Q4 2016 atento earnings presentation 3.21.17 vf
- 1. 1 Atento Fiscal 2016 Fourth Quarter and Full Year Results March 21, 2017 Lynn Antipas Tyson Vice President Investor Relations +1-914-485-1150 [email protected]
- 2. 22 This presentation has been prepared by Atento. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. This presentation contains forward-looking statements within the meaning of the U.S. federal securities laws, that are subject to risks and uncertainties. All statements other than statements of historical fact included in this presentation are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue“, the negative thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. These forward-looking statements are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you consider this presentation, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. Other factors that could cause our results to differ from the information set forth herein are included in the reports that we file with the U.S. Securities and Exchange Commission. We refer you to those reports for additional detail, including the section entitled “Risk Factors” in our Annual Report on Form 20-F. Because of these factors, we caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this presentation after the date of this presentation. The historical and projected financial information in this presentation includes financial information that is not presented in accordance with International Financial Reporting Standards (“IFRS”). We refer to these measures as “non-GAAP financial measurers.” The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS. Additional information about Atento can be found at www.atento.com. Disclaimer
- 3. 3 Operating Highlights and Strategic Overview Alejando Reynal, CEO
- 4. 44 Solid Growth from Multisector Clients, Telefónica Revenue Under Pressure • Q4 consolidated revenue down 4.2% ‒ Revenue from multisector(1) clients up 2.4% driven by broad-based gains ‒ Brazil multisector returns to growth up 2.2% Delivered on Margin Protection and Cash Generation • Q4 adjusted EBITDA margin 13.3% ‒ Disciplined inflation pass-through, continued efficiency initiatives, and improved mix of revenue • Strong Q4 free cash flow (FCF) before interest of $90MM Strengthened Balance Sheet and Earnings Trajectory • Q4 voluntary accelerated pay-down of $30MM of higher-cost Brazil debentures • Low year-end leverage of 1.5x. Solid Full Year Results Given Macro Context - In line with Objectives • Revenues down 1.4%, adj. EBITDA margins 12.6%, FCF before interest $136.3MM Balanced Fiscal 2016 Q4 and Full-Year Results: Expanded Market Leadership Position, Protected Margin, Delivered Strong Cash Flow (1) Multisector equals total clients excluding Telefónica
- 5. 55 Improving Macros • Brazil expected to return to growth in second-half • Recovery in consumer spending likely to be slow and clients will remain focused on managing cost, presenting both challenges and opportunities for Atento Telefónica Revenue Remains Under Pressure • Overall health of our relationship strong: extension of Master Service Agreement to 2023 • New business opportunities support higher share of wallet particularly in sales, retention, and collections Strong Growth Across Rest of Business Consistent with Strategy • Consolidate our leadership in core voice • Continue growth into higher value-add solutions, organically and through targeted investments to build capabilities • Accelerate profitable growth with mainstream digital offer Fiscal 2017 Environment
