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EVERTEC Reports Second Quarter 2021 Results

Increases Annual Guidance

EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

  • Revenue increased 26% to $149.1 million
  • GAAP Net Income attributable to common shareholders was $49.2 million or $0.68 per diluted share
  • Adjusted EBITDA increased 60% to $80.3 million
  • Adjusted earnings per common share was $0.78, an increase of 105%
  • Share repurchases totaled $10.1 million

Six-Month Year-to-Date 2021 Highlights

  • Revenue increased 20% to $288.7 million
  • GAAP Net Income attributable to common shareholders was $84.7 million or $1.16 per diluted share
  • Adjusted EBITDA increased 40% to $149.2 million
  • Adjusted earnings per common share was $1.40, an increase of 67%
  • Share repurchases totaled $24.4 million

Mac Schuessler, President and Chief Executive Officer stated, “We delivered strong second quarter results as we continue to benefit from improving consumer demand in Puerto Rico and our recent new business implementations in Latin America. Looking to the second half of 2021, we are raising our full year guidance."

Second Quarter 2021 Results

Revenue. Total revenue for the quarter ended June 30, 2021 was $149.1 million, an increase of 26% compared with $117.9 million in the prior year quarter. The revenue increase in the second quarter was primarily driven by transactional revenue growth in Puerto Rico reflecting increased consumer demand, coupled with increased revenue from the Company's digital solutions, such as ATH Movil and ATH Movil Business. Latin America reflected double-digit growth driven mainly by recent new business implementations. Prior year revenue was negatively impacted by COVID-19 related stay-at-home orders across all the regions in which the Company operates.

Net Income attributable to common shareholders. For the quarter ended June 30, 2021, GAAP Net Income attributable to common shareholders was $49.2 million, or $0.68 per diluted share, an increase of $33.7 million or $0.47 per diluted share as compared to the prior year.

Adjusted EBITDA. For the quarter ended June 30, 2021, Adjusted EBITDA was $80.3 million, an increase of 60% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 53.8%, an increase of approximately 1,120 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.

Adjusted Net Income. For the quarter ended June 30, 2021, Adjusted Net Income was $57.1 million, an increase of 106% compared with $27.8 million in the prior year. Adjusted earnings per common share was $0.78, increase of 105% compared to $0.38 in the prior year.

Share Repurchase

During the three months ended June 30, 2021, the Company repurchased a total of 231 thousand shares of its common stock at an average price of $43.75 per share for a total of $10.1 million. Year-to-date the Company repurchased 614 thousand shares of its common stock at an average price of $39.70 for a total of $24.4 million. As of June 30, 2021, a total of approximately $76 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 $570 million and $579 million representing growth of 12% to 13%, compared with $543 million to $552 million previously estimated
  • Adjusted earnings per common share between $2.56 to $2.66 representing a growth range of 24% to 28% from $2.07 in 2020, compared with $2.25 to $2.32 previously estimated
  • Capital expenditures are now anticipated to be approximately $60 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 second 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 10158361. The replay will be available through Tuesday, August 10, 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 June 30,

 

Six months ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(Dollar amounts in thousands, except share data)

 

 

 

 

 

 

 

 

Revenues

 

$

149,148

 

 

 

$

117,937

 

 

 

$

288,676

 

 

 

$

239,879

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

 

 

Cost of revenues, exclusive of depreciation and amortization

 

59,381

 

 

 

56,979

 

 

 

119,185

 

 

 

111,046

 

 

Selling, general and administrative expenses

 

16,752

 

 

 

17,529

 

 

 

32,854

 

 

 

34,846

 

 

Depreciation and amortization

 

18,723

 

 

 

17,839

 

 

 

37,346

 

 

 

35,634

 

 

Total operating costs and expenses

 

94,856

 

 

 

92,347

 

 

 

189,385

 

 

 

181,526

 

 

Income from operations

 

54,292

 

 

 

25,590

 

 

 

99,291

 

 

 

58,353

 

 

Non-operating income (expenses)

 

 

 

 

 

 

 

 

Interest income

 

450

 

 

 

373

 

 

 

839

 

 

 

736

 

 

Interest expense

 

(5,658

)

 

 

(6,183

)

 

 

(11,564

)

 

 

(12,962

)

 

Earnings of equity method investment

 

394

 

 

 

193

 

 

 

896

 

 

 

531

 

 

Other income, net

 

2,245

 

 

 

172

 

 

 

2,573

 

 

 

280

 

 

Total non-operating expenses

 

(2,569

)

 

 

(5,445

)

