UPDATES ANNUAL GUIDANCE
EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today
announced results for the second quarter ended June 30, 2022.
Second Quarter 2022 and Recent Highlights
- Revenue increased 8% to $160.6 million
- GAAP Net Income attributable to common shareholders was $33.6
million a decrease of 32% , or $0.47 per diluted share, a decrease
of 31%
- Adjusted EBITDA decreased 9% to $73.4 million
- Adjusted earnings per common share was $0.65, a decrease of
17%
- Share repurchases totaled $14.0 million
- Completed Popular transaction and BBR acquisition in Chile on
July 1
Mac Schuessler, President and Chief Executive Officer stated,
“We are pleased with another quarter of strong revenue in both
Puerto Rico and Latin America. Additionally, we closed on the
Popular transaction and the BBR acquisition in Chile as expected,
and will now focus on continuing to support Popular on their
strategic objectives and integrating BBR as we continue to expand
in Latin America."
Second Quarter 2022 Results
Revenue. Total revenue for the quarter ended June 30, 2022 was
$160.6 million, an increase of 8% compared with $149.1 million in
the prior year. Revenue in Puerto Rico benefited from increased
transaction volumes in our payments segment in addition to the
continued growth in our digital solutions, ATH Movil and ATH
Business, as well as, revenue generated from a small tuck-in
acquisition we completed at the beginning of the quarter. Revenue
in the quarter also benefited from the printing contract entered
into during June of the prior year, one-time software sales and the
year over year CPI impact from the MSA with Popular, which was
amended on July 1, 2022 with the close of the Popular transaction.
Latin America revenue reflected organic growth.
Net Income attributable to common shareholders. For the quarter
ended June 30, 2022, GAAP Net Income attributable to common
shareholders was $33.6 million, or $0.47 per diluted share, a
decrease of $15.6 million or $0.21 per diluted share as compared to
the prior year. In the second quarter a $4.1 million impairment
loss on a multi-year software development was recognized through
cost of revenues, which represented an impact of $0.06 per diluted
share, as well as an increase in provisions for expected losses.
The quarter also reflected an increase in cost of sales driven by
the aforementioned software sales, and an increase operating costs
primarily due to professional fees and personnel costs.
Adjusted EBITDA. For the quarter ended June 30, 2022, Adjusted
EBITDA was $73.4 million, a decrease of 9% compared to the prior
year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of
total revenues) was 45.7%, a decrease of approximately 810 basis
points from the prior year. The year over year decrease in margin
primarily reflects the increased expenses discussed above. In
addition, the prior year margin benefited from foreign currency
remeasurement gains of $1.4 million, compared with $0.2 million in
losses in the current year quarter.
Adjusted Net Income. For the quarter ended June 30, 2022,
Adjusted Net Income was $47.0 million, a decrease of 18% compared
with $57.1 million in the prior year. Adjusted earnings per common
share was $0.65, a decrease of 17% compared to $0.78 in the prior
year. The decrease was driven by the decrease in Adjusted EBITDA
and a higher adjusted tax rate in the quarter.
Share Repurchase
During the three months ended June 30, 2022, the Company
repurchased 357,114 shares of its common stock at an average price
of $39.30 per share for a total of $14.0 million. As of June 30,
2022, a total of approximately $115 million remained available for
future use under the Company’s share repurchase program.
2022 Outlook
The Company's financial outlook for 2022 is as follows:
- Total consolidated revenue is now anticipated between $607
million and $615 million representing a growth of approximately 3%
to 4% compared with $597 million and $605 million, previously
estimated.
- Adjusted earnings per common share continue to be expected
between $2.52 to $2.60 representing a decline of 8% to 5% as
compared to $2.74 in 2021. This excludes the gain on sale from the
Popular transaction and one-time adjustments.
- Capital expenditures continue to be expected at approximately
$60 million.
