Raises annual guidance
EVERTEC, Inc. (NYSE: EVTC) (“Evertec”, the “Company”, “we” or
“our”) today announced results for the third quarter ended
September 30, 2023.
Third Quarter 2023 Highlights
- Revenue increased 19% to $173.2 million
- GAAP Net Income attributable to common shareholders decreased
93% to $10.0 million and decreased 93% to $0.15 per diluted share,
as the prior year included the gain from the Popular Transaction
and the current year includes the loss on foreign currency
swap
- Adjusted EBITDA increased 31% to $78.7 million and Adjusted
earnings per common share increased 51% to $0.80
- Acquired 4.8 million shares of Sinqia for $26.5 million
- Entered into a foreign currency swap to fix the Sinqia
acquisition purchase price in US dollars
Mac Schuessler, President and Chief Executive Officer stated,
“We are pleased with the revenue growth across all of our segments.
We continue to work diligently to close the Sinqia acquisition in
the fourth quarter of 2023, and as we begin to look towards 2024,
we are focused on collaborating across the Company to continue to
cross sell our products across all of our regions."
Third Quarter 2023 Results
Revenue. Total revenue for the quarter ended September 30, 2023
was $173.2 million, an increase of 19% compared with $145.8 million
in the prior year quarter, reflecting growth across all of the
Company's segments. Merchant acquiring revenue growth was a result
of an increase in sales volume and spread, and the continued
benefit from pricing initiatives. Payment processing revenues in
Puerto Rico continue to reflect an increase in transaction volumes
as well as continued growth in ATH Movil revenues, primarily ATH
Business. Payment processing LATAM revenue benefited from a
catch-up adjustment related to our processing contract with Getnet
Chile of $6.3 million as we now estimate that minimums on the
contract will be exceeded. LATAM revenues also benefited from
continued organic growth across regions and the contribution from
the paySmart acquisition completed in the first quarter of 2023.
Business solutions revenue increased mainly due to the impact in
the prior year of the $6.9 million one-time credit granted to
Popular upon closing of the Popular Transaction in the third
quarter of 2022 as well as an increase in hardware and software
sales.
Net Income attributable to common shareholders. For the quarter
ended September 30, 2023, GAAP Net Income attributable to common
shareholders was $10.0 million, or $0.15 per diluted share, a
decrease of $127.8 million or $1.91 per diluted share as compared
to the prior year. The decrease was primarily driven by the impact
in the prior year of the gain recognized in connection with closing
the Popular Transaction of $135.6 million and the loss on foreign
currency swap to fix the price of the Sinqia acquisition of $29.2
million in the current year. Partially offsetting these negative
impacts was the increase in revenues discussed above and an income
tax benefit in the quarter of $4.9 million, primarily driven by the
foreign currency hedge loss, compared with an income tax expense in
the prior year quarter of $9.0 million, driven by the gain from the
Popular transaction. Costs of revenues increased primarily due to
an increase in personnel costs, and an increase in professional
fees and cloud services, partially offset by recoveries of
previously recorded operational losses. Selling, general and
administrative expenses increased mainly due to an increase in
personnel costs as well as an increase in professional fees mainly
related to corporate development initiatives. Additionally, the
current quarter reflects a non-cash unrealized loss on foreign
currency remeasurement of $2.8 million compared with a non-cash
unrealized loss of $7.8 million in the prior year quarter.
Adjusted EBITDA and Adjusted EBITDA Margin. For the quarter
ended September 30, 2023, Adjusted EBITDA was $78.7 million, an
increase of $18.5 million when compared to the prior year quarter.
Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total
revenues) was 45.4%, an increase of approximately 420 basis points
from the prior year. The increase in Adjusted EBITDA and Adjusted
EBITDA margin reflect the increase in revenues, including the
impact of the revenue recognized from Getnet Chile discussed above
that had no associated incremental cost of revenues, partially
offset by the increase in expenses discussed above.
Adjusted Net Income and Adjusted earnings per common share. For
the quarter ended September 30, 2023, Adjusted Net Income was $52.4
million, an increase of $16.8 million compared to $35.6 million in
the prior year. The increase was driven by the higher adjusted
EBITDA, lower non-gaap tax expense and lower interest expense,
partially offset by higher operating depreciation and amortization.
