Atento S.A. (ATTO) on Q3 2021 Results - Earnings Call Transcript
Operator: Good morning and welcome to the Atento's Third Quarter 2021 Results Conference Call. Today's call is being recorded. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Mr. Pablo Sanchez, Chief Marketing Officer and ESG Director for Atento. Please go ahead.
Pablo Sanchez: Thank you. Welcome everyone to our third quarter 2021 earnings conference call. 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 constitute forward-looking statements which are not warranties of future performance and involve risk 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 on the second slide of our earnings call presentation. Our public filings and earnings presentation can be found at investors.atento.com. Unless noted otherwise, all growth rates are on a year-over-year and constant currency basis. Here with us today's call are Carlos López-Abadía, Atento's Chief Executive Officer; and Jose Azevedo, Chief Financial Officer. Following their prepared remarks, we will move to a Q&A session. As we have been doing in the recent calls, we will do our best to answer all questions received. We believe the Q&A session is relevant part of the call. So we encourage you to ask your questions over the phone through the webcast systems or even by sending us e-mail. I will now turn the call over to Carlos which will do today's call from our Madrid office.
Carlos López-Abadía: Good morning. Good afternoon. Thanks for joining us today. We would like to discuss with you today a strong set of Q3 results that reflect the continuing improvement of Atento's performance. We saw continued improvement across all key financial metrics. Starting with revenue, with 4.1% growth in the quarter and EBITDA with 14.7% growth with a margin of almost 14%, 1.2 percentage points higher year-on-year which puts us on a solid track to meet our guidance for the year. Revenue growth has been driven by Brazil with a very strong performance of our Telefonica account, delivering 19.3% growth in the quarter and continued growth of our U.S. operation. U.S. has grown 40% in the quarter, while more than doubling EBITDA. Our EBITDA performance continues to improve with highest EBITDA and EBITDA margin since the beginning of our transformation with $51 million in the quarter and $141 million in the nine months to September. We also continue to reduce leverage with net debt-to-EBITDA at 2.8x, already within our guidance for the year. Sales performance is critical to an enterprise but we're shifting from legacy sectors to now higher potential sectors, sales are even more important in managing the transformation profitable. We continue to improve our sales engine and the shift to new economy high potential sectors. We have increased our sales results in the nine months to September by 34%. More importantly is the quality of the sales. We increased EBITDA margin of new sales, three percentage points from pre pandemic levels, while improving hard currency sales by 77%. Revenue in the target sectors of media, tech and born-digital represent now 11.2% of our base, up from 8.3% last year. We have added 14 new logos in Q3 and 40 in the year-to-date. Now beyond financial indicators, I would like to talk to you about something very important to Atento and to myself. The impact that we have on the people and communities that we touch. We are proud to have introduced a new and stronger ESG plan to leverage more of Atento's strengths to make a difference. Our plan covers all three areas: environment, social and governance. As a company with around 150,000 employees, we probably have an opportunity to make a greater direct impact in the social arena. Let me highlight our initiatives in diversity to skilling and giving first job opportunities to many. We're also very proud to have joined recently the partnership for Afghan refugees in the U.S. I am looking forward to keeping you updated on our progress and contributions in ESG. Finally, we want to reiterate our guidance for the year and give you visibility to our targets for 2022. Two years ago, at this time, in our investor conference, we shared with you our three year objectives. Since then, we have had a pandemic and many changes in our industry and markets. But we still want to reiterate those very same objectives for 2022. We disclosed in our 6-K that we suffered the cyber-attack in Brazil that detected early affected a small number of our servers. Now, that we are back to normal; I want to take this opportunity to thank our clients publicly for the support. Suddenly, I learned that many of them have suffered similar attacks as well. Unfortunately, a common challenge for many of us. Thank you very much. Jose, over to you.
