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EVERTEC REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS


SAN JUAN, PUERTO RICO – February 25, 2020 – EVERTEC, Inc. (NYSE: EVTC) announced the results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Highlights

  • Revenue increased 8% to $127.2 million
  • GAAP Net Income attributable to common shareholders was $25.0 million, or $0.34 per diluted share
  • Adjusted EBITDA increased 5% to $55.3 million
  • Adjusted earnings per common share was $0.48, or a 4% increase

Full Year 2019 Highlights

  • Revenue grew 7% to $487.4 million
  • GAAP Net Income attributable to common shareholders was $103.5 million, or $1.41 per diluted share
  • Adjusted EBITDA increased 6% to $226.2 million
  • Adjusted earnings per common share was $1.96, or a 7% increase
  • $46.2 million returned to shareholders through share repurchases and dividends

Mac Schuessler, President and Chief Executive Officer stated “We are pleased with our financial results for the year and with the advancement of our key growth strategies. We enhanced our product offering for our customers and delivered significant new wins in Latin America, including the recent completion of our PlacetoPay acquisition.

Schuessler continued, "Looking to 2020, we expect to drive results in Puerto Rico through our focus on innovation and to deliver strong growth in Latin America through our execution on new contracts and further market expansion."

Fourth Quarter 2019 Results

Revenue. Total revenue for the quarter ended December 31, 2019 was $127.2 million, an increase of 8% compared with $118.2 million in the prior year. Revenue increase in the quarter primarily reflects growth in our Puerto Rico businesses driven by higher transaction volumes, value added solutions, new contracts and pricing actions.

Net Income attributable to common shareholders. For the quarter ended December 31, 2019, GAAP Net Income attributable to common shareholders was $25.0 million, or $0.34 per diluted share, compared with $20.2 million or $0.27 per diluted share in the prior year.

Adjusted EBITDA. For the quarter ended December 31, 2019, Adjusted EBITDA was $55.3 million, an increase of 5% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenue) decreased approximately 100 basis points to 43.5% compared with 44.5% in the prior year. The decrease in Adjusted EBITDA margin was primarily driven by higher costs related to projects in the quarter and the negative impact of foreign currency exchange as compared to a positive foreign currency impact in the prior year.

Adjusted Net Income. For the quarter ended December 31, 2019, Adjusted Net Income was $34.9 million, an increase of 1% compared with $34.5 million in the prior year. Adjusted earnings per common share was $0.48, an increase of 4% compared with $0.46 in the prior year. The results included the impact of higher tax rate in the quarter.

Full Year 2019 Results

Revenue. Total revenue for the year ended December 31, 2019 was $487.4 million, an increase of 7% compared with $453.9 million in the prior year. The increase in revenues primarily reflects growth driven in ATH debit network transaction volumes, value added solutions, new managed services, pricing actions as well as one-time revenue related to an electronic benefits services contract and other completed projects.

Net Income attributable to common shareholders. For the year ended December 31, 2019, GAAP Net Income attributable to common shareholders was $103.5 million, or $1.41 per diluted share, compared with $86.3 million or $1.16 per diluted share in the prior year. The increase reflects revenue growth, partially offset by higher operating expenses and increases in depreciation and amortization related to higher capital expenditures and project completions.

Adjusted EBITDA. For the year ended December 31, 2019, Adjusted EBITDA was $226.2 million, an increase of  6% compared to the prior year. Adjusted EBITDA margin decreased 40 basis points to 46.4% compared with 46.8% in the prior year. The decrease in Adjusted EBITDA margin was primarily driven by higher operating expenses, negative impact of foreign currency exchange, partially offset by higher revenue.

Adjusted Net Income. For the year ended December 31, 2019, Adjusted Net Income was $143.7 million, an increase of 5% compared with $137.2 million in the prior year. Adjusted earnings per common share was $1.96, an increase of 7% compared with $1.84 in the prior year and includes the impact of higher operating depreciation and amortization.

Acquisitions

On December 2, 2019, the Company completed the acquisition of 100% of the shares of capital stock of an entity commercially known as PlacetoPay. Based in Colombia, PlacetoPay is a gateway and payment service provider primarily in Colombia and Ecuador.  The results of this acquisition are reported within the Payment Services, Latin America segment.