- Effective tax rate is now anticipated between 14% to 15%, an
increase from the 13% to 14% previously estimated.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its second
quarter 2022 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 6023459. The replay will
be available through Thursday, August 11, 2022. 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 can be found 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 manages a system of electronic payment
networks and offers a comprehensive suite of services for core
banking, cash processing and fulfillment in Puerto Rico, that
process over three billion transactions annually. The Company also
offers technology outsourcing in 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 release material 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 interested parties to
evaluate companies in the industry. Reconciliations of the non-GAAP
measures to the most directly comparable GAAP measure are included
in the schedules to this release. These non-GAAP measures include
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings
per common share and are defined below.
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to
exclude unusual items and other adjustments. 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 net income adjusted to
exclude unusual items and other adjustments.
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. Further, the Company's presentation
of these measures should not be construed as an inference that the
Company's future operating results will not be affected by unusual
or nonrecurring items.
Forward-Looking Statements
Certain statements in this press release constitute
“forward-looking statements” within the meaning of, and subject to
the protection of, the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause the actual
results, performance or achievements of EVERTEC to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Statements
preceded by, followed by, or that otherwise include the words
“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. Any statements that refer to expectations or other
characterizations of future events, circumstances or results are
forward-looking statements.
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: the Company’s reliance
on its relationship with Popular, Inc. (“Popular”) for a
significant portion of its revenues pursuant to the Company’s
second amended and restated Master Services Agreement ("MSA") with
them, and to grow the Company’s merchant acquiring business; as a
regulated institution, the likelihood that the Company will be
required to obtain regulatory approval before engaging in certain
new activities or businesses, whether organically or by
acquisition, and its potential inability to obtain such approval on
a timely basis or at all, which may make transactions more
expensive or impossible to complete, or make us less attractive to
potential sellers; the Company’s ability to renew its client
contracts on terms favorable to the Company, including the contract
with Popular, and any significant concessions the Company may grant
to Popular with respect to pricing or other key terms arising out
of any disputes or in anticipation of the negotiation of the
extension of the MSA, both in respect of the current term and any
extension of the MSA; the Company’s dependence on its processing
systems, technology infrastructure, security systems and fraudulent
payment detection systems, as well as on the Company’s personnel
and certain third parties with whom it does business, and the risks
to the Company’s business if its systems are hacked or otherwise
compromised; the Company’s ability to develop, install and adopt
new software, technology and computing systems; a decreased client
base due to consolidations and failures in the financial services
industry; the credit risk of the Company’s merchant clients, for
which it 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; the Company’s 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 macroeconomic, market, in international,
legal, tax, political, or administrative conditions, including
inflation or the risk of recession; the geographical concentration
of the Company’s business in Puerto Rico, including its 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 the Company’s customer
base, general consumer spending, the Company’s cost of operations
and the Company’s 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 Company’s ability to protect its intellectual
property rights against infringement and to defend itself against
claims of infringement brought by third parties; the Company’s
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; the
Company’s level of indebtedness and the impact of rising interest
rates, and restrictions contained in the Company’s debt agreements,
including the secured credit facilities, as well as debt that could
be incurred in the future; the Company’s ability to prevent a
cybersecurity attack or breach to its information security; the
possibility that the Company could lose its preferential tax rate
in Puerto Rico; the possibility of future catastrophic hurricanes,
earthquakes and other potential natural disasters affecting the
Company’s main markets in Latin America and the Caribbean; and
uncertainty related to the effect of the discontinuation of the
London Interbank Offered Rate at the end of 2021.
Consideration should be given to the areas of risk described
above, as well as those risks set forth under the headings
“Forward-Looking Statements” and “Risk Factors” in the reports we
file with the SEC from time to time, in connection with considering
any forward-looking statements that may be made by us and our
businesses generally. We undertake no obligation to release
publicly any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events unless
we are required to do so by law.
EVERTEC, Inc.