 

 

(7,256

)

 

 

(11,415

)

 

Income before income taxes

 

51,723

 

 

 

20,145

 

 

 

92,035

 

 

 

46,938

 

 

Income tax expense

 

2,632

 

 

 

4,520

 

 

 

7,340

 

 

 

9,038

 

 

Net income

 

49,091

 

 

 

15,625

 

 

 

84,695

 

 

 

37,900

 

 

Less: Net (loss) income attributable to non-controlling interest

 

(106

)

 

 

141

 

 

 

(5

)

 

 

205

 

 

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

 

49,197

 

 

 

15,484

 

 

 

84,700

 

 

 

37,695

 

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

1,732

 

 

 

1,067

 

 

 

(881

)

 

 

(7,238

)

 

Unrealized gain on change in fair value of debt securities available-for-sale

 

89

 

 

 

 

 

 

89

 

 

 

 

 

Gain (loss) on cash flow hedges

 

1,088

 

 

 

(678

)

 

 

5,277

 

 

 

(12,537

)

 

Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders

 

$

52,106

 

 

 

$

15,873

 

 

 

$

89,185

 

 

 

$

17,920

 

 

Net income per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.68

 

 

 

$

0.22

 

 

 

$

1.17

 

 

 

$

0.52

 

 

Diluted

 

$

0.68

 

 

 

$

0.21

 

 

 

$

1.16

 

 

 

$

0.52

 

 

Shares used in computing net income per common share:

 

 

 

 

 

 

 

 

Basic

 

72,127,847

 

 

 

71,864,499

 

 

 

72,139,125

 

 

 

71,938,574

 

 

Diluted

 

72,831,366

 

 

 

72,774,365

 

 

 

72,716,950

 

 

 

73,019,219

 

 

EVERTEC, Inc.

Schedule 2: Unaudited Condensed Consolidated Balance Sheets

 

(In thousands)

 

June 30, 2021

 

December 31, 2020

Assets

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

199,891

 

 

 

$

202,649

 

 

Restricted cash

 

19,411

 

 

 

18,456

 

 

Accounts receivable, net

 

93,878

 

 

 

95,727

 

 

Prepaid expenses and other assets

 

42,360

 

 

 

42,214

 

 

Total current assets

 

355,540

 

 

 

359,046

 

 

Debt securities available-for-sale, at fair value

 

3,059

 

 

 

 

 

Investment in equity investee

 

13,398

 

 

 

12,835

 

 

Property and equipment, net

 

41,240

 

 

 

43,538

 

 

Operating lease right-of-use asset

 

24,326

 

 

 

27,538

 

 

Goodwill

 

396,603

 

 

 

397,670

 

 

Other intangible assets, net

 

224,685

 

 

 

219,909

 

 

Deferred tax asset

 

5,577

 

 

 

5,730

 

 

Net investment in leases

 

207

 

 

 

301

 

 

Other long-term assets

 

6,149

 

 

 

6,012

 

 

Total assets

 

$

1,070,784

 

 

 

$

1,072,579

 

 

Liabilities and stockholders’ equity

 

 

 

 

Current Liabilities:

 

 

 

 

Accrued liabilities

 

$

59,749

 

 

 

$

58,033

 

 

Accounts payable

 

27,818

 

 

 

43,348

 

 

Contract liability

 

23,769

 

 

 

24,958

 

 

Income tax payable

 

3,125

 

 

 

6,573

 

 

Current portion of long-term debt

 

16,999

 

 

 

14,250

 

 

Operating lease payable

 

5,445

 

 

 

5,830

 

 

Total current liabilities

 

136,905

 

 

 

152,992

 

 

Long-term debt

 

454,085

 

 

 

481,041

 

 

Deferred tax liability

 

2,018

 

 

 

2,748

 

 

Contract liability - long term

 

30,693

 

 

 

31,336

 

 

Operating lease liability - long-term

 

19,581

 

 

 

22,402

 

 

Derivative liability

 

19,768

 

 

 

25,578

 

 

Other long-term liabilities

 

9,690

 

 

 

14,053

 

 

Total liabilities

 

672,740

 

 

 

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; 71,969,856 shares issued and outstanding as of June 30, 2021 (December 31, 2020 - 72,137,678)

 

719

 

 

 

721

 

 

Additional paid-in capital

 

 

 

 

5,340

 

 

Accumulated earnings

 

436,817

 

 

 

379,934

 

 

Accumulated other comprehensive loss, net of tax

 

(43,769

)

 

 

(48,254

)

 

Total EVERTEC, Inc. stockholders’ equity

 

393,767

 

 

 

337,741

 

 

Non-controlling interest

 

4,277

 

 

 

4,688

 

 

Total equity

 

398,044

 

 

 

342,429

 

 

Total liabilities and equity

 

$

1,070,784

 

 

 

$

1,072,579

 

 

EVERTEC, Inc.