Share Repurchase

During the three months ended December 31, 2019 and for the full year 2019, the Company repurchased a total of 0.1 million and 1.1 million shares of common stock, respectively, at an average price of $30.60 and $28.79 per share, respectively.  During the three months ended December 31, 2019 and for the full year 2019,  total repurchases were $3.3 million and $31.8 million, respectively. As of December 31, 2019, a total of approximately $30.6 million remained available for future use under the Company’s share repurchase program.

2020 Outlook

The Company financial outlook for 2020 is as follows:

  • Total consolidated revenue between $501 million and $508 million representing growth of 3% to 4%
  • Adjusted earnings per common share between $2.00 to $2.06 representing a growth range of 2% to 5% as compared to $1.96 in 2019
  • Capital expenditures are anticipated to be approximately $45 million
  • Effective tax rate of approximately 13%

Earnings Conference Call and Audio Webcast

The Company will host a conference call to discuss its fourth quarter and full year  2019 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 10138823. The replay will be available through Tuesday, March 3, 2020. 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 Latin America, providing a broad range of merchant acquiring, payment processing and business solutions services. The Company manages a system of electronic payment networks that process approximately two billion transactions annually and offers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, Evertec owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. 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. In addition, the Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the senior 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 believe better reflects the Company's comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of Apollo Global Management LLC’s acquisition of a 51% indirect ownership in EVERTEC Group (the "Merger"). 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 for a significant portion of revenue and to grow the Company's merchant acquiring business; the Company's ability to renew its client contracts on terms favorable to the Company, including the Company's Master Services Agreement (MSA) 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; a potential government shutdown; a continuation of the Government of Puerto Rico’s fiscal crisis; the effectiveness of the Company’s risk management procedures; dependence on the Company's processing systems, technology infrastructure, security systems and fraudulent-payment-detection systems, and the risk that the Company's systems may experience breakdowns or fail to prevent security breaches, confidential data theft or fraudulent transfers; our ability to develop, install and adopt new technology; impairments to the Company’s amortizable intangible assets and goodwill; a decreased client base due to consolidations in the banking and financial-services industry; the credit risk of the Company’s merchant clients, for which the Company may also be liable; a decline in the market for the Company’s services due to increased competition, changes in consumer spending or payment preferences; the continuing market position of the ATH® network; the Company’s dependence on credit card associations and debit networks; regulatory limitations on the Company’s activities, including the potential need to seek regulatory approval to consummate transactions, due to the Company’s relationship with Popular and the Company’s role as a service provider to financial institutions and the Company’s potential inability to obtain such approval on a timely basis or at all; changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions; the Company’s ability to comply with federal, state, and local regulatory requirements; the geographical concentration of the Company’s business in Puerto Rico; operating an international business in multiple regions with potential political and economic instability; operating an international business in countries and with counterparties that increase the Company’s compliance risks and puts the Company at risk of violating U.S. sanctions laws; the Company’s ability to execute the Company’s expansion and acquisition strategies; the Company’s ability to protect the Company’s intellectual property rights; the Company’s ability to recruit and retain qualified personnel; evolving industry standards; the Company’s high level of indebtedness and restrictions contained in the Company’s debt agreements; the Company’s ability to generate sufficient cash to service the Company’s indebtedness and to generate future profits and the impact of natural disasters or catastrophic events in the countries in which the Company operates.

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 Consolidated Statements of Income and Comprehensive Income

 

 

Quarter ended December 31,

 

Year ended December 31,

(Dollar amounts in thousands, except share data)

 

2019

 

2018

 

2019

 

2018

Revenues

 

$

127,186

 

 

$

118,231

 

 

$

487,374

 

 

$

453,869

 

Operating costs and expenses

 

 

 

 

 

 

 

 

Cost of revenues, exclusive of depreciation and amortization shown below

 

58,881

 

 

50,942

 

 

213,379

 

 

196,957

 

Selling, general and administrative expenses

 

16,056

 

 

23,033

 

 

61,411

 

 

68,717

 

Depreciation and amortization

 

17,642

 

 

15,684

 

 

68,082

 

 

63,067

 

Total operating costs and expenses

 

92,579

 

 

89,659

 

 

342,872

 

 

328,741

 

Income from operations

 

34,607

 

 

28,572

 

 

144,502

 

 

125,128

 

Non-operating income (expenses)

 

 

 

 

 

 

 

 

Interest income

 

353

 

 

261

 

 

1,217

 

 

787

 

Interest expense

 

(6,620)

 

 

(7,143)

 

 

(28,811)

 

 

(30,044)

 

Earnings of equity method investment

 

210

 

 

80

 

 

936

 

 

692

 