Schedule 1: Unaudited Condensed
Consolidated Statements of Income and Comprehensive Income
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(Dollar amounts in thousands, except share
data)
Revenues
$
160,571
$
149,148
$
310,819
$
288,676
Operating costs and expenses
Cost of revenues, exclusive of
depreciation and amortization
74,313
59,381
138,972
119,185
Selling, general and administrative
expenses
20,051
16,752
40,435
32,854
Depreciation and amortization
19,560
18,723
38,720
37,346
Total operating costs and expenses
113,924
94,856
218,127
189,385
Income from operations
46,647
54,292
92,692
99,291
Non-operating income (expenses)
Interest income
805
450
1,472
839
Interest expense
(5,932
)
(5,658
)
(11,479
)
(11,564
)
Earnings of equity method investment
862
394
1,432
896
Other (expenses) income
(1,138
)
2,245
2,168
2,573
Total non-operating expenses
(5,403
)
(2,569
)
(6,407
)
(7,256
)
Income before income taxes
41,244
51,723
86,285
92,035
Income tax expense
7,688
2,632
13,863
7,340
Net income
33,556
49,091
72,422
84,695
Less: Net loss attributable to
non-controlling interest
(33
)
(106
)
(65
)
(5
)
Net income attributable to EVERTEC, Inc.’s
common stockholders
33,589
49,197
72,487
84,700
Other comprehensive (loss) income, net of
tax
Foreign currency translation
adjustments
(6,549
)
1,732
(4,335
)
(881
)
Gain on cash flow hedges
3,337
1,088
13,062
5,277
Unrealized (loss) gain on change in fair
value of debt securities available-for-sale
(29
)
89
(56
)
89
Total comprehensive income attributable
to EVERTEC, Inc.’s common stockholders
$
30,348
$
52,106
$
81,158
$
89,185
Net income per common share:
Basic
$
0.47
$
0.68
$
1.01
$
1.17
Diluted
$
0.47
$
0.68
$
1.00
$
1.16
Shares used in computing net income per
common share:
Basic
71,476,850
72,127,847
71,714,876
72,139,125
Diluted
72,149,949
72,831,366
72,558,565
72,716,950
EVERTEC, Inc.
Schedule 2: Unaudited Condensed
Consolidated Balance Sheets
(In thousands)
June 30, 2022
December 31, 2021
Assets
Current Assets:
Cash and cash equivalents
$
288,064
$
266,351
Restricted cash
22,576
19,566
Accounts receivable, net
107,685
113,285
Prepaid expenses and other assets
46,307
37,148
Assets held-for-sale
25,161
—
Total current assets
489,793
436,350
Debt securities available-for-sale, at
fair value
2,397
3,041
Investment in equity investee
15,120
12,054
Property and equipment, net
48,122
48,533
Operating lease right-of-use asset
19,330
21,229
Goodwill
385,536
393,318
Other intangible assets, net
189,604
213,288
Deferred tax asset
7,057
6,910
Net investment in leases
—
107
Other long-term assets
12,382
9,926
Total assets
$
1,169,341
$
1,144,756
Liabilities and stockholders’
equity
Current Liabilities:
Accrued liabilities
$
79,039
$
74,540
Accounts payable
34,439
28,484
Contract liability
21,403
17,398
Income tax payable
3,011
7,132
Current portion of long-term debt
22,500
19,750
Current portion of operating lease
liability
5,921
5,580
Total current liabilities
166,313
152,884
Long-term debt
432,723
444,785
Deferred tax liability
2,142
2,369
Contract liability - long term
32,743
36,258
Operating lease liability - long-term
14,940
16,456
Derivative liability
—
13,392
Other long-term liabilities
7,879
8,344
Total liabilities
656,740
674,488
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; 71,367,324 shares issued and outstanding as of
June 30, 2022 (December 31, 2021 - 71,969,856)
713
719
Additional paid-in capital
1,671
7,565
Accumulated earnings
545,814
506,051
Accumulated other comprehensive loss, net
of tax
(39,452
)
(48,123
)
Total EVERTEC, Inc. stockholders’
equity
508,746
466,212
Non-controlling interest
3,855
4,056
Total equity
512,601
470,268
Total liabilities and equity
$
1,169,341
$
1,144,756
EVERTEC, Inc.