Schedule 3: Unaudited Condensed Consolidated Statements of Cash Flows

 

 

 

Six months ended June 30,

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

84,695

 

 

 

$

37,900

 

 

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

 

 

 

 

Depreciation and amortization

 

37,346

 

 

 

35,634

 

 

Amortization of debt issue costs and accretion of discount

 

991

 

 

 

1,074

 

 

Operating lease amortization

 

2,938

 

 

 

2,890

 

 

Provision for expected credit losses and sundry losses

 

85

 

 

 

922

 

 

Deferred tax benefit

 

(947

)

 

 

(1,214

)

 

Share-based compensation

 

7,235

 

 

 

7,122

 

 

Gain from sale of assets

 

(778

)

 

 

 

 

Loss on disposition of property and equipment and impairment of intangible

 

1,106

 

 

 

193

 

 

Earnings of equity method investment

 

(896

)

 

 

(531

)

 

Dividend received from equity method investment

 

1,183

 

 

 

 

 

Decrease (increase) in assets:

 

 

 

 

Accounts receivable, net

 

(48

)

 

 

14,387

 

 

Prepaid expenses and other assets

 

1,407

 

 

 

(4,102

)

 

Other long-term assets

 

(14

)

 

 

1,141

 

 

(Decrease) increase in liabilities:

 

 

 

 

Accrued liabilities and accounts payable

 

(10,899

)

 

 

(13,653

)

 

Income tax payable

 

(3,398

)

 

 

4,988

 

 

Contract liability

 

(1,664

)

 

 

2,817

 

 

Operating lease liabilities

 

(3,438

)

 

 

(3,281

)

 

Other long-term liabilities

 

(2,875

)

 

 

965

 

 

Total adjustments

 

27,334

 

 

 

49,352

 

 

Net cash provided by operating activities

 

112,029

 

 

 

87,252

 

 

Cash flows from investing activities

 

 

 

 

Additions to software

 

(21,317

)

 

 

(11,833

)

 

Acquisition of customer relationship

 

(14,750

)

 

 

 

 

Property and equipment acquired

 

(8,803

)

 

 

(6,614

)

 

Proceeds from sales of property and equipment

 

802

 

 

 

 

 

Acquisition of available-for-sale debt securities

 

(2,968

)

 

 

 

 

Net cash used in investing activities

 

(47,036

)

 

 

(18,447

)

 

Cash flows from financing activities

 

 

 

 

Statutory withholding taxes paid on share-based compensation

 

(8,793

)

 

 

(2,777

)

 

Net borrowings under Revolving Facility

 

 

 

 

15,000

 

 

Repayment of short-term borrowings for purchase of equipment and software

 

(1,556

)

 

 

(1,553

)

 

Dividends paid

 

(7,213

)

 

 

(7,193

)

 

Repurchase of common stock

 

(24,388

)

 

 

(7,300

)

 

Repayment of long-term debt

 

(24,919

)

 

 

(24,123

)

 

Net cash used in financing activities

 

(66,869

)

 

 

(27,946

)

 

Effect of foreign exchange rate on cash, cash equivalents and restricted cash

 

73

 

 

 

(2,890

)

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(1,803

)

 

 

37,969

 

 

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

 

$

219,302

 

 

 

$

169,090

 

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

Cash and cash equivalents

 

$

199,891

 

 

 

$

146,920

 

 

Restricted cash

 

19,411

 

 

 

22,170

 

 

Cash, cash equivalents and restricted cash

 

$

219,302

 

 

 

$

169,090

 

 

EVERTEC, Inc.

