Announces acquisition of Grandata
EVERTEC, Inc. (NYSE: EVTC) (“Evertec”, the “Company”, “we” or “our”) today announced results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights
- Revenue increased 22% to $211.8 million
- GAAP Net Income attributable to common shareholders increased 146% to $24.7 million and increased 153% to $0.38 per diluted share
- Adjusted EBITDA increased 11% to $87.4 million and Adjusted earnings per common share increased 8% to $0.86
- Share repurchases totaled $12.3 million.
- Closed on acquisition of 100% of Grandata Inc. ("Grandata") on October 30th
Mac Schuessler, President and Chief Executive Officer stated, "We are pleased with our third quarter results that demonstrate our commitment to continue to improve our margin. We are excited to announce the acquisition of Grandata, which align with our capital deployment strategy focusing on Latin America and diversifying our revenue."
Third Quarter 2024 Results
Revenue. Total revenue for the quarter ended September 30, 2024 was $211.8 million, an increase of 22% compared with $173.2 million in the prior year quarter as a result of organic growth across all of the Company's segments as well as the contribution from Sinqia. Merchant acquiring revenue benefited from an improvement in spread and sales volume growth. Payments Puerto Rico revenue reflected continued growth in ATH Movil Business and increased transaction volumes. Latin America revenue benefited from the contribution from the Sinqia acquisition as well as continued organic growth across the region. Latin America revenue also benefited from better than expected volumes in our GetNet Chile relationship which resulted in the recognition of an incremental $1.8 million in revenue, compared with $6.3 million recognized in the prior year quarter for the same concept. Business Solutions revenue reflected increases for completed projects, primarily for Banco Popular.
Net Income attributable to common shareholders. For the quarter ended September 30, 2024, GAAP Net Income attributable to common shareholders was $24.7 million, or $0.38 per diluted share, an increase of $14.6 million or $0.23 per diluted share as prior year Net Income was negatively impacted by the $29.2 million loss on the foreign currency swap to fix the price of the Sinqia acquisition and the increase in revenues in the quarter. These positive variances were partially offset by increased operating expenses, as Cost of revenues reflected an increase in personnel costs, mostly due to Sinqia, and, to a lesser extent, an increase in cloud services and professional fees. Selling, general and administrative expenses also increased mainly due to the addition of Sinqia headcount and an increase in equipment expenses, partially offset by lower professional fees. Interest expense increased from prior year due to the incremental debt raised to finance the Sinqia acquisition, while depreciation and amortization expense increase is primarily related to the intangibles recorded as part of the Sinqia acquisition. Income tax expense increased to $1.7 million compared to an income tax benefit in the prior year quarter of $4.9 million, primarily driven by the foreign currency hedge loss.
Adjusted EBITDA and Adjusted EBITDA Margin. For the quarter ended September 30, 2024, Adjusted EBITDA was $87.4 million, an increase of $8.7 million when compared to the prior year quarter, driven by the increase in revenues and the contribution from the Sinqia acquisition. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 41.3%, a decrease of approximately 420 basis points from the prior year. The decrease in Adjusted EBITDA margin reflects the addition of Sinqia, which contributes at a lower margin, as well as the impact of the $6.3 million adjustment for GetNet Chile in the prior year, compared with $1.8 million in the current year, which is 100% accretive to margin.
Adjusted Net Income and Adjusted earnings per common share. For the quarter ended September 30, 2024, Adjusted Net Income was $55.4 million, an increase of $3.0 million compared to $52.4 million in the prior year. The increase was driven by the higher Adjusted EBITDA, positively impacted by the factors explained above, and a decrease in Non-GAAP tax expense, partially offset by higher operating depreciation and amortization and higher cash interest expense, due to the incremental debt raised for the Sinqia acquisition. Adjusted earnings per common share was $0.86, an increase of $0.06 per diluted share compared to $0.80, in the prior year driven by the factors explained for Adjusted Net Income and a lower share count as a result of repurchases completed in 2024.
Share Repurchase
During the three months ended September 30, 2024, the Company repurchased 374,091 shares of its common stock at an average price of $32.86 per share for a total of $12.3 million. As of September 30, 2024, a total of approximately $138 million remained available for future use under the Company's share repurchase program.
Business Acquisition
On October 30, 2024, the Company closed an agreement to acquire 100% of the share capital of Grandata. Grandata is a data analytics company operating in Mexico that specializes in leveraging behavioral data to provide credit risk insights, with a focus on underbanked populations. This transaction enhances our existing product offering and will enable us to address our customer’s needs more fully. We plan on leveraging our existing client base to accelerate the growth of this acquisition similar to what we have been able to do with other transactions.
