potentially Q2, fundamentally Q1, which is we expect some, or at least we're forecasting that some customers that have very high dependence on us you know, 80%, 90%, 100% in a particular line of business, that they would naturally diversify that with other providers. That may or may not happen, but we are forecasting that, and it's included, and it's factored in our guidance. We do have some extraordinary expenses in Q1, specifically around all the things that we're doing on cyber. So we... We got on to the improvement immediately, so a lot of those impacts happened during Q4, and still a few in Q1. I don't think we have much of those in Q2 other than what we consider business as usual, but again, all this is factored in. in the guidance. A key one also, we have had impact of Omicron. You know, obviously pandemic impact is always a bad thing, but on the good side has been relatively low impact in terms of serious cases, much less than it used to be. And from a financial perspective, tell you that the bulk of the impact was in January, decreasing rapidly in February. By the end of March, we're back to normal. So we expect that to be, you know, just a blip on Q1. We don't expect major impacts for the rest of the year. And I think there was a third part of the question, or not. I forgot the third part.

So, Carlos, could you expand a little bit on the current Bloomberg article that came out?

I don't know which one the reference is, but I think I remember that the third part of the question was about the acquisition and money. Guys, our policy is not to comment on market rumors. We're a public company. Of course, it's our obligation to look at you know, different opportunities to maximize the value of the company, but it's our policy not to comment on anything. Whether we're doing or not doing something, we're not going to comment on that. When we have something to release or comment to the market, we will do that.

Thank you. So, Carlos, we have another question from our webcast. Can you please give us more color about the impact of the cyber attack and why the impact has been 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, you know, if you don't learn, if you learn something, it's an investment. If not, it's an absolute loss. So there's a number of things that we learned. One, on the positive, I think we took the position, I took the position, that we wanted to be 100% transparent with our customers and our clients and put the safety, security, and well-being first. So we were very transparent from day one. you know, you read the same articles and the same press that I do. And I don't mean this industry, but in general, that is not necessarily the common practice out there. We have followed that and we'll continue to follow that. As it turned out, as I think I mentioned 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, one of the things we learned, is that although technically things could be sound and the technology may have worked as anticipated, there is a lot that needs to happen when you work with human beings, you know, and one of the things I learned is different companies have different levels of structured protocols to deal with these situations. So although some companies, and we were working, we're back up and running with some customers in a couple of days, But the vast majority of the companies, they wanted to persuade themselves that things were satisfactory from a risk technology perspective. Now, some companies had some very well thought through protocols. Others did not. And we got into, in some cases, into a crisis. exploratory process, which resulted in the return to service and the return to volumes, very importantly, because you could turn up service, but volumes may come through at a different pace, at a completely different pace that we anticipated, and particularly on the basis of the conversations that we had very early on with our customers. Fundamentally, that was the... the most important point and our most important learning. And as part of that, as we are updating, we have updated our cyber policy and approach. I apologize, we got all kind of echo here. Hopefully it's not for... Everybody else. We have one very important part that we have included is working with our customers on the protocols to allow us to very rapidly, you know, get back to service when we are, as we were, certain that there was no security risk. Thank you.

Thank you, Carlos. So now we'll open the microphone for Vincent Colacino from Barrington Research. Vincent?

Yes. Good morning, Carlos. Hi, Vincent. What portion of the revenue that was lost in Q4 are you anticipating will return?

We know, as I mentioned, I think my previous question, the answer to my previous question, now we know you know, with pretty good certainty what has returned. We have built into the Q1, Q2, and the fourth year some anticipation that, you know, some volume reduction in those cases where we see customers having a very high dependence on us. But in terms of the volume returning, the vast majority of it has returned back to normal.

So if I'm understanding you correctly, for Q1 in Brazil, most of the volume will have returned, should be modeled into our expectations.

It has. There's some not completely. the vast majority has returned and we've made allowance also for some potential down the road impact. Again, as I said, the, in the cases where, you know, customers have a high dependency on us, we try, we rather based on recent experience, we'd rather be, you know, prudent in, in, in, in this.