Schedule 4: Unaudited Segment Information

 

 

Three months ended June 30, 2021

(In thousands)

Payment

Services -

Puerto Rico &

Caribbean

 

Payment

Services -

Latin America

 

Merchant

Acquiring, net

 

Business

Solutions

 

Corporate and

Other
(1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

38,589

 

 

$

25,835

 

 

$

38,335

 

 

$

60,693

 

 

$

(14,304)

 

 

$

149,148

 

Operating costs and expenses

19,361

 

 

20,965

 

 

19,374

 

 

36,175

 

 

(1,019)

 

 

94,856

 

Depreciation and amortization

3,882

 

 

2,952

 

 

967

 

 

4,600

 

 

6,322

 

 

18,723

 

Non-operating income (expenses)

230

 

 

2,396

 

 

323

 

 

1,390

 

 

(1,700)

 

 

2,639

 

EBITDA

23,340

 

 

10,218

 

 

20,251

 

 

30,508

 

 

(8,663)

 

 

75,654

 

Compensation and benefits (2)

280

 

 

757

 

 

295

 

 

760

 

 

2,191

 

 

4,283

 

Transaction, refinancing and other fees (3)

 

 

 

 

 

 

(647)

 

 

971

 

 

324

 

Adjusted EBITDA

$

23,620

 

 

$

10,975

 

 

$

20,546

 

 

$

30,621

 

 

$

(5,501)

 

 

$

80,261

 

________________________

(1)  

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $10.7 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $1.9 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $1.7 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)

 

Primarily represents share-based compensation and severance payments.

(3)

 

Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A, net of dividends received, a software impairment charge and a gain from sale of assets.

 

Three months ended June 30, 2020

(In thousands)

Payment

Services -

Puerto Rico &

Caribbean

 

Payment

Services -

Latin America

 

Merchant

Acquiring, net

 

Business

Solutions

 

Corporate and

Other
(1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

27,461

 

 

$

19,797

 

 

$

24,764

 

 

$

55,495

 

 

$

(9,580)

 

 

$

117,937

 

Operating costs and expenses

17,453

 

 

17,947

 

 

12,230

 

 

37,008

 

 

7,709

 

 

92,347

 

Depreciation and amortization

3,193

 

 

2,815

 

 

455

 

 

4,381

 

 

6,995

 

 

17,839

 

Non-operating income (expenses)

(178)

 

 

584

 

 

158

 

 

684

 

 

(883)

 

 

365

 

EBITDA

13,023

 

 

5,249

 

 

13,147

 

 

23,552

 

 

(11,177)

 

 

43,794

 

Compensation and benefits (2)

253

 

 

835

 

 

235

 

 

472

 

 

1,956

 

 

3,751

 

Transaction, refinancing and other fees (3)

 

 

 

 

 

 

 

 

2,656

 

 

2,656

 

Adjusted EBITDA

$

13,276

 

 

$

6,084

 

 

$

13,382

 

 

$

24,024

 

 

$

(6,565)

 

 

$

50,201

 

________________________

(1)  

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $7.3 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $2.3 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean.

(2)  

Primarily represents share-based compensation and severance payments.

(3)  

Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

 

Six months ended June 30, 2021

(In thousands)

Payment

Services -

Puerto Rico &

Caribbean

 

Payment

Services -

Latin America

 

Merchant

Acquiring, net

 

Business

Solutions

 

Corporate and

Other
(1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

74,853

 

 

$

50,849

 

 

$

69,202

 

 

$

121,304

 

 

$

(27,532)

 

 

$

288,676

 

Operating costs and expenses

39,850

 

 

40,811

 

 

35,840

 

 

72,864

 

 

20

 

 

189,385

 

Depreciation and amortization

7,824

 

 

5,886

 

 

1,621

 

 

9,394

 

 

12,621

 

 

37,346

 

Non-operating income (expenses)

415

 

 

3,504

 

 

554

 

 

1,943

 

 

(2,947)

 

 

3,469

 

EBITDA

43,242

 

 

19,428

 

 

35,537

 

 

59,777

 

 

(17,878)

 

 

140,106

 

Compensation and benefits (2)

521

 

 

1,566

 

 

526

 

 

1,123

 

 

4,051

 

 

7,787

 

Transaction, refinancing and other fees (3)

660

 

 

 

 

 

 

(647)

 

 

1,244

 

 

1,257

 

Adjusted EBITDA

$

44,423

 

 

$

20,994

 

 

$

36,063

 

 

$

60,253

 

 

$

(12,583)

 

 

$

149,150

 

________________________

(1)   

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $20.4 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $4.2 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2) 

 

Primarily represents share-based compensation and severance payments.

(3) 

 

Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of dividends received, a software impairment charge and a gain from sale of assets.