Adjusted earnings per common share was $0.80, an increase of $0.27
per diluted share compared to $0.53, in the prior year driven by
the increase in adjusted net income and a lower share count that
reflects the impact from the share repurchases completed in 2022
and the shares received as part of the Popular Transaction.
Share Repurchase
During the three months ended September 30, 2023, the Company
repurchased 208,564 shares of its common stock at an average price
of $37.44 per share for a total of $7.8 million. As of September
30, 2023, a total of approximately $150 million remained available
for future use under the Company’s share repurchase program.
2023 Outlook
The Company is revising its financial outlook for 2023 as
follows:
- Total consolidated revenue is now anticipated to be between
$663 million and $667 million representing growth of approximately
7% to 8% growth, compared with $652 to $658 million previously
estimated.
- Adjusted earnings per common share between $2.81 to $2.86
representing approximately 11% to 13% growth as compared to $2.53
in 2022, as recast, and compared with $2.75 to $2.83 previously
estimated.
- We continue to expect capital expenditures to be approximately
$70 million.
- The effective tax rate is now anticipated to be approximately
16%, compared with 16% to 17% previously estimated.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its third
quarter 2023 financial results today at 4:30 p.m. ET. Hosting the
call will be Mac Schuessler, President and Chief Executive Officer,
and Joaquin Castrillo, Chief Financial Officer. The conference call
can be accessed live over the phone by dialing (888) 338-7153 or
for international callers by dialing (412) 317-5117. A replay will
be available one hour after the end of the conference call and can
be accessed by dialing (877) 344-7529 or (412) 317-0088 for
international callers; the pin number is 4266400. The replay will
be available through Thursday, November 2, 2023. The call will be
webcast live from the Company’s website at www.evertecinc.com under
the Investor Relations section or directly at
http://ir.evertecinc.com. A supplemental slide presentation that
accompanies this call and webcast will be available prior to the
call on the investor relations website at ir.evertecinc.com and
will remain available after the call.
About Evertec
EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction
processing business in Puerto Rico, the Caribbean and Latin
America, providing a broad range of merchant acquiring, payment
services and business process management services. Evertec owns and
operates the ATH® network, one of the leading personal
identification number (“PIN”) debit networks in Latin America. In
addition, the Company processes over six billion transactions
annually and manages a system of electronic payment networks in
Puerto Rico and Latin America and offers a comprehensive suite of
services for core banking, cash processing, and fulfillment in
Puerto Rico. Additionally, the Company offers technology
outsourcing and payment transactions fraud monitoring to all the
regions it serves. Based in Puerto Rico, the Company operates in 26
Latin American countries and serves a diversified customer base of
leading financial institutions, merchants, corporations and
government agencies with “mission-critical” technology solutions.
For more information, visit www.evertecinc.com.
Use of Non-GAAP Financial Information
The non-GAAP measures referenced in this earnings release are
supplemental measures of the Company’s performance and are not
required by, or presented in accordance with, accounting principles
generally accepted in the United States of America (“GAAP”). They
are not measurements of the Company’s financial performance under
GAAP and should not be considered as alternatives to total revenue,
net income or any other performance measures derived in accordance
with GAAP or as alternatives to cash flows from operating
activities, as indicators of operating performance or as measures
of the Company’s liquidity. In addition to GAAP measures,
management uses these non-GAAP measures to focus on the factors the
Company believes are pertinent to the daily management of the
Company’s operations and believes that they are also frequently
used by analysts, investors and other stakeholders to evaluate
companies in our industry. These measures have certain limitations
in that they do not include the impact of certain expenses that are
reflected in our condensed consolidated statements of operations
that are necessary to run our business. Other companies, including
other companies in our industry, may not use these measures or may
calculate these measures differently than as presented herein,
limiting their usefulness as comparative measures.
Reconciliations of the non-GAAP measures to the most directly
comparable GAAP measure are included at the end of this earnings
release. These non-GAAP measures include EBITDA, Adjusted EBITDA,
Adjusted Net Income and Adjusted Earnings per common share, each as
defined below. Effective for the quarter ended March 31, 2023, the
Company modified the manner in which it calculates Adjusted EBITDA,
Adjusted Net Income and Adjusted earnings per common share to
exclude the impact of unrealized gains and losses from foreign
currency remeasurement for assets and liabilities denominated in
non-functional currencies. These non-cash unrealized gains and
losses are non-operational in nature and we believe that excluding
these better presents the overall financial performance of our core
business, and help facilitate comparison with industry peers. The
Company has recast prior periods to conform with the modified
definition of Adjusted EBITDA, Adjusted Net Income and Adjusted
Earnings per common share.