- 6. 66 Telecommunications Other Verticals US Nearshore • Atento relatively less penetrated, excluding Telefonica (3% share of $3 Bn market) • Proven partner able to scale at pace • Attractive growth opportunities in sales, cross-selling and retention • Atento Digital: digital and analytical solutions Financial Services Consolidate Leadership in Core Voice Continued Growth into Higher Value-Add Solutions Accelerate Profitable Growth with Mainstream Digital Offer • Solid penetration with growth potential (22% share of $2.5Bn market) • Increasing levels of outsourcing • Significant growth opportunities in Digital, Late Collections Credit Origination • Leveraging M&A to build capabilities and scale (i.e. R-Brasil & Interfile) • Atento has a 10% share of $2 Bn market • Relatively high growth given earlier in outsourcing penetration curve • Driving high levels of growth leveraging carve-outs where appropriate • New disruptive players presenting large growth opportunities • Low penetration given lack of historic focus (2.8% share of $2.5 Bn market) • High growth market with tailwinds from FX and political instability in Philippines • Atento strong growth with upside potential Fiscal 2017: Strong Multisector Growth
- 7. 77 Revenue Growth of 1-5% • Strong broad-based growth from multisector clients • Telefónica revenue stable at Fiscal 2016 Q4 level Adjusted EBITDA Margin 11-12% • Disciplined inflation pass-through and efficiency initiatives • Investments to accelerate growth initiatives and ramp-up of new business Strong Cash Generation • Cash conversion ~40% of adjusted EBITDA • Continue program of accelerated pay-down higher-cost Brazil debt Amplified Business Seasonality • Revenue and earnings growth accelerates in second-half Fiscal 2017: Return to Growth Maintain Margins, Drive Cash Generation and Net Income Growth
- 9. 99 Consolidated: Balanced Fourth Quarter and Full-Year Results Highlights(1) Revenue • Q4: broad-based revenue growth of 2.4% from multisector clients, aided by new business wins. Growth more than offset by macro-driven 12.7% decline from Telefónica • Revenue mix from multisector up 4.7 percentage points to a record 60% • Over 80% of workstations won were with existing and new multisector clients led by other telco and financial services Margin Protection Achieved • Rigorous inflation pass-through, rapid reduction in cost structure, efficiency initiatives and improved mix of business Strong Cash Flow and Enhanced Financial Flexibility • FCF before net interest of $136.3 MM FY • $30 million in voluntary accelerated debt pay-down in Q4 • Liquidity of $247 million(5) with a low net debt to adj. EBITDA of 1.5x (1) Unless otherwise noted, all results are for Q4 2016; all revenue growth rates are on a constant currency basis, year-over-year, and exclude the effect of our Morocco business divested in September, 2016. (2) Reported Net Income and Earnings per Share (EPS) include the impact of non-cash foreign exchange gains/losses on intercompany balances. (3) EBITDA, Adj. EBITDA and Adj. Earnings are Non GAAP measures. For more information, see Glossary page. (4) We define Free Cash flow (FCF) as net cash flows from operating activities less net cash and disposals of payments for acquisition of property, plant, equipment and intangible assets. (5) Liquidity is defined as cash and cash equivalents plus undrawn revolving credit facilities. US$ MM Except per share 2016 2015 2016 2015 Revenue 442.0 453.8 1,757.5 1,949.9 CC Growth (1) -4.2% -1.4% Reported Net Income (2) 16.7 7.5 3.4 52.2 EPS $0.23 $0.10 $0.05 $0.71 Adjusted EBITDA(3) 58.6 63.8 221.9 249.7 Margin 13.3% 14.1% 12.6% 12.8% EPS $0.19 $0.36 $0.65 $1.06 Net cash flow from/(used in) operating activities 83.8 40.3 141.9 37.0 Free cash flow before interest (4) 90.0 20.1 136.3 (8.6) Leverage (x) 1.5 1.6 Q4 Full Year