 

Six months ended June 30, 2020

(In thousands)

Payment

Services -

Puerto Rico &

Caribbean

 

Payment

Services -

Latin America

 

Merchant

Acquiring, net

 

Business

Solutions

 

Corporate and

Other
(1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

57,348

 

 

 

$

41,437

 

 

$

49,885

 

 

$

111,438

 

 

$

(20,229

)

 

 

$

239,879

 

Operating costs and expenses

34,859

 

 

 

35,598

 

 

26,936

 

 

70,625

 

 

13,508

 

 

 

181,526

 

Depreciation and amortization

6,442

 

 

 

5,572

 

 

954

 

 

8,677

 

 

13,989

 

 

 

35,634

 

Non-operating income (expenses)

(65

)

 

 

1,338

 

 

312

 

 

1,071

 

 

(1,845

)

 

 

811

 

EBITDA

28,866

 

 

 

12,749

 

 

24,215

 

 

50,561

 

 

(21,593

)

 

 

94,798

 

Compensation and benefits (2)

484

 

 

 

1,577

 

 

451

 

 

908

 

 

3,831

 

 

 

7,251

 

Transaction, refinancing and other fees (3)

 

 

 

 

 

 

 

 

 

4,442

 

 

 

4,442

 

Adjusted EBITDA

$

29,350

 

 

 

$

14,326

 

 

$

24,666

 

 

$

51,469

 

 

$

(13,320

)

 

 

$

106,491

 

________________________

(1)   

Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $16.3 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $3.9 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean.

(2) 

 

Primarily represents share-based compensation and severance payments.

(3) 

 

Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

EVERTEC, Inc.

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

 

 

 

Three months ended June 30,

 

Six months ended June 30,

(Dollar amounts in thousands, except share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

49,091

 

 

 

$

15,625

 

 

 

$

84,695

 

 

 

$

37,900

 

 

Income tax expense

 

2,632

 

 

 

4,520

 

 

 

7,340

 

 

 

9,038

 

 

Interest expense, net

 

5,208

 

 

 

5,810

 

 

 

10,725

 

 

 

12,226

 

 

Depreciation and amortization

 

18,723

 

 

 

17,839

 

 

 

37,346

 

 

 

35,634

 

 

EBITDA

 

75,654

 

 

 

43,794

 

 

 

140,106

 

 

 

94,798

 

 

Equity income (1)

 

923

 

 

 

(193

)

 

 

421

 

 

 

(531

)

 

Compensation and benefits (2)

 

4,283

 

 

 

3,751

 

 

 

7,787

 

 

 

7,251

 

 

Transaction, refinancing and other fees (3)

 

(599

)

 

 

2,849

 

 

 

836

 

 

 

4,973

 

 

Adjusted EBITDA

 

80,261

 

 

 

50,201

 

 

 

149,150

 

 

 

106,491

 

 

Operating depreciation and amortization (4)

 

(10,724

)

 

 

(9,578

)

 

 

(21,606

)

 

 

(19,055

)

 

Cash interest expense, net (5)

 

(4,944

)

 

 

(5,606

)

 

 

(10,020

)

 

 

(11,616

)

 

Income tax expense (6)

 

(7,535

)

 

 

(7,079

)

 

 

(15,291

)

 

 

(14,257

)

 

Non-controlling interest (7)

 

71

 

 

 

(165

)

 

 

(72

)

 

 

(257

)

 

Adjusted net income

 

$

57,129

 

 

 

$

27,773

 

 

 

$

102,161

 

 

 

$

61,306

 

 

Net income per common share (GAAP):

 

 

 

 

 

 

 

 

Diluted

 

$

0.68

 

 

 

$

0.21

 

 

 

$

1.16

 

 

 

$

0.52

 

 

Adjusted Earnings per common share (Non-GAAP):

 

 

 

 

 

 

 

 

Diluted

 

$

0.78

 

 

 

$

0.38

 

 

 

$

1.40

 

 

 

$

0.84

 

 

Shares used in computing adjusted earnings per common share:

 

 

 

 

 

 

 

 

Diluted

 

72,831,366

 

 

 

72,774,365

 

 

 

72,716,950

 

 

 

73,019,219

 

 

________________________

(1)  

Represents the elimination of dividends received net 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 and severance payments.

(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, a software impairment charge and a gain from sale of assets.  

(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

 

$

570

 

 

 

to

 

$

579

 

 

 

$

511

 

 

Earnings per Share (EPS) (GAAP)

 

$

2.01

 

 

 

to

 

$

2.11

 

 

 

$

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)

 

$

2.56

 

 

 

to

 

$

2.66

 

 

 

$

2.07

 

 

Shares used in computing adjusted earnings per common share

 

 

 

 

 

72.5

 

 

 

73.1

 

 

________________________

(1)

 

Represents share-based compensation, the elimination of non-cash equity earnings from the Company's 19.99% equity investment in CONTADO, net of dividends received, 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.

 

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