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to
exclude certain non-cash items and unusual expenses such as:
share-based compensation, restructuring related expenses, fees and
expenses from corporate transactions such as M&A activity and
financing, equity investment income net of dividends received, and
the impact from unrealized gains and losses on foreign currency
remeasurement for assets and liabilities in non-functional
currency. This measure is reported to the chief operating decision
maker for purposes of making decisions about allocating resources
to the segments and assessing their performance. For this reason,
Adjusted EBITDA, as it relates to the Company's segments, is
presented in conformity with Accounting Standards Codification 280,
Segment Reporting, and is excluded from the definition of non-GAAP
financial measures under the Securities and Exchange Commission's
Regulation G and Item 10(e) of Regulation S-K. The Company's
presentation of Adjusted EBITDA is substantially consistent with
the equivalent measurements that are contained in the secured
credit facilities in testing EVERTEC Group’s compliance with
covenants therein such as the secured leverage ratio.
Adjusted Net Income is defined as Adjusted EBITDA less:
operating depreciation and amortization expense, defined as GAAP
Depreciation and amortization less amortization of intangibles
related to acquisitions such as customer relationships, trademarks;
cash interest expense defined as GAAP interest expense, less GAAP
interest income adjusted to exclude non-cash amortization of debt
issue costs, premium and accretion of discount; income tax expense
which is calculated on adjusted pre-tax income using the applicable
GAAP tax rate, adjusted for uncertain tax position releases, tax
true-ups, windfall from share-based compensation, unrealized gains
and losses from foreign currency remeasurement, among others; and
non-controlling interest which is the 35% non-controlling equity
interest in Evertec Colombia, net of amortization for intangibles
created as part of the purchase.
Adjusted Earnings per common share is defined as Adjusted
Net Income divided by diluted shares outstanding.
The Company uses Adjusted Net Income to measure the Company's
overall profitability because the Company believes it better
reflects the comparable operating performance by excluding the
impact of the non-cash amortization and depreciation that was
created as a result of merger and acquisition activity. In
addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net
Income and Adjusted Earnings per common share, you should be aware
that in the future the Company may incur expenses such as those
excluded in calculating them.
Forward-Looking Statements
Certain statements in this earnings release constitute
“forward-looking statements” within the meaning of, and subject to
the protection of, the Private Securities Litigation Reform Act of
1995. We intend such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained
in Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements contained in this press release other than statements of
historical facts, including, without limitation, statements
regarding our ability to meet our guidance expectations for
revenue, earnings per share, Adjusted earnings per common share,
capital expenditures and effective tax rate, including for fiscal
year 2023, are forward looking statements. Words such as
“believes,” “expects,” “anticipates,” “intends,” “projects,”
“estimates,” and “plans” and similar expressions of future or
conditional verbs such as “will,” “should,” “would,” “may,” and
“could” are generally forward-looking in nature and not historical
facts.