Schedule 3: Unaudited Condensed
Consolidated Statements of Cash Flows
Six months ended June
30,
2022
2021
Cash flows from operating
activities
Net income
$
72,422
$
84,695
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
38,720
37,346
Amortization of debt issue costs and
accretion of discount
805
991
Operating lease amortization
3,056
2,938
Provision for expected credit losses and
sundry losses
1,795
85
Deferred tax benefit
(1,210
)
(947
)
Share-based compensation
9,444
7,235
Gain from sale of assets
—
(778
)
Loss on disposition of property and
equipment and impairment of software
4,370
1,106
Earnings of equity method investment
(1,432
)
(896
)
Dividend received from equity method
investment
—
1,183
Loss on valuation of foreign currency
1,046
—
(Increase) decrease in assets:
Accounts receivable, net
2,759
(48
)
Prepaid expenses and other assets
(1,972
)
1,407
Other long-term assets
(3,965
)
(14
)
Increase (decrease) in liabilities:
Accrued liabilities and accounts
payable
7,397
(10,899
)
Income tax payable
(3,862
)
(3,398
)
Unearned income
1,025
(1,664
)
Operating lease liabilities
(1,605
)
(3,438
)
Other long-term liabilities
1,109
(2,875
)
Total adjustments
57,480
27,334
Net cash provided by operating
activities
129,902
112,029
Cash flows from investing
activities
Additions to software
(18,918
)
(21,317
)
Acquisition of customer relationships
(10,607
)
(14,750
)
Property and equipment acquired
(10,051
)
(8,803
)
Proceeds from sales of property and
equipment
76
802
Purchase of certificates of deposit
(7,264
)
—
Proceeds from maturities of
available-for-sale debt securities
572
—
Acquisition of available-for-sale debt
securities
—
(2,968
)
Net cash used in investing activities
(46,192
)
(47,036
)
Cash flows from financing
activities
Statutory withholding taxes paid on
share-based compensation
(5,676
)
(8,793
)
Repayment of short-term borrowings for
purchase of equipment and software
(853
)
(1,556
)
Dividends paid
(7,177
)
(7,213
)
Repurchase of common stock
(35,215
)
(24,388
)
Repayment of long-term debt
(9,875
)
(24,919
)
Net cash used in financing activities
(58,796
)
(66,869
)
Effect of foreign exchange rate on cash,
cash equivalents and restricted cash
(191
)
73
Net increase (decrease) in cash, cash
equivalents and restricted cash
24,723
(1,803
)
Cash, cash equivalents and restricted
cash at beginning of the period
285,917
221,105
Cash, cash equivalents and restricted
cash at end of the period
$
310,640
$
219,302
Reconciliation of cash, cash
equivalents and restricted cash
Cash and cash equivalents
$
288,064
$
199,891
Restricted cash
22,576
19,411
Cash, cash equivalents and restricted
cash
$
310,640
$
219,302
EVERTEC, Inc.
Schedule 4: Unaudited Segment
Information
Three months ended June 30,
2022
(In thousands)
Payment Services
-
Puerto Rico &
Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
46,078
$
30,784
$
38,539
$
64,690
$
(19,520
)
$
160,571
Operating costs and expenses
28,680
25,032
22,823
40,297
(2,908
)
113,924
Depreciation and amortization
5,466
2,712
1,040
4,279
6,063
19,560
Non-operating income (expenses)
309
123
332
624
(1,664
)
(276
)
EBITDA
23,173
8,587
17,088
29,296
(12,213
)
65,931
Compensation and benefits (2)
675
973
446
555
2,756
5,405
Transaction, refinancing and other fees
(3)
—
—
—
(16
)
2,055
2,039
Adjusted EBITDA
$
23,848
$
9,560
$
17,534
$
29,835
$
(7,402
)
$
73,375
(1)
Corporate and Other consists of corporate overhead, certain
leveraged activities, other non-operating expenses and intersegment
eliminations. Intersegment revenue eliminations predominantly
reflect the $13.3 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 $2.5 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, and the
elimination of non-cash equity earnings from our 19.99% equity
investment in Consorcio de Tarjetas Dominicanas S.A.
