EVERTEC Reports Third Quarter 2018 Results
Increases Annual Guidance
EVERTEC, Inc. (NYSE:EVTC) (“Evertec” or the “Company”) today announced results for the third quarter ended September 30,
2018.
Third Quarter 2018 and Recent Highlights
- Revenue grew 9% to $112.0 million
- GAAP Net Income attributable to common shareholders was $23.0 million or $0.31 per diluted share
- Adjusted EBITDA increased 25% to $52.1 million
- Adjusted earnings per common share was $0.45, an increase of 36%
Nine-Month Year-to-Date 2018 Highlights
- Revenue grew 9% to $335.6 million
- GAAP Net Income attributable to common shareholders was $66.1 million or $0.89 per diluted share
- Adjusted EBITDA increased 13% to $159.8 million
- Adjusted earnings per common share was $1.38, an increase of 13%
Mac Schuessler, President and Chief Executive Officer stated, “Following the one-year anniversary of hurricanes Irma and Maria,
our third quarter financial results exceeded our expectations and reflect the strong performance of our Puerto Rico business, as
well as solid execution and innovation efforts. Based on our third quarter results, and an anticipated robust fourth quarter, we
are increasing our annual guidance for 2018."
Third Quarter 2018 Results
Revenue. Total revenue for the quarter ended September 30, 2018 was $112.0 million an increase of 9% compared with
$102.7 million in the prior year. Revenue increase in the quarter primarily reflected growth over last year's hurricane impacted
results as well as the elevated sales volumes in Puerto Rico driven by post-hurricane recovery activity, federal relief and benefit
programs.
Net Income attributable to common shareholders. For the quarter ended September 30, 2018, GAAP Net Income
attributable to common shareholders was $23.0 million, or $0.31 per diluted share, an increase of $16.9 million or $0.23 per
diluted share as compared to the prior year.
Adjusted EBITDA. For the quarter ended September 30, 2018, Adjusted EBITDA was $52.1 million, an increase of 25%
compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) increased 590 basis points
to 46.5% compared with 40.6% in the prior year. The increase in Adjusted EBITDA margin was primarily driven by growth over the
hurricane impact in the third quarter of 2017 as well as favorable foreign currency impact of approximately 100 basis points in the
quarter.
Adjusted Net Income. For the quarter ended September 30, 2018, Adjusted Net Income was $33.6 million, an increase of
38% compared with $24.3 million in the prior year. Adjusted earnings per common share was $0.45, an increase of 36% as compared to
$0.33 in the prior year.
2018 Outlook
The Company is increasing its financial outlook for 2018 as follows:
- Total consolidated revenue between $448 million and $452 million representing growth of 10% to
11%
- Adjusted earnings per common share of $1.79 to $1.83 representing growth of 22% to 24% as compared to
$1.47 in 2017
- Capital expenditures ranging between $37 million and $42 million
- Non-GAAP effective tax rate of approximately 13%.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its third quarter 2018 financial results today at 4:30 p.m. ET. Hosting the
call will be Mac Schuessler, President and Chief Executive Officer, and Joaquin Castrillo, Interim 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 10110465. The replay will be available through Tuesday, November 6,
2018. 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 more than 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 our 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. Our 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.
We use Adjusted Net Income to measure our overall profitability because we believe it better reflects our 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 we may incur
expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an
inference that our 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: our reliance on our relationship with Popular for a significant portion of our revenues
pursuant to our master services agreement with them, and our reliance on Banco Popular, to grow our merchant acquiring business; as
a regulated institution, we most likely will be required to obtain regulatory approval before engaging in certain new activities or
businesses, whether organically or by acquisition, and may be unable to obtain such approval on a timely basis or at all, which may
make transactions more expensive or impossible to complete, or make us less attractive to potential sellers; our ability to renew
our client contracts on terms favorable to us, including our contract with Popular; our dependence on our processing systems,
technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third
parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised; our ability to
develop, install and adopt new software, technology and computing systems; a decreased client base due to consolidations and
failures in the financial services industry; the credit risk of our merchant clients, for which we may also be liable; the
continuing market position of the ATH network; a reduction in consumer confidence, whether as a result of a global economic
downturn or otherwise, which leads to a decrease in consumer spending; our dependence on credit card associations, including any
adverse changes in credit card association or network rules or fees; changes in the regulatory environment and changes in
international, legal, tax, political, administrative or economic conditions; the geographical concentration of our business in
Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities, which are facing severe 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; the
risks in connection with operating an international business in Latin America and the Caribbean, in jurisdictions with potential
political and economic instability; our ability to execute our geographic expansion and acquisition strategies, including
challenges in successfully acquiring new businesses and integrating and growing acquired businesses; our ability to protect our
intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third parties;
our ability to recruit and retain the qualified personnel necessary to operate our business; our ability to comply with U.S.