Various factors that could cause actual future results and other
future events to differ materially from those estimated by
management include, but are not limited to: our reliance on our
relationship with Popular, Inc. (“Popular”) for a significant
portion of our revenues pursuant to our second amended and restated
Master Services Agreement (“MSA”) with them, and as it may impact
our ability to grow our business; our ability to renew our client
contracts on terms favorable to us, including but not limited to
the current term and any extension of the MSA with Popular; our
dependence on our processing systems, technology infrastructure,
security systems and fraudulent payment detection systems, as well
as on our personnel and certain third parties with whom we do
business, and the risks to our business if our systems are hacked
or otherwise compromised; our ability to develop, install and adopt
new software, technology and computing systems; a decreased client
base due to consolidations and/or failures in the financial
services industry; the credit risk of our merchant clients, for
which we may also be liable; the continuing market position of the
ATH network; a reduction in consumer confidence, whether as a
result of a global economic downturn or otherwise, which leads to a
decrease in consumer spending; our dependence on credit card
associations, including any adverse changes in credit card
association or network rules or fees; changes in the regulatory
environment and changes in macroeconomic, market, international,
legal, tax, political, or administrative conditions, including
inflation or the risk of recession; the geographical concentration
of our business in Puerto Rico, including our business with the
government of Puerto Rico and its instrumentalities, which are
facing severe political and fiscal challenges; additional adverse
changes in the general economic conditions in Puerto Rico, whether
as a result of the government’s debt crisis or otherwise, including
the continued migration of Puerto Ricans to the U.S. mainland,
which could negatively affect our customer base, general consumer
spending, our cost of operations and our ability to hire and retain
qualified employees; operating an international business in Latin
America and the Caribbean, in jurisdictions with potential
political and economic instability; the impact of foreign exchange
rates on operations; our ability to protect our intellectual
property rights against infringement and to defend ourselves
against claims of infringement brought by third parties; our
ability to comply with U.S. federal, state, local and foreign
regulatory requirements; evolving industry standards and adverse
changes in global economic, political and other conditions; our
level of indebtedness and the impact of rising interest rates,
restrictions contained in our debt agreements, including the
secured credit facilities, as well as debt that could be incurred
in the future; our ability to prevent a cybersecurity attack or
breach to our information security; the possibility that we could
lose our preferential tax rate in Puerto Rico; failure to satisfy
one or more conditions to closing of the Sinqia Transaction (as
defined below); our inability to integrate Sinqia (as defined
below) successfully into the Company or to achieve expected
accretion to our earnings per common share; any loss of personnel
or customers in connection with the Transaction; any cost and other
terms of new debt financing incurred in connection with the
Transaction; and any possibility of future catastrophic hurricanes,
earthquakes and other potential natural disasters affecting our
main markets in Latin America and the Caribbean; and the other
factors set forth under "Part 1, Item 1A. Risk Factors," in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 filed with the Securities and Exchange Commission
(the "SEC") on February 24, 2023, as any such factors may be
updated from time to time in the Company’s filings with the SEC.
The Company undertakes no obligation to release publicly any
revisions to any forward-looking statements, to report events or to
report the occurrence of unanticipated events unless it is required
to do so by law.
EVERTEC, Inc. Schedule 1: Unaudited Condensed
Consolidated Statements of Income and Comprehensive Income
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
(Dollar amounts in thousands, except share
data)
Revenues
$
173,198
$
145,803
$
500,088
$
456,622
Operating costs and expenses
Cost of revenues, exclusive of
depreciation and amortization
81,280
76,272
238,149
215,244
Selling, general and administrative
expenses
30,437
26,001
83,834
66,436
Depreciation and amortization
21,919
19,712
63,680
58,432
Total operating costs and expenses
133,636
121,985
385,663
340,112