Three months ended June 30,
2021
(In thousands)
Payment Services
-
Puerto Rico &
Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
38,589
$
25,835
$
38,335
$
60,693
$
(14,304
)
$
149,148
Operating costs and expenses
19,361
20,965
19,374
36,175
(1,019
)
94,856
Depreciation and amortization
3,882
2,952
967
4,600
6,322
18,723
Non-operating income (expenses)
230
2,396
323
1,390
(1,700
)
2,639
EBITDA
23,340
10,218
20,251
30,508
(8,663
)
75,654
Compensation and benefits (2)
280
757
295
760
2,191
4,283
Transaction, refinancing and other fees
(3)
—
—
—
(647
)
971
324
Adjusted EBITDA
$
23,620
$
10,975
$
20,546
$
30,621
$
(5,501
)
$
80,261
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $10.7 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring and intercompany software developments and transaction
processing of $1.9 million from Payment Services - Latin America to
both Payment Services - Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $1.7
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 2018
Credit Agreement and the elimination of non-cash equity earnings
from our 19.99% equity investment in Consorcio de Tarjetas
Dominicanas S.A. net dividends received, a software impairment
charge and a gain from sale of assets.
EVERTEC, Inc.
Schedule 4: Unaudited Segment
Information
Six months ended June 30,
2022
(In thousands)
Payment Services
-
Puerto Rico &
Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
86,086
$
59,567
$
74,168
$
127,314
$
(36,316
)
$
310,819
Operating costs and expenses
49,960
48,619
43,027
79,225
(2,704
)
218,127
Depreciation and amortization
9,946
5,524
2,059
9,042
12,149
38,720
Non-operating income (expenses)
544
3,729
632
1,324
(2,629
)
3,600
EBITDA
46,616
20,201
33,832
58,455
(24,092
)
135,012
Compensation and benefits (2)
1,012
1,786
786
1,000
5,100
9,684
Transaction, refinancing and other fees
(3)
—
—
—
(16
)
4,080
4,064
Adjusted EBITDA
$
47,628
$
21,987
$
34,618
$
59,439
$
(14,912
)
$
148,760
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $24.2 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring and intercompany software developments and transaction
processing of $7.0 million from Payment Services - Latin America to
both Payment Services - Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $5.1
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
elimination of non-cash equity earnings from our 19.99% equity
investment in Consorcio de Tarjetas Dominicanas S.A.
Six months ended June 30,
2021
(In thousands)
Payment Services
-
Puerto Rico &
Caribbean
Payment Services -
Latin America
Merchant Acquiring,
net
Business
Solutions
Corporate and Other
(1)
Total
Revenues
$
74,853
$
50,849
$
69,202
$
121,304
$
(27,532
)
$
288,676
Operating costs and expenses
39,850
40,811
35,840
72,864
20
189,385
Depreciation and amortization
7,824
5,886
1,621
9,394
12,621
37,346
Non-operating income (expenses)
415
3,504
554
1,943
(2,947
)
3,469
EBITDA
43,242
19,428
35,537
59,777
(17,878
)
140,106
Compensation and benefits (2)
521
1,566
526
1,123
4,051
7,787
Transaction, refinancing and other fees
(3)
660
—
—
(647
)
1,244
1,257
Adjusted EBITDA
$
44,423
$
20,994
$
36,063
$
60,253
$
(12,583
)
$
149,150
(1)
Corporate and Other consists of corporate
overhead, certain leveraged activities, other non-operating
expenses and intersegment eliminations. Intersegment revenue
eliminations predominantly reflect the $20.4 million processing fee
from Payments Services - Puerto Rico & Caribbean to Merchant
Acquiring and intercompany software developments and transaction
processing of $4.2 million from Payment Services - Latin America to
both Payment Services - Puerto Rico & Caribbean and Business
Solutions, and transaction processing and monitoring fees of $2.9
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 and the elimination of non-cash equity earnings
from our 19.99% equity investment in Consorcio de Tarjetas
Dominicanas S.A. net of dividends received, a software impairment
charge and a gain from the sale of the asset.
