Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries EVERTEC Reports First Quarter 2021 Results By: EVERTEC via Business Wire April 29, 2021 at 16:05 PM EDT Increases Annual Guidance EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced results for the first quarter ended March 31, 2021. First Quarter 2021 Highlights Revenue increased 14% to $139.5 million GAAP Net Income attributable to common shareholders was $35.5 million or $0.49 per diluted share Adjusted EBITDA increased 22% to $68.9 million Adjusted earnings per common share was $0.62, an increase of 35% Share repurchases totaled $14.3 million Mac Schuessler, President and Chief Executive Officer stated, “In the first quarter, we delivered strong results as we lapped the one-year anniversary of the pandemic. We benefited from volume growth and continued increase of our digital solutions in Puerto Rico as well as the new client contracts in Latin America. Additionally, as a result of the strong first quarter, the incremental federal stimulus package, as well as the execution against our share repurchase program, we are increasing our outlook for 2021 results." First Quarter 2021 Results Revenue. Total revenue for the quarter ended March 31, 2021 was $139.5 million, an increase of 14% compared with $121.9 million in the prior year. Revenue increase in the quarter reflected sales volume growth with a high average ticket, as well as continued growth in our digital solutions in Puerto Rico. Additionally, revenue growth in Latin America was driven by new client contracts. Revenue growth also includes approximately $1 million in one-time hardware and software sales. Net Income attributable to common shareholders. For the quarter ended March 31, 2021, GAAP Net Income attributable to common shareholders was $35.5 million, or $0.49 per diluted share, an increase of $13.3 million or $0.19 per diluted share as compared to the prior year. Adjusted EBITDA. For the quarter ended March 31, 2021, Adjusted EBITDA was $68.9 million, an increase of 22% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 49.4%, an increase of approximately 320 basis points from the prior year. The year over year increase in margin primarily reflects the benefit of higher payment revenues in both Puerto Rico and Latin America while at the same time controlling costs. Adjusted Net Income. For the quarter ended March 31, 2021, Adjusted Net Income was $45.0 million, an increase of 34% compared with $33.5 million in the prior year. Adjusted earnings per common share was $0.62, an increase of 35% compared to $0.46 in the prior year. Share Repurchase During the three months ended March 31, 2021, the Company repurchased 382,974 shares of its common stock at an average price of $37.26 per share for a total of $14.3 million. As of March 31, 2021, a total of approximately $86 million remained available for future use under the Company’s share repurchase program. 2021 Outlook The Company is increasing its financial outlook for 2021 as follows: Total consolidated revenue is now anticipated between $543 million and $552 million representing growth of 6% to 8%, compared with $533 million to $544 million previously estimated Adjusted earnings per common share between $2.25 to $2.32 representing a growth range of 9% to 12% from $2.07 in 2020, compared with $2.15 to $2.23 previously estimated Capital expenditures are now anticipated to be between $50 and $55 million Effective tax rate of approximately 13% to 14%. Earnings Conference Call and Audio Webcast The Company will host a conference call to discuss its first quarter 2021 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 10154680. The replay will be available through Thursday, May 6, 2021. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com. A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call. About EVERTEC EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in Puerto Rico, the Caribbean and Latin America, providing a broad range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, the Company manages a system of electronic payment networks and offers a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico, that process approximately three billion transactions annually. The Company also offers technology outsourcing in all the regions it serves. Based in Puerto Rico, the Company operates in 26 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com. Use of Non-GAAP Financial Information The non-GAAP measures referenced in this release material are supplemental measures of the Company’s performance and are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities, as indicators of operating performance or as measures of the Company’s liquidity. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the Company believes are pertinent to the daily management of the Company’s operations and believes that they are also frequently used by analysts, investors and other interested parties to evaluate companies in the industry. Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share and are defined below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to the Company's segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. The Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio. Adjusted Net Income is defined as net income adjusted to exclude unusual items and other adjustments. Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding. The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future the Company may incur expenses such as those excluded in calculating them. Further, the Company's presentation of these measures should not be construed as an inference that the Company's future operating results will not be affected by unusual or nonrecurring items. Forward-Looking Statements Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular, Inc. ("Popular") for a significant portion of revenue pursuant to the Master Services Agreement (MSA) with Popular and to grow the Company's merchant acquiring business; as a regulated institution, the likelihood the Company will be required to obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition, and the Company’s potential inability to obtain such approval on a timely basis or at all, which may make transactions more expensive or impossible to complete, or make the Company less attractive to potential sellers; the Company's ability to renew its client contracts on terms favorable to the Company, including the Company's contract with Popular, and any significant concessions the Company may have to grant to Popular with respect to pricing or other key terms in anticipation of the negotiation of the extension of the MSA, both in respect of the current term and any extension of the MSA; dependence on the Company's 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 