Income from operations
39,562
23,818
114,425
116,510
Non-operating income (expenses)
Interest income
1,926
807
5,162
2,279
Interest expense
(5,709
)
(6,763
)
(16,992
)
(18,242
)
Loss on foreign currency remeasurement
(2,806
)
(7,779
)
(7,337
)
(6,858
)
Loss on foreign currency swap
(29,225
)
—
(29,225
)
—
Earnings of equity method investment
1,197
688
3,828
2,120
Gain on sale of business
—
135,642
—
135,642
Other income, net
153
374
2,754
1,621
Total non-operating (expenses) income
(34,464
)
122,969
(41,810
)
116,562
Income before income taxes
5,098
146,787
72,615
233,072
Income tax (benefit) expense
(4,858
)
9,048
4,546
22,911
Net income
9,956
137,739
68,069
210,161
Less: Net loss attributable to
non-controlling interest
(80
)
(75
)
(174
)
(140
)
Net income attributable to EVERTEC, Inc.’s
common stockholders
10,036
137,814
68,243
210,301
Other comprehensive income (loss), net of
tax
Foreign currency translation
adjustments
(11,332
)
4,125
9,426
(210
)
Gain on cash flow hedges
3,468
5,762
3,739
18,824
Unrealized loss on change in fair value of
debt securities available-for-sale
(11
)
$
(21
)
$
(31
)
$
(77
)
Total comprehensive income attributable
to EVERTEC, Inc.’s common stockholders
$
2,161
$
147,680
$
81,377
$
228,838
Net income per common share:
Basic
$
0.16
$
2.08
$
1.05
$
3.01
Diluted
$
0.15
$
2.06
$
1.04
$
2.98
Shares used in computing net income per
common share:
Basic
64,648,542
66,398,547
64,886,551
69,906,483
Diluted
65,779,259
67,045,809
65,705,596
70,588,915
EVERTEC, Inc. Schedule 2: Unaudited Condensed
Consolidated Balance Sheets
(In thousands)
September 30, 2023
December 31, 2022
Assets
Current Assets:
Cash and cash equivalents
$
177,821
$
185,274
Restricted cash
20,607
18,428
Accounts receivable, net
115,779
111,493
Settlement assets
34,771
31,542
Prepaid expenses and other assets
53,373
42,392
Total current assets
402,351
389,129
Debt securities available-for-sale, at
fair value
2,079
2,203
Equity securities, at fair value
25,992
—
Investment in equity investee
20,011
14,661
Property and equipment, net
56,957
56,387
Operating lease right-of-use asset
12,523
15,918
Goodwill
434,496
423,392
Other intangible assets, net
220,240
200,320
Deferred tax asset
18,280
5,701
Derivative asset
11,492
7,440
Net investment in leases
—
14
Other long-term assets
17,039
16,578
Total assets
$
1,221,460
$
1,131,743
Liabilities and stockholders’
equity
Current Liabilities:
Accrued liabilities
$
91,310
$
80,666
Accounts payable
52,403
29,730
Contract liability
14,428
15,226
Income tax payable
958
9,406
Current portion of long-term debt
20,750
20,750
Short-term borrowings
6,000
20,000
Current portion of operating lease
liability
5,979
5,936
Settlement liabilities
27,684
26,696
Foreign currency swap liability
29,225
—
Total current liabilities
248,737
208,410
Long-term debt
374,656
389,498
Deferred tax liability
10,828
10,111
Contract liability - long term
34,062
34,068
Operating lease liability - long-term
7,045
10,788
Other long-term liabilities
9,783
4,120
Total liabilities
685,111
656,995
Stockholders’ equity
Preferred stock, par value $0.01;
2,000,000 shares authorized; none issued
—
—
Common stock, par value $0.01; 206,000,000
shares authorized; 64,630,922 shares issued and outstanding as of
September 30, 2023 (December 31, 2022 - 64,847,233)
646
648
Additional paid-in capital
4,403
—
Accumulated earnings
530,714
487,349
Accumulated other comprehensive loss, net
of tax
(3,352
)
(16,486
)
Total EVERTEC, Inc. stockholders’
equity
532,411
471,511
Non-controlling interest
3,938
3,237
Total equity
536,349
474,748
Total liabilities and equity
$
1,221,460
$
1,131,743
EVERTEC, Inc. Schedule 3: Unaudited Condensed
Consolidated Statements of Cash Flows
Nine months ended September
30,
2023
2022
Cash flows from operating
activities
Net income
68,069
$
210,161
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
63,680
58,432
Amortization of debt issue costs and
accretion of discount
1,795
1,187
Operating lease amortization
4,619
4,576
Unrealized loss on foreign currency
hedge
29,225
—
Unrealized gain on change in fair value of
equity securities
(104
)
—
(Release) provision for expected credit
losses and sundry losses
(305
)
3,363
Deferred tax benefit
(16,491
)
(1,699
)
Share-based compensation
18,812
14,740
Gain on sale of a business
—
(135,642
)
Loss on disposition of property and
equipment
789
4,691
Earnings of equity method investment
(3,828
)
(2,120
)
Dividend received from equity method
investment
3,497
2,053
Loss on foreign currency remeasurement
7,337
6,858
Decrease (increase) in assets:
Accounts receivable, net
(4,590
)
3,503
Prepaid expenses and other assets
(11,181
)
(3,417
)
Other long-term assets
(1,013
)
(4,389
)
(Decrease) increase in liabilities:
Accrued liabilities and accounts
payable
17,387
468
Income tax payable
(9,108
)
2,921