2024 Outlook
The Company's financial outlook for 2024 is as follows:
- Total consolidated revenue between $841 million and $847 million approximately 21% to 22% growth.
- Adjusted earnings per common share between $3.08 to $3.15 approximately 9% to 12% growth as compared to $2.82 in 2023.
- Capital expenditures are now anticipated to be approximately $85 million, including Sinqia.
- Effective tax rate of approximately 5% compared to a 6% to 7% in 2023.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its third quarter 2024 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 8246402. The replay will be available through Wednesday, November 13, 2024. 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 processor and financial technology provider in Latin America, Puerto Rico and the Caribbean, 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 approximately six billion transactions annually. The Company also offers financial 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 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.
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, non-compete agreements, among others; 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 interests, net of amortization for intangibles created as part of the purchase.
Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding.
The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future the Company may incur expenses such as those excluded in calculating them.
Forward-Looking Statements
Certain statements in this earnings release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our ability to meet our guidance expectations for revenue, earnings per share, Adjusted earnings per common share, capital expenditures and effective tax rate, including for fiscal year 2023, are forward looking statements. Words such as “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts.
Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our second Amended and Restated Master Services Agreement (“A&R MSA”) with them, and as it may impact our ability to grow our business; our ability to renew our client contracts on terms favorable to us, including but not limited to the current term and any extension of the MSA with Popular; our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised; our ability to develop, install and adopt new software, technology and computing systems; a decreased client base due to consolidations and/or failures in the financial services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH network; a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer spending; our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees; changes in the regulatory environment and changes in macroeconomic, market, international, legal, tax, political, or administrative conditions, including inflation or the risk of recession; the geographical concentration of our business in Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities, which are facing severe political and fiscal challenges; additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the government’s debt crisis or otherwise, including the continued migration of Puerto Ricans to the U.S. mainland, which could negatively affect our customer base, general consumer spending, our cost of operations and our ability to hire and retain qualified employees; operating an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability; the impact of foreign exchange rates on operations; our ability to protect our intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third parties; our ability to comply with U.S. federal, state, local