Atento S.A.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Greetings, and welcome to the Atento S.A. First Quarter 2018 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shay Chor, Investor Relations Director. Thank you. You may begin.

[Shay Chor:]

Thank you, and welcome to everyone to our fiscal 2018 first quarter earnings call. Alejandro Reynal, our CEO and Mauricio Montilha, our CFO, are here with us for this call. Alejandro will begin this call by giving a brief quarterly performance and business review, and Mauricio will then provide more detail in our quarterly results. After that, we'll take any questions you may have. Alejandro will have a few closing remarks after the Q&A session. Before proceeding, let me mention that certain comments made on this call will contain financial information that has been prepared under International Financial Reporting Standards. This financial information is unaudited. In addition, this call may contain announcements that constitute 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 security regulators, and we invite you to read the complete disclosure included in the second page of our earnings presentation. Our public filings and earnings presentations can be found at investors.atento.com. Please note that unless otherwise noted, all growth rates are on a year-over-year and the constant-currency basis. Now let me turn the call over to Alejandro.

[Alejandro Reynal:]

Thank you, Shay. Good morning, everybody, and thank you for joining us today. Please turn to Page 4 of the presentation. We are pleased to say that we delivered another quarter of solid top line growth, on revenue diversification with consolidated revenues up 4.5% in the first 3 months of 2018. From a regional perspective, the quarter was very much in line with the business seasonality and the expectations. In Brazil, we continued to deliver revenue growth, fueled by Multisector business and higher value-added solutions. As anticipated, the growth rate experienced [indiscernible] and it does not reflect yet a positive impact on the economic recovery in the country. An economic recovery [indiscernible], despite positive trends in market indicators, is happening at a slower pace than expected. Profitability in our Brazilian business is in line with our short-term guidance, and it has been impacted by overcapacity due to slower growth and ramp-up of specific client programs with margins below plan. We have identified the issues and have put in place an operational improvement plan, which is already delivering results. We expect to see demand recoup and recovering margins along the second half of 2018. We are very pleased with the performance of our Americas segment as we continue delivering strong growth in the region, with revenues up 9.7%, and almost 14% on our Multisector business. The growth in revenues spread across the region with Argentina are performing, followed by strong performance in countries such as Chile and Colombia. Our Telefónica business experienced also 1.7% increasing revenues, driven by strong performance in Argentina, Mexico and Chile. Profitability increased 1 percentage point in the quarter to reach adjusted EBITDA margin of 11%. We remain optimistic regarding our Americas region growth trajectory due to the very good commercial momentum in verticals, such as financial services and the growing interest of Atento's expanded capabilities, particularly in collections and back-office solutions. EMEA delivered a good quarter, highlighted by ongoing solid Multisector revenue growth in Spain of 7.8% and a stable profitability. Increased volumes in Multisector continued to accelerate revenue diversification and drive profitability in the region. Multisector was up 3.7 percentage points in the quarter, representing the largest improvement in revenue mix for the whole group. Our expectations for the region is to continue down the path of revenue diversification fueled by Multisector performance and increased penetration in highly attractive verticals. The quarter also delivered the positive evolution from a client and commercial perspective. Multisector clients continued to be a growth engine for Atento across all regions, with approximately 8% increase in revenues for the period, coming mainly from financial services and other Multisector verticals. Sustained robust Multisector growth is accelerating revenue diversification across the whole group, which is at a new historic level for the quarter, an increase of 1.5 percentage points versus prior year. Also, on the client side, we continue accelerating the deployment of Atento's expanded value offer across our footprint, and we are experiencing very good commercial momentum for back office, collections and digital solutions, driven mainly by opportunities in financial services and nontelco verticals. Higher value-added solutions demand continues strong at approximately 1/3 of our qualified pipeline. Telefónica revenues remained stable at group level, with 1.4% increase in Brazil and 1.7% increase in Americas in the quarter. We continue to be Telefónica's reference partner for CRM BPO services, and increased our share of their spend; strengthening our commercial partnership across the footprint. Beyond the first quarter, our key priority remains to deliver profitable growth, while performing our business to win in the digital world. Our focus for months to come are

[Mauricio Montilha:]