Contract liability
(1,146
)
1,344
Operating lease liabilities
(3,739
)
(4,450
)
Other long-term liabilities
(247
)
(3,571
)
Total adjustments
95,389
(51,152
)
Net cash provided by operating
activities
163,458
159,009
Cash flows from investing
activities
Additions to software
(34,193
)
(28,287
)
Acquisition of customer relationship
—
(10,607
)
Property and equipment acquired
(16,429
)
(16,313
)
Proceeds from sales of property and
equipment
23
77
Acquisition of available-for-sale debt
securities
(962
)
(254
)
Purchase of equity securities
(26,505
)
—
Investment in equity investee
(5,500
)
—
Purchase of certificates of deposit
—
(7,264
)
Proceeds from maturities of
available-for-sale debt securities
1,048
1,015
Acquisitions, net of cash acquired
(22,915
)
(44,369
)
Net cash used in investing activities
(105,433
)
(106,002
)
Cash flows from financing
activities
Withholding taxes paid on share-based
compensation
(5,956
)
(5,685
)
Net decrease in short-term borrowings
(14,000
)
—
Repayment of short-term borrowings for
purchase of equipment and software
—
(901
)
Dividends paid
(9,735
)
(10,515
)
Repurchase of common stock
(23,598
)
(72,532
)
Repayment of long-term debt
(15,563
)
(9,875
)
Net cash used in financing activities
(68,852
)
(99,508
)
Effect of foreign exchange rate on cash,
cash equivalents and restricted cash
10,716
4,260
Net increase in cash, cash equivalents
and restricted cash
(111
)
(42,241
)
Cash, cash equivalents, restricted cash
and cash included in settlement assets at beginning of the
period
215,657
285,917
Cash, cash equivalents, restricted
cash, and cash included in settlement assets at end of the
period
$
215,546
$
243,676
Reconciliation of cash, cash
equivalents and restricted cash
Cash and cash equivalents
$
177,821
$
216,357
Restricted cash
20,607
18,705
Cash and cash equivalents included in
settlement assets
17,118
8,614
Cash, cash equivalents, restricted cash
and cash settlement assets
$
215,546
$
243,676
EVERTEC, Inc. Schedule 4: Unaudited Segment
Information
Three Months Ended September
30, 2023
(In thousands)
Payment Services -
Puerto Rico & Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
51,600
$
46,155
$
40,557
$
56,522
$
(21,636
)
$
173,198
Operating costs and expenses
28,402
38,608
26,997
40,643
(1,014
)
133,636
Depreciation and amortization
6,203
4,898
1,078
4,478
5,262
21,919
Non-operating income (expenses)
110
(2,148
)
—
69
(28,712
)
(30,681
)
EBITDA
29,511
10,297
14,638
20,426
(44,072
)
30,800
Compensation and benefits (2)
663
859
662
696
4,090
6,970
Transaction, refinancing and other fees
(3)
269
3,451
—
—
34,363
38,083
(Gain) loss on foreign currency
remeasurement (4)
(87
)
2,885
—
—
8
2,806
Adjusted EBITDA
$
30,356
$
17,492
$
15,300
$
21,122
$
(5,611
)
$
78,659
_________________________________
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $13.5 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring, intercompany software developments and transaction
processing of $4.4 million from Payment Services- Latin America to
both Payment Services- Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $3.7
million from Payment Services - Puerto Rico & Caribbean to
Payment Services - Latin America.
(2)
Primarily represents share-based
compensation and severance payments.
(3)
Primarily represents fees and expenses
associated with corporate transactions as defined in the Credit
Agreement, the foreign currency swap loss and the elimination of
unrealized equity earnings from our 19.99% equity investment in
Consorcio de Tarjetas Dominicanas S.A., net of dividends
received.
(4)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
Three Months Ended September
30, 2022
(In thousands)
Payment Services -
Puerto Rico & Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
44,592
$
33,741
$
36,911
$
49,306
$
(18,747
)
$
145,803
Operating costs and expenses
26,960
28,513
25,261
38,522
2,729
121,985
Depreciation and amortization
5,116
4,104
1,045
3,745
5,702
19,712
Non-operating income (expenses)
385
(7,094
)
348
136,218
(932
)
128,925
EBITDA
23,133
2,238
13,043
150,747
(16,706
)
172,455
Compensation and benefits (2)
1,557
972
498
503
2,141
5,671
Transaction, refinancing and other fees
(3)
330
—
325
(134,974
)
8,581
(125,738
)
Loss (gain) on foreign currency
remeasurement (4)
68
7,725
—
—
(14
)
7,779
Adjusted EBITDA
$
25,088
$
10,935
$
13,866
$
16,276
$
(5,998
)
$
60,167
_________________________________
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $12.3 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring, intercompany software developments and transaction
processing of $3.7 million from Payment Services- Latin America to
both Payment Services- Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $2.8
million from Payment Services - Puerto Rico & Caribbean to
Payment Services - Latin America.