- 10. 1010 Brazil – Multisector Returns to Growth Revenue • Multisector returned to growth in Q4, up 2.2%, supported by new client wins and acquisition of RBrasil • Q4 sequential improvement in revenue trajectory versus third-quarter • Mix of revenue from multisector clients reached 66.5% FY, up 440 b.p. • Mix of revenue from higher value-add solutions reached 41.5% FY, up 340 b.p. Stable Profitability • Adjusted EBITDA up 5% in Q4 • Supported by rigorous inflation pass-through, continued focus on cost and efficiency initiatives, and improved mix of revenue. Highlights(1) (1) Unless otherwise noted, all results are for Q4 2016; all growth rates are on a constant currency basis and year-over-year. (2) EBITDA and Adj. EBITDA are Non GAAP measures. For more information, see Glossary page. US$ MM 2016 2015 2016 2015 Revenue 214.4 192.6 816.4 930.2 CC Growth (1) -4.6% -7.0% Reported Operating income/(loss) 13.8 10.9 46.3 66.5 CC Growth (1) 9.5% -27.3% Adjusted EBITDA(2) 35.9 29.4 121.0 129.4 EBITDA Margin(2) 16.7% 15.3% 14.8% 13.9% Q4 Full Year
- 11. 1111 Americas – Growth led by U.S. Nearshore and Multisector (1) Unless otherwise noted, all results are for Q4 2016; all growth rates are on a constant currency basis and year-over-year. (2) Excluding the favorable impact of the CVI elimination, operating profit was $5.1 million in Q4 and $46.5 million in FY (3) EBITDA and Adj. EBITDA are Non GAAP measures. For more information, see Glossary page. Revenue • Multisector up 1.2% in Q4 supported by growth in Colombia, Peru and U.S. Nearshore • Decline in Q4 driven by Telefónica in Argentina and Mexico • Mix of revenue from multisector 55%, up 280 b.p. FY • ~5,600 workstations won FY with new and existing clients in driven by multisector, especially financial services Profitability • Under pressure due to decline in volumes • Proactive restructuring underway to align cost structure with volume Highlights(1) US$ MM 2016 2015 2016 2015 Revenue 172.8 203.9 718.9 789.8 CC Growth (1) -4.1% 6.5% Reported Operating income/(loss) (2) 46.8 17.3 88.2 65.8 CC Growth (1) N.M 59.5% Adjusted EBITDA(3) 19.6 29.1 92.0 109.1 EBITDA Margin(3) 11.3% 14.3% 12.8% 13.8% Q4 Full Year
- 12. 1212 EMEA – Continued Growth in Multisector supported by new clients Revenue • Q4: continued strong growth of multisector, up 11.7% • ~1,000 workstations won FY, 83% from new clients • Mix of revenue from multisector up 230 b.p. to 35.3% FY • Mix of revenue from higher value-add solutions up 140 b.p. to 9.9% FY Profitability • Impact of volume declines partially offset by effective cost saving initiatives Highlights(1) (1) Unless otherwise noted, all results are for Q4 2016; all revenue growth rates are on a constant currency basis and year-over-year and exclude the effect of Morocco. (2) EBITDA and Adj. EBITDA are Non GAAP measures. For more information, see Glossary page. USD$MM 2016 2015 2016 2015 Revenue 55.3 57.7 223.9 231.7 CC Growth (1) -2.6% -3.1% Reported Operating income/(loss) (0.4) 1.6 (7.5) (0.3) CC Growth (1) N.M N.M Adjusted EBITDA(2) 5.1 6.9 16.3 18.6 EBITDA Margin(2) 9.2% 12.0% 7.3% 8.0% Q4 Full Year