Jose Azevedo: Thank you, Carlos and good day, everyone. I will start by presenting in more detail how we continue to deliver on our turnaround plan and why we are on path to achieve our 2021 guidance targets. As we're executing the last phase of our transformation, we have focused more on accelerating the profitable growth we have been able to achieve to date. Going to the numbers on Slide 10, you can see our key third quarter figures. All regions performed very well year-over-year, with total revenue growing 4%, boosted by both U.S. Multisector growth and higher Telefonica revenue in Brazil. The 3.5% growth in Multisector sales was mainly driven by the Americas due to U.S. client wins, mainly in public services. U.S. revenues totaled $29 million in the quarter and $84 million in the nine months, a 40% increase compared to the last year. Importantly, we continue in generating profitable growth. In fact, we delivered the best third quarter EBITDA since we initiated the transformation plan, although we delivered growth across all the regions. Our strong performance reflects the client wins in the U.S. and Brazil, combined with the success of the efficiency initiatives that we began implementing in 2019. Looking ahead, the $51 million of EBITDA that we delivered in Q3 put us on track to meet our EBITDA margin guidance for the year. Our consolidated EBITDA margin was 13.9% for the quarter, with Brazil being the highlight. it's margin increased to 17.6% from 16.2% in last year's quarter. In the Americas, we expected margins to continue expanding as we continue growing in the U.S. market. Off note, U.S. programs had a EBITDA margins around 20% in the Q3 2021. Moving to the next slide; our nine months results were strong too, although attesting the success of Atento's transformation. I would like also to highlight that U.S. growth was 40% on the nine month end, is consistent with our strategy to expand Atento's hard currency revenues which now represent 25% of total revenue, with 28% of EBITDA being in hard currencies. But the key message I want to deliver here is 12.6% EBITDA margin that we achieved in the nine months which has already put us within our guidance range for the year. And because Q4 is seasonally stronger, we are confident in our ability to meet our full year guidance. As Carlos mentioned, we expected to finish the year within the guidance range or better, especially in terms of top line growth, particularly given the high demand for CX services we are seeing currently. As I said at the beginning of my remarks, the main challenge now is to use the solid foundation we have built to accelerate profitable growth. And the main way is to accomplish that hard to continue expand our U.S. business, hence, increasing our exposure to hard currencies even more. Now, let's take a look at our cash flow which also represented our best performance since launching the transformation plan. We generated $26 million of operating cash flow and nearly $7 million of free cash flow, also a record for the third quarter. I'd like to point out that the positive free cash flow was a shift, despite it's being a quarter in which we made one interest payments. For the nine months, free cash flow was negative $30 million. As we advised on last quarter's call, this was mainly due to $16 million in tax payments that we were postponed from 2020 under government pandemic reliefs programs and to $11 million in one-off expenses related to the debt refinancings. Excluding these one-offs and growth-related expenses, working capital and CapEx, run rate free cash flow was approximately $40 million in nine months, 2021. Cash CapEx was 3.2% of revenues in nine months 2021 as compared to 2.6% in the same period last year. The increase mainly reflects investments in IT to allow for an acceleration in growth in the future. Finally, Atento's capital structure. We ended the quarter with net debt $550 million and a strong cash position of $146 million. Our leverage was 2.8x already within our full year guidance range of 2.5x to 3x. This is a direct result of the consistent improvement in EBITDA that we have delivered in recent quarters. As we have been saying since our Investor Day in November 2019, improving the capital structure is one of the key elements of our re-rating process. In addition to 2021, we are confident in our ability to deliver even more in the reach out target net leverage of between 2x to 2.5x by end of 2022. I would like to take the opportunity to reinforce that we maintain the guidance for 2021 and the guidance for 2022 as we presented in the three year plan. This concludes my prepared remarks. Thank you for your interest and support. Let's go back to Carlos for his closing remarks.
Carlos López-Abadía: Thank you very much to all of you. I think we covered the results, some ideas that we have for the future. And other than thanking you for your attendance or participation, I would like to invite you for your questions or having the dialogue they always in doing much more than the prepared remarks.
Operator: I would like to turn the call over to Mr. Pablo Sanchez for the questions received via webcast.