(2)
Primarily represents share-based
compensation and severance payments.
(3)
Primarily represents fees and expenses
associated with corporate transactions as defined in the 2018
Credit Agreement, the gain from the Popular transaction and the
elimination of unrealized equity earnings from our 19.99% equity
investment in Consorcio de Tarjetas Dominicanas S.A., net of
dividends received.
(4)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
Nine months ended September
30, 2023
(In thousands)
Payment Services -
Puerto Rico & Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
150,824
$
120,548
$
122,152
$
169,188
$
(62,624
)
$
500,088
Operating costs and expenses
85,019
101,586
81,302
118,653
(897
)
385,663
Depreciation and amortization
18,178
13,002
3,357
13,436
15,707
63,680
Non-operating income (expenses)
590
(3,643
)
308
667
(27,902
)
(29,980
)
EBITDA
84,573
28,321
44,515
64,638
(73,922
)
148,125
Compensation and benefits (2)
2,033
2,510
2,054
2,226
12,693
21,516
Transaction, refinancing and other fees
(3)
850
3,704
—
—
38,741
43,295
(Gain) loss on foreign currency
remeasurement (4)
(41
)
7,372
—
—
6
7,337
Adjusted EBITDA
$
87,415
$
41,907
$
46,569
$
66,864
$
(22,482
)
$
220,273
_________________________________
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $39.9 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring, intercompany software developments and transaction
processing of $12.8 million from Payment Services- Latin America to
both Payment Services- Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $9.9
million from Payment Services - Puerto Rico & Caribbean to
Payment Services - Latin America.
(2)
Primarily represents share-based
compensation and severance payments.
(3)
Primarily represents fees and expenses
associated with corporate transactions as defined in the Credit
Agreement, the foreign currency swap loss and the elimination of
unrealized equity earnings from our 19.99% equity investment in
Consorcio de Tarjetas Dominicanas S.A., net of dividends
received.
(4)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
Nine months ended September
30, 2022
(In thousands)
Payment Services -
Puerto Rico & Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
130,678
$
93,308
$
111,079
$
176,620
$
(55,063
)
$
456,622
Operating costs and expenses
76,920
77,132
68,288
117,747
25
340,112
Depreciation and amortization
15,062
9,628
3,104
12,787
17,851
58,432
Non-operating income (expenses)
928
(3,365
)
980
137,542
(3,560
)
132,525
EBITDA
69,748
22,439
46,875
209,202
(40,797
)
307,467
Compensation and benefits (2)
2,569
2,758
1,284
1,503
7,241
15,355
Transaction, refinancing and other fees
(3)
330
—
325
(134,990
)
11,615
(122,720
)
Loss on foreign currency remeasurement
(4)
230
5,596
—
—
1,032
6,858
Adjusted EBITDA
$
72,877
$
30,793
$
48,484
$
75,715
$
(20,909
)
$
206,960
_________________________________
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $36.5 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring, intercompany software developments and transaction
processing of $10.7 million from Payment Services- Latin America to
both Payment Services- Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $7.9
million from Payment Services - Puerto Rico & Caribbean to
Payment Services - Latin America.
(2)
Primarily represents share-based
compensation and severance payments.
(3)
Primarily represents fees and expenses
associated with corporate transactions as defined in the 2018
Credit Agreement, the gain from the Popular transaction and the
elimination of unrealized equity earnings from our 19.99% equity
investment in Consorcio de Tarjetas Dominicanas S.A., net of
dividends received.