Thank you, Alejandro. As a reminder, I'll be referring to the growth rates on a constant currency and year-over-year basis, unless noted otherwise. I ask you to please turn to Slide eight. Consolidated revenues grew by 4.5% in the quarter, reflecting once again the good performance in Americas and Brazil. Multisector clients were up 7.9% in the quarter and now represents 61.4% of the revenues, a 150 basis points higher than last year. Telefónica revenue is considered relatively stable, down 0.6% in Q1. Revenue from higher value-added solutions was down 150 basis points to 25% in the quarter due to client mix changes. And EBITDA totaled $49.8 million in the first quarter. EBITDA margin was 10.1%, in line with short-term trends we expected when we disclosed our fiscal 2018 guidance last quarter. Also, it's important to mention we [indiscernible] EBITDA line. We continue to expect this to remain throughout the year. Softer first quarter margins were explained by lower margins in Brazil, but partially compensated by margin expansion in Americas. Recurring net income attributable to owners of the parent company, which is $7.8 million, [indiscernible] of $0.10. Net income in the quarter was affected by the lower adjusted EBITDA and the higher effective tax rate. The effective tax rate impact to recurring net income reached 51%, and we expect it to normalize throughout 2018. Moving now to Slide 9, where we look at the performance of our segments. Brazil revenues maintained its recent growth trend and were up 3.6% in the first quarter. Revenue for Multisector increased by 4.6%, particularly due to expansion of higher value-added solutions. Revenue mix from Multisector increased 60 basis points to 69.0% of the total. New wins from commercial activity remains solid. Revenues from Telefónica grew 1.4% [indiscernible] in the region. Adjusted EBITDA totaled $26.4 million in the first quarter, with adjusted EBITDA margin of 11.1%, down 330 basis points following Q4 '17 trends. It's important to discuss the dynamics we have been seeing in Brazil. We continue to see overall volumes lagging and still lagging economic recovery. While we expect volumes to be recovered within the year, we have been executing operational plan [indiscernible] for our contracts which are not performing as expected. This plan includes adjusting operations to improve the efficiency levels or even [indiscernible] possible contract renegotiations if improvement is not possible. Additionally, we have some [indiscernible] softer volumes and [indiscernible] this is the case. We expect this plan to drive margin recovery in second half of the year for Brazil. On to Slide 10 now, we look into Americas region, where revenue growth was also pretty strong. Revenue in the Americas were up 9.7% year-over-year and Multisector continued to increase significantly, up 13.9%, with volume increases driven by Argentina, Chile and Colombia. Strong performance pushed Multisector up 310 basis points versus Q1 of '17 to 59.6% of revenues. Revenues from Telefónica increased by 1.7% on continued positive results in Argentina, Mexico and Chile. Adjusted EBITDA totaled $21 million in the quarter. Adjusted EBITDA margin increased 100 basis points to 11%, and reflecting normalized profitability levels in contracts implemented during 2017. Now please turn to Slide 11. EMEA revenues decreased 2.4% in the quarter and Telefónica revenues were down by 8% driven by lower volume into this year. Similar to recent quarters, our commercial strategy within Multisector clients continues to bear fruits, with revenues from Multisector growing a strong 7.8% on the back of higher volumes from non-TEF telcos. In the quarter, revenue mix from Multisector was up 3.7 percentage points to 38.9% of the revenues. Adjusted EBITDA in the quarter totaled $5 million, with margins stable at 7.8%, reflecting higher volumes from Multisector combined with operational efficiency initiatives implemented in the period. Turn, please, to Slide 12, we will talk about the cash flow and capital structure. Free cash flow before interest and acquisitions was negative 3.9 -- $34.9 million, impacted by higher one-off working capital, including client-specific [volume increase] initiatives and a higher [indiscernible] in some contracts under [indiscernible] renegotiations. We expect most of these effects to be already reversed in the second quarter, with full normalization throughout 2018. Cash CapEx totaled 2.7% of revenues, up from 2.2% in the first quarter of 2017, but [indiscernible] guidance for the year. I would like to highlight that the net financial expenses in the quarter includes the interest payments of our 2022 bonds, in the amount of [$12.3 million] and a negative $3.1 million effect in our hedge instruments compared to a hedging gain of $1.5 million posted in the first quarter of 2017. The interest of the bond and the hedge effect will impact the first and the third quarter of each year until the debt expires in August 2022. [As of] March 31, 2018, we had cash and cash equivalents of $100 million, and revolving credit facilities of $104 million, out of which $90 million were undrawn, implying total liquidity of $190 million. Total net debt with third parties was $394 million and the adjusted [indiscernible] EBITDA to net debt ratio was 1.8x, compared to 1.6x in both Q4 '17 and Q1 '17, reflecting the lower cash position. Now we would like to turn the call over to the operator and take questions from the audience.