the Company does business and the risks to the Company's business if 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 in the financial-services industry; the credit risk of the Company’s merchant clients, for which the Company 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 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 Company’s ability to execute its geographic expansion and acquisition strategies, including challenges in successfully acquiring new businesses and integrating and growing acquired businesses; the Company’s ability to protect the Company’s intellectual property rights against infringement and to defend the Company 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 senior 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 in the Company’s 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 our main markets in Latin America and the Caribbean; uncertainty related to the effect of the discontinuation of the London Interbank Offered Rate at the end of 2021; the nature, timing and amount of any restatement; and the continued impact of COVID-19 pandemic and measures taken in response to the outbreak, on our resources, net income and liquidity due to current and future disruptions in operations as well as the macroeconomic instability caused by the pandemic. Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. 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 the Company is required to do so by law. EVERTEC, Inc. Schedule 1: Unaudited Condensed Consolidated Statements of Income and Comprehensive Income Three months ended March 31, 2021 2020 (Dollar amounts in thousands, except share data) Revenues $ 139,528 $ 121,942 Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization 59,804 54,067 Selling, general and administrative expenses 16,102 17,317 Depreciation and amortization 18,623 17,795 Total operating costs and expenses 94,529 89,179 Income from operations 44,999 32,763 Non-operating income (expenses) Interest income 389 363 Interest expense (5,906 ) (6,779 ) Earnings of equity method investment 502 338 Other income 328 108 Total non-operating expenses (4,687 ) (5,970 ) Income before income taxes 40,312 26,793 Income tax expense 4,708 4,518 Net income 35,604 22,275 Less: Net income attributable to non-controlling interest 101 64 Net income attributable to EVERTEC, Inc.’s common stockholders 35,503 22,211 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments (2,613 ) (8,305 ) Gain (loss) on cash flow hedges 4,189 (11,859 ) Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders $ 37,079 $ 2,047 Net income per common share: Basic $ 0.49 $ 0.31 Diluted $ 0.49 $ 0.30 Shares used in computing net income per common share: Basic 72,150,529 72,012,648 Diluted 72,949,401 73,293,005 EVERTEC, Inc. Schedule 2: Unaudited Condensed Consolidated Balance Sheets (In thousands) March 31, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 156,363 $ 202,649 Restricted cash 19,059 18,456 Accounts receivable, net 99,737 95,727 Prepaid expenses and other assets 44,573 42,214 Total current assets 319,732 359,046 Debt securities available-for-sale, at fair value 2,968 — Investment in equity investee 12,867 12,835 Property and equipment, net 42,146 43,538 Operating lease right-of-use asset 25,604 27,538 Goodwill 396,298 397,670 Other intangible assets, net 229,972 219,909 Deferred tax asset 5,671 5,730 Net investment in leases 255 301 Other long-term assets 5,136 6,012 Total assets $ 1,040,649 $ 1,072,579 Liabilities and stockholders’ equity Current Liabilities: Accrued liabilities $ 56,600 $ 58,033 Accounts payable 26,998 43,348 Contract liability 25,319 24,958 Income tax payable 6,547 6,573 Current portion of long-term debt 15,625 14,250 Operating lease payable 5,491 5,830 Total current liabilities 136,580 152,992 Long-term debt 458,738 481,041 Deferred tax liability 2,151 2,748 Contract liability - long term 31,798 31,336 Operating lease liability - long-term 20,884 22,402 Derivative liability 21,012 25,578 Other long-term liabilities 13,479 14,053 Total liabilities 684,642 730,150 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; 72,166,443 shares issued and outstanding as of March 31, 2021 (December 31, 2020 - 72,137,678) 721 721 Additional paid-in capital — 5,340 Accumulated earnings 397,556 379,934 Accumulated other comprehensive loss, net of tax (46,678) (48,254) Total EVERTEC, Inc. stockholders’ equity 351,599 337,741 Non-controlling interest 4,408 4,688 Total equity 356,007 342,429 Total liabilities and equity $ 1,040,649 $ 1,072,579 EVERTEC, Inc. Schedule 3: Unaudited Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2021 2020 Cash flows from operating activities Net income $ 35,604 $ 22,275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,623 17,795 Amortization of debt issue costs and accretion of discount 569 621 Operating lease amortization 1,492 1,173 (Release) provision for expected credit losses and sundry losses (184 ) 104 Deferred tax benefit (890 ) (1,080 ) Share-based compensation 3,380 3,483 Loss on disposition of property and equipment and impairment of intangible 1,042 81 Earnings of equity method investment (502 ) (338 ) Decrease (increase) in assets: Accounts receivable, net (4,048 ) 11,729 Prepaid expenses and other assets (2,539 ) (1,836 ) Other long-term assets 833 (2,477 ) (Decrease) increase in liabilities: Accrued liabilities and accounts payable (18,457 ) (20,662 ) Income tax payable 82 3,307 Contract liability 1,185 1,075 Operating lease liabilities (1,611 ) (1,409 ) Other long-term liabilities 167 84 Total adjustments (858 ) 11,650 Net cash provided by operating activities 34,746 33,925 Cash flows from investing activities Additions to software (11,971 ) (6,055 ) Acquisition of customer relationship (14,750 ) — Property and equipment acquired (4,724 ) (3,357 ) Acquisition of available-for-sale debt securities (2,968 ) — Net cash used in investing activities (34,413 ) (9,412 ) Cash flows from financing activities Statutory withholding taxes paid on share-based compensation (8,728 ) (2,706 ) Repayment of short-term borrowings for purchase of equipment and software (758 ) (792 ) Dividends paid (3,605 ) — Repurchase of common stock (14,268 ) (7,300 ) Repayment of long-term debt (21,357 ) (20,560 ) Net cash used in financing activities (48,716 ) (31,358 ) Effect of foreign exchange rate on cash, cash equivalents and restricted cash 2,700 828 Net decrease in cash, cash equivalents and restricted cash (45,683 ) (6,017 ) Cash, cash equivalents and restricted cash at beginning of the period 221,105 131,121 Cash, cash equivalents and restricted cash at end of the period $ 175,422 $ 125,104 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 156,363 $ 103,521 Restricted cash 19,059 21,583 Cash, cash