And, um, Can you give us an update on your strategies around the world in addressing wage inflation? I know in Brazil a lot of your contracts can be adjusted for wage inflation. I assume in the Americas as well. But just give us an update overall.

Sure. The... Higher inflation is not a good thing for us, particularly in Latin America. U.S., Europe, we have an unusual high wage inflation. We have so far a good ability to pass through that on prices. Latin America, as you know, the market is a bit more complicated, although we do have the ability in our contracts to – 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 a very clear trend through the year. So we, you know, part of the reason that, you know, we're... cautious about, you know, 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 the year. The first few months are where we are mostly impacted by inflation. So other than the traditional markets, such as Brazil, Argentina, of course, the high inflation in the places where typically we don't have it is U.S. and Europe. We don't anticipate 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, as you know, it's a market we just have started developing the last couple of years. I'm happy to tell you that customers that we have been acquiring are growing very fast with us. So we have a good component of tailwind of customers of the customers in the right industries and the right customers that, you know, increase their volumes with us. But also we continue to be very aggressive in terms of acquiring new customers. We have a very active pipeline and we expect to continue to grow both from existing customers and the new customers that we have.

Okay. Thank you for answering my questions.

No, thank you.

So we have a question from our webcast. Could you expand on your financial cost, specifically your current cost of capital?

Yeah, let me make a couple of comments, and I'll pass it on to Jose to give you a much better answer. In terms of our financing cost, we had a lot of one-off costs associated with the reissuance of the bond, but also some of the instruments that we have put in place, which made a ton of sense in the beginning of last year, and particularly as we were putting these things in place in December 2020 or late 2020, the world has changed quite a bit, you know, from late 2020 then to today. So some of the things, including the interest rate, foreign exchange position, et cetera, have changed, and what made sense at that time makes much less sense right now, and we are working to restructure all of that. But Jose has... Probably much better answer for you. Thank you, Carlos.

Now, in fact, our financial costs, I can give you very quick some information about it. What changes was, first, the interest rates from the bond, the previous bond and the new one, that increase our interest and our cost, of course. It means that words per year, 40 million. Yeah. We pay always 20 in February and 20 in August. And the hedge in the first year give us a positive effect in terms of cash, not in MTM, but the market to market, but in terms of cash was a positive effect. Then we have around 6 million coming from the existing revolvers that we use during the year. Extra costs, one of the costs that affects the financial is basically the insurance of the new bonds. The cost that we have is around 10 million plus the premium that we have paid for the bondholders, around 11 million.

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 to repeat on my prepared remarks, we did complete the MSA, just as for those of you perhaps are less familiar with the agreement, we had extended the Brazil piece and the Spain piece, and we have concluded the rest of the footprint before the end of the year. So now we have extended the whole footprint. But more important than the MSA itself for us, as I mentioned in my remarks, I do tell everyone in my team that MSAs 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, you know, I can tell you that our most important contracts with Telefonica extend way beyond the MSA. So the most important contracts in Brazil and now in Spain, they extend to the end of 2025. And that, again, is not required 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 place on us.

Thank you. Thank you.

And we do have a question. Our phone question next is from Ryan O'Hagan with EIP. Please go ahead.

Thanks for taking the question and 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 there's been any kind of impact on the goodwill of customer relationships based on what's happened? I know you guys have some pretty big contracts. I'm just wondering with the downtime and some of the comments you made about the dependence on 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 And one thing that was mentioned, I think, on the 3Q qual 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. And finally, the revenue guidance that you've given for the year, I presume that's on the actual number for FY21 rather than the kind of expected number X cyber attack.