[Operator:]

[Operator Instructions] Our first question comes from the line of Susana Salaru with Itaú.

[Susana Salaru:]

We have two questions. The first one is related to Brazil margins. We saw decline, and it's mentioned that it's because of overcapacity and some specific client programs; and it was also mentioned that our operational improvement actions that are being done. Could you please elaborate a bit what will be this operational plan that's being done? And when should we expect these initiatives to mature? That would be our first question. The second question is related to the higher value-added solutions contribution to the revenue mix. It declined. So also, we'd like to hear if there is any plan to change that trend?

[Alejandro Reynal:]

Susana, this is Aljandro. Thanks for joining the call. On the Brazil question, which I'll answer first, and then Mauricio will touch upon the mix of solutions. As I mentioned on the call, there is primarily two factors. The first one is overcapacity and the second one is specific performance in certain accounts. With regards to the first one, which is the overcapacity, and if you look at our numbers of workstations in Brazil, we have grown quarter-on-quarter, and this is based on the acquisitions that we've done and the investment for additional capacity. At this stage, and as we've mentioned during the fourth quarter call and today, the growth lags the expectations, although what we're seeing is that the growth is -- we now opine, should be as expected in the third and fourth quarter of the year. So the overcapacity basically will be gone by then. I mean, it's more of a short-term impact that we have of having capacity available to several of our clients. And the volume has not been as expected for the first and second quarter. With that, we've taken the measures of further operational adjustments, and also based on what we see in terms of forecasted volume should be solved by third and fourth quarter. The second issue is, as related to specific client programs, here, we have programs that have been ramping up from the fourth quarter into the first quarter of this year. Performance is not where we expect in those and, therefore, in the comparison versus same quarter last year, it produces a drag on margins. We have implemented the plans to address those operational issues. And for those programs as well, we should have no issues in the third and fourth quarter of this year. So in summary, the two items are related to overcapacity and specific client programs. And in the two cases, the actions have been taken and we should have no issues related to that as of the third quarter of this year.

[Mauricio Montilha:]

Susana, so on the higher guide in solutions mix, we haven't changed particularly with mix of service. When I look at particularly on where we are growing strong on the finished sector, there is no change. And then we have some internalization, particularly in some telcos, of the area that we've been providing our solutions, depending on the strategies; Telefónica is one of them. That's certain. We internalized, or what we called the more higher value-added clients. And so this was on the client base. But the second point is, it depends on the quarter; in this quarter, as we ramp up several projects last year, we ramped up a lot of projects more on the contact center service, more basic. So we had a lower participation on solutions. So all in all, if I look at solutions overall versus last quarter, for example, we continue very strong in financial sector, some internalization on the telco side and a lot of growth as we ramped that up last year. Especially in second part of the last year, there was more focus on the more traditional work. And that's, in general terms, we have very good traction on the pipeline for solutions for the year as well, and then we do expect that this will recover along the year.

[Operator:]

Our next question comes from the line of Vincent Colicchio with Barrington.

[Vincent Colicchio:]

Yes, Mauricio, a follow-up on the higher value-added solutions. What solutions are being internalized? And how much additional exposure do you have to this area? And also, do you expect high-value solutions in the mix to increase in upcoming quarters?

[Alejandro Reynal:]

Vincent, it's Alejandro. Just to comment, the -- in terms of the second point, the quality of the pipeline in terms of solutions is very strong. And I would say that it's stronger than what we had the last year. Right now, about 20% of the revenue-qualified pipeline is on solutions, which is higher than what we had last year. So from that perspective, we feel good about the trajectory for the rest of the year in terms of incorporating the solutions business. When I look into the specific opportunity that we are offering to our clients, not only in Brazil, but also in Americas, it does look very, very promising from a pipeline point of view. I would say that the -- when you look at the quarter-on-quarter comparison, this quarter versus last, as Mauricio said, it's a mix element. There is no major tendency that we can point out that would make us think that the percentage of solutions is going to slow down overtime. The specific internalization situation that Mauricio was referring, that was just pointed to one specific client, one specific operation. So it's not a situation that we're seeing all across the board, it's very specific to one situation. So again, I think what you will see over the next quarters is that the percentage of solutions should evolve in a positive way versus last year and continue to be up ahead of the 25% range that we are right now total percentage of our revenues. So the trend is growing -- is [Indiscernible]

[Vincent Colicchio:]

And then, you're seeing accelerated demand in the financial services and some other fast-growing verticals. Do you have the resources in place to -- on the delivery and sales side to continue to accelerate that side of the business?

