Raises annual guidance
EVERTEC, Inc. (NYSE: EVTC) (“Evertec”, the “Company”, “we” or
“our”) today announced results for the second quarter ended June
30, 2023.
Second Quarter 2023 Highlights
- Revenue increased 4% to $167.1 million
- GAAP Net Income attributable to common shareholders decreased
16% to $28.2 million and decreased 9% to $0.43 per diluted
share
- Adjusted EBITDA increased to $74.5 million and Adjusted
earnings per common share increased 6% to $0.71
- Share repurchases totaled $9.5 million for the quarter
- Announced Sinqia acquisition
- Increased and extended share repurchase program
Mac Schuessler, President and Chief Executive Officer stated,
“We delivered a strong second quarter in both Puerto Rico and Latin
America, while concurrently executing on our strategic growth plan
through M&A. Given our strong quarter, we are once again
raising our guidance for the year."
Second Quarter 2023 Results
Revenue. Total revenue for the quarter ended June 30, 2023 was
$167.1 million, an increase of 4% compared with $160.6 million in
the prior year quarter, driven by growth in our payment segments,
both in Puerto Rico and Latin America. Merchant acquiring revenue
growth was a result of increased spread per transaction, in part
due to the continued benefit from pricing initiatives and card mix,
and an increase in sales volumes. Payment processing growth in
Puerto Rico was driven by increased transaction volumes as well as
continued growth in ATH Movil revenues, primarily ATH Business.
Payment processing LATAM revenue growth reflected the impact from
the BBR and paySmart acquisitions completed in the third quarter of
2022 and first quarter of 2023, respectively, and organic growth.
These increases were partially offset by the impact to business
solutions from the assets sold as part of the Popular Transaction
in the third quarter of 2022.
Net Income attributable to common shareholders. For the quarter
ended June 30, 2023, GAAP Net Income attributable to common
shareholders was $28.2 million, or $0.43 per diluted share, a
decrease of $5.4 million or $0.04 per diluted share as compared to
the prior year. The decrease was primarily driven by an increase in
costs of revenues, primarily due to the revenue sharing agreement
with Banco Popular, as well as an increase in personnel costs,
primarily attributable to increased headcount in Latin America
resulting from the BBR and paySmart acquisitions, and an increase
in professional fees and cloud services, partially offset by the
impact in the prior year of a $4.1 million impairment loss on a
multi-year software development. 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 gain on foreign
currency remeasurement of $0.3 million compared with a non-cash
unrealized loss of $1.7 million in the prior year quarter.
Adjusted EBITDA and Adjusted EBITDA Margin. For the quarter
ended June 30, 2023, Adjusted EBITDA was $74 million, a decrease of
$0.4 million when compared to the prior year quarter. Adjusted
EBITDA margin (Adjusted EBITDA as a percentage of total revenues)
was 44.6%, a decrease of approximately 160 basis points from the
prior year. The decrease in Adjusted EBITDA and Adjusted EBITDA
margin reflects the impact of the revenue sharing agreement with
Banco Popular which increased expenses year over year, and the
impact from the sale of assets to Popular as part of the Popular
Transaction, which were of higher margin.
Adjusted Net Income and Adjusted earnings per common share. For
the quarter ended June 30, 2023, Adjusted Net Income was $46.6
million, a decrease of $1.3 million compared to $96.0 million in
the prior year. The decrease was driven by lower adjusted EBITDA,
higher operating depreciation and amortization and higher non-GAAP
tax expense partially offset by lower interest expense, net.
Adjusted earnings per common share was $0.71, an increase of $0.04
per diluted share compared to $0.67, in the prior year due to 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 June 30, 2023, the Company
repurchased 268,398 shares of its common stock at an average price
of $35.64 per share for a total of $9.5 million. As of June 30,
2023, a total of approximately $63 million remained available for
future use under the Company’s share repurchase program. On July
20, 2023, the Company announced that its Board of Directors
approved an increase to the share repurchase authorization to an
aggregate $150 million and an extension of the expiration date to
December 31, 2024.
2023 Outlook
The Company is revising its financial outlook for 2023 as
follows:
- Total consolidated revenue is now anticipated to be between
$652 million and $658 million representing growth of approximately
5% to 6% growth, compared with $644 to $652 million previously
estimated.
- Adjusted earnings per common share between $2.75 to $2.83
representing approximately 9% to 12% growth as compared to $2.53 in
2022, as recast, compared with $2.59 to $2.68 previously
estimated.
- We continue to expect capital expenditures to be approximately
$70 million.