EVERTEC, Inc.
Schedule 5: Reconciliation of
GAAP to Non-GAAP Operating Results
Three months ended June
30,
Six months ended June
30,
(Dollar amounts in thousands, except share
data)
2022
2021
2022
2021
Net income
$
33,556
$
49,091
$
72,422
$
84,695
Income tax expense
7,688
2,632
13,863
7,340
Interest expense, net
5,127
5,208
10,007
10,725
Depreciation and amortization
19,560
18,723
38,720
37,346
EBITDA
65,931
75,654
135,012
140,106
Equity income (1)
(862
)
923
(1,432
)
421
Compensation and benefits (2)
5,405
4,283
9,684
7,787
Transaction, refinancing and other fees
(3)
2,901
(599
)
5,496
836
Adjusted EBITDA
73,375
80,261
148,760
149,150
Operating depreciation and amortization
(4)
(11,156
)
(10,724
)
(22,408
)
(21,606
)
Cash interest expense, net (5)
(4,858
)
(4,944
)
(9,487
)
(10,020
)
Income tax expense (6)
(10,325
)
(7,535
)
(19,002
)
(15,291
)
Non-controlling interest (7)
1
71
11
(72
)
Adjusted net income
$
47,037
$
57,129
$
97,874
$
102,161
Net income per common share
(GAAP):
Diluted
$
0.47
$
0.68
$
1.00
$
1.16
Adjusted Earnings per common share
(Non-GAAP):
Diluted
$
0.65
$
0.78
$
1.35
$
1.40
Shares used in computing adjusted earnings
per common share:
Diluted
72,149,949
72,831,366
72,558,565
72,716,950
(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 2018 Credit Agreement, a software
impairment charge and a gain from sale of assets. (4)
Represents operating depreciation and amortization expense, which
excludes amounts generated as a result of merger and acquisition
activity.
(5)
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. (6)
Represents income tax expense calculated on adjusted pre-tax income
using the applicable GAAP tax rate, adjusted for certain discrete
items. (7) 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 Share
2022 Outlook(1)
2021
(Dollar amounts in millions, except per
share data)
Low
High
Revenues
$
607
to
$
615
$
590
Earnings per Share (EPS) (GAAP)
$
1.81
to
$
1.90
$
2.21
Per share adjustment
to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
Share-based comp, non-cash equity earnings
and other (2)
0.36
0.36
0.23
Merger and acquisition related
depreciation and amortization (3)
0.44
0.44
0.43
Non-cash interest expense (4)
0.02
0.02
0.02
Tax effect of Non-GAAP adjustments (5)
(0.11
)
(0.12
)
(0.15
)
Total adjustments
0.71
0.70
0.53
Adjusted EPS (Non-GAAP)
$
2.52
to
$
2.60
$
2.74
Shares used in computing adjusted earnings
per common share
70.1
72.9
(1) Excludes potential one-time effects from the Popular
transaction that closed on July 1, 2022.
(2)
Represents share-based compensation, the elimination of non-cash
equity earnings from the Company's 19.99% equity investment in
CONTADO, severance and other adjustments to reconcile GAAP EPS to
Non-GAAP EPS. (3) Represents depreciation and amortization expenses
amounts generated as a result of the Merger and intangibles related
to acquisitions. (4)
Represents non-cash amortization of the
debt issue costs, premium and accretion of discount.
(5)
Represents income tax expense on non-GAAP
adjustments using the applicable GAAP tax rate (anticipated at
approximately 14% to 15%).
View source
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