[Alejandro Reynal:]

Sorry, Vince, you said if we have the sufficient sales resources to capture on that business?

[Vincent Colicchio:]

Yes. Is your resource mix well positioned to capitalize on movement in that direction?

[Alejandro Reynal:]

Yes, it is. What we have been doing -- because most of the solution business at this stage is still in Brazil, what we've done over the last couple of quarters, like second part of last year and actually this year as well, is to strengthen the capabilities and the resources we have in the Americas, in -- particularly in Argentina and Colombia, where we're having the greatest demand for solutions business. So I can say now that, the same solutions that we have for financial services in Brazil, we can offer to banks in Colombia and Argentina. And this is where we are seeing more so the opportunities from a pipeline point of view. So the question to be answered is just, I mean, we have reinforced capabilities and we have now the resources to deliver up on these services.

[Vincent Colicchio:]

Is there any update on the potential changes on the payroll tax credit in Brazil?

[Alejandro Reynal:]

No. There's no changes. We're still receiving the benefit. There is no expectation, and we continue to monitor this in congress here but there's no expectation for the law to be voted in Congress at this stage. As we have mentioned in the past, this is the log exponent we have included as part of the exception, so in any case, it would be a positive to us whether it continues to be what it is now or when it gets voted. But at this stage, there's no -- no progress has -- it hasn't been put before a vote in congress.

[Vincent Colicchio:]

And then one last one from me. In EMEA, you're seeing good growth from non-Telefónica telcos. Is the margin on that business consistent with your existing business?

[Alejandro Reynal:]

Yes. It is consistent. I think one of the things that we're seeing in EMEA, specifically in Spain, that the fact that the economy has improved over the last year, two years, there's more demand from the telcos to do client acquisitions, so basically telemarketing networks. Most of those programs are coming at a better-than-average margin. And also, I would say that it's very positive because this wasn't the case in the past. Now instead we're working for two of the major competitors of Telefónica in the Spanish market. And again, very successful on these customer acquisition campaigns. So the development overall is positive, and margins are coming at or better than the average and mostly on customer acquisition efforts.

[Operator:]

[Operator Instructions] Our next question comes from the line of Beltrán Palazuelo with Santalucía.

[Beltrán Palazuelo:]

I have two questions so I don't get much time from you guys. In terms of free cash flow generation, what are your expectations of accumulated free cash flow, second, third and fourth quarters? Is it more than $100 million? And the second question is on capital allocation. There seems to be a complete disconnect of the price share with the real underlying value of this business. We analyzed exactly where you spend your money, doing a simple math, if you spend $60 million growing apart from your maintenance CapEx, $30 million comes from working capital, $30 million comes from growth CapEx, you get more or less the forward-state a constant $10 million of EBITDA, that's 6x. You're paying 6x EBITDA for growth. Then, you have your share trading at an enterprise value of under $900 million, you're going to $220 million of EBITDA, you can fund your growth at 4x EBITDA. And if you didn't want to grow, it's $60 million, I think, it's more or less a guidance of free cash flow generation. If the working capital investments are not more than $30 million, so you could actually buy your shares at 24 times the free cash flow yield. My other question is, I'm representing 1.5 million shares. What is exactly the alignment of the major shareholder? Is he aligned with us? Is -- he really want to add value to the minority shareholders? And the second question is how does management see it? Because you're on top of the game, and you can buy shares with your own money at 24% free cash flow yield. Why aren't you buying shares? It seems to me that, I don't know, the balance sheet is strong. There are going to be more than $100 million in free cash flow generation in the next three quarters, why isn't the company taking measures to really show that the market is wrong? We are -- in our office, we are quite puzzled why nobody is taking measures. Is there something that I'm not seeing, something that worries you? Because when we see the results quarter-after-quarter, there seems to be a complete disconnect and we really like that management takes care of that situation and allocate cash effectively at the 24% free cash flow yield versus a 12% or 13% return growing. But then when you see free cash flow generation, I think there's cash flow for both. So I would like to have a concise answer or else I would think that maybe, I don't know, there's not alignment between the major shareholder and the management because or else, I don't know what is happening. What are you trying to do with the $100 million cash generation in the next few quarters?