- We continue to expect an effective tax rate of approximately
16% to 17%.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its second
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 1769798. The replay will
be available through Wednesday, August 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: 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; the
Company’s ability to renew its client contracts on terms favorable
to the Company, including but not limited to the current term and
any extension of the MSA with Popular; 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 in
international, legal, tax, political, administrative or economic
conditions; 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 impact of foreign exchange rates on operations; 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 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; the elimination of Popular's
ownership of the Company's common stock; 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 June
30,
Six months ended June
30,
2023
2022
2023
2022
(Dollar amounts in thousands, except share
data)
Revenues
$
167,076
$
160,571
$
326,890
$
310,819
Operating costs and expenses
Cost of revenues, exclusive of
depreciation and amortization
80,452
74,313
156,869
138,972
Selling, general and administrative
expenses
29,522
20,051
53,397
40,435
Depreciation and amortization
22,329
19,560
41,761
38,720
Total operating costs and expenses
132,303
113,924
252,027
218,127
Income from operations
34,773
46,647
74,863
92,692
Non-operating income (expenses)
Interest income
2,103
805
3,236
1,472
Interest expense
(5,640
)
(5,932
)
(11,283
)
(11,479
)
Gain (loss) on foreign currency
remeasurement
333
(1,747
)
(4,531
)
921
Earnings of equity method investment
1,476
862
2,631
1,432
Other income, net
1,591
609
2,601
1,247
Total non-operating expenses
(137
)
(5,403
)
(7,346
)
(6,407
)
Income before income taxes
34,636
41,244
67,517
86,285
Income tax expense
6,586
7,688
9,404
13,863
Net income
28,050
33,556
58,113
72,422
Less: Net (loss) attributable to
non-controlling interest
(105
)
(33
)
(94
)
(65
)
Net income attributable to EVERTEC, Inc.’s
common stockholders
28,155
33,589
58,207
72,487
Other comprehensive income (loss), net of
tax
Foreign currency translation
adjustments
3,153
(6,549
)
20,758
(4,335
)
Gain on cash flow hedges
1,816
3,337
271
13,062
Unrealized loss on change in fair value of
debt securities available-for-sale
—
$
(29
)
$
(20
)
$
(56
)
Total comprehensive income attributable
to EVERTEC, Inc.’s common stockholders
$
33,124
$
30,348
$
79,216
$
81,158
Net income per common share:
Basic
$
0.43
$
0.47
$
0.90
$
1.01
Diluted
$
0.43
$
0.47
$
0.89
$
1.00
Shares used in computing net income per
common share:
Basic
65,046,328
71,476,850
65,007,528
71,714,876
Diluted
65,510,091
72,149,949
65,571,453
72,558,565
EVERTEC, Inc.
Schedule 2: Unaudited Condensed
Consolidated Balance Sheets
(In thousands)
June 30, 2023
December 31, 2022
Assets
Current Assets:
Cash and cash equivalents
$
191,620
$
185,274
Restricted cash
19,485
18,428
Accounts receivable, net
109,421
111,493
Settlement assets
30,014
31,542
Prepaid expenses and other assets
43,348
42,392
Total current assets
393,888
389,129
Debt securities available-for-sale, at
fair value
2,175
2,203
Investment in equity investee
17,136
14,661
Property and equipment, net
57,761
56,387
Operating lease right-of-use asset
14,035
15,918
Goodwill
438,256
423,392
Other intangible assets, net
213,779
200,320
Deferred tax asset
8,264
5,701
Derivative asset
7,733
7,440
Net investment in leases
—
14
Other long-term assets
18,606
16,578
Total assets
$
1,171,633
$
1,131,743
Liabilities and stockholders’
equity
Current Liabilities:
Accrued liabilities
$
79,749
$
80,666
Accounts payable
50,147
29,730
Contract liability
17,821
15,226
Income tax payable
171
9,406
Current portion of long-term debt
20,750
20,750
Short-term borrowings
—
20,000
Current portion of operating lease
liability
6,189
5,936
Settlement liabilities
24,103
26,696
Total current liabilities
198,930
208,410
Long-term debt
379,602
389,498
Deferred tax liability
9,407
10,111
Contract liability - long term
33,345
34,068
Operating lease liability - long-term
8,579
10,788
Other long-term liabilities
3,628
4,120
Total liabilities
633,491
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; 64,839,109 shares issued and outstanding as of
June 30, 2023 (December 31, 2022 - 64,847,233)
648
648
Additional paid-in capital
—
—
Accumulated earnings
529,364
487,349
Accumulated other comprehensive loss, net
of tax
4,523
(16,486
)
Total EVERTEC, Inc. stockholders’
equity
534,535
471,511
Non-controlling interest
3,607
3,237
Total equity
538,142
474,748
Total liabilities and equity
$
1,171,633
$
1,131,743
EVERTEC, Inc.