- 13. 1313 Strong Cash Flow Generation Full year free cash flow before net interest of $136.3 million, up $144.9 million YoY • Rigorous working capital controls & capital allocation discipline • Structural one-off improvements in working capital contributed to improvement • Normalized for one-off items, cash conversion(2) 36% – up 16 percentage points YoY (1) We define FCF as net cash flows from operating activities less net cash and disposals of payments for acquisition of property, plant, equipment and intangible assets. Unaudited. (2) Free cash flow before interest as a percentage of adjusted EBITDA. Free Cash Flow (FCF) US$ MM 2016 2015 2016 2015 Cash from/(used in) operating activities(1) 83.8 40.3 141.9 37.0 Payments for PP&E and intangible assets (13.5) (35.8) (69.9) (96.4) Disposals of PP&E and intangible assets (0.1) - 1.0 2.4 FCF - Operational(1) 70.2 4.5 73.0 (57.0) Acquisition of Subsidiaries - - (8.6) - Sales of Subsidiaries 0.4 - 2.4 - Free Cash Flow 70.6 4.5 66.8 (57.0) Net Interest Expense (19.4) (15.6) (69.5) (48.4) FCF before Interest Expense 90.0 20.1 136.3 (8.6) Q4 Full Year
- 14. 1414 Strong Balance Sheet • Liquidity of $247 million(1), low leverage of 1.5x Accelerated Deleveraging (2) • Total payments of $62 million in 2016: ‒ $32 million of regular scheduled repayments ‒ $30 million of voluntary accelerated payments of higher-cost Brazil debt in Q4 Strong Balance Sheet and Enhanced Financial Flexibility (1) Liquidity includes cash and cash equivalents and undrawn credit facilities. (2) Amounts based on current foreign exchange rates. Debt US$ MM 2016 2015 Cash & Cash Equivalents 194.0 184.0 Total Debt 534.9 575.6 Net Debt with Third Parties 340.9 391.6 Net Debt/Adj. EBITDA (x) 1.5 1.6 Year End
- 15. 1515 Fiscal 2017 Guidance Return to Growth Maintain Margins Drive Cash Generation and Net Income Growth (1) Adjusted EBITDA and margin exclude the impact of restructuring and site relocation expenses. We exclude these from our adjusted numbers to more clearly show the underlying health and trajectory of our business. Consolidated Revenue Growth (CCY) 1% to 5% Adjusted EBITDA Margin Range (CCY) (1) 11% to 12% Non-recurring Expenses – Adjustments to EBITDA ~$13 MM Net Interest Expense Range $60MM to $65MM Cash Capex (% of Revenue) ~3-4% Effective Tax Rate ~34% Diluted Share Count ~73.9MM shares Cash conversion as % of Adj. EBITDA ~40% Guidance
- 16. 1616 • Selective growth, margin protection and cash generation • Strengthened balance sheet and earnings trajectory • Strategic pillars support topline growth and revenue diversification • Continue strong cash generation • Drive earnings expansion Fiscal 2016 Delivered on Priorities Fiscal 2017 Return to Top and Bottom-Line Growth Recap
- 18. 1818 Adjustments to EBITDA by Quarter (1) Information excludes the effect of Morocco business, which was divested in September, 2016. (2) Additional detailed information can be found on the 4Q16 6K form of the Company on the topics related to Reconciliation of EBITDA and Adjusted EBITDA. ($ in millions) Q1 Q2 Q3(1) Q4(1) FY(4) Q1 Q2 Q3(1) Q4(1) FY(4) Profit/(loss) for the period 20.5 6.5 17.4 7.5 52.2 (4.8) (8.1) (0.5) 16.7 3.4 Net finance expense 1.6 19.6 9.5 15.7 46.4 19.4 28.2 22.3 37.7 107.8 Income tax expense 5.6 5.3 8.7 3.5 23.2 1.0 0.6 2.6 1.1 5.2 Depreciation and amortization 28.0 26.5 23.3 23.7 101.5 21.7 25.4 25.0 25.4 97.3 EBITDA (non-GAAP) (unaudited) 55.7 57.9 58.9 50.4 223.3 37.3 46.1 49.4 80.9 213.7 Acquisition and integration related costs 0.1 - - - 0.1 - - - - - Restructuring costs 1.0 2.7 3.9 8.2 15.8 6.2 6.7 6.2 14.7 33.7 Site relocation costs 0.4 0.1 - 2.9 3.4 5.7 0.2 0.7 2.8 9.3 Financing and IPO fees 0.3 - - - 0.3 - - - - - Contingent Value Instrument - - - - - - - - (41.7) (41.7) Asset impairments and Others 0.8 1.4 2.3 2.3 6.8 (0.4) 1.3 4.2 1.9 6.9 Adjusted EBITDA (non-GAAP) (unaudited) 58.3 62.1 65.1 63.8 249.7 48.8 54.2 60.5 58.6 221.9 Fiscal 2015 Fiscal 2016