federal, state, local and foreign regulatory requirements; evolving industry standards and adverse changes in global economic,
political and other conditions; our high level of indebtedness and restrictions contained in our debt agreements, including the
senior secured credit facilities, as well as debt that could be incurred in the future; our ability to prevent a cybersecurity
attack or breach in our information security; our ability to generate sufficient cash to service our indebtedness and to generate
future profits; our ability to refinance our debt; the possibility that we could lose our preferential tax rate in Puerto Rico; the
risk that the counterparty to our interest rate swap agreement fails to satisfy its obligations under the agreement; uncertainty of
the pending debt restructuring process under Title III of the Puerto Rico Oversight, Management and Economic Stability Act
(“PROMESA”), as well as actions taken by the Puerto Rico government or by the PROMESA Board to address the Puerto Rico fiscal
crisis; uncertainty related to Hurricanes Irma and Maria and their aftermaths’ impact on the economies of Puerto Rico and the
Caribbean; the possibility of future catastrophic hurricanes affecting Puerto Rico and/or the Caribbean, as well as other potential
natural disasters; and the nature, timing and amount of any restatement.
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. We undertake no obligation
to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated
events unless we are required to do so by law.
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 1: Unaudited Consolidated Condensed Statements of Income and Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
| (Dollar amounts in thousands, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
112,017 |
|
|
|
$ |
102,725 |
|
|
|
$ |
335,638 |
|
|
|
$ |
307,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenues, exclusive of depreciation and amortization shown below |
|
|
49,464 |
|
|
|
62,699 |
|
|
|
146,015 |
|
|
|
149,902 |
|
| Selling, general and administrative expenses |
|
|
14,404 |
|
|
|
14,612 |
|
|
|
45,684 |
|
|
|
40,031 |
|
| Depreciation and amortization |
|
|
15,788 |
|
|
|
16,606 |
|
|
|
47,383 |
|
|
|
48,189 |
|
| Total operating costs and expenses |
|
|
79,656 |
|
|
|
93,917 |
|
|
|
239,082 |
|
|
|
238,122 |
|
| Income from operations |
|
|
32,361 |
|
|
|
8,808 |
|
|
|
96,556 |
|
|
|
69,394 |
|
| Non-operating income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
205 |
|
|
|
159 |
|
|
|
526 |
|
|
|
560 |
|
| Interest expense |
|
|
(7,557 |
) |
|
|
(8,012 |
) |
|
|
(22,901 |
) |
|
|
(22,454 |
) |
| Earnings of equity method investment |
|
|
238 |
|
|
|
155 |
|
|
|
612 |
|
|
|
413 |
|
| Other income, net |
|
|
1,130 |
|
|
|
192 |
|
|
|
1,878 |
|
|
|
2,829 |
|
| Total non-operating expenses |
|
|
(5,984 |
) |
|
|
(7,506 |
) |
|
|
(19,885 |
) |
|
|
(18,652 |
) |
| Income before income taxes |
|
|
26,377 |
|
|
|
1,302 |
|
|
|
76,671 |
|
|
|
50,742 |
|
| Income tax expense (benefit) |
|
|
3,302 |
|
|
|
(4,840 |
) |
|
|
10,349 |
|
|
|
1,248 |
|
| Net income |
|
|
23,075 |
|
|
|
6,142 |
|
|
|
66,322 |
|
|
|
49,494 |
|
| Less: Net income attributable to non-controlling interest |