Pablo Sanchez: Thank you very much. We will start with some questions we have already received. So first one is U.S. sales have been strong. How sustainable is this growth? And do you have a long-term market position in mind?
Carlos López-Abadía: Well, they have been strong for sure and we expect it to continue to be. Do we have a long-term target continue to grow? We start from a relatively low base. And obviously, there's always an advantage to be at relatively a small player coming in. We expect to continue to grow at a very fast pace. We got 40% growth in revenues, as you saw this quarter. We expect to continue at a high growth rate. And quite frankly, from a market positioning perspective, one of the things that we've learned competing in the U.S. market is that we seem to be -- some of the clients tell us that we seem to be the best kept secret of the U.S. market, a company that is in the Top 5 worldwide and is virtually unknown. I expect that as we get more credentials, we are better known in the U.S. to even have a better opportunity to serve clients and to continue to grow.
Pablo Sanchez: Thanks. Let's go to the next one. Do you expect to expand your base of tech, media and born-digital clients at the same pace? Or can you accelerate it?
Carlos López-Abadía: Well, we are very happy with the pace at which we're growing. Obviously, we'd like to accelerate it. As I mentioned in my remarks, we -- and you've seen in the slides, we've come from -- sorry, 8.3% of our base to 11.2% of our base. We expect this expansion to continue. This is a sector that are highly attractive to us. We chose them for a reason or for several reasons, one of them being that they are naturally high growth themselves. So you start working with companies in these sectors and there is a lot of potential to grow with them. In addition to that, they tend to be companies that place a higher emphasis or higher value to -- on higher value services, higher quality, et cetera, allows us to deliver more value to them and to get better margins ourselves. So there is -- there will be a continued emphasis in these sectors and expect to continue the growth to grow in these sectors.
Pablo Sanchez: Okay. Next is, can you comment more on main drivers of the margin expansion in Brazil? Is there more room to improve there in terms of cost structure and in the other markets?
Carlos López-Abadía: Well, there is always opportunity for improvement. We are happy with the results and the margins that we get in Brazil but there is always opportunity to do more as there is everywhere else in Atento. So yes, we do expect and we will continue to expand margins in Brazil and elsewhere, particularly in some markets where we have even higher opportunity to expand margins. There's two components to that. One is the cost base. And sometimes, when people talk about efficiencies, they're thinking about just cutting costs. What we have been deploying and we will continue to deploy is better ways to do business, methods, practices and technology that allow us to deliver the same or higher quality service at a lower cost point, not simply just cut costs. Cutting cost has a natural end to it but improving the way you operate has the potential of continue to give us incremental improvements year on year-on-year. That's one component and we still have opportunities to show across Atento. The other component is the revenue component of the margin, the natural margin of what we sell. We have improved, not only in the amount of sales, sales growth but also the quality of those sales. And part of that is reflected on higher margin, selling higher margin services in higher margin sectors. I also mentioned in the prepared remarks that we have grown three percentage points, the sold -- in sold margins. So that shows as well that there is opportunity to improve also from the from the sales side or the -- from the revenue side. So the answer -- the short answer to that is yes, we expect to continue to improve.
Pablo Sanchez: What are you medium and long-term targets for hard currency revenues?
Carlos López-Abadía: We don't have any specific or hard target for hard currency, if I can use hard twice in the same sentence. We expect to continue to grow our share of higher currency revenue and margin. We're doing that and we expect to continue to do that. Is there a target? Clearly, we will continue to grow hard currency sales at a disproportionate large share of our total sales. And we expect to continue to do so significantly over the next foreseeable future. Particularly, I mean, for us, the hard currency markets tend to be EMEA and U.S., particularly the U.S. We've seen, I expect to see continued growth at a very high margin.
Pablo Sanchez: Okay. I think that we have one question on the phone.
Operator: And the question is from Vincent Colicchio with Barrington Research. Please go ahead.