- 19. 1919 Add-Backs to Net Income by Quarter (1) Information excludes the effect of Morocco business, which was divested in September, 2016. (2) Additional detailed information can be found on the 4Q16 6K form of the Company on the topics related to Reconciliation of EBITDA and Adjusted EBITDA. ($ in millions, except percentage changes) Q1 Q2 Q3(1) Q4(1) FY(1) Q1 Q2 Q3(1) Q4(1) FY(1) Profit/(Loss) attributable to equity holders of the parent 20.5 6.5 17.4 7.5 52.2 (4.8) (8.1) (0.5) 16.7 3.4 Acquisition and integration related Costs 0.1 - - - 0.1 - - - - - Amortization of Acquisition related Intangible assets 7.7 6.9 7.0 6.3 27.5 5.4 6.2 6.5 6.3 24.2 Restructuring Costs 1.0 2.7 3.9 8.2 15.8 6.2 6.7 6.2 14.7 33.7 Site relocation costs 0.4 0.1 - 2.9 3.4 5.7 0.2 0.7 2.8 9.3 Financing and IPO fees 0.3 - - - 0.3 - - - - - Asset impairments and Others 0.8 1.4 2.3 2.3 6.8 (0.4) 1.3 4.2 1.9 6.9 DTA adjustment in Spain - - - 1.5 1.5 - - - - - Net foreign exchange gain on financial instruments (13.0) (1.0) (0.5) (3.5) (17.5) (0.5) (0.2) 0.1 (0.1) (0.7) Net foreign exchange impacts 0.4 2.6 (3.0) 4.5 4.0 3.5 9.2 2.5 5.8 21.1 Contingent Value Instrument - - - - - - - - (26.2) (26.2) Tax effect (2.9) (3.5) (4.1) (2.9) (16.2) (5.3) (6.0) (5.1) (8.1) (23.5) Adjusted Earnings (non-GAAP) (unaudited) 15.3 15.7 23.0 26.8 77.9 9.8 9.3 14.6 13.8 48.2 Adjusted Basic Earnings per share (in U.S. dollars) (*) (unaudited). 0.21 0.21 0.31 0.36 1.06 0.13 0.13 0.20 0.19 0.65 Fiscal 2015 Fiscal 2016
- 20. 2020 FX Rates – Fiscal 2016 FX Assumptions Q1 Q2 Q3 Q4 FY 2016 Euro (EUR) 0.91 0.89 0.90 0.93 0.90 Brazilian Real (BRL) 3.91 3.51 3.25 3.29 3.48 Mexican Peso (MXN) 18.05 18.10 18.76 19.83 18.69 Colombian Peso (COP) 3,259.17 2,994.86 2,948.13 3,015.14 3,054.33 Chilean Peso (CLP) 702.02 677.93 661.47 665.52 676.73 Peruvian Soles (PEN) 3.45 3.32 3.34 3.40 3.38 Argentinean Peso (ARS) 14.46 14.22 14.94 15.46 14.78 Average
- 21. 2121 Mix of Revenue by Service Type Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Customer Service 48.7% 48.0% 47.0% 47.9% 47.9% 49.6% 49.7% 50.2% 47.8% 49.0% Sales 18.2% 18.3% 18.2% 17.4% 18.0% 16.4% 16.3% 15.3% 17.2% 16.6% Collection 10.0% 10.3% 10.9% 11.2% 10.6% 10.2% 10.0% 9.4% 10.0% 10.1% Back Office 9.1% 9.4% 10.2% 10.2% 9.7% 10.5% 10.1% 11.2% 11.7% 10.8% Technical Support 10.7% 10.7% 10.5% 9.9% 10.5% 9.6% 9.4% 9.6% 9.2% 9.4% Service desk 0.1% 0.1% - - - - - - - - Others 3.2% 3.2% 3.2% 3.4% 3.3% 3.7% 4.5% 4.3% 4.1% 4.1% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Fiscal 2015 Fiscal 2016
- 22. 2222 Notes: (1) Includes service delivery centers at facilities operated by us and those owned by our clients where we provide operations personnel and workstations. (2) Includes Uruguay. (3) Includes Guatemala and El Salvador. (4) Includes Puerto Rico. (5) Operations in Morocco were divested on September 30, 2016 – see detailed figures of Morocco in Note 7 “Discontinued Operations” of the interim financial statements. Number of Work Stations and Delivery Centers 2015 2016 2015 2016 Brazil 47,694 45,913 33 31 Americas 36,229 37,574 51 50 Argentina (2) 3,705 3,673 11 11 Central America (3) 2,629 2,644 5 5 Chile 2,495 2,673 3 3 Colombia 7,292 7,723 9 9 Mexico 9,905 10,298 16 15 Peru 8,893 9,253 4 4 United States (4) 1,310 1,310 3 3 EMEA 7,644 5,595 18 14 Morocco (5) 2,039 - - 4 - Spain 5,605 5,595 14 14 Total 91,567 89,082 102 95 Number of Service Delivery Number of Work Stations