equivalents and restricted cash $ 175,422 $ 125,104 EVERTEC, Inc. Schedule 4: Unaudited Segment Information Three months ended March 31, 2021 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 36,264 $ 25,014 $ 30,867 $ 60,611 $ (13,228) $ 139,528 Operating costs and expenses 20,489 19,846 16,466 36,689 1,039 94,529 Depreciation and amortization 3,942 2,934 654 4,794 6,299 18,623 Non-operating income (expenses) 185 1,108 231 553 (1,247) 830 EBITDA 19,902 9,210 15,286 29,269 (9,215) 64,452 Compensation and benefits (2) 241 809 231 363 1,860 3,504 Transaction, refinancing and other fees (3) 660 — — — 273 933 Adjusted EBITDA $ 20,803 $ 10,019 $ 15,517 $ 29,632 $ (7,082) $ 68,889 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.7 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $2.3 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean, and transaction processing and monitoring fees of $1.2 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $3.5 million. (2) Primarily represents share-based compensation. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, a software impairment charge and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A. Three months ended March 31, 2020 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 29,887 $ 21,640 $ 25,121 $ 55,943 $ (10,649 ) $ 121,942 Operating costs and expenses 17,406 17,651 14,706 33,617 5,799 89,179 Depreciation and amortization 3,249 2,757 499 4,296 6,994 17,795 Non-operating income (expenses) 113 754 154 387 (962 ) 446 EBITDA 15,843 7,500 11,068 27,009 (10,416 ) 51,004 Compensation and benefits (2) 231 742 216 436 1,875 3,500 Transaction, refinancing and other fees (3) — — — — 1,786 1,786 Adjusted EBITDA $ 16,074 $ 8,242 $ 11,284 $ 27,445 $ (6,755 ) $ 56,290 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $1.6 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.1 million. (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. EVERTEC, Inc. Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results Three months ended March 31, (Dollar amounts in thousands, except share data) 2021 2020 Net income $ 35,604 $ 22,275 Income tax expense 4,708 4,518 Interest expense, net 5,517 6,416 Depreciation and amortization 18,623 17,795 EBITDA 64,452 51,004 Equity income (1) (502 ) (338 ) Compensation and benefits (2) 3,504 3,500 Transaction, refinancing and other fees (3) 1,435 2,124 Adjusted EBITDA 68,889 56,290 Operating depreciation and amortization (4) (10,882 ) (9,477 ) Cash interest expense, net (5) (5,076 ) (6,010 ) Income tax expense (6) (7,756 ) (7,178 ) Non-controlling interest (7) (143 ) (92 ) Adjusted net income $ 45,032 $ 33,533 Net income per common share (GAAP): Diluted $ 0.49 $ 0.30 Adjusted Earnings per common share (Non-GAAP): Diluted $ 0.62 $ 0.46 Shares used in computing adjusted earnings per common share: Diluted 72,949,401 73,293,005 (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"). (2) Primarily represents share-based compensation. (3) Represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, recorded as part of selling, general and administrative expenses and a software impairment charge. (4) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity. (5) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount. (6) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items. (7) Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase. EVERTEC, Inc. Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share 2021 Outlook 2020 (Dollar amounts in millions, except per share data) Low High Revenues $ 543 to $ 552 $ 511 Earnings per Share (EPS) (GAAP) $ 1.70 to $ 1.77 $ 1.43 Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: Share-based comp, non-cash equity earnings and other (1) 0.21 0.21 0.29 Merger and acquisition related depreciation and amortization (2) 0.42 0.42 0.45 Non-cash interest expense (3) 0.02 0.02 0.01 Tax effect of Non-GAAP adjustments (4) (0.09 ) (0.09 ) (0.11 ) Non-controlling interest (5) (0.01 ) (0.01 ) (0.01 ) Total adjustments 0.55 0.55 0.63 Adjusted EPS (Non-GAAP) $ 2.25 to $ 2.32 $ 2.07 Shares used in computing adjusted earnings per common share 73.0 73.1 (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 the Merger and intangibles related to acquisitions. (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 13% to 14%). (5) Represents the 35% non-controlling equity interest in Evertec Colombia net of amortization for intangibles created as part of the purchase. View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005928/en/Contacts Investor Contact Kay Sharpton (787) 773-5442 IR@evertecinc.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
EVERTEC Reports First Quarter 2021 Results By: EVERTEC via Business Wire April 29, 2021 at 16:05 PM EDT Increases Annual Guidance EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced results for the first quarter ended March 31, 2021. First Quarter 2021 Highlights Revenue increased 14% to $139.5 million GAAP Net Income attributable to common shareholders was $35.5 million or $0.49 per diluted share Adjusted EBITDA increased 22% to $68.9 million Adjusted earnings per common share was $0.62, an increase of 35% Share repurchases totaled $14.3 million Mac Schuessler, President and Chief Executive Officer stated, “In the first quarter, we delivered strong results as we lapped the one-year anniversary of the pandemic. We benefited from volume growth and continued increase of our digital solutions in Puerto Rico as well as the new client contracts in Latin America. Additionally, as a result of the strong first quarter, the incremental federal stimulus package, as well as the execution against our share repurchase program, we are increasing our outlook for 2021 results." First Quarter 2021 Results Revenue. Total revenue for the quarter ended March 31, 2021 was $139.5 million, an increase of 14% compared with $121.9 million in the prior year. Revenue increase in the quarter reflected sales volume growth with a high average ticket, as well as continued growth in our digital solutions in Puerto Rico. Additionally, revenue growth in Latin America was driven by new client contracts. Revenue growth also includes approximately $1 million in one-time hardware and software sales. Net Income attributable to common shareholders. For the quarter ended March 31, 2021, GAAP Net Income attributable to common shareholders was $35.5 million, or $0.49 per diluted share, an increase of $13.3 million or $0.19 per diluted share as compared to the prior year. Adjusted EBITDA. For the quarter ended March 31, 2021, Adjusted EBITDA was $68.9 million, an increase of 22% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 49.4%, an increase of approximately 320 basis points from the prior year. The year over year increase in margin primarily reflects the benefit of higher payment revenues in both Puerto Rico and Latin America while at the same time controlling costs. Adjusted Net Income. For the quarter ended March 31, 2021, Adjusted Net Income was $45.0 million, an increase of 34% compared with $33.5 million in the prior year. Adjusted earnings per common share was $0.62, an increase of 35% compared to $0.46 in the prior year. Share Repurchase During the three months ended March 31, 2021, the Company repurchased 382,974 shares of its common stock at an average price of $37.26 per share for a total of $14.3 million. As of March 31, 2021, a total of approximately $86 million remained available for future use under the Company’s share repurchase program. 