Other (expense) income

 

(550)

 

 

724

 

 

(1,169)

 

 

2,602

 

Total non-operating expenses

 

(6,607)

 

 

(6,078)

 

 

(27,827)

 

 

(25,963)

 

Income before income taxes

 

28,000

 

 

22,494

 

 

116,675

 

 

99,165

 

Income tax expense

 

2,957

 

 

2,247

 

 

12,975

 

 

12,596

 

Net income

 

25,043

 

 

20,247

 

 

103,700

 

 

86,569

 

Less: Net income attributable to non-controlling interest

 

30

 

 

48

 

 

231

 

 

299

 

Net income attributable to EVERTEC, Inc.’s common stockholders

 

25,013

 

 

20,199

 

 

103,469

 

 

86,270

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

1,040

 

 

(4,339)

 

 

4,754

 

 

(10,564)

 

Gain (loss) on cash flow hedge

 

2,045

 

 

(4,486)

 

 

(10,974)

 

 

(2,377)

 

Total comprehensive income

 

$

28,098

 

 

$

11,374

 

 

$

97,249

 

 

$

73,329

 

Net income per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

 

$

0.27

 

 

$

1.44

 

 

$

1.19

 

Diluted

 

$

0.34

 

 

$

0.27

 

 

$

1.41

 

 

$

1.16

 

Shares used in computing net income per common share:

 

 

 

 

 

 

 

 

Basic

 

71,955,667

 

 

72,656,706

 

 

72,099,755

 

 

72,607,321

 

Diluted

 

73,305,009

 

 

74,690,226

 

 

73,475,763

 

 

74,420,110

 

 

EVERTEC, Inc.

Schedule 2: Unaudited Consolidated Balance Sheets

(Dollar amounts in thousands, except share data)

 

December 31, 2019

 

December 31, 2018

Assets

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

111,030

 

 

$

69,973

 

Restricted cash

 

20,091

 

 

16,773

 

Accounts receivable, net

 

106,812

 

 

100,323

 

Prepaid expenses and other assets

 

38,085

 

 

29,124

 

Total current assets

 

276,018

 

 

216,193

 

Investment in equity investee

 

12,288

 

 

12,149

 

Property and equipment, net

 

43,791

 

 

36,763

 

Operating lease right-of-use asset

 

29,979

 

 

 

Goodwill

 

399,487

 

 

394,644

 

Other intangible assets, net

 

241,937

 

 

259,269

 

Deferred tax asset

 

2,131

 

 

1,917

 

Net investment in lease

 

722

 

 

1,060

 

Other long-term assets

 

5,323

 

 

5,297

 

Total assets

 

$

1,011,676

 

 

$

927,292

 

Liabilities and stockholders’ equity

 

 

 

 

Current Liabilities:

 

 

 

 

Accrued liabilities

 

$

58,160

 

 

$

57,006

 

Accounts payable

 

39,165

 

 

47,272

 

Unearned income

 

20,668

 

 

11,527

 

Income tax payable

 

6,298

 

 

6,650

 

Current portion of long-term debt

 

14,250

 

 

14,250

 

Current portion of operating lease liability

 

5,773

 

 

 

Total current liabilities

 

144,314

 

 

136,705

 

Long-term debt

 

510,947

 

 

524,056

 

Deferred tax liability

 

4,261

 

 

9,950

 

Unearned income - long term

 

28,437

 

 

26,075

 

Operating lease liability - long-term

 

24,679

 

 

 

Other long-term liabilities

 

27,415

 

 

14,900

 

Total liabilities

 

740,053

 

 

711,686

 

Commitments and contingencies (Note 22)

 

 

 

 

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; 72,000,261 shares issued and outstanding at December 31, 2019 (December 31, 2018 - 72,378,710)

 

720

 

 

723

 

Additional paid-in capital

 

 

 

5,783

 

Accumulated earnings

 

296,476

 

 

228,742

 

Accumulated other comprehensive loss, net of tax

 

(30,009)

 

 

(23,789)

 

Total EVERTEC, Inc. stockholders’ equity

 

267,187

 

 

211,459

 

Non-controlling interest

 

4,436

 

 

4,147

 

Total equity

 

271,623

 

 

215,606

 

Total liabilities and equity

 

$

1,011,676

 

 

$

927,292

 

 

EVERTEC, Inc.