[Alejandro Reynal:]

Yes. Thank you, Beltrán. Good to speak to you and again, thanks for being supportive to us. I mean, your question is very good and comprehensive. I'll probably take the first, answer to it, and then hand over to Mauricio. On the first one, I do agree that there is still completely value disconnect between the business and where we're trading at. The truth is I think the business has very solid fundamentals. And as I've said here, I remain very optimistic about the prospects of the company. And I think we have a bright 2018 ahead of us from a top line and margin point of view and also from a free cash flow generation perspective. So from that perspective, I totally agree. I think from a capital allocation perspective, for us, the first and most important priority is to fund the business, granted that there is a disconnect between the multiple at which we fund the business versus the multiple we're trading. At the end of the day, we need to make sure that the business continues to grow. And I have to say that there's opportunities to further continue to deliver that from an organic and inorganic perspective. So from a capital allocation perspective, the company prioritizes, and the management, organic growth and there's a strong pipeline for traditional solutions business. And then, we will continue to look for opportunities to increase our capabilities through inorganic transactions. There are things that we're looking on the markets, such as opportunities to expand growth, being as I've mentioned before, Colombia, Argentina, Chile, even Brazil. And some of that requires additional capabilities, and we're looking to increase those in an organic way. So I think that it will be from a capital allocation point of view, the first priority of the business. Second, we -- last year, we've spent some effort in prepaying our debt. That, with the refinancing which I think it was done on very good terms, has been addressed. So from that perspective, right now what has been stated as the capital allocation after financing the growth has been the payment of dividends, which we did last year. I have to say that the company is, together with our main shareholder, assessing other avenues to reward shareholders and for capital allocation. I cannot disclose those what they are right now, because they have not been decided. But at the end of the day, we want to create value for shareholders and also for the company. And to this extent, I have to say that we are very much aligned with your views, with your concerns. And our major shareholder is also very much in line. I think the discussions that we have at our board reflect some of the discussions that we're having now. I mean, how we can bridge the disconnect that there is between the true value of the company and the business model that we have in place and the value that currently the company's trading at. And what I can say from this perspective is that we will be taking your comments very seriously and discuss it again with our shareholders, and potentially take actions in '18. But again, from a stated point of view, our capital allocation at this stage is, first and foremost, continue to finance the growth of the company from an organic and inorganic point of view. And secondly, the dividend policy that we have in place. And we are currently assessing other means for capital allocation that consider some of the concerns that you have expressed. At this stage, we don't have any other policy in place, so I cannot comment on that. But we are looking into the different alternatives. And again, let me hand over to Mauricio.

[Beltrán Palazuelo:]

Basically, so I understand the answer is the shareholder decides and with no -- I don't know, one day decide things will go. And then my other question is, are the revenues, as you say, inorganic or more organic growth? Is this growth from the -- or the returns of this growth, is it done between -- well, at accretive rates, more than 24 times free cash flow yield, less than 4 times EBITDA? So because I really don't understand the discussions, there are discussions, but nothing has been done. And the, I think, measures have to be taken and I don't know, minority shareholders should not wait more months, more weeks, until the board takes action. The board has to take action now. And I don't know, if the shareholder doesn't want to play by the rules, by the capital markets, they should take an action. But they can't manage the company as if it was a private company. They play by the public market rules. They have to act like they are a traded company. And if they're a traded company, they have to try and allocate their CapEx, good for the business and good for the minority shareholders. And at the moment, we're not seeing that. So we would much like to have the board as well as an independent board also works for the independent shareholders, not only for the major shareholder.

[Alejandro Reynal:]

Yes. Let us -- first, again, thanks for the comments, Beltrán. I think your point comes into capital allocation, and your point is that there is resource for the company to invest in both items. I think what I'm saying here is that investing for growth is something that we as a business, because we look at the company in a long-term basis, we need to do. The company needs to grow, needs to continue to invest in client relationships. We are currently the market leader in all the markets where we operate, and that's thanks to the ongoing investment that we do to satisfy our clients' needs. So this is probably without a question the first and foremost capital allocation priority. Then, there are some other uses for our cash as you're pointing out. And I can only state here one, which is the one that we have communicated formally there. So what I mean is that we have already taken into account your concerns. And my commitment -- and our commitment is to take that seriously and take action. And again, we are well aligned, I don't think what we're seeing is that we're misaligned. We are totally aligned with your comments here. I don't know, Mauricio, if you have any comments?