and foreign regulatory requirements; evolving industry standards and adverse changes in global economic, political and other conditions; our level of indebtedness and the impact of rising interest rates, restrictions contained in our debt agreements, including the secured credit facilities, as well as debt that could be incurred in the future; our ability to prevent a cybersecurity attack or breach to our information security; the possibility that we could lose our preferential tax rate in Puerto Rico; our inability to integrate Sinqia successfully into the Company or to achieve expected accretion to our earnings per common share; any loss of personnel or customers in connection with the Sinqia Transaction; any possibility of future catastrophic hurricanes, earthquakes and other potential natural disasters affecting our main markets in Latin America and the Caribbean; and the other factors set forth under "Part 1, Item 1A. Risk Factors," in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the "SEC") on February 29, 2024, 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 (Loss)
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
(Dollar amounts in thousands, except share data) |
|
|
|
|
|
|
|
|
||||||||
Revenues |
|
$ |
211,795 |
|
|
$ |
173,198 |
|
|
$ |
629,091 |
|
|
$ |
500,088 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of revenues, exclusive of depreciation and amortization |
|
|
102,497 |
|
|
|
81,280 |
|
|
|
302,426 |
|
|
|
238,149 |
|
Selling, general and administrative expenses |
|
|
34,097 |
|
|
|
30,437 |
|
|
|
107,910 |
|
|
|
83,834 |
|
Depreciation and amortization |
|
|
33,660 |
|
|
|
21,919 |
|
|
|
101,051 |
|
|
|
63,680 |
|
Total operating costs and expenses |
|
|
170,254 |
|
|
|
133,636 |
|
|
|
511,387 |
|
|
|
385,663 |
|
Income from operations |
|
|
41,541 |
|
|
|
39,562 |
|
|
|
117,704 |
|
|
|
114,425 |
|
Non-operating income (expenses) |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
3,696 |
|
|
|
1,926 |
|
|
|
10,274 |
|
|
|
5,162 |
|
Interest expense |
|
|
(18,704 |
) |
|
|
(5,709 |
) |
|
|
(57,352 |
) |
|
|
(16,992 |
) |
Loss on foreign currency remeasurement |
|
|
(1,112 |
) |
|
|
(2,806 |
) |
|
|
(3,164 |
) |
|
|
(7,337 |
) |
Loss on foreign currency swap |
|
|
— |
|
|
|
(29,225 |
) |
|
|
— |
|
|
|
(29,225 |
) |
Earnings of equity method investment |
|
|
1,099 |
|
|
|
1,197 |
|
|
|
3,266 |
|
|
|
3,828 |
|
Other income, net |
|
|
389 |
|
|
|
153 |
|
|
|
6,484 |
|
|
|
2,754 |
|
Total non-operating expenses |
|
|
(14,632 |
) |
|
|
(34,464 |
) |
|
|
(40,492 |
) |
|
|
(41,810 |
) |
Income before income taxes |
|
|
26,909 |
|
|
|
5,098 |
|
|
|
77,212 |
|
|
|
72,615 |
|
Income tax expense (benefit) |
|
|
1,707 |
|
|
|
(4,858 |
) |
|
|
3,100 |
|
|
|
4,546 |
|
Net income |
|
|
25,202 |
|
|
|
9,956 |
|
|
|
74,112 |
|
|
|
68,069 |
|
Less: Net income (loss) attributable to non-controlling interest |
|
|
524 |
|
|
|
(80 |
) |
|
|
1,554 |
|
|
|
(174 |
) |
Net income attributable to EVERTEC, Inc.’s common stockholders |
|
|
24,678 |
|
|
|
10,036 |
|
|
|
72,558 |
|
|
|
68,243 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
|
|
15,354 |
|
|
|
(11,332 |
) |
|
|
(75,473 |
) |
|
|
9,426 |
|
(Loss) gain on cash flow hedges |
|
|
(11,937 |
) |
|
|
3,468 |
|
|
|
(8,555 |
) |
|
|
3,739 |
|
Unrealized loss on change in fair value of debt securities available-for-sale |
|
|
(1 |
) |
|
|
(11 |
) |
|
|
(4 |
) |
|
|
(31 |
) |
Other comprehensive income (loss), net of tax |
|
$ |
3,416 |
|
|
$ |
(7,875 |
) |
|
$ |
(84,032 |
) |
|
$ |
13,134 |
|
Total comprehensive income (loss) attributable to EVERTEC, Inc.’s common stockholders |
|
$ |
28,094 |
|
|