2021 Outlook The Company is increasing its financial outlook for 2021 as follows: Total consolidated revenue is now anticipated between $543 million and $552 million representing growth of 6% to 8%, compared with $533 million to $544 million previously estimated Adjusted earnings per common share between $2.25 to $2.32 representing a growth range of 9% to 12% from $2.07 in 2020, compared with $2.15 to $2.23 previously estimated Capital expenditures are now anticipated to be between $50 and $55 million Effective tax rate of approximately 13% to 14%. Earnings Conference Call and Audio Webcast The Company will host a conference call to discuss its first quarter 2021 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 10154680. The replay will be available through Thursday, May 6, 2021. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com. A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call. About EVERTEC EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in Puerto Rico, the Caribbean and Latin America, providing a broad range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, the Company manages a system of electronic payment networks and offers a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico, that process approximately three billion transactions annually. The Company also offers technology outsourcing in all the regions it serves. Based in Puerto Rico, the Company operates in 26 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com. Use of Non-GAAP Financial Information The non-GAAP measures referenced in this release material are supplemental measures of the Company’s performance and are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities, as indicators of operating performance or as measures of the Company’s liquidity. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the Company believes are pertinent to the daily management of the Company’s operations and believes that they are also frequently used by analysts, investors and other interested parties to evaluate companies in the industry. Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share and are defined below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to the Company's segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. The Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio. Adjusted Net Income is defined as net income adjusted to exclude unusual items and other adjustments. Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding. The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future the Company may incur expenses such as those excluded in calculating them. Further, the Company's presentation of these measures should not be construed as an inference that the Company's future operating results will not be affected by unusual or nonrecurring items. Forward-Looking Statements Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular, Inc. ("Popular") for a significant portion of revenue pursuant to the Master Services Agreement (MSA) with Popular and to grow the Company's merchant acquiring business; as a regulated institution, the likelihood the Company will be required to obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition, and the Company’s potential inability to obtain such approval on a timely basis or at all, which may make transactions more expensive or impossible to complete, or make the Company less attractive to potential sellers; the Company's ability to renew its client contracts on terms favorable to the Company, including the Company's contract with Popular, and any significant concessions the Company may have to grant to Popular with respect to pricing or other key terms in anticipation of the negotiation of the extension of the MSA, both in respect of the current term and any extension of the MSA; dependence on the Company's 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 the Company does business and the risks to the Company's business if 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 in the financial-services industry; the credit risk of the Company’s merchant clients, for which the Company 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 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 Company’s ability to execute its geographic expansion and acquisition strategies, including challenges in successfully acquiring new businesses and integrating and growing acquired businesses; the Company’s ability to protect the Company’s intellectual property rights against infringement and to defend the Company 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 senior 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 in the Company’s 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 our main markets in Latin America and the Caribbean; uncertainty related to the effect of the discontinuation of the London Interbank Offered Rate at the end of 2021; the nature, timing and amount of any restatement; and the continued impact of COVID-19 pandemic and measures taken in response to the outbreak, on our resources, net income and liquidity due to current and future disruptions in operations as well as the macroeconomic instability caused by the pandemic. Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. 