[Mauricio Montilha:]

Beltrán, now just a comment on the cash flow. We guided in the year, the cash conversion before the interest is something around 35% to 40%. And we see that this is -- given the trends on the costs we have and the quality of our client base, this is [Indiscernible] for the year. So there's no surprise. We had, as we already said, some [Indiscernible] cash flow and the working capital in Q1. And because we decided to do it while we are negotiating price increase with [Indiscernible] invoice to avoid [Indiscernible]. Our profitability and some -- were some technical issue with some of our clients, but we are mostly full solid in Q3. So there's no, I'll say, from today from our current perspective, there is nothing in the wires and that will prevent us to continue to have a healthy cash conversion for the year.

[Beltrán Palazuelo:]

Then I appreciate your time. I really -- we here in Spain, in our office, we really take a couple of the bonds very, very seriously and we would like to -- things to be solved. Because at the moment, with you as -- as no one is working for us, you're managing the business excellently. As you say, you're a market leader in lots of markets, in nearly all the markets you operate and the company's growing well. But there's a big disconnect, and you, as managers, should take action and add value to minorities, buying back shares and showing the market they're wrong. So thank you very much, and I appreciate your time and I thank you for your time and for all your hard work that you're devoting to Atento.

[Alejandro Reynal:]

Thank you, Beltrán. I appreciate very much your kind comments and support. Thank you.

[Operator:]

Our next question comes from the line of Diego Aragão with Goldman Sachs.

[Diego Aragão:]

You mentioned that higher value-added solutions demand continues, let's say, strong at approximately one third of your pipeline. So can you tell us with whom are you competing with for this revenue? I mean, just to understand the competitive landscape and whether this -- there is some change on this front? And the second question is regarding your free cash flow and working capital in the quarter. Sorry if I missed it, the explanation from your opening remarks, but can you provide more colors about the onetime item that impacted your working capital in the quarter?

[Alejandro Reynal:]

Thank you, good to hear from you. First, in terms of the higher value-added solutions which I'll cover, and then Mauricio will touch upon the second point. Typically, as you point out, the nature of the competition, it changes to an extent. So for example, for some of that work that we're doing currently for financial services, that was -- I mean, the higher value-added segment, that has required some upfront consulting capabilities so, therefore, analysis of the bank processes. And then, of course, the operation of the recommendation that it's being assessed by the consultants. So for those projects that require a certain level of process transformation, you're seeing -- in some cases, not in 100% of situations -- different competitors than the traditional ones. So for example, we've seen in Brazil, in several locations, Accenture and IBM competing for the same business. This is why we mentioned last year that we've created or started a partnership with FALCONI because -- and I think it's good to say as well that the partnership has delivered three commercial deals for us and FALCONI over the last quarter. And this is, I think, very relevant because what we're doing together is partnering in offering the process consulting and the delivery of the services, together as a partnership. So, therefore, strengthening our value proposition into the market and, therefore, being more successful when competing against the other players, such as Accenture and IBM. So in summary, yes, I mean, when we go for certain types of higher value-added services that requires some process consulting components, we do see different players in the market than the traditional call center competitors. And they tend to be more on the Accentures, IBMs of the world, and they have some consulting and delivery capabilities. Those, however, that I've mentioned, that also deals with the digital environment and the competitors that we're seeing in the digital space, which again, they're also different from the traditional competitors that we see in the BPO space. But again, in summary, just -- I mean, the nature of the competition does vary and it's different. Mauricio, on the...

[Mauricio Montilha:]

Diego, just a quick comment. We already commented -- the fact is… [Technical Difficulty] …in some cases, I never see any price increase, so we decided to postpone the invoices and not make an increase. And we have an issue with a large client in changing the systems. So the invoices are there. So all already collected in April. There was just a big spike at the end of March. So most of -- just 80% of this delay, let's say, the margin, we have been already collecting in April. So being normalized, and almost everything will be in Q2 just from a [indiscernible].

[Operator:]

[Operator Instructions] Thank you. Mr. Reynal, it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

[Alejandro Reynal:]

Yes. Thank you very much, everybody, for your time today and for your questions. In terms of concluding remarks, we see the first quarter results, again, as a reflection of the historical seasonality and in line with the short-term trends we mentioned when we announced our fiscal 2018 guidance. Going forward, we remain focused on profitable growth and cash flow generation, and the priorities mentioned before, which are

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.