|
|
78 |
|
|
|
40 |
|
|
|
251 |
|
|
|
274 |
|
| Net income attributable to EVERTEC, Inc.’s common stockholders |
|
|
22,997 |
|
|
|
6,102 |
|
|
|
66,071 |
|
|
|
49,220 |
|
| Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign currency translation adjustments |
|
|
(4,325 |
) |
|
|
2,083 |
|
|
|
(6,225 |
) |
|
|
(518 |
) |
| Gain on cash flow hedge |
|
|
219 |
|
|
|
381 |
|
|
|
2,109 |
|
|
|
757 |
|
| Total comprehensive income attributable to EVERTEC, Inc.’s common
stockholders |
|
|
$ |
18,891 |
|
|
|
$ |
8,566 |
|
|
|
$ |
61,955 |
|
|
|
$ |
49,459 |
|
| Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
$ |
0.32 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.91 |
|
|
|
$ |
0.68 |
|
| Diluted |
|
|
$ |
0.31 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.89 |
|
|
|
$ |
0.67 |
|
| Shares used in computing net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
72,721,414 |
|
|
|
72,386,947 |
|
|
|
72,590,679 |
|
|
|
72,509,742 |
|
| Diluted |
|
|
74,657,100 |
|
|
|
73,093,718 |
|
|
|
74,123,431 |
|
|
|
73,090,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 2: Unaudited Consolidated Condensed Balance Sheets
|
|
|
|
|
|
|
|
| (Dollar amounts in thousands) |
|
|
September 30, 2018 |
|
|
December 31, 2017 |
| Assets |
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
91,310 |
|
|
|
$ |
50,423 |
|
| Restricted cash |
|
|
12,686 |
|
|
|
9,944 |
|
| Accounts receivable, net |
|
|
82,865 |
|
|
|
83,328 |
|
| Prepaid expenses and other assets |
|
|
29,671 |
|
|
|
25,011 |
|
| Total current assets |
|
|
216,532 |
|
|
|
168,706 |
|
| Investment in equity investee |
|
|
12,039 |
|
|
|
13,073 |
|
| Property and equipment, net |
|
|
36,655 |
|
|
|
37,924 |
|
| Goodwill |
|
|
396,035 |
|
|
|
398,575 |
|
| Other intangible assets, net |
|
|
260,744 |
|
|
|
279,961 |
|
| Deferred tax asset |
|
|
1,093 |
|
|
|
988 |
|
| Other long-term assets |
|
|
5,500 |
|
|
|
3,561 |
|
| Total assets |
|
|
$ |
928,598 |
|
|
|
$ |
902,788 |
|
| Liabilities and stockholders’ equity |
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
| Accrued liabilities |
|
|
$ |
45,174 |
|
|
|
$ |
38,451 |
|
| Accounts payable |
|
|
37,397 |
|
|
|
41,135 |
|
| Unearned income |
|
|
14,017 |
|
|
|
7,737 |
|
| Income tax payable |
|
|
5,684 |
|
|
|
1,406 |
|
| Current portion of long-term debt |
|
|
23,191 |
|
|
|
46,487 |
|
| Short-term borrowings |
|
|
— |
|
|
|
12,000 |
|
| Total current liabilities |
|
|
125,463 |
|
|
|
147,216 |
|
| Long-term debt |
|
|
541,949 |
|
|
|
557,251 |
|
| Deferred tax liability |
|
|
11,509 |
|
|
|
13,820 |
|
| Unearned income - long term |
|
|
24,217 |
|
|
|
23,486 |
|
| Other long-term liabilities |
|
|
10,508 |
|
|
|
13,039 |
|
| Total liabilities |
|
|
713,646 |
|
|
|
754,812 |
|
| 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; 72,740,277 shares
issued and outstanding at September 30, 2018 (December 31, 2017 - 72,393,933) |
|
|
727 |
|
|
|
723 |
|
| Additional paid-in capital |
|
|
12,910 |
|
|
|
5,350 |
|
| Accumulated earnings |
|
|
212,180 |
|
|
|
148,887 |
|
| Accumulated other comprehensive loss, net of tax |
|
|
(14,964 |
) |
|
|
(10,848 |
) |
| Total EVERTEC, Inc. stockholders’ equity |
|
|
210,853 |