Schedule 3: Unaudited Consolidated Statements of Cash Flows

 

 

Years ended December 31,

(In thousands)

 

2019

 

2018

Cash flows from operating activities

 

 

 

 

Net income

 

$

103,700

 

 

$

86,569

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

68,082

 

 

63,067

 

Amortization of debt issue costs and accretion of discount

 

2,988

 

 

4,316

 

Operating lease amortization

 

6,161

 

 

 

Loss on extinguishment of debt

 

 

 

2,645

 

Provision for doubtful accounts and sundry losses

 

3,939

 

 

2,112

 

Deferred tax benefit

 

(6,391)

 

 

(4,611)

 

Share-based compensation

 

13,570

 

 

12,592

 

Loss on disposition of property and equipment and other intangibles

 

893

 

 

109

 

Earnings of equity method investment

 

(936)

 

 

(692)

 

Dividend received from equity method investment

 

485

 

 

390

 

(Increase) decrease in assets:

 

 

 

 

Accounts receivable

 

(7,851)

 

 

(18,181)

 

Prepaid expenses and other assets

 

(8,770)

 

 

(3,911)

 

Other long-term assets

 

(1,750)

 

 

(4,432)

 

Increase (decrease) in liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

(215)

 

 

16,057

 

Income tax payable

 

(596)

 

 

5,245

 

Unearned income

 

11,504

 

 

7,021

 

Operating lease liabilities

 

(6,055)

 

 

 

Other long-term liabilities

 

1,191

 

 

4,438

 

Total adjustments

 

76,249

 

 

86,165

 

Net cash provided by operating activities

 

179,949

 

 

172,734

 

Cash flows from investing activities

 

 

 

 

Additions to software

 

(36,871)

 

 

(27,386)

 

Acquisitions, net of cash acquired

 

(5,585)

 

 

 

Property and equipment acquired

 

(23,002)

 

 

(13,933)

 

Proceeds from sales of property and equipment

 

111

 

 

19

 

Net cash used in investing activities

 

(65,347)

 

 

(41,300)

 

Cash flows from financing activities

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

545,000

 

Debt issuance costs

 

 

 

(4,418)

 

Net decrease in short-term borrowings

 

 

 

(12,000)

 

Repayments of borrowings for purchase of equipment and software

 

(886)

 

 

(720)

 

Dividends paid

 

(14,420)

 

 

(7,273)

 

Withholding taxes paid on share-based compensation

 

(8,849)

 

 

(2,159)

 

Repurchase of common stock

 

(31,822)

 

 

(10,000)

 

Repayment of long-term debt

 

(14,250)

 

 

(613,485)

 

Net cash used in financing activities

 

(70,227)

 

 

(105,055

 

Net increase in cash, cash equivalents and restricted cash

 

44,375

 

 

26,379

 

Cash, cash equivalents and restricted cash at beginning of the period

 

86,746

 

 

60,367

 

Cash, cash equivalents and restricted cash at end of the period

 

$

131,121

 

 

$

86,746

 

 

EVERTEC, Inc.

Schedule 4: Unaudited Segment Information

 

Quarter Ended December 31, 2019

(In thousands)

Payment
Services - 
Puerto Rico & Caribbean

 

Payment
Services - 
Latin America

 

Merchant
Acquiring, net

 

Business
Solutions

 

Corporate and Other (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

32,634

 

 

$

21,920

 

 

$

27,185

 

 

$

57,170

 

 

$

(11,723)

 

 

$

127,186

 

Operating costs and expenses

17,730

 

 

18,531

 

 

16,172

 

 

37,096

 

 

3,050

 

 

92,579

 

Depreciation and amortization

3,170

 

 

2,537

 

 

466

 

 

4,416

 

 

7,053

 

 

17,642

 

Non-operating income (expenses)

320

 

 

(125)

 

 

9

 

 

53

 

 

(597)

 

 

(340)

 

EBITDA

18,394

 

 

5,801

 

 

11,488

 

 

24,543

 

 

(8,317)

 

 

51,909

 

Compensation and benefits (2)

256

 

 

1,053

 

 

244

 

 

482

 

 

1,371

 

 

3,406

 

Transaction, refinancing and other fees (3)

 

 

208

 

 

 

 

 

 

(200)

 

 

8

 

Adjusted EBITDA

$

18,650

 

 

$

7,062

 

 

$

11,732

 

 

$

25,025

 

 

$

(7,146)

 

 

$

55,323

 

_____________________

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment eliminations predominantly reflect the $10.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software sale and developments of $1.7 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.

(2) Primarily represents share-based compensation.