Schedule 3: Unaudited Condensed
Consolidated Statements of Cash Flows
Six months ended June
30,
2023
2022
Cash flows from operating
activities
Net income
58,113
$
72,422
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
41,761
38,720
Amortization of debt issue costs and
accretion of discount
791
805
Operating lease amortization
3,103
3,056
Provision for expected credit losses and
sundry losses
3,752
1,795
Deferred tax benefit
(3,290
)
(1,210
)
Share-based compensation
12,056
9,444
Loss on disposition of property and
equipment
372
4,370
Earnings of equity method investment
(2,631
)
(1,432
)
Loss (gain) on foreign currency
remeasurement
4,531
(921
)
Decrease (increase) in assets:
Accounts receivable, net
1,261
2,759
Prepaid expenses and other assets
(628
)
(1,972
)
Other long-term assets
(2,282
)
(3,965
)
(Decrease) increase in liabilities:
Accrued liabilities and accounts
payable
21,802
7,397
Income tax payable
(10,027
)
(3,862
)
Contract liability
1,181
1,025
Operating lease liabilities
(3,035
)
(1,605
)
Other long-term liabilities
(592
)
1,109
Total adjustments
68,125
55,513
Net cash provided by operating
activities
126,238
127,935
Cash flows from investing
activities
Additions to software
(24,151
)
(18,918
)
Acquisition of customer relationship
—
(10,607
)
Property and equipment acquired
(11,327
)
(10,051
)
Proceeds from sales of property and
equipment
22
76
Purchase of certificates of deposit
—
(7,264
)
Proceeds from maturities of
available-for-sale debt securities
—
572
Acquisitions, net of cash acquired
(22,915
)
—
Net cash used in investing activities
(58,371
)
(46,192
)
Cash flows from financing
activities
Withholding taxes paid on share-based
compensation
(5,955
)
(5,676
)
Net decrease in short-term borrowings
(20,000
)
—
Repayment of short-term borrowings for
purchase of equipment and software
—
(853
)
Dividends paid
(6,503
)
(7,177
)
Repurchase of common stock
(15,790
)
(35,215
)
Repayment of long-term debt
(10,375
)
(9,875
)
Net cash used in financing activities
(58,623
)
(58,796
)
Effect of foreign exchange rate on cash,
cash equivalents and restricted cash
(1,841
)
1,776
Net increase in cash, cash equivalents
and restricted cash
7,403
24,723
Cash, cash equivalents and restricted
cash at beginning of the period
203,702
277,707
Cash, cash equivalents and restricted
cash at end of the period
$
211,105
$
302,430
Cash and cash equivalents included in
Settlement Assets
17,542
8,210
Total cash and cash equivalents on the
consolidated statement of cash flows
$
228,647
$
310,640
Reconciliation of cash, cash
equivalents and restricted cash
Cash and cash equivalents
$
191,620
$
279,854
Restricted cash
19,485
22,576
Cash and cash equivalents included in
Settlement Assets
17,542
8,210
Cash, cash equivalents and restricted
cash
$
228,647
$
310,640
EVERTEC, Inc.
Schedule 4: Unaudited Segment
Information
Three months ended June 30,
2023
(In thousands)
Payment
Services -
Puerto Rico
&
Caribbean
Payment
Services -
Latin America
Merchant
Acquiring, net
Business
Solutions
Corporate and
Other (1)
Total
Revenues
$
50,795
$
39,076
$
41,248
$
56,971
$
(21,014
)
$
167,076
Operating costs and expenses
28,895
33,666
27,616
39,097
3,029
132,303
Depreciation and amortization
6,087
5,393
1,150
4,469
5,230
22,329
Non-operating income (expenses)
115
2,290
1
66
928
3,400
EBITDA
28,102
13,093
14,783
22,409
(17,885
)
60,502
Compensation and benefits (2)
842
999
860
965
5,035
8,701
Transaction, refinancing and other fees
(3)
288
253
—
—
5,068
5,609
Loss (gain) on foreign currency
remeasurement (4)
(49
)
(285
)
—
—
1
(333
)
Adjusted EBITDA
$
29,183
$
14,060
$
15,643
$
23,374
$
(7,781
)
$
74,479
(1)
Corporate and Other consists of
corporate overhead, certain leveraged activities, other
non-operating expenses and intersegment eliminations. Intersegment
revenue eliminations predominantly reflect the $13.4 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 $3.3 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, and the elimination of non-cash equity earnings
from our 19.99% equity investment in Consorcio de Tarjetas
Dominicanas S.A.
(4)
Represents non-cash unrealized
gains (losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
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
)
1,009
993
Loss (gain) on foreign currency
remeasurement (4)
27
674
—
—
1,046
1,747
Adjusted EBITDA
$
23,875
$
10,234
$
17,534
$
29,835
$
(7,402
)
$
74,076
(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.
(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.