|
|
|
144,112 |
|
| Non-controlling interest |
|
|
4,099 |
|
|
|
3,864 |
|
| Total equity |
|
|
214,952 |
|
|
|
147,976 |
|
| Total liabilities and equity |
|
|
$ |
928,598 |
|
|
|
$ |
902,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 3: Unaudited Consolidated Condensed Statements of Cash Flows
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
|
2018 |
|
|
2017 |
| Cash flows from operating activities |
|
|
|
|
|
|
| Net income |
|
|
$ |
66,322 |
|
|
|
$ |
49,494 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
| Depreciation and amortization |
|
|
47,383 |
|
|
|
48,189 |
|
| Amortization of debt issue costs and accretion of discount |
|
|
3,410 |
|
|
|
3,828 |
|
| Provision for doubtful accounts and sundry losses |
|
|
1,065 |
|
|
|
452 |
|
| Deferred tax benefit |
|
|
(2,734 |
) |
|
|
(6,338 |
) |
| Share-based compensation |
|
|
9,692 |
|
|
|
6,579 |
|
| Loss on impairment of software |
|
|
— |
|
|
|
6,473 |
|
| Loss on disposition of property and equipment and other intangibles |
|
|
12 |
|
|
|
229 |
|
| Earnings of equity method investment |
|
|
(612 |
) |
|
|
(413 |
) |
| Dividend received from equity method investment |
|
|
390 |
|
|
|
— |
|
| (Increase) decrease in assets: |
|
|
|
|
|
|
| Accounts receivable, net |
|
|
(64 |
) |
|
|
5,446 |
|
| Prepaid expenses and other assets |
|
|
(4,462 |
) |
|
|
(3,813 |
) |
| Other long-term assets |
|
|
(280 |
) |
|
|
1,447 |
|
| (Decrease) increase in liabilities: |
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
|
|
(3,674 |
) |
|
|
(9,127 |
) |
| Income tax payable |
|
|
4,278 |
|
|
|
2,990 |
|
| Unearned income |
|
|
7,655 |
|
|
|
4,570 |
|
| Other long-term liabilities |
|
|
62 |
|
|
|
(1,571 |
) |
| Total adjustments |
|
|
62,121 |
|
|
|
58,941 |
|
| Net cash provided by operating activities |
|
|
128,443 |
|
|
|
108,435 |
|
| Cash flows from investing activities |
|
|
|
|
|
|
| Additions to software |
|
|
(15,385 |
) |
|
|
(15,955 |
) |
| Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(42,836 |
) |
| Property and equipment acquired |
|
|
(9,620 |
) |
|
|
(8,285 |
) |
| Proceeds from sales of property and equipment |
|
|
15 |
|
|
|
30 |
|
| Net cash used in investing activities |
|
|
(24,990 |
) |
|
|
(67,046 |
) |
| Cash flows from financing activities |
|
|
|
|
|
|
| Statutory withholding taxes paid on share-based compensation |
|
|
(2,128 |
) |
|
|
(1,576 |
) |
| Net (decrease) increase in short-term borrowings |
|
|
(12,000 |
) |
|
|
5,000 |
|
| Repayment of short-term borrowing for purchase of equipment and software |
|
|
(686 |
) |
|
|
(1,872 |
) |
| Dividends paid |
|
|
(3,636 |
) |
|
|
(21,762 |
) |
| Repurchase of common stock |
|
|
— |
|
|
|
(7,671 |
) |
| Repayment of long-term debt |
|
|
(41,374 |
) |
|
|
(14,748 |
) |
| Net cash used in financing activities |
|
|
(59,824 |
) |
|
|
(42,629 |
) |
| Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
43,629 |
|
|
|
(1,240 |
) |
| Cash, cash equivalents and restricted cash at beginning of the period |
|
|
60,367 |
|
|
|
60,032 |
|
| Cash, cash equivalents and restricted cash at end of the period |
|
|
$ |
103,996 |
|
|
|
$ |
58,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 4: Unaudited Segment Information