$ |
2,161 |
|
|
$ |
(11,474 |
) |
|
$ |
81,377 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
0.39 |
|
|
$ |
0.16 |
|
|
$ |
1.12 |
|
|
$ |
1.05 |
|
Diluted |
|
$ |
0.38 |
|
|
$ |
0.15 |
|
|
$ |
1.11 |
|
|
$ |
1.04 |
|
Shares used in computing net income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
63,944,132 |
|
|
|
64,648,542 |
|
|
|
64,512,868 |
|
|
|
64,886,551 |
|
Diluted |
|
|
64,719,129 |
|
|
|
65,779,259 |
|
|
|
65,316,948 |
|
|
|
65,705,596 |
|
EVERTEC, Inc.
Schedule 2: Unaudited Condensed Consolidated Balance Sheets
(In thousands) |
|
September 30, 2024 |
|
December 31, 2023 |
|||
Assets |
|
|
|
|
|||
Current Assets: |
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
275,359 |
|
|
$ |
295,600 |
Restricted cash |
|
|
25,663 |
|
|
|
23,073 |
Accounts receivable, net |
|
|
131,101 |
|
|
|
126,510 |
Settlement assets |
|
|
37,441 |
|
|
|
51,467 |
Prepaid expenses and other assets |
|
|
64,071 |
|
|
|
64,704 |
Total current assets |
|
|
533,635 |
|
|
|
561,354 |
Debt securities available-for-sale, at fair value |
|
|
1,726 |
|
|
|
2,095 |
Equity securities, at fair value |
|
|
5,287 |
|
|
|
9,413 |
Investment in equity investees |
|
|
28,550 |
|
|
|
21,145 |
Property and equipment, net |
|
|
64,178 |
|
|
|
62,453 |
Operating lease right-of-use asset |
|
|
11,329 |
|
|
|
14,796 |
Goodwill |
|
|
750,542 |
|
|
|
791,700 |
Other intangible assets, net |
|
|
443,444 |
|
|
|
518,070 |
Deferred tax asset |
|
|
32,751 |
|
|
|
47,847 |
Derivative asset |
|
|
749 |
|
|
|
4,385 |
Other long-term assets |
|
|
22,774 |
|
|
|
27,005 |
Total assets |
|
$ |
1,894,965 |
|
|
$ |
2,060,263 |
Liabilities and stockholders’ equity |
|
|
|
|
|||
Current Liabilities: |
|
|
|
|
|||
Accrued liabilities |
|
$ |
119,169 |
|
|
$ |
129,160 |
Accounts payable |
|
|
53,702 |
|
|
|
66,516 |
Contract liability |
|
|
23,034 |
|
|
|
21,055 |
Income tax payable |
|
|
5,674 |
|
|
|
3,402 |
Current portion of long-term debt |
|
|
23,867 |
|
|
|
23,867 |
Current portion of operating lease liability |
|
|
7,478 |
|
|
|
6,693 |
Settlement liabilities |
|
|
37,500 |
|
|
|
47,620 |
Total current liabilities |
|
|
270,424 |
|
|
|
298,313 |
Long-term debt |
|
|
930,851 |
|
|
|
946,816 |
Deferred tax liability |
|
|
45,116 |
|
|
|
87,916 |
Contract liability - long term |
|
|
56,652 |
|
|
|
41,825 |
Operating lease liability - long-term |
|
|
5,174 |
|
|
|
9,033 |
Derivative liability |
|
|
9,001 |
|
|
|
900 |
Other long-term liabilities |
|
|
31,804 |
|
|
|
40,084 |
Total liabilities |
|
|
1,349,022 |
|
|
|
1,424,887 |
Commitments and contingencies |
|
|
|
|
|||
Redeemable non-controlling interests |
|
|
39,771 |
|
|
|
36,968 |
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; 63,609,122 shares issued and outstanding as of September 30, 2024 (December 31, 2023 - 65,450,799) |
|
|
636 |
|
|
|
654 |
Additional paid-in capital |
|
|
5,079 |
|
|
|
36,527 |
Accumulated earnings |
|
|
562,727 |
|
|
|
538,903 |
Accumulated other comprehensive (loss) income, net of tax |
|
|
(65,823 |
) |
|
|
18,209 |
Total stockholders’ equity |
|
|
502,619 |
|
|
|
594,293 |
Non-redeemable non-controlling interest |
|
|
3,553 |
|
|
|
4,115 |
Total equity |
|
|
506,172 |
|
|
|
598,408 |
Total liabilities and equity |
|
$ |
1,894,965 |
|
|
$ |
2,060,263 |
EVERTEC, Inc.
Schedule 3: Unaudited Condensed Consolidated Statements of Cash Flows
|
|
Nine months ended September 30, |
||||||
|
|
2024 |
|
2023 |
||||
|
|
|
|
|
||||
Cash flows from operating activities |
|
|
|
|
||||
Net income |
|
|
74,112 |
|
|
|
68,069 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
101,051 |
|
|
|
63,680 |
|