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 the Company is required to do so by law. EVERTEC, Inc. Schedule 1: Unaudited Condensed Consolidated Statements of Income and Comprehensive Income Three months ended March 31, 2021 2020 (Dollar amounts in thousands, except share data) Revenues $ 139,528 $ 121,942 Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization 59,804 54,067 Selling, general and administrative expenses 16,102 17,317 Depreciation and amortization 18,623 17,795 Total operating costs and expenses 94,529 89,179 Income from operations 44,999 32,763 Non-operating income (expenses) Interest income 389 363 Interest expense (5,906 ) (6,779 ) Earnings of equity method investment 502 338 Other income 328 108 Total non-operating expenses (4,687 ) (5,970 ) Income before income taxes 40,312 26,793 Income tax expense 4,708 4,518 Net income 35,604 22,275 Less: Net income attributable to non-controlling interest 101 64 Net income attributable to EVERTEC, Inc.’s common stockholders 35,503 22,211 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments (2,613 ) (8,305 ) Gain (loss) on cash flow hedges 4,189 (11,859 ) Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders $ 37,079 $ 2,047 Net income per common share: Basic $ 0.49 $ 0.31 Diluted $ 0.49 $ 0.30 Shares used in computing net income per common share: Basic 72,150,529 72,012,648 Diluted 72,949,401 73,293,005 EVERTEC, Inc. Schedule 2: Unaudited Condensed Consolidated Balance Sheets (In thousands) March 31, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 156,363 $ 202,649 Restricted cash 19,059 18,456 Accounts receivable, net 99,737 95,727 Prepaid expenses and other assets 44,573 42,214 Total current assets 319,732 359,046 Debt securities available-for-sale, at fair value 2,968 — Investment in equity investee 12,867 12,835 Property and equipment, net 42,146 43,538 Operating lease right-of-use asset 25,604 27,538 Goodwill 396,298 397,670 Other intangible assets, net 229,972 219,909 Deferred tax asset 5,671 5,730 Net investment in leases 255 301 Other long-term assets 5,136 6,012 Total assets $ 1,040,649 $ 1,072,579 Liabilities and stockholders’ equity Current Liabilities: Accrued liabilities $ 56,600 $ 58,033 Accounts payable 26,998 43,348 Contract liability 25,319 24,958 Income tax payable 6,547 6,573 Current portion of long-term debt 15,625 14,250 Operating lease payable 5,491 5,830 Total current liabilities 136,580 152,992 Long-term debt 458,738 481,041 Deferred tax liability 2,151 2,748 Contract liability - long term 31,798 31,336 Operating lease liability - long-term 20,884 22,402 Derivative liability 21,012 25,578 Other long-term liabilities 13,479 14,053 Total liabilities 684,642 730,150 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; 72,166,443 shares issued and outstanding as of March 31, 2021 (December 31, 2020 - 72,137,678) 721 721 Additional paid-in capital — 5,340 Accumulated earnings 397,556 379,934 Accumulated other comprehensive loss, net of tax (46,678) (48,254) Total EVERTEC, Inc. stockholders’ equity 351,599 337,741 Non-controlling interest 4,408 4,688 Total equity 356,007 342,429 Total liabilities and equity $ 1,040,649 $ 1,072,579 EVERTEC, Inc. Schedule 3: Unaudited Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2021 2020 Cash flows from operating activities Net income $ 35,604 $ 22,275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,623 17,795 Amortization of debt issue costs and accretion of discount 569 621 Operating lease amortization 1,492 1,173 (Release) provision for expected credit losses and sundry losses (184 ) 104 Deferred tax benefit (890 ) (1,080 ) Share-based compensation 3,380 3,483 Loss on disposition of property and equipment and impairment of intangible 1,042 81 Earnings of equity method investment (502 ) (338 ) Decrease (increase) in assets: Accounts receivable, net (4,048 ) 11,729 Prepaid expenses and other assets (2,539 ) (1,836 ) Other long-term assets 833 (2,477 ) (Decrease) increase in liabilities: Accrued liabilities and accounts payable (18,457 ) (20,662 ) Income tax payable 82 3,307 Contract liability 1,185 1,075 Operating lease liabilities (1,611 ) (1,409 ) Other long-term liabilities 167 84 Total adjustments (858 ) 11,650 Net cash provided by operating activities 34,746 33,925 Cash flows from investing activities Additions to software (11,971 ) (6,055 ) Acquisition of customer relationship (14,750 ) — Property and equipment acquired (4,724 ) (3,357 ) Acquisition of available-for-sale debt securities (2,968 ) — Net cash used in investing activities (34,413 ) (9,412 ) Cash flows from financing activities Statutory withholding taxes paid on share-based compensation (8,728 ) (2,706 ) Repayment of short-term borrowings for purchase of equipment and software (758 ) (792 ) Dividends paid (3,605 ) — Repurchase of common stock (14,268 ) (7,300 ) Repayment of long-term debt (21,357 ) (20,560 ) Net cash used in financing activities (48,716 ) (31,358 ) Effect of foreign exchange rate on cash, cash equivalents and restricted cash 2,700 828 Net decrease in cash, cash equivalents and restricted cash (45,683 ) (6,017 ) Cash, cash equivalents and restricted cash at beginning of the period 221,105 131,121 Cash, cash equivalents and restricted cash at end of the period $ 175,422 $ 125,104 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 156,363 $ 103,521 Restricted cash 19,059 21,583 Cash, cash equivalents and restricted cash $ 175,422 $ 125,104 EVERTEC, Inc. Schedule 4: Unaudited Segment Information Three months ended March 31, 2021 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 36,264 $ 25,014 $ 30,867 $ 60,611 $ (13,228) $ 139,528 Operating costs and expenses 20,489 19,846 16,466 36,689 1,039 94,529 Depreciation and amortization 3,942 2,934 654 4,794 6,299 18,623 Non-operating income (expenses) 185 1,108 231 553 (1,247) 830 EBITDA 19,902 9,210 15,286 29,269 (9,215) 64,452 Compensation and benefits (2) 241 809 231 363 1,860 3,504 Transaction, refinancing and other fees (3) 660 — — — 273 933 Adjusted EBITDA $ 20,803 $ 10,019 $ 15,517 $ 29,632 $ (7,082) $ 68,889 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.7 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $2.3 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean, and transaction processing and monitoring fees of $1.2 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $3.5 million. (2) Primarily represents share-based compensation. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, a software impairment charge and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A. Three months ended March 31, 2020 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 29,887 $ 21,640 $ 25,121 $ 55,943 $ (10,649 ) $ 121,942 Operating costs and expenses 17,406 17,651 14,706 33,617 5,799 89,179 Depreciation and amortization 3,249 2,757 499 4,296 6,994 17,795 Non-operating income (expenses) 113 754 154 387 (962 ) 446 EBITDA 15,843 7,500 11,068 27,009 (10,416 ) 51,004 Compensation and benefits (2) 231 742 216 436 1,875 3,500 Transaction, refinancing and other fees (3) — — — — 1,786 1,786 Adjusted EBITDA $ 16,074 $ 8,242 $ 11,284 $ 27,445 $ (6,755 ) $ 56,290 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $1.6 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.1 million. (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. EVERTEC, Inc. Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results Three months ended March 31, (Dollar amounts in thousands, except share data) 2021 2020 Net income $ 35,604 $ 22,275 Income tax expense 4,708 4,518 Interest expense, net 5,517 6,416 Depreciation and amortization 18,623 17,795 EBITDA 64,452 51,004 Equity income (1) (502 ) (338 ) Compensation and benefits (2) 3,504 3,500 Transaction, refinancing and other fees (3) 1,435 2,124 Adjusted EBITDA 68,889 56,290 Operating depreciation and amortization (4) (10,882 ) (9,477 ) Cash interest expense, net (5) (5,076 ) (6,010 ) Income tax expense (6) (7,756 ) (7,178 ) Non-controlling interest (7) (143 ) (92 ) Adjusted net income $ 45,032 $ 33,533 Net income per common share (GAAP): Diluted $ 0.49 $ 0.30 Adjusted Earnings per common share (Non-GAAP): Diluted $ 0.62 $ 0.46 Shares used in computing adjusted earnings per common share: Diluted 72,949,401 73,293,005 (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"). (2) Primarily represents share-based compensation. (3) Represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, recorded as part of selling, general and administrative expenses and a software impairment charge. (4) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity. (5) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount. (6) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items. (7) Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase. EVERTEC, Inc. Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share 2021 Outlook 2020 (Dollar amounts in millions, except per share data) Low High Revenues $ 543 to $ 552 $ 511 Earnings per Share (EPS) (GAAP) $ 1.70 to $ 1.77 $ 1.43 Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: Share-based comp, non-cash equity earnings and other (1) 0.21 0.21 0.29 Merger and acquisition related depreciation and amortization (2) 0.42 0.42 0.45 Non-cash interest expense (3) 0.02 0.02 0.01 Tax effect of Non-GAAP adjustments (4) (0.09 ) (0.09 ) (0.11 ) Non-controlling interest (5) (0.01 ) (0.01 ) (0.01 ) Total adjustments 0.55 0.55 0.63 Adjusted EPS (Non-GAAP) $ 2.25 to $ 2.32 $ 2.07 Shares used in computing adjusted earnings per common share 73.0 73.1 (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 the Merger and intangibles related to acquisitions. (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 13% to 14%). (5) Represents the 35% non-controlling equity interest in Evertec Colombia net of amortization for intangibles created as part of the purchase. View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005928/en/Contacts Investor Contact Kay Sharpton (787) 773-5442 IR@evertecinc.com
EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced results for the first quarter ended March 31, 2021. First Quarter 2021 Highlights Revenue increased 14% to $139.5 million GAAP Net Income attributable to common shareholders was $35.5 million or $0.49 per diluted share Adjusted EBITDA increased 22% to $68.9 million Adjusted earnings per common share was $0.62, an increase of 35% Share repurchases totaled $14.3 million Mac Schuessler, President and Chief Executive Officer stated, “In the first quarter, we delivered strong results as we lapped the one-year anniversary of the pandemic. We benefited from volume growth and continued increase of our digital solutions in Puerto Rico as well as the new client contracts in Latin America. Additionally, as a result of the strong first quarter, the incremental federal stimulus package, as well as the execution against our share repurchase program, we are increasing our outlook for 2021 results." First Quarter 2021 Results Revenue. Total revenue for the quarter ended March 31, 2021 was $139.5 million, an increase of 14% compared with $121.9 million in the prior year. Revenue increase in the quarter reflected sales volume growth with a high average ticket, as well as continued growth in our digital solutions in Puerto Rico. Additionally, revenue growth in Latin America was driven by new client contracts. Revenue growth also includes approximately $1 million in one-time hardware and software sales. Net Income attributable to common shareholders. For the quarter ended March 31, 2021, GAAP Net Income attributable to common shareholders was $35.5 million, or $0.49 per diluted share, an increase of $13.3 million or $0.19 per diluted share as compared to the prior year. Adjusted EBITDA. For the quarter ended March 31, 2021, Adjusted EBITDA was $68.9 million, an increase of 22% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 49.4%, an increase of approximately 320 basis points from the prior year. The year over year increase in margin primarily reflects the benefit of higher payment revenues in both Puerto Rico and Latin America while at the same time controlling costs. Adjusted Net Income. For the quarter ended March 31, 2021, Adjusted Net Income was $45.0 million, an increase of 34% compared with $33.5 million in the prior year. Adjusted earnings per common share was $0.62, an increase of 35% compared to $0.46 in the prior year. Share Repurchase During the three months ended March 31, 2021, the Company repurchased 382,974 shares of its common stock at an average price of $37.26 per share for a total of $14.3 million. As of March 31, 2021, a total of approximately $86 million remained available for future use under the Company’s share repurchase program. 2021 Outlook The Company is increasing its financial outlook for 2021 as follows: Total consolidated revenue is now anticipated between $543 million and $552 million representing growth of 6% to 8%, compared with $533 million to $544 million previously estimated Adjusted earnings per common share between $2.25 to $2.32 representing a growth range of 9% to 12% from $2.07 in 2020, compared with $2.15 to $2.23 previously estimated Capital expenditures are now anticipated to be between $50 and $55 million Effective tax rate of approximately 13% to 14%. Earnings Conference Call and Audio Webcast The Company will host a conference call to discuss its first quarter 2021 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 10154680. The replay will be available through Thursday, May 6, 2021. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com. A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call. About EVERTEC EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in Puerto Rico, the Caribbean and Latin America, providing a broad range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, the Company manages a system of electronic payment networks and offers a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico, that process approximately three billion transactions annually. The Company also offers technology outsourcing in all the regions it serves. Based in Puerto Rico, the Company operates in 26 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com. Use of Non-GAAP Financial Information The non-GAAP measures referenced in this release material are supplemental measures of the Company’s performance and are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities, as indicators of operating performance or as measures of the Company’s liquidity. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the Company believes are pertinent to the daily management of the Company’s operations and believes that they are also frequently used by analysts, investors and other interested parties to evaluate companies in the industry. Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share and are defined below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to the Company's segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. The Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio. Adjusted Net Income is defined as net income adjusted to exclude unusual items and other adjustments. Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding. The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future the Company may incur expenses such as those excluded in calculating them. Further, the Company's presentation of these measures should not be construed as an inference that the Company's future operating results will not be affected by unusual or nonrecurring items. Forward-Looking Statements Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular, Inc. ("Popular") for a significant portion of revenue pursuant to the Master Services Agreement (MSA) with Popular and to grow the Company's merchant acquiring business; as a regulated institution, the likelihood the Company will be required to obtain regulatory approval before engaging in certain new activities or businesses, whether organically or by acquisition, and the Company’s potential inability to obtain such approval on a timely basis or at all, which may make transactions more expensive or impossible to complete, or make the Company less attractive to potential sellers; the Company's ability to renew its client contracts on terms favorable to the Company, including the Company's contract with Popular, and any significant concessions the Company may have to grant to Popular with respect to pricing or other key terms in anticipation of the negotiation of the extension of the MSA, both in respect of the current term and any extension of the MSA; dependence on the Company's 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 the Company does business and the risks to the Company's business if 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 in the financial-services industry; the credit risk of the Company’s merchant clients, for which the Company 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 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 Company’s ability to execute its geographic expansion and acquisition strategies, including challenges in successfully acquiring new businesses and integrating and growing acquired businesses; the Company’s ability to protect the Company’s intellectual property rights against infringement and to defend the Company 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 senior 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 in the Company’s 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 our main markets in Latin America and the Caribbean; uncertainty related to the effect of the discontinuation of the London Interbank Offered Rate at the end of 2021; the nature, timing and amount of any restatement; and the continued impact of COVID-19 pandemic and measures taken in response to the outbreak, on our resources, net income and liquidity due to current and future disruptions in operations as well as the macroeconomic instability caused by the pandemic. Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. 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 the Company is required to do so by law. EVERTEC, Inc. Schedule 1: Unaudited Condensed Consolidated Statements of Income and Comprehensive Income Three months ended March 31, 2021 2020 (Dollar amounts in thousands, except share data) Revenues $ 139,528 $ 121,942 Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization 59,804 54,067 Selling, general and administrative expenses 16,102 17,317 Depreciation and amortization 18,623 17,795 Total operating costs and expenses 94,529 89,179 Income from operations 44,999 32,763 Non-operating income (expenses) Interest income 389 363 Interest expense (5,906 ) (6,779 ) Earnings of equity method investment 502 338 Other income 328 108 Total non-operating expenses (4,687 ) (5,970 ) Income before income taxes 40,312 26,793 Income tax expense 4,708 4,518 Net income 35,604 22,275 Less: Net income attributable to non-controlling interest 101 64 Net income attributable to EVERTEC, Inc.’s common stockholders 35,503 22,211 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments (2,613 ) (8,305 ) Gain (loss) on cash flow hedges 4,189 (11,859 ) Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders $ 37,079 $ 2,047 Net income per common share: Basic $ 0.49 $ 0.31 Diluted $ 0.49 $ 0.30 Shares used in computing net income per common share: Basic 72,150,529 72,012,648 Diluted 72,949,401 73,293,005 EVERTEC, Inc. Schedule 2: Unaudited Condensed Consolidated Balance Sheets (In thousands) March 31, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 156,363 $ 202,649 Restricted cash 19,059 18,456 Accounts receivable, net 99,737 95,727 Prepaid expenses and other assets 44,573 42,214 Total current assets 319,732 359,046 Debt securities available-for-sale, at fair value 2,968 — Investment in equity investee 12,867 12,835 Property and equipment, net 42,146 43,538 Operating lease right-of-use asset 25,604 27,538 Goodwill 396,298 397,670 Other intangible assets, net 229,972 219,909 Deferred tax asset 5,671 5,730 Net investment in leases 255 301 Other long-term assets 5,136 6,012 Total assets $ 1,040,649 $ 1,072,579 Liabilities and stockholders’ equity Current Liabilities: Accrued liabilities $ 56,600 $ 58,033 Accounts payable 26,998 43,348 Contract liability 25,319 24,958 Income tax payable 6,547 6,573 Current portion of long-term debt 15,625 14,250 Operating lease payable 5,491 5,830 Total current liabilities 136,580 152,992 Long-term debt 458,738 481,041 Deferred tax liability 2,151 2,748 Contract liability - long term 31,798 31,336 Operating lease liability - long-term 20,884 22,402 Derivative liability 21,012 25,578 Other long-term liabilities 13,479 14,053 Total liabilities 684,642 730,150 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; 72,166,443 shares issued and outstanding as of March 31, 2021 (December 31, 2020 - 72,137,678) 721 721 Additional paid-in capital — 5,340 Accumulated earnings 397,556 379,934 Accumulated other comprehensive loss, net of tax (46,678) (48,254) Total EVERTEC, Inc. stockholders’ equity 351,599 337,741 Non-controlling interest 4,408 4,688 Total equity 356,007 342,429 Total liabilities and equity $ 1,040,649 $ 