|
|
|
|
|
|
|
|
Three months ended September 30, 2018 |
| (In thousands) |
|
|
Payment
Services -
Puerto Rico & Caribbean |
|
|
Payment
Services -
Latin America |
|
|
Merchant
Acquiring, net |
|
|
Business
Solutions |
|
|
Corporate and
Other (1)
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
28,951 |
|
|
|
$ |
18,907 |
|
|
|
$ |
24,486 |
|
|
|
$ |
48,831 |
|
|
|
$ |
(9,158 |
) |
|
|
$ |
112,017 |
| Operating costs and expenses |
|
|
13,021 |
|
|
|
18,890 |
|
|
|
14,160 |
|
|
|
30,983 |
|
|
|
2,602 |
|
|
|
79,656 |
| Depreciation and amortization |
|
|
2,505 |
|
|
|
2,337 |
|
|
|
427 |
|
|
|
3,398 |
|
|
|
7,121 |
|
|
|
15,788 |
| Non-operating income (expenses) |
|
|
602 |
|
|
|
3,834 |
|
|
|
— |
|
|
|
12 |
|
|
|
(3,080 |
) |
|
|
1,368 |
| EBITDA |
|
|
19,037 |
|
|
|
6,188 |
|
|
|
10,753 |
|
|
|
21,258 |
|
|
|
(7,719 |
) |
|
|
49,517 |
| Compensation and benefits (2) |
|
|
207 |
|
|
|
363 |
|
|
|
196 |
|
|
|
485 |
|
|
|
1,117 |
|
|
|
2,368 |
| Transaction, refinancing and other fees (3) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
215 |
|
|
|
215 |
| Adjusted EBITDA |
|
|
$ |
19,244 |
|
|
|
$ |
6,551 |
|
|
|
$ |
10,948 |
|
|
|
$ |
21,744 |
|
|
|
$ |
(6,387 |
) |
|
|
$ |
52,100 |
|
___________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 and Caribbean to Merchant Acquiring 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 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.
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2017 |
| (In thousands) |
|
|
Payment
Services -
Puerto Rico & Caribbean |
|
|
Payment
Services -
Latin America |
|
|
Merchant
Acquiring, net |
|
|
Business
Solutions |
|
|
Corporate and
Other (1)
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
25,225 |
|
|
|
$ |
17,432 |
|
|
|
$ |
21,555 |
|
|
|
$ |
46,275 |
|
|
|
$ |
(7,762 |
) |
|
|
$ |
102,725 |
| Operating costs and expenses |
|
|
16,219 |
|
|
|
21,396 |
|
|
|
19,444 |
|
|
|
31,620 |
|
|
|
5,238 |
|
|
|
93,917 |
| Depreciation and amortization |
|
|
2,259 |
|
|
|
2,608 |
|
|
|
618 |
|
|
|
4,024 |
|
|
|
7,097 |
|
|
|
16,606 |
| Non-operating income (expenses) |
|
|
567 |
|
|
|
1,732 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,952 |
) |
|
|
347 |
| EBITDA |
|
|
11,832 |
|
|
|
376 |
|
|
|
2,729 |
|
|
|
18,679 |
|
|
|
(7,855 |
) |
|
|
25,761 |
| Compensation and benefits (2) |
|
|
205 |
|
|
|
139 |
|
|
|
216 |
|
|
|
781 |
|
|
|
1,007 |
|
|
|
2,348 |
| Transaction, refinancing and other fees (3) |
|
|
3,160 |
|
|
|
3,221 |
|
|
|
6,464 |
|
|
|
— |
|
|
|
757 |
|
|
|
13,602 |
| Adjusted EBITDA |
|
|
$ |
15,197 |
|
|
|
$ |
3,736 |
|
|
|
$ |
9,409 |
|
|
|
$ |
19,460 |
|
|
|
$ |
(6,091 |
) |
|
|
$ |
41,711 |
|
__________________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Corporate and Other consists of corporate overhead, certain leveraged activities, other
non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $7.8 million
processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring 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, 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 and an impairment charge and contractual fee accrual for a third party
software solution that was determined to be commercially unviable.