Vincent Colicchio: Yes, thanks for taking my questions. Carlos, curious, in terms of the cyber-attack, do you have insurance for that? And do you get -- does that -- those revenue losses get recovered? How does that work?
Carlos López-Abadía: We do have insurance. And as I mentioned -- well, as I mentioned in the remarks but I think we alluded to in the press release when -- or the 6-K, when it happened. The impact in terms of the number of servers was relatively small. We detected very early. We have, just to give you a sense, about 67,000 machines in Brazil only and it -- only about -- in the 20s, 20 something, our machines were affected. We detected very early. We clean it up essentially in the first 24 hours. So I'm very happy with the speed at which it was detected and corrected. I also -- if you allow me, Vincent, I want to take the opportunity to thank our customers again. As I mentioned earlier, it was a surprise. I can't say it was a pleasant surprise but it was a surprise to learn how many of our customers have been affected, some of them multiple times in the very recent past. And I just can't thank them enough, both on the public and the moral support that we received. But as I mentioned, we don't expect to -- I think I mentioned on the presentation that we don't expect to affect the guidance that we've given you for the year.
Vincent Colicchio: And then, in terms of the Telefonica relationship; do you have a healthy -- what does the pipeline look like of new deals? Is that healthy? And are the margin on those deals similar to the recent margins you've gotten on Telefonica deals?
Carlos López-Abadía: The pipeline is very healthy. We still have to win this business. As you know, pipeline doesn't equate sales always. But I'm very happy with the Telefonica relationship. We -- as you have seen, we've grown this year. We don't expect that to go on forever. As you know, my intention, our expectation is to grow the Multisector that for us is a non-Telefonica part of the business to grow it at a faster than the market growth rate and that to make -- more than make up the overtime decrease of the Telefonica business. We expect to do that. I think, it's healthy for our customer mix. In the meantime and in response to your -- in terms of the margins, we'll continue to focus on business that is very valuable to both Telefonica and ourselves. And as I mentioned many times, the only way to get good margins, decent margins in the business is to make sure that you are delivering significant value to the customer. So the answer to your question is, is yes, we have a good pipeline. We still have to win it. We may be making some announcements in the near future. But in general, the -- I'm happy with what I see with Telefonica. We think -- and I want to be clear, we think a long-term picture in which we grow more the rest of the business than Telefonica.
Vincent Colicchio: And Jose, one housekeeping question. For the nine months, what was the constant currency revenue growth?
Jose Azevedo: So in constant, we are close by 5%.
Vincent Colicchio: For the nine months revenue growth is 5%. Is that right?
Jose Azevedo: Yes.
Vincent Colicchio: Okay. And just one more, if I may, for Carlos. So the Manpower relationship, is it -- is there anything to update us there? Or is it too early to comment on?
Carlos López-Abadía: No, it's a bit too early. I expect to push in the multilingual business is a long-term play for us. So we'll be updating you mostly through next year. That's where the Manpower relationship is playing out.
Jose Azevedo: Sorry, let me correct. Only -- the 5% is for Q3, the 10% is the nine month. I'm sorry, because I answered only for the Q3.
Vincent Colicchio: No worries, thanks for that correction. And thanks for answering my questions.
Carlos López-Abadía: Thank you, Vincent.
Operator:
Pablo Sanchez: Great. Let's move on with some other greeting questions we are getting here. So Carlos, can you tell us why the company has been successful in winning born-digital U.S. based business?
Carlos López-Abadía: Sorry, to grow born-digital?
Pablo Sanchez: In winning born-digital U.S. based business.
