Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 26, 2023

EVERTEC, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Puerto Rico		66-0783622
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Cupey Center Building,	Road 176, Kilometer 1.3,
San Juan,	Puerto Rico	00926
(Address of principal executive offices)		(Zip Code)

(787) 759-9999

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

COMMISSION FILE NUMBER 001-35872

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EVTC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On July 26, 2023 the Company issued a press release announcing its preliminary results for the second quarter ended June 30, 2023. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Note: The information contained in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits.


Number						Exhibit
99.1						Press Release re: Second quarter earnings issued by EVERTEC, Inc. dated July 26, 2023

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	EVERTEC, Inc.
	(Registrant)

Date: July 26, 2023	By:	/s/ Joaquin A. Castrillo-Salgado
		Name: Joaquin A. Castrillo-Salgado
		Title: Chief Financial Officer

EXHIBIT INDEX


Number						Exhibit
99.1						Press Release re: Second quarter earnings issued by EVERTEC, Inc. dated July 26, 2023
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Exhibit 99.1

EVERTEC REPORTS SECOND QUARTER 2023 RESULTS

Raises annual guidance

SAN JUAN, PUERTO RICO - July 26, 2023 - 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.

Investor Contact

Beatriz Brown-Sáenz

(787) 773-5442

IR@evertecinc.com

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	(3,467)		(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	21,979		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	215,657		277,707
Cash, cash equivalents and restricted cash at end of the period	$	223,060	$	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	$	240,602	$	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.

(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.

(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.

Document and Entity Information Document	3 Months Ended
Document and Entity Information Document	Jun. 30, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 26, 2023
Entity Registrant Name	EVERTEC, Inc.
Entity Incorporation, State or Country Code	PR
Entity File Number	001-35872
Entity Central Index Key	0001559865
Amendment Flag	false
Entity Tax Identification Number	66-0783622
Entity Address, Address Line One	Cupey Center Building,
Entity Address, Address Line Two	Road 176, Kilometer 1.3,
Entity Address, City or Town	San Juan,
Entity Address, Country	PR
Entity Address, Postal Zip Code	00926
City Area Code	787
Local Phone Number	759-9999
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	EVTC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false