(4)
Represents non-cash unrealized
gains (losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
Six months ended June 30,
2023
(In thousands)
Payment
Services -
Puerto Rico
&
Caribbean
Payment
Services -
Latin America
Merchant
Acquiring, net
Business
Solutions
Corporate and
Other (1)
Total
Revenues
$
99,224
$
74,393
$
81,595
$
112,666
$
(40,988
)
$
326,890
Operating costs and expenses
56,617
62,978
54,305
78,010
117
252,027
Depreciation and amortization
11,975
8,104
2,279
8,957
10,446
41,761
Non-operating income (expenses)
480
(1,495
)
308
598
810
701
EBITDA
55,062
18,024
29,877
44,211
(29,849
)
117,325
Compensation and benefits (2)
1,370
1,651
1,392
1,530
8,603
14,546
Transaction, refinancing and other fees
(3)
580
253
—
—
4,379
5,212
Loss (gain) on foreign currency
remeasurement (4)
46
4,487
—
—
(2
)
4,531
Adjusted EBITDA
$
57,058
$
24,415
$
31,269
$
45,741
$
(16,869
)
$
141,614
(1)
Corporate and Other consists of
corporate overhead, certain leveraged activities, other
non-operating expenses and intersegment eliminations. Intersegment
revenue eliminations predominantly reflect the $26.4 million
processing fee from Payments Services - Puerto Rico & Caribbean
to Merchant Acquiring, intercompany software developments and
transaction processing of $8.4 million from Payment Services- Latin
America to both Payment Services- Puerto Rico & Caribbean and
Business Solutions, and transaction processing and monitoring fees
of $6.2 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.
(4)
Represents non-cash unrealized
gains (losses) on foreign currency remeasurement for assets and
liabilities denominated in non-functional currencies.
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
)
3,034
3,018
Loss (gain) on foreign currency
remeasurement (4)
162
(2,129
)
—
—
1,046
(921
)
Adjusted EBITDA
$
47,790
$
19,858
$
34,618
$
59,439
$
(14,912
)
$
146,793
(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, 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.
(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.
(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 June
30,
Six months ended June
30,
(Dollar amounts in thousands, except share
data)
2023
2022
2023
2022
Net income
28,050
33,556
58,113
72,422
Income tax expense
6,586
7,688
9,404
13,863
Interest expense, net
3,537
5,127
8,047
10,007
Depreciation and amortization
22,329
19,560
41,761
38,720
EBITDA
60,502
65,931
117,325
135,012
Equity income (1)
(1,476
)
(862
)
(2,631
)
(1,432
)
Compensation and benefits (2)
8,701
5,405
14,546
9,684
Transaction, refinancing and other fees
(3)
7,085
1,855
7,843
4,450
(Gain) loss on foreign currency
remeasurement (4)
(333
)
1,747
4,531
(921
)
Adjusted EBITDA
74,479
74,076
141,614
146,793
Operating depreciation and amortization
(5)
(12,835
)
(11,156
)
(25,204
)
(22,408
)
Cash interest expense, net (6)
(3,457
)
(4,858
)
(7,820
)
(9,487
)
Income tax expense (7)
(11,626
)
(10,075
)
(16,408
)
(18,884
)
Non-controlling interest (8)
80
1
46
11
Adjusted net income
$
46,641
$
47,988
$
92,228
$
96,025
Net income per common share
(GAAP):
Diluted
$
0.43
$
0.47
$
0.89
$
1.00
Adjusted Earnings per common share
(Non-GAAP):
Diluted
$
0.71
$
0.67
$
1.41
$
1.32
Shares used in computing adjusted earnings
per common share:
Diluted
65,510,091
72,149,949
65,571,453
72,558,565
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, recorded as part of selling, general and administrative
expenses.
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
$
652
to
$
658
$
618
Earnings per Share (EPS) (GAAP)
$
1.82
to
$
1.91
$
3.45
Per share adjustment
to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
Share-based comp, non-cash equity earnings
and other (1)
0.56
0.56
(1.42
)
Merger and acquisition related
depreciation and amortization (2)
0.47
0.47
0.49
Non-cash interest expense (3)
0.01
0.01
0.01
Tax effect of Non-GAAP adjustments (4)
(0.18
)
(0.19
)
(0.10
)
Loss (gain) on foreign currency
remeasurement (5)
0.07
0.07
0.10
Total adjustments
0.93
0.92
(0.92
)
Adjusted EPS (Non-GAAP)
$
2.75
to
$
2.83
$
2.53
Shares used in computing adjusted earnings
per common share
65.5
69.3
(1)
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.
(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% to 17%).
(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/20230726113288/en/
Investor Contact Beatriz Brown-Sáenz (787) 773-5442
IR@evertecinc.com
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