Carlos López-Abadía: U.S. based business. Well, in general, let me try to answer in two pieces. Winning born-digital was a question of putting our mind and our backs into it. We decided to focus in a number of segments and born-digital being one of them, as I mentioned in a earlier -- on an earlier question, because they have natural characteristics that are very attractive to us, higher natural growth, interest in higher value-added services, et cetera, right? So clearly, we put our mind to it and our backs into it. And obviously, the results are there. Particularly in the U.S., it was a combination. Also, I think I mentioned earlier, a combination of -- we're focusing to the right segments. We focus into it. We executed on it. We built a very strong team that we have a couple of years ago and we continue to build it as we expand. And in addition to that, as I mentioned earlier, we had a little bit of the David versus Goliath advantage with the small guys that in the U.S. that actually are part of a much larger company that actually has a lot of credentials, ability and capabilities. And several customers have told us that with the best kept big secret in the U.S., we will continue to exploit that and continue to grow very fast, particularly in those sectors but in general, in that those and other sectors.
Pablo Sanchez: Thanks. We have two questions about 2022. Let me try to put together. So first one is, if you can comment on the expectations for growth for 2022. The second one is a bit more specific, asking about the EBITDA margins, as laid out in the Investor Day presentation at the beginning of the plan. And if we -- can you review those margins again and tell us why you feel confident in achieving them for the next year?
Carlos López-Abadía: Well, let me start with that first. The -- we are confident to achieve them. And part of that is because we, as a management team, made the commitment of delivering those and pandemic or other disasters being no excuse to that. So we feel very strongly -- the whole team feel very strongly about delivering those. But beyond our -- just our confidence, we have done a number of things that makes us feel more confident. So one is we have introduced a lot of changes in terms of our ability to serve our customers at a -- in a more efficient way. We are changing. We haven't finished yet. There is still quite a bit to achieve. But we have been introducing methods, practices, technology, common across our regions and trying to institute best practices across them all. As I said, we have started. There is still a lot to be achieved. But you can already see that we are delivering at a higher contribution margin than before. Those improvements that are obviously recurring and additional improvements, as I mentioned, we believe we have only started down the route, should help us to -- if we were confident a couple of years ago to be more confident than we were two years ago. Now in addition to that, on the revenue side, as you can see, not only we keep on improving our sales capabilities every year but also we're selling at a higher quality, better margins. So again, what -- two years ago was a planned vision. I think now we have two years of track record that gives us the confidence that we will meet the commitments that we put out there for all of you.
Pablo Sanchez: Next one is, can you simply remove the currency hedge? Or would there be a large financial penalty for doing that?
Carlos López-Abadía: Well, I think the specifics of that are probably for Jose but I'll tell you that we're looking at different options that we have on the currency hedge. But with any of the such hedges depending on the macro movements can go in different directions for against you. But clearly, we're looking at the options that we have to make sure that we have -- we maximize the positive impacts of the hedge and minimize the negative ones. Jose, anything else?
Jose Azevedo: No, it's exactly that, Carlos. We're looking for options that we have. The simple answer for that is normally all instruments like this one, we have to pay the market to market. But as you mentioned, we keep on looking for opportunities to change the structure.
Pablo Sanchez: Okay. Next one is, as we head into 2022, would the company consider buying some shares back in the open market, especially considering how cheap the stock is relatively to the value of the business?
Carlos López-Abadía: Well, anything is possible. But at the moment, I have no intention. I don't foresee buying shares or having the use of cash to be dedicated to buying shares. Much higher priority -- as always, I think I mentioned this from the beginning, the highest priority is the expansion and improvement of the business. And there's two particular areas where we're emphasizing the use of cash. As we move from a legacy customer base to a new set of customers, we need CapEx to grow the new customers. That's a high priority for us as the essence of the transformation of Atento. In addition to that, as we introduce better technology, higher technology, new services, new capabilities and the renewal of the technology base is also a high priority for us. So for us, I prioritize those particular uses of cash way before any share buybacks.
Pablo Sanchez: Okay. The next one saying congratulations on strong results and margins. Growth in Brazil slowed down this quarter. Are we seeing any improvement as things are starting to open up again?