(4)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
EVERTEC, Inc. Schedule 5: Reconciliation of
GAAP to Non-GAAP Operating Results
Three months ended September
30,
Nine months ended September
30,
(Dollar amounts in thousands, except share
data)
2023
2022
2023
2022
Net income
9,956
137,739
68,069
210,161
Income tax (benefit) expense
(4,858
)
9,048
4,546
22,911
Interest expense, net
3,783
5,956
11,830
15,963
Depreciation and amortization
21,919
19,712
63,680
58,432
EBITDA
30,800
172,455
148,125
307,467
Equity income (1)
1,834
1,159
(797
)
(273
)
Compensation and benefits (2)
6,970
5,671
21,516
15,355
Transaction, refinancing and other fees
(3)
36,249
(126,897
)
44,092
(122,447
)
Loss on foreign currency remeasurement
(4)
2,806
7,779
7,337
6,858
Adjusted EBITDA
78,659
60,167
220,273
206,960
Operating depreciation and amortization
(5)
(13,061
)
(10,748
)
(38,265
)
(33,156
)
Cash interest expense, net (6)
(3,755
)
(5,645
)
(11,575
)
(15,132
)
Income tax expense (7)
(9,447
)
(8,184
)
(25,855
)
(27,067
)
Non-controlling interest (8)
50
47
96
58
Adjusted net income
$
52,446
$
35,637
$
144,674
$
131,663
Net income per common share
(GAAP):
Diluted
$
0.15
$
2.06
$
1.04
$
2.98
Adjusted Earnings per common share
(Non-GAAP):
Diluted
$
0.80
$
0.53
$
2.20
$
1.87
Shares used in computing adjusted earnings
per common share:
Diluted
65,779,259
67,045,809
65,705,596
70,588,915
_________________________________
(1)
Represents the elimination of non-cash
equity earnings from our 19.99% equity investment in Dominican
Republic, Consorcio de Tarjetas Dominicanas S.A. ("CONTADO"), net
of dividends received.
(2)
Primarily represents share-based
compensation and severance payments.
(3)
Represents fees and expenses associated
with corporate transactions as defined in the Credit Agreement, the
gain from the Popular Transaction and the foreign currency swap
loss.
(4)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
(5)
Represents operating depreciation and
amortization expense, which excludes amounts generated as a result
of merger and acquisition activity.
(6)
Represents interest expense, less interest
income, as they appear on the condensed consolidated statements of
income and comprehensive income, adjusted to exclude non-cash
amortization of the debt issue costs, premium and accretion of
discount.
(7)
Represents income tax expense calculated
on adjusted pre-tax income using the applicable GAAP tax rate,
adjusted for certain discrete items.
(8)
Represents the 35% non-controlling equity
interest in Evertec Colombia, net of amortization for intangibles
created as part of the purchase.
EVERTEC, Inc. Schedule 6: Outlook Summary and
Reconciliation to Non-GAAP Adjusted Earnings per Common Share
2022
Outlook 2023
(As recast)
(Dollar amounts in millions, except per
share data)
Low
High
Revenues
$
663
to
$
667
$
618
Earnings per Share (EPS) (GAAP)
$
1.69
to
$
1.75
$
3.45
Per share adjustment
to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
Share-based comp, non-cash equity earnings
and other (1)
0.72
0.72
(1.42
)
Merger and acquisition related
depreciation and amortization (2)
0.49
0.49
0.49
Non-cash interest expense (3)
0.01
0.01
0.01
Tax effect of Non-GAAP adjustments (4)
(0.21
)
(0.22
)
(0.10
)
Loss (gain) on foreign currency
remeasurement (5)
0.11
0.11
0.10
Total adjustments
1.12
1.11
(0.92
)
Adjusted EPS (Non-GAAP)
$
2.81
to
$
2.86
$
2.53
Shares used in computing adjusted earnings
per common share
65.7
69.3
_________________________________ (1)
Represents share-based compensation, the
elimination of non-cash equity earnings from the Company's 19.99%
equity investment in CONTADO, the foreign currency hedge loss
severance and other adjustments to reconcile GAAP EPS to Non-GAAP
EPS.
(2)
Represents depreciation and amortization
expenses amounts generated as a result of M&A activity.
(3)
Represents non-cash amortization of the
debt issue costs, premium and accretion of discount.
(4)
Represents income tax expense on non-GAAP
adjustments using the applicable GAAP tax rate (anticipated at
approximately 16%).
(5)
Represents non-cash unrealized gains
(losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026277734/en/
Investor Beatriz Brown-Sáenz (787) 773-5442
IR@evertecinc.com
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