Amortization of debt issue costs and accretion of discount |
|
|
3,576 |
|
|
|
1,795 |
|
Operating lease amortization |
|
|
5,340 |
|
|
|
4,619 |
|
Deferred tax benefit |
|
|
(20,275 |
) |
|
|
(16,491 |
) |
Share-based compensation |
|
|
22,387 |
|
|
|
18,812 |
|
Unrealized loss on foreign currency hedge |
|
|
— |
|
|
|
29,225 |
|
Earnings of equity method investment |
|
|
(3,266 |
) |
|
|
(3,828 |
) |
Dividend received from equity method investment |
|
|
3,364 |
|
|
|
3,497 |
|
Gain on sale of equity securities |
|
|
(2,599 |
) |
|
|
— |
|
Loss on foreign currency remeasurement |
|
|
3,164 |
|
|
|
7,337 |
|
Other, net |
|
|
(287 |
) |
|
|
380 |
|
(Increase) decrease in assets: |
|
|
|
|
||||
Accounts receivable, net |
|
|
(838 |
) |
|
|
(4,590 |
) |
Prepaid expenses and other assets |
|
|
(1,791 |
) |
|
|
(11,181 |
) |
Other long-term assets |
|
|
3,247 |
|
|
|
(1,013 |
) |
(Decrease) increase in liabilities: |
|
|
|
|
||||
Accrued liabilities and accounts payable |
|
|
(12,046 |
) |
|
|
12,224 |
|
Income tax payable |
|
|
2,359 |
|
|
|
(9,108 |
) |
Contract liability |
|
|
12,038 |
|
|
|
(1,146 |
) |
Operating lease liabilities |
|
|
(5,341 |
) |
|
|
(3,739 |
) |
Other long-term liabilities |
|
|
702 |
|
|
|
(247 |
) |
Total adjustments |
|
|
110,785 |
|
|
|
90,226 |
|
Net cash provided by operating activities |
|
|
184,897 |
|
|
|
158,295 |
|
Cash flows from investing activities |
|
|
|
|
||||
Additions to software |
|
|
(48,778 |
) |
|
|
(34,193 |
) |
Property and equipment acquired |
|
|
(21,050 |
) |
|
|
(16,406 |
) |
Acquisition of available-for-sale debt securities |
|
|
— |
|
|
|
(962 |
) |
Purchase of equity securities |
|
|
(132 |
) |
|
|
(26,505 |
) |
Investment in equity investee |
|
|
(2,000 |
) |
|
|
(5,500 |
) |
Proceeds from maturities of available-for-sale debt securities |
|
|
370 |
|
|
|
1,048 |
|
Proceeds from sale of equity securities |
|
|
6,128 |
|
|
|
— |
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(22,915 |
) |
Net cash used in investing activities |
|
|
(65,462 |
) |
|
|
(105,433 |
) |
Cash flows from financing activities |
|
|
|
|
||||
Withholding taxes paid on share-based compensation |
|
|
(9,907 |
) |
|
|
(5,956 |
) |
Net decrease in short-term borrowings |
|
|
— |
|
|
|
(14,000 |
) |
Dividends paid |
|
|
(9,692 |
) |
|
|
(9,735 |
) |
Repurchase of common stock |
|
|
(82,293 |
) |
|
|
(23,598 |
) |
Repayment of long-term debt |
|
|
(17,900 |
) |
|
|
(15,563 |
) |
Repayment of other financing agreements |
|
|
(7,046 |
) |
|
|
— |
|
Settlement activity, net |
|
|
209 |
|
|
|
5,163 |
|
Other financing activities, net |
|
|
(3,652 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(130,281 |
) |
|
|
(63,689 |
) |
Effect of foreign exchange rate on cash, cash equivalents and restricted cash |
|
|
(6,596 |
) |
|
|
10,716 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(17,442 |
) |
|
|
(111 |
) |
Cash, cash equivalents, restricted cash, and cash included in settlement assets at beginning of the period |
|
|
343,724 |
|
|
|
215,657 |
|
Cash, cash equivalents, restricted cash, and cash included in settlement assets at end of the period |
|
$ |
326,282 |
|
|
$ |
215,546 |
|
Reconciliation of cash, cash equivalents, restricted cash, and cash included in settlement assets |
|
|
|
|
||||
Cash and cash equivalents |
|
|
275,359 |
|
|
|
177,821 |
|
Restricted cash |
|
|
25,663 |
|
|
|
20,607 |
|
Cash and cash equivalents included in settlement assets |
|
|
25,260 |
|
|
|
17,118 |
|
Cash, cash equivalents, restricted cash, and cash included in settlement assets |
|
$ |
326,282 |
|
|
$ |
215,546 |
|
EVERTEC, Inc.
Schedule 4: Unaudited Segment Information
|