- 23. Consolidated Debt and Leverage 23 Leverage ratio of 1.5x Cash and Cash equivalents of $194MM, and existing revolving credit facility of €50MM, totaling Liquidity of $247MM Average debt maturity of 2.6 years Average cost of debt (LTM): 10.7% per year 2016 Debt Payments BNDES: $18MM Debentures: $43MM (Regular Q4-16: $13MM/ Accelerated from 2017: $30MM) Argentinian $24MM CVI eliminated in Q4-16 Highlights 4Q16 392 448 459 436 341 1,6x 1,9x 2,0x 1,9x 1,5x 0,0x 0,5x 1,0x 1,5x 2,0x 2,5x Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 - 200 400 600 800 Net Debt / EBITDA $MM Net Debt Net Debt / EBITDA $ MM Currency Maturity Interest Rate Outstanding Balance 4Q'16 % Mix Senior Secured Notes (1) USD 2020 7.375% 303.3 57% Brazilian Debentures (2) BRL 2019 CDI + 3.7% 156.6 29% TJLP + 2.5% / SELIC + 2.5% 71.4 13% Finance lease payables USD / COP 2019 8.14% / 8.41% 3.6 1% 534.9 100% 10.13% 89.87% 340.9 (1) Cross currency swaps covers 90% of interest until 2018 and 75% from 2018 to 2020 Senior Secured Notes principal covered by 75% (2) An interest rate swap to a fixed cost of 14.1% p.a., covers 48% of total balance in Dec-16. Without the accelerated payment, this percentage would be 40%. BNDES BRL 2020 Net Debt Long-Term Debt Gross Debt Short-Term Debt
- 24. Brazil Debt and Leverage Leverage ratio of 1.2x Liquidity of $72MM Average debt maturity of 2.1 years Average cost of debt (LTM): 13.9% per year 2016 Debt Payments BNDES: $18MM Debentures: $43MM (Regular Q4-16: $13MM / Accelerated from 2017: $30MM) Highlights 4Q16 (1) Net Debt/EBITDA calculated in Brazilian Reais 187 220 256 222 157 1,7x 1,8x 1,9x 1,7x 1,2x 0,0x 0,5x 1,0x 1,5x 2,0x Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 - 100 200 300 Net Debt / EBITDA (1) $MM Net Debt Net Debt / EBITDA 24 $ MM Currency Maturity Interest Rate Outstanding Balance 4Q'16 % Mix Brazilian Debentures (*) BRL 2019 CDI + 3.7% 156.6 69% TJLP + 2.5% / SELIC + 2.5% 71.4 31% 228.0 100% 19% 81% 156.6 (*) An interest rate swap to a fixed cost of 14.1% p.a., covers 48% of total balance in Dec-16. Without the accelerated payment, this percentage would be 40%. BNDES BRL 2020 Net Debt Long-Term Debt Gross Debt Short-Term Debt
- 25. 2525 Glossary of Terms Adjusted EBITDA – EBITDA adjusted to exclude the acquisition and integration related costs, restructuring costs, sponsor management fees, asset impairments, site relocation costs, financing and IPO fees and other items which are not related to our core results of operations. Adjusted EBITDA margin – Adjusted EBITDA excluding special items/operating revenue. Adjusted net income (loss) – net loss which excludes corporate transaction costs, asset dispositions, asset impairments, the revaluation of our derivatives and foreign exchange gain (loss), and net income or loss attributable to non-controlling interests and debt extinguishment. Free cash flow – net cash flows from operating activities less cash payments for acquisition of property, plant and equipment, and intangible assets. Liquidity – cash and cash equivalents and undrawn revolving credit facilities.