Okay, again, somebody is going to have to remind me of the different parts. Let me start with the last first. No, the guidance is based on the recurring, meaning, you know, ex-cyberattack, we are forecasting to do better in 2022 than we would have done in 2021 without the cyberattack. The number will be much higher in terms of increases, what have you, ex-cyberattack. you know, if we give you the numbers based on the actual. So my objective, my ambition is always to do better. And whenever we have a bump on the road, whether it is a cyber attack or a pandemic, is to get back to the overall multi-year trend that this company is demonstrated and we will continue to demonstrate that we deliver. So that was the third part. You asked, I think the first part was something about the cyber.

The first one was just on the goodwill and the relationships that were kind of impacted by it.

Yeah, look, you know, a cyber attack or a situation like this is never a great situation for us or our customers. So let me start with that. Having said that, in terms of our long-term relationship with customers and the way I believe we have handled, I think it's demonstrating already and will continue to demonstrate that it is a positive. Not everyone is completely transparent with these things. I think you'll find that, and I'm not talking about our industry. I'm talking in general. All you can do is just read the papers. Most of the time, people say, well, I'm having a technical difficulty. I will get back to you in whatever, in a few hours. And there may or may not be disclosure 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 our relationship with our customers, the well-being of our customers, our brand, and the long-term trust. We are here to help them, protect them, and that we can be a partner that is completely transparent with them is of paramount importance. Now, that may have a cost, as it did 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 the long term, you know, 10 years from now, but we're already seeing it with many customers. Having said that, let me be clear, you know, this has not been a positive event for us or for our customers. Let me be crystal clear on that. But in terms of the impact with the relationship, I'm already seeing it and will continue to be expected to be a very important long-term positive.

Got it. I suppose that the last question I had was just around the insurance cover for the last earnings. Is that something you guys expect to be a meaningful contributor this year?

I expect to collect it for sure. We actually, initially we thought it was possible to get it done in Q4. It wasn't, and part of the reason is everybody wanted, we run a complicated business in which, you know, to take a look at losses and all that, you have to take a look at volumes, invoices, et cetera, and the assessors wanted to take a look at the results with the books closed. So that's in the works. I don't anticipate a problem on that front. So it will happen, you know, in the course of the year.

I'm sorry. Could you confirm, you know, what kind of quantum you're talking about there, how much cash that's going to equate to the balance sheet or kind of loss of earnings?

We have $11 million of insurance that I would expect to collect.

Got it. Helpful. That's super helpful. And one last question. I know you've kind of addressed it already, but obviously the minority investors have made a couple of submissions to the SEC and there was a rumor in Bloomberg about appointed bankers. Could you comment on the fact that whether or not it's true that the bankers have been appointed for any purpose, be that run a sales process or look at further efficiency programs?

I tried to answer that question earlier. Let me... Let me do it again. It's the same answer as before, which is we don't comment on rumors, not now or as a matter of policy. And as I said earlier, as a public company, as a responsible company, we look at any opportunity, any realistic opportunity to increase shareholder value. And we do that as a matter of policy. Of course, we do that as part of the business we run, and we don't comment on what we're doing at any particular time regarding to that. So when we have something to disclose, we do that. We're not doing that at this time.

Got it. No, completely understood. Thanks so much, and I appreciate you taking my questions.

Thank you.

Thank you. And the next question will be from Beltran Palazuelo with DLTV. Please go ahead.

Hello, good morning, Carlos, Jose, Hernan. This is Beltran. I have a couple of questions. First of all, regarding working capital in 2021, of course, there was a problem with the cyber attack, but I don't know why, let's say, the draining in cash of working capital is high. Secondly, if you could give us more color, of course, you were thinking about wage inflation, that will hurt the first half. But if you could give, let's say, more color, what is the ambition of margins of this company before it was 14% to 15%? But if there's more, is it still more ambitious in, let's say, 15% to 16% in maybe 2023? And then regarding the guidance, 2022, if you could give us, let's say, free cash flow, what is the free cash flow guidance? Because at the end of the day, it's very important. I've seen, let's say, the weak numbers on 2021. very good to see what is the ambition. And then regarding the net debt, if you get, let's say, 1.6 billion in the currency and put the margins, it seems very, very cautious, the net debt to EBITDA. Then the two last questions, cost of the hedge, could give us more detail. And then regarding the results of 2020, it seems that you changed a couple of things in the EMEA and Americans and eliminations because the They do not, they're not the same figures as you reported in 2020 when you see the EBITDA margin of Americas and EMEA. If you could give us, give me more detail in those type things.