Three Months Ended September 30, 2024 |
||||||||||||||||||||
(In thousands) |
Payment Services - Puerto Rico & Caribbean |
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
$ |
52,755 |
|
|
$ |
76,029 |
|
|
$ |
45,437 |
|
$ |
61,103 |
|
$ |
(23,529 |
) |
|
$ |
211,795 |
|
Operating costs and expenses |
|
33,144 |
|
|
|
70,857 |
|
|
|
29,231 |
|
|
42,347 |
|
|
(5,325 |
) |
|
|
170,254 |
|
Depreciation and amortization |
|
7,599 |
|
|
|
14,152 |
|
|
|
1,217 |
|
|
5,614 |
|
|
5,078 |
|
|
|
33,660 |
|
Non-operating income (expenses) |
|
149 |
|
|
|
(482 |
) |
|
|
— |
|
|
166 |
|
|
543 |
|
|
|
376 |
|
EBITDA |
|
27,359 |
|
|
|
18,842 |
|
|
|
17,423 |
|
|
24,536 |
|
|
(12,583 |
) |
|
|
75,577 |
|
Compensation and benefits (2) |
|
758 |
|
|
|
1,349 |
|
|
|
775 |
|
|
928 |
|
|
3,785 |
|
|
|
7,595 |
|
Transaction, refinancing and other fees (3) |
|
296 |
|
|
|
(627 |
) |
|
|
29 |
|
|
40 |
|
|
3,367 |
|
|
|
3,105 |
|
(Gain) loss on foreign currency remeasurement (4) |
|
(61 |
) |
|
|
1,176 |
|
|
|
— |
|
|
— |
|
|
(3 |
) |
|
|
1,112 |
|
Adjusted EBITDA |
$ |
28,352 |
|
|
$ |
20,740 |
|
|
$ |
18,227 |
|
$ |
25,504 |
|
$ |
(5,434 |
) |
|
$ |
87,389 |
|
| ___________________________ | ||
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $14.4 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction-processing of $5.5 million from Latin America Payments and Solutions to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction-processing and monitoring fees of $3.7 million from Payment Services - Puerto Rico & Caribbean to Latin America Payments and Solutions. |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the elimination of unrealized earnings from equity investments, net of dividends received. |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
|
Three Months Ended September 30, 2023 |
|||||||||||||||||||||
(In thousands) |
Payment Services - Puerto Rico & Caribbean |
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenues |
$ |
51,600 |
|
|
$ |
46,155 |
|
|
$ |
40,557 |
|
$ |
56,522 |
|
$ |
(21,636 |
) |
|
$ |
173,198 |
|
|
Operating costs and expenses |
|
28,402 |
|
|
|
38,608 |
|
|
|
26,997 |
|
|
40,643 |
|
|
(1,014 |
) |
|
|
133,636 |
|
|
Depreciation and amortization |
|
6,203 |
|
|
|
4,898 |
|
|
|
1,078 |
|
|
4,478 |
|
|
5,262 |
|
|
|
21,919 |
|
|
Non-operating income (expenses) |
|
110 |
|
|
|
(2,148 |
) |
|
|
— |
|
|
69 |
|
|
(28,712 |
) |
|
|
(30,681 |
) |
|
EBITDA |
|
29,511 |
|
|
|
10,297 |
|
|
|
14,638 |
|
|
20,426 |
|
|
(44,072 |
) |
|
|
30,800 |
|
|
Compensation and benefits (2) |
|
663 |
|
|
|
859 |
|
|
|
662 |
|
|
696 |
|
|
4,090 |
|
|
|
6,970 |
|
|
Transaction, refinancing and other (3) |
|
269 |
|
|
|
3,451 |
|
|
|
— |
|
|
— |
|
|
34,363 |
|
|
|
38,083 |
|
|
(Gain) loss on foreign currency remeasurement (4) |
|
(87 |
) |
|
|
2,885 |
|
|
|
— |
|
|
— |
|
|
8 |
|
|
|
2,806 |
|
|
Adjusted EBITDA |
$ |
30,356 |
|
|
$ |
17,492 |
|
|
$ |
15,300 |
|
$ |
21,122 |
|
$ |
(5,611 |
) |
|
$ |
78,659 |
|
|
| ___________________________ | ||
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $13.5 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction-processing of $4.4 million from Latin America Payments and Solutions to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction-processing and monitoring fees of $3.7 million from Payment Services - Puerto Rico & Caribbean to Latin America Payments and Solutions. |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the foreign currency swap loss and the elimination of unrealized earnings from equity investments, net of dividends received. |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
|
Nine months ended September 30, 2024 |