Carlos López-Abadía: Yes. We had a couple of one-offs in Brazil this quarter. One had to do with some tax adjustments and another one on some reason that we chose to exit because of the low margins. But yes, we have high expectations in Brazil. We did very well in Brazil. Telefonica has performed. Vivo in the case of Brazil performed very well for us this year. But I expect to resume the growth in Multisector, Q4. And I have high expectation for Brazil is a great economy. Obviously, we have the uncertainty of elections next year but that's nothing that we're not used to managing through. And at the end of the day, as the pandemic ends and hopefully, we're seeing the last waves of it, we -- the positive impact of economies that come back to up to speed, as we've seen in U.S. and some other places, will also come to Brazil and other economies in Latin America. And that will be good for the economy. It would be good for the industry. It would be good for us as well.
Pablo Sanchez: Okay. Next is . Do you anticipate any financial effects from the cyber-attack in October? And what are your target run rate leverage and EBITDA margin over the next three years?
Carlos López-Abadía: That's a multipart question. So I think I answered the first part on the cyber-attack. What was the second?
Pablo Sanchez: The second one, what are your target run rate leverage and EBITDA margin for the next three years?
Carlos López-Abadía: We have not prepared to disclose those today. Actually, this gives me the opportunity to recommend to you guys, not only to do that disclosure but to do it in the context of an industry or Investor Day that it was probably over the week. We moved -- we think cancelled -- we moved the Investor Day. The initial we were thinking about November time frame. We probably will do it in spring. So it's not that we've canceled in any way to perform. But I think we owe that to you, I think, is not only something that we owe that to our investor base but something I find particularly beneficial to engage in a more direct discussion with many of you, get your views and also give us the opportunity to give you an expanded perhaps or hopefully an expanded understanding of what this management team is proving to do. So, stay tune; we'll announce the date that we're looking at some time in the early spring of next year.
Pablo Sanchez: Next one is . Can you provide some additional color on the contracts which have been executed in Brazil?
Carlos López-Abadía: Probably not today. I will have to think about what is disclosable or what is not. So I'd rather stay quiet. By the way, they're not huge or that material. I mean it's a relatively small, immaterial to the overall Brazil business or Atento.
Pablo Sanchez: Let me ask. I don't know. Let me check and ask if we have some question on the phone.
Operator: We have no questions on the phone at this time.
Pablo Sanchez: Yes. Okay.
Operator: Pardon me, we just got one in. The next question, one moment, please. The next question is from Eriko Miyazaki-Ross with Global Evolution. Please go ahead.
Eriko Miyazaki-Ross: Hi, there. Thanks for taking the question and congratulations on the earnings. Just wanted to quickly follow-up. I mean -- I think you mentioned at the time of the bond roadshow that you were expecting to get to marginally positive annual free cash flow over the next couple of years. Can you just elaborate whether you actually expect to hit that target, I guess, for FY '21, considering, I guess, the fact that you've talked about how Q4 is typically seasonally stronger? And then, I guess, kind of what you're anticipating for FY '22 as well on the free cash flow side of things.
Carlos López-Abadía: But we -- I don't think we're making a -- providing guidance for 2022 on cash flow. But Jose, on 2021, where do we stand?
Jose Azevedo: Yes, we expect to be in the breakeven and we talked about to be positive by around $10 million. We -- what we have is we invest a bit more in terms of CapEx because we got some new business that we have to invest into. But the expectation is the by breakeven or positive by around $5 million. That is the expectation that we have. And for next year, we spoke sometimes about the free cash flow. We maintain the same. It will be a positive one.
Eriko Miyazaki-Ross: Great, that's helpful. And then just to clarify, with respect to the sort of breakeven or slightly positive free cash that you're expecting for FY '21. Is that including some of those one-off items that you mentioned before? So for example, I guess, on the tax and the refinancing, etcetera.
Jose Azevedo: Yes. No, that will be with everything included.
Eriko Miyazaki-Ross: Okay, that's very helpful. Thank you.
Jose Azevedo: Okay. Thank you.
Pablo Sanchez: So let's go on with the greeting questions. Carlos, we have one. Happy to see the Investor Day scheduled for April. Why was this moved from November? Was it related to the COVID?