(3) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

 

Quarter Ended December 31, 2018

(In thousands)

Payment
Services - 
Puerto Rico & Caribbean

 

Payment
Services - 
Latin America

 

Merchant
Acquiring, net

 

Business
Solutions

 

Corporate and Other (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

29,957

 

 

$

22,365

 

 

$

25,826

 

 

$

51,617

 

 

$

(11,534)

 

 

$

118,231

 

Operating costs and expenses

12,922

 

 

19,883

 

 

14,365

 

 

35,883

 

 

6,606

 

 

89,659

 

Depreciation and amortization

2,504

 

 

2,249

 

 

430

 

 

3,441

 

 

7,060

 

 

15,684

 

Non-operating income (expenses)

451

 

 

4,702

 

 

(5)

 

 

99

 

 

(4,443)

 

 

804

 

EBITDA

19,990

 

 

9,433

 

 

11,886

 

 

19,274

 

 

(15,523)

 

 

45,060

 

Compensation and benefits (2)

202

 

 

(46)

 

 

192

 

 

479

 

 

2,162

 

 

2,989

 

Transaction, refinancing and other fees (3)

 

 

 

 

 

 

(1)

 

 

4,575

 

 

4,574

 

Adjusted EBITDA

$

20,192

 

 

$

9,387

 

 

$

12,078

 

 

$

19,752

 

 

$

(8,786)

 

 

$

52,623

 

_____________________

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $9.2 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software sale and developments of $2.3 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(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, relief contributions related to the 2017 hurricanes and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

 

Year Ended December 31, 2019

(In thousands)

Payment
Services - 
Puerto Rico & Caribbean

 

Payment
Services - 
Latin America

 

Merchant
Acquiring, net

 

Business
Solutions

 

Corporate and Other (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

125,544

 

 

$

84,453

 

 

$

106,388

 

 

$

216,662

 

 

$

(45,673)

 

 

$

487,374

 

Operating costs and expenses

61,396

 

 

65,701

 

 

62,098

 

 

138,224

 

 

15,453

 

 

342,872

 

Depreciation and amortization

11,646

 

 

9,930

 

 

1,814

 

 

16,529

 

 

28,163

 

 

68,082

 

Non-operating income (expenses)

1,781

 

 

286

 

 

48

 

 

340

 

 

(2,688)

 

 

(233)

 

EBITDA

77,575

 

 

28,968

 

 

46,152

 

 

95,307

 

 

(35,651)

 

 

212,351

 

Compensation and benefits (2)

1,034

 

 

1,501

 

 

1,004

 

 

2,114

 

 

8,145

 

 

13,798

 

Transaction, refinancing, exit activity and other fees (3)

 

 

210

 

 

 

 

 

 

(163)

 

 

47

 

Adjusted EBITDA

$

78,609

 

 

$

30,679

 

 

$

47,156

 

 

$

97,421

 

 

$

(27,669)

 

 

$

226,196

 

____________________

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $39.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software sale and developments of $6.7 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2) Primarily represents share-based compensation and severance payments.
(3) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

 

Year Ended December 31, 2018

(In thousands)

Payment
Services - 
Puerto Rico & Caribbean

 

Payment
Services - 
Latin America

 

Merchant
Acquiring, net

 

Business
Solutions

 

Corporate and Other (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

114,119

 

 

$

80,899

 

 

$

99,655

 

 

$

197,602

 

 

$

(38,406)

 

 

$

453,869

 

Operating costs and expenses

52,006

 

 

75,240

 

 

55,778

 

 

126,232

 

 

19,485

 

 

328,741

 

Depreciation and amortization

9,734

 

 

9,284

 

 

1,698

 

 

13,878

 

 

28,473

 

 

63,067

 

Non-operating income (expenses)

2,420

 

 

11,750

 

 

3

 

 

477

 

 

(11,356)

 

 

3,294

 

EBITDA

74,267

 

 

26,693

 

 

45,578

 

 

85,725

 

 

(40,774)

 

 

191,489

 

Compensation and benefits (2)

1,087

 

 

1,034

 

 

938

 

 

2,088

 

 

8,512

 

 

13,659

 

Transaction, refinancing, and other fees (3)

(250)

 

 

 

 

 

 

 

 

7,561

 

 

7,311

 

Adjusted EBITDA

$

75,104

 

 

$

27,727

 

 

$

46,516

 

 

$

87,813

 

 

$

(24,701)

 

 

$

212,459

 

___________________

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $36.1 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software sale and developments of $2.3 million from Payment Services- Latin America to Payment Services- Puerto Rico & Caribbean and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2) Primarily represents share-based compensation, other compensation expense and severance payments.
(3) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, relief contributions related to the 2017 hurricanes and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

 

EVERTEC, Inc.

Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results

 

 

Quarter ended December 31,

 

Year ended December 31,

(Dollar amounts in thousands, except share data)

 

2019

 

2018

 

2019

 

2018

Net income

 

$

25,043

 

 

$

20,247

 

 

$

103,700

 

 

$

86,569

 

Income tax expense

 

2,957

 

 

2,247

 

 

12,975

 

 

12,596

 

Interest expense, net

 

6,267

 

 

6,882

 

 

27,594

 

 

29,257

 

Depreciation and amortization

 

17,642

 

 

15,684

 

 

68,082

 

 

63,067

 

EBITDA

 

51,909

 

 

45,060

 

 

212,351

 

 

191,489

 

Equity income(1)

 

(210)

 

 

(80)

 

 

(451)

 

 

(259)

 

Compensation and benefits (2)

 

3,406

 

 

2,989

 

 

13,798

 

 

13,659

 

Transaction, refinancing and other fees (3)

 

218

 

 

4,654

 

 

498

 

 

7,570

 

Adjusted EBITDA

 

55,323

 

 

52,623

 

 

226,196

 

 

212,459

 

Operating depreciation and amortization (4)

 

(9,364)

 

 

(7,299)

 

 

(34,880)

 

 

(29,208)

 

Cash interest expense, net (5)

 

(6,242)

 

 

(6,707)

 

 

(27,016)

 

 

(26,103)

 

Income tax expense (6)

 

(4,785)

 

 

(4,022)

 

 

(20,239)

 

 

(19,514)

 

Non-controlling interest (7)

 

(60)

 

 

(87)

 

 

(347)

 

 

(472)

 

Adjusted Net Income

 

$

34,872

 

 

$

34,508

 

 

$

143,714

 

 

$

137,162

 

Net income per common share (GAAP):

 

 

 

 

 

 

 

 

Diluted

 

$

0.34

 

 

$

0.27

 

 

$

1.41

 

 

$

1.16

 

Adjusted earnings per common share (Non-GAAP):

 

 

 

 

 

 

 

 

Diluted

 

$

0.48

 

 

$

0.46

 

 

$

1.96

 

 

$

1.84

 

Shares used in computing adjusted earnings per common share:

 

 

 

 

 

 

 

 

Diluted

 

73,305,009

 

 

74,690,226

 

 

73,475,763

 

 

74,420,110

 

____________________________________

1) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Dominican Republic, Consorcio de Tarjetas Dominicanas, S.A. (“CONTADO”), net of dividends received.
2) Primarily represents share-based compensation and severance payments.
3) Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded as part of selling, general and administrative expenses and cost of revenues.
4) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger and other from purchase accounting intangibles generated from acquisitions.
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 discreet 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

 

 

 

 

 

 

 

 

2019

 

 

2020 Outlook

 

Actual

(Dollar amounts in millions, except per share data)

 

 

 

 

 

 

 

 

Revenues

 

$

501

 

 

to

 

$

508

 

 

$

487

 

Earnings per Share (EPS) (GAAP)

 

$

1.45

 

 

to

 

$

1.51

 

 

$

1.41

 

Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS:

 

 

 

 

 

 

 

 

Share-based comp, non-cash equity earnings and other (1)

 

0.18

 

 

 

 

0.18

 

 

0.19

 

Merger and acquisition related depreciation and amortization (2)

 

0.46

 

 

 

 

0.46

 

 

0.45

 

Non-cash interest expense (3)

 

 

 

 

 

 

 

 

Tax effect of non-gaap adjustments (4)

 

(0.08)

 

 

 

 

(0.08)

 

 

(0.09)

 

Non-controlling interest (5)

 

(0.01)

 

 

 

 

(0.01)

)

 

 

Total adjustments

 

0.55

 

 

 

 

0.55

 

 

0.55

 

Adjusted EPS (Non-GAAP)

 

$

2.00

 

 

to

 

$

2.06

 

 

$

1.96

 

Shares used in computing adjusted earnings per common share

 

 

 

 

 

73.3

 

 

73.5

 

_________________________

(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%).
(5) Represents the 35% non-controlling equity interest in Evertec Colombia net of amortization for intangibles created as part of the purchase.