Okay. Well, Dan, first of all, you know, it's great to hear your voice again. You have a ton of questions right there. I don't even remember them. Can I make a suggestion? There's something you owe me to address right now. I'm happy to do that. Can we set up a session with you to go through all your financial questions one by one?

Okay. Thank you for your time. Thank you for your answer, and thank you, but maybe just maybe the two, it's good, what is the free cash flow generation guidance for 2022? Of course, there's inflation, and of course, there's a cyber attack, but it's very good to hear what is the ambition of free cash flow generation in 2022, and then regarding margins, it seems like 14 to 15% was going to be achieved, and suddenly you take 100 basis points, so it's good that you reflect that at some point you will get to that target or even higher, or else... Yeah. No support from the financial markets.

Yeah. Let me tackle those two and let's set up a proper session. Jose and I will be more than happy to, particularly Jose, since a lot of your questions, I think, are more in Jose's department. We'll be very happy to go through that in detail. So on those two, particularly let me start with the – the margin targets. We continue to be committed to the plan that we discussed with you guys three years ago. As you know, we had a dip in 2020 because of the pandemic. We had a problem with the cyber. We'll have other problems through our lifetime. This is a complicated market, but we are committed to to come back and continue the long-term trend. So let me be very clear. Expectations to get that, I think the 2021 has put us behind a few months. I would expect to get back to the targets that we discussed with you three years ago, probably in the first half of the year after. I don't expect more than a few months of impact. My impact to that timeline, my ambition is to exit 2022 with a very strong exit rate, you know, demonstrated that, yes, you know, we got a problem with cyber in Q4 of 2021, but we are strong and continue to show in that trend beyond the number that you remember and beyond. Okay?

Okay. Carlos, thank you. Thank you for the hard work for all the team and thank you for your answer.

Thank you. We have a question from our webcast. Carlos, what is the reasonable expectation for the percentage of hard currency EBITDA going forward? Your increase in hard currency EBITDA in 2021 was 26%, which might have been helped by the decline in Brazil EBITDA owning to the cyber attack. Could you expand there, please?

Sure. We continue to grow the percentage of our hard currency. It's part of our strategy and policy. We, as I mentioned a number of times to you guys, the i find that that the us market european markets not only they're very attractive per se and inherently but but also it uh one of it helped it helps this company one of the challenges that we have which is the the fx exposure and and fluctuations so we continue to we will continue as a target to increase our um our um hard currency uh percentage um What do we expect for 2022? I expect something in the order of 30%. So we expect to continue growing the percentage, the fraction of hard currency in our cash and maybe the

Thank you, Carlos. So we have one more question from our webcast. How are the results of ongoing negotiation with clients to adjust contracts prices to inflation? Are they mostly completed? Could there still be pressure on guided margins for 2022 coming from this front?

That front is fairly tractable. So all the things, unfortunately, in the environment that we work, that's part of what we do. So it's our cost from that perspective is going to be higher this year because the inflation is higher. But the impact is fundamentally the first half. The way it works is every contract that we have signed in the last, few years, and I think by now the majority, if not the totality of our contracts, have the inflation adjustment process. What tends to happen is that the wage inflation happens in the beginning of the year. In many countries, this is driven by government and or unions, and it happens immediately. And then the adjustment on the prices of the existing contracts. It happens through the year, you know. We achieve very high rates of pass-through. I think we expect to continue to be at the high end, 80% plus, for example, in Brazil. So it's something we do every year, and it's factored in the higher inflation of this year is factored in the guidance that we've given you.

Thank you, Carlos. Thank you, Jose, for your time. This concludes our call. Operator, please, you can finalize the call.

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.