Carlos López-Abadía: We had so many things going on in -- around the same time. And we had a -- if you have a scale of one of these, you'll see that the windows are relatively small if -- you have Thanksgiving in one end, variety for the events that you have -- you don't want to clash with. At the end of the day, we ended up with very few windows and with a lot of work in Atento, we thought would be better. We collectively, ourselves yourself will be better served if we moved it too early in the year.
Pablo Sanchez: Next one is, can margins in Americas and EMEA get as high as Brazil?
Carlos López-Abadía: Yes, actually, the U.S. margins are already ahead of those of Brazil. So that's already a fact. EMEA, the markets there are a bit more complicated but I believe that they can go as high and potentially higher. In EMEA, the key is to provide a -- there' a number of levers but one very important one is to be able to provide services to customers in Europe and serve them from Latin America or offshore to a significant near-shore offshore to a significant degree. A lot of our business in EMEA is out of Spain. We've been improving significantly the margins in EMEA. We are closing the year -- we will be closing the year with a record margin -- EBITDA margins in EMEA. We're very happy that we can prove -- we have proven that the existing business can be run at a higher margin. It can -- to get a significantly higher, one of the levers is the near shore. The other levers is, as I mentioned, the multilingual component that would be, not only exploring but pushing through 2022.
Pablo Sanchez: Most of them have already been answered. And the last one is without providing 2023 guidance, do you think you might be able to increase EBITDA margins even further in 2023?
Carlos López-Abadía: Yes, absolutely. I think one of -- I don't know if that question comes from the same investor that put that to me on an e-mail not too long ago and something that I took note to cover at length in our investor conference. The answer is yes. I think some people -- and again, I don't know whether the mentality of capped returns, EBITDA could possibly come from I have a mentality of, hey, our job is to expand any barrier perceived or otherwise to performance. As I mentioned, the efficiency improvements we are introducing are not -- in case somebody had that impression are not about, hey, let's cut cost. Let's do -- let's run -- work harder, run faster, sell the furniture. Those kind of efficiencies are short-lived and absolutely limited. The efficiencies that we've been achieving and deploying -- and by the way, I insist there is a lot more that we can do. We have only started our efficiencies based on doing the work in a better way with better processes, better methods, better technology. You've seen best practices. The variance that we have -- that we had was significant from the best performing center to the worst performing center; we have reduced those. We still have a long way to go in terms of improvement. That improvement is ongoing. It's recurring and you can build on top for that. The improvement that also comes from better contracts, better sales, participating in higher-margin markets, such as, for example, the U.S. that is also recurring. And because compared to other competitors or the large companies, we have very little exposure to those inherently higher-margin markets. We have a lot to go, a lot to improve from that perspective as well. So the answer in terms of our capability to continue to improve margins, margin expansion as well as growth but particularly margin expansion is -- I don't see any limitation in the near future. The only limitation is execution is how quickly can we implement those changes. We have been already doing so again, nothing that I'm saying here is something that I'm making up. You just take a look at we've done over the last two, three years. And you can extrapolate or make your own conclusions. But anything that I am telling you is something that we already are delivering. What I'm telling you is that we -- not only we're going to continue to do that but we're going to improve on it. So the answer is a categorical yes, we can significantly improve our performance, particularly in terms of margin and margin expansion.
Pablo Sanchez: One last one. That is, why do you think you are winning business in the U.S.A.? Is it new bids? Or is it winning business from competitors?
Carlos López-Abadía: I'm not sure what the differences but the answer is the same. We have very small presence in the U.S. So the vast majority of what we're winning is new customers, new logos. We're expanding in the new areas, in many cases, new segments. I don't know if I announced in this group, we have opened two new centers in the U.S., one in Miramar in Florida, the other one in Salt Lake City. So we continue to expand the business and gaining new logos, new sectors and sometimes even new industries. If there's nothing else, Pablo, he is giving me the sign of -- with on here, I would like to thank you all again for participating. As I mentioned, I always enjoy more the Q&A than the prepared remarks. So please keep your questions coming. Thank you very much.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.