1,072,579 EVERTEC, Inc. Schedule 3: Unaudited Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2021 2020 Cash flows from operating activities Net income $ 35,604 $ 22,275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,623 17,795 Amortization of debt issue costs and accretion of discount 569 621 Operating lease amortization 1,492 1,173 (Release) provision for expected credit losses and sundry losses (184 ) 104 Deferred tax benefit (890 ) (1,080 ) Share-based compensation 3,380 3,483 Loss on disposition of property and equipment and impairment of intangible 1,042 81 Earnings of equity method investment (502 ) (338 ) Decrease (increase) in assets: Accounts receivable, net (4,048 ) 11,729 Prepaid expenses and other assets (2,539 ) (1,836 ) Other long-term assets 833 (2,477 ) (Decrease) increase in liabilities: Accrued liabilities and accounts payable (18,457 ) (20,662 ) Income tax payable 82 3,307 Contract liability 1,185 1,075 Operating lease liabilities (1,611 ) (1,409 ) Other long-term liabilities 167 84 Total adjustments (858 ) 11,650 Net cash provided by operating activities 34,746 33,925 Cash flows from investing activities Additions to software (11,971 ) (6,055 ) Acquisition of customer relationship (14,750 ) — Property and equipment acquired (4,724 ) (3,357 ) Acquisition of available-for-sale debt securities (2,968 ) — Net cash used in investing activities (34,413 ) (9,412 ) Cash flows from financing activities Statutory withholding taxes paid on share-based compensation (8,728 ) (2,706 ) Repayment of short-term borrowings for purchase of equipment and software (758 ) (792 ) Dividends paid (3,605 ) — Repurchase of common stock (14,268 ) (7,300 ) Repayment of long-term debt (21,357 ) (20,560 ) Net cash used in financing activities (48,716 ) (31,358 ) Effect of foreign exchange rate on cash, cash equivalents and restricted cash 2,700 828 Net decrease in cash, cash equivalents and restricted cash (45,683 ) (6,017 ) Cash, cash equivalents and restricted cash at beginning of the period 221,105 131,121 Cash, cash equivalents and restricted cash at end of the period $ 175,422 $ 125,104 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 156,363 $ 103,521 Restricted cash 19,059 21,583 Cash, cash equivalents and restricted cash $ 175,422 $ 125,104 EVERTEC, Inc. Schedule 4: Unaudited Segment Information Three months ended March 31, 2021 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 36,264 $ 25,014 $ 30,867 $ 60,611 $ (13,228) $ 139,528 Operating costs and expenses 20,489 19,846 16,466 36,689 1,039 94,529 Depreciation and amortization 3,942 2,934 654 4,794 6,299 18,623 Non-operating income (expenses) 185 1,108 231 553 (1,247) 830 EBITDA 19,902 9,210 15,286 29,269 (9,215) 64,452 Compensation and benefits (2) 241 809 231 363 1,860 3,504 Transaction, refinancing and other fees (3) 660 — — — 273 933 Adjusted EBITDA $ 20,803 $ 10,019 $ 15,517 $ 29,632 $ (7,082) $ 68,889 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.7 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $2.3 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean, and transaction processing and monitoring fees of $1.2 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $3.5 million. (2) Primarily represents share-based compensation. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, a software impairment charge and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A. Three months ended March 31, 2020 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Corporate and Other (1) Total Revenues $ 29,887 $ 21,640 $ 25,121 $ 55,943 $ (10,649 ) $ 121,942 Operating costs and expenses 17,406 17,651 14,706 33,617 5,799 89,179 Depreciation and amortization 3,249 2,757 499 4,296 6,994 17,795 Non-operating income (expenses) 113 754 154 387 (962 ) 446 EBITDA 15,843 7,500 11,068 27,009 (10,416 ) 51,004 Compensation and benefits (2) 231 742 216 436 1,875 3,500 Transaction, refinancing and other fees (3) — — — — 1,786 1,786 Adjusted EBITDA $ 16,074 $ 8,242 $ 11,284 $ 27,445 $ (6,755 ) $ 56,290 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $1.6 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.1 million. (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. EVERTEC, Inc. Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results Three months ended March 31, (Dollar amounts in thousands, except share data) 2021 2020 Net income $ 35,604 $ 22,275 Income tax expense 4,708 4,518 Interest expense, net 5,517 6,416 Depreciation and amortization 18,623 17,795 EBITDA 64,452 51,004 Equity income (1) (502 ) (338 ) Compensation and benefits (2) 3,504 3,500 Transaction, refinancing and other fees (3) 1,435 2,124 Adjusted EBITDA 68,889 56,290 Operating depreciation and amortization (4) (10,882 ) (9,477 ) Cash interest expense, net (5) (5,076 ) (6,010 ) Income tax expense (6) (7,756 ) (7,178 ) Non-controlling interest (7) (143 ) (92 ) Adjusted net income $ 45,032 $ 33,533 Net income per common share (GAAP): Diluted $ 0.49 $ 0.30 Adjusted Earnings per common share (Non-GAAP): Diluted $ 0.62 $ 0.46 Shares used in computing adjusted earnings per common share: Diluted 72,949,401 73,293,005 (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"). (2) Primarily represents share-based compensation. (3) Represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, recorded as part of selling, general and administrative expenses and a software impairment charge. (4) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity. (5) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount. (6) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items. (7) Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase. EVERTEC, Inc. Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share 2021 Outlook 2020 (Dollar amounts in millions, except per share data) Low High Revenues $ 543 to $ 552 $ 511 Earnings per Share (EPS) (GAAP) $ 1.70 to $ 1.77 $ 1.43 Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: Share-based comp, non-cash equity earnings and other (1) 0.21 0.21 0.29 Merger and acquisition related depreciation and amortization (2) 0.42 0.42 0.45 Non-cash interest expense (3) 0.02 0.02 0.01 Tax effect of Non-GAAP adjustments (4) (0.09 ) (0.09 ) (0.11 ) Non-controlling interest (5) (0.01 ) (0.01 ) (0.01 ) Total adjustments 0.55 0.55 0.63 Adjusted EPS (Non-GAAP) $ 2.25 to $ 2.32 $ 2.07 Shares used in computing adjusted earnings per common share 73.0 73.1 (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 the Merger and intangibles related to acquisitions. (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 13% to 14%). (5) Represents the 35% non-controlling equity interest in Evertec Colombia net of amortization for intangibles created as part of the purchase. View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005928/en/