|||||||||||||||||||||
(In thousands) |
Payment Services - Puerto Rico & Caribbean |
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenues |
$ |
159,985 |
|
|
$ |
224,914 |
|
|
$ |
133,855 |
|
$ |
181,567 |
|
$ |
(71,230 |
) |
|
$ |
629,091 |
|
|
Operating costs and expenses |
|
95,829 |
|
|
|
221,241 |
|
|
|
87,531 |
|
|
120,461 |
|
|
(13,675 |
) |
|
|
511,387 |
|
|
Depreciation and amortization |
|
22,357 |
|
|
|
45,460 |
|
|
|
3,859 |
|
|
13,802 |
|
|
15,573 |
|
|
|
101,051 |
|
|
Non-operating income |
|
431 |
|
|
|
3,627 |
|
|
|
— |
|
|
456 |
|
|
2,072 |
|
|
|
6,586 |
|
|
EBITDA |
|
86,944 |
|
|
|
52,760 |
|
|
|
50,183 |
|
|
75,364 |
|
|
(39,910 |
) |
|
|
225,341 |
|
|
Compensation and benefits (2) |
|
2,227 |
|
|
|
4,501 |
|
|
|
2,269 |
|
|
2,619 |
|
|
11,570 |
|
|
|
23,186 |
|
|
Transaction, refinancing and other fees (3) |
|
1,019 |
|
|
|
(6,015 |
) |
|
|
243 |
|
|
329 |
|
|
4,351 |
|
|
|
(73 |
) |
|
(Gain) loss on foreign currency remeasurement (4) |
|
(128 |
) |
|
|
3,291 |
|
|
|
— |
|
|
— |
|
|
1 |
|
|
|
3,164 |
|
|
Adjusted EBITDA |
$ |
90,062 |
|
|
$ |
54,537 |
|
|
$ |
52,695 |
|
$ |
78,312 |
|
$ |
(23,988 |
) |
|
$ |
251,618 |
|
|
| ___________________________ | ||
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $43.2 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $14.7 million from Latin America Payments and Solutions to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $13.4 million from Payment Services - Puerto Rico & Caribbean to Latin America Payments and Solutions. |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the elimination of realized gains from equity securities and the elimination of unrealized earnings from equity investments, net of dividends received. |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
|
Nine months ended September 30, 2023 |
|||||||||||||||||||||
(In thousands) |
Payment Services - Puerto Rico & Caribbean |
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenues |
$ |
150,824 |
|
|
$ |
120,548 |
|
|
$ |
122,152 |
|
$ |
169,188 |
|
$ |
(62,624 |
) |
|
$ |
500,088 |
|
|
Operating costs and expenses |
|
85,019 |
|
|
|
101,586 |
|
|
|
81,302 |
|
|
118,653 |
|
|
(897 |
) |
|
|
385,663 |
|
|
Depreciation and amortization |
|
18,178 |
|
|
|
13,002 |
|
|
|
3,357 |
|
|
13,436 |
|
|
15,707 |
|
|
|
63,680 |
|
|
Non-operating income (expenses) |
|
590 |
|
|
|
(3,643 |
) |
|
|
308 |
|
|
667 |
|
|
(27,902 |
) |
|
|
(29,980 |
) |
|
EBITDA |
|
84,573 |
|
|
|
28,321 |
|
|
|
44,515 |
|
|
64,638 |
|
|
(73,922 |
) |
|
|
148,125 |
|
|
Compensation and benefits (2) |
|
2,033 |
|
|
|
2,510 |
|
|
|
2,054 |
|
|
2,226 |
|
|
12,693 |
|
|
|
21,516 |
|
|
Transaction, refinancing and other fees (3) |
|
850 |
|
|
|
3,704 |
|
|
|
— |
|
|
— |
|
|
38,741 |
|
|
|
43,295 |
|
|
(Gain) loss on foreign currency remeasurement (4) |
|
(41 |
) |
|
|
7,372 |
|
|
|
— |
|
|
— |
|
|
6 |
|
|
|
7,337 |
|
|
Adjusted EBITDA |
$ |
87,415 |
|
|
$ |
41,907 |
|
|
$ |
46,569 |
|
$ |
66,864 |
|
$ |
(22,482 |
) |
|
$ |
220,273 |
|
|
| ___________________________ | ||
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $39.9 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $12.8 million from Latin America Payments and Solutions to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $9.9 million from Payment Services - Puerto Rico & Caribbean to Latin America Payments and Solutions. |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement the foreign currency swap loss and the elimination of unrealized earnings from equity investments, net of dividends received. |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
EVERTEC, Inc.
Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||||||
(Dollar amounts in thousands, except share data) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income |
|
|
25,202 |
|
|
|
9,956 |
|
|
|
74,112 |
|
|
|
68,069 |
|
Income tax expense |
|
|
1,707 |
|
|
|
(4,858 |
) |
|
|
3,100 |
|
|
|
4,546 |
|
Interest expense, net |
|
|
15,008 |
|
|
|
3,783 |
|
|
|
47,078 |
|
|
|
11,830 |
|
Depreciation and amortization |
|
|
33,660 |
|
|
|
21,919 |
|
|
|
101,051 |
|
|
|
63,680 |
|
EBITDA |
|
|
75,577 |
|
|
|
30,800 |
|
|
|
225,341 |
|
|
|
148,125 |
|
Equity income (1) |
|
|
1,929 |
|
|
|
1,834 |
|
|
|
(238 |
) |
|
|
(797 |
) |
Compensation and benefits (2) |
|
|
7,595 |
|
|
|
6,970 |
|
|
|
23,186 |
|
|
|
21,516 |
|
Transaction, refinancing and other (3) |
|
|
1,176 |
|
|
|
36,249 |
|
|
|
165 |
|
|
|
44,092 |
|
Loss on foreign currency remeasurement (4) |
|
|
1,112 |
|
|
|
2,806 |
|
|
|
3,164 |
|
|
|
7,337 |
|
Adjusted EBITDA |
|
|
87,389 |
|
|
|
78,659 |
|
|
|
251,618 |
|
|
|
220,273 |
|
Operating depreciation and amortization (5) |
|
|
(16,293 |
) |
|
|
(13,061 |
) |
|
|
(45,732 |
) |
|
|
(38,265 |
) |
Cash interest expense, net (6) |
|
|
(13,908 |
) |
|
|
(3,755 |
) |
|
|
(43,749 |
) |
|
|
(11,575 |
) |
Income tax expense (7) |
|
|
(1,234 |
) |
|
|
(9,447 |
) |
|
|
(3,298 |
) |
|
|
(25,855 |
) |
Non-controlling interest (8) |
|
|
(535 |
) |
|
|
50 |
|
|
|
(1,601 |
) |
|
|
96 |
|
Adjusted net income |
|
$ |
55,419 |
|
|
$ |
52,446 |
|
|
$ |
157,238 |
|
|
$ |
144,674 |
|
Net income per common share (GAAP): |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
$ |
0.38 |
|
|
$ |
0.15 |
|
|
$ |
1.11 |
|
|
$ |
1.04 |
|
Adjusted Earnings per common share (Non-GAAP): |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
$ |
0.86 |
|
|
$ |
0.80 |
|
|
$ |
2.41 |
|
|
$ |
2.20 |
|
Shares used in computing adjusted earnings per common share: |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
|
64,719,129 |
|
|
|
65,779,259 |
|
|
|
65,316,948 |
|
|
|
65,705,596 |
|
| ___________________________ | ||
(1) |
Represents the elimination of non-cash equity earnings from our equity investments, 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, the elimination of realized gains from the change in fair market value of equity securities and the foreign currency swap loss. |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
(5) |
Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity. |
|
(6) |
Represents interest expense, less interest income, as they appear on the condensed consolidated statements of income and comprehensive income (loss), 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 non-controlling equity interests, 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
|
|
Outlook 2024 |
|
2023 |
||||||||||
(Dollar amounts in millions, except per share data) |
|
Low |
|
|
|
High |
|
|
||||||
Revenues |
|
$ |
840.5 |
|
|
to |
|
$ |
846.5 |
|
|
$ |
695 |
|
Earnings per Share (EPS) (GAAP) |
|
$ |
1.64 |
|
|
to |
|
$ |
1.73 |
|
|
$ |
1.21 |
|
Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: |
|
|
|
|
|
|
|
|
||||||
Share-based comp, non-cash equity earnings and other (1) |
|
|
0.50 |
|
|
|
|
|
0.50 |
|
|
|
1.36 |
|
Merger and acquisition related depreciation and amortization (2) |
|
|
1.00 |
|
|
|
|
|
1.00 |
|
|
|
0.62 |
|
Non-cash interest expense (3) |
|
|
0.05 |
|
|
|
|
|
0.04 |
|
|
|
(0.01 |
) |
Tax effect of Non-GAAP adjustments (4) |
|
|
(0.08 |
) |
|
|
|
|
(0.08 |
) |
|
|
(0.36 |
) |
Non-controlling interest (5) |
|
|
(0.03 |
) |
|
|
|
|
(0.04 |
) |
|
|
— |
|
Total adjustments |
|
|
1.44 |
|
|
|
|
|
1.42 |
|
|
|
1.61 |
|
Adjusted EPS (Non-GAAP) |
|
$ |
3.08 |
|
|
to |
|
$ |
3.15 |
|
|
$ |
2.82 |
|
Shares used in computing adjusted earnings per common share |
|
|
|
|
|
|
65.2 |
|
|
|
65.8 |
|
||
| ___________________________ | ||
(1) |
Represents share-based compensation, the elimination of non-cash equity earnings from equity investees, non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies, severance and other adjustments to reconcile GAAP EPS to Non-GAAP EPS, net of dividends received. |
|
(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 5%). |
|
(5) |
Represents the non-controlling equity interests, net of amortization for intangibles created as part of the purchase. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106136199/en/
Contacts
Investors
Beatriz Brown-Sáenz
(787) 773-5442
IR@evertecinc.com