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2018 |
| (In thousands) |
|
|
Payment
Services -
Puerto Rico & Caribbean |
|
|
Payment
Services -
Latin America |
|
|
Merchant
Acquiring, net |
|
|
Business
Solutions |
|
|
Corporate and
Other (1)
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
84,162 |
|
|
|
$ |
58,534 |
|
|
|
$ |
73,829 |
|
|
|
$ |
145,985 |
|
|
|
$ |
(26,872 |
) |
|
|
$ |
335,638 |
| Operating costs and expenses |
|
|
39,084 |
|
|
|
55,357 |
|
|
|
41,413 |
|
|
|
90,349 |
|
|
|
12,879 |
|
|
|
239,082 |
| Depreciation and amortization |
|
|
7,230 |
|
|
|
7,035 |
|
|
|
1,268 |
|
|
|
10,437 |
|
|
|
21,413 |
|
|
|
47,383 |
| Non-operating income (expenses) |
|
|
1,969 |
|
|
|
7,048 |
|
|
|
8 |
|
|
|
378 |
|
|
|
(6,913 |
) |
|
|
2,490 |
| EBITDA |
|
|
54,277 |
|
|
|
17,260 |
|
|
|
33,692 |
|
|
|
66,451 |
|
|
|
(25,251 |
) |
|
|
146,429 |
| Compensation and benefits (2) |
|
|
885 |
|
|
|
1,080 |
|
|
|
746 |
|
|
|
1,609 |
|
|
|
6,350 |
|
|
|
10,670 |
| Transaction, refinancing and other fees (3) |
|
|
(250 |
) |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
2,986 |
|
|
|
2,737 |
| Adjusted EBITDA |
|
|
$ |
54,912 |
|
|
|
$ |
18,340 |
|
|
|
$ |
34,438 |
|
|
|
$ |
68,061 |
|
|
|
$ |
(15,915 |
) |
|
|
$ |
159,836 |
|
___________________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Corporate and Other consists of corporate overhead, certain leveraged activities, other
non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $26.9 million
processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring 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 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.
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2017 |
| (In thousands) |
|
|
Payment
Services -
Puerto Rico & Caribbean |
|
|
Payment
Services -
Latin America |
|
|
Merchant
Acquiring, net |
|
|
Business
Solutions |
|
|
Corporate and
Other (1)
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
78,821 |
|
|
|
$ |
43,369 |
|
|
|
$ |
67,546 |
|
|
|
$ |
142,944 |
|
|
|
$ |
(25,164 |
) |
|
|
$ |
307,516 |
| Operating costs and expenses |
|
|
39,703 |
|
|
|
47,265 |
|
|
|
46,545 |
|
|
|
90,985 |
|
|
|
13,624 |
|
|
|
238,122 |
| Depreciation and amortization |
|
|
6,677 |
|
|
|
6,327 |
|
|
|
1,813 |
|
|
|
12,120 |
|
|
|
21,252 |
|
|
|
48,189 |
| Non-operating income (expenses) |
|
|
1,676 |
|
|
|
7,187 |
|
|
|
1 |
|
|
|
3 |
|
|
|
(5,625 |
) |
|
|
3,242 |
| EBITDA |
|
|
47,471 |
|
|
|
9,618 |
|
|
|
22,815 |
|
|
|
64,082 |
|
|
|
(23,161 |
) |
|
|
120,825 |
| Compensation and benefits (2) |
|
|
429 |
|
|
|
446 |
|
|
|
432 |
|
|
|
1,293 |
|
|
|
3,951 |
|
|
|
6,551 |
| Transaction, refinancing and other fees (3) |
|
|
2,500 |
|
|
|
3,221 |
|
|
|
6,464 |
|
|
|
— |
|
|
|
1,439 |
|
|
|
13,624 |
| Adjusted EBITDA |
|
|
$ |
50,400 |
|
|
|
$ |
13,285 |
|
|
|
$ |
29,711 |
|
|
|
$ |
65,375 |
|
|
|
$ |
(17,771 |
) |
|
|
$ |
141,000 |
|
_______________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Corporate and Other consists of corporate overhead, certain leveraged activities, other
non-operating expenses and intersegment eliminations. Intersegment eliminations predominantly reflect the $25.2 million
processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring 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, 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 and an impairment charge and contractual fee accrual for a third party
software solution that was determined to be commercially unviable.
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
| (Dollar amounts in thousands, except share data) |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
| Net income |
|
|
$ |
23,075 |
|
|
|
$ |
6,142 |
|
|
|
$ |
66,322 |
|
|
|
$ |
49,494 |
|
| Income tax expense (benefit) |
|
|
3,302 |
|
|
|
(4,840 |
) |
|
|
10,349 |
|
|
|
1,248 |
|
| Interest expense, net |
|
|
7,352 |
|
|
|
7,853 |
|
|
|
22,375 |
|
|
|
21,894 |
|
| Depreciation and amortization |
|
|
15,788 |
|
|
|
16,606 |
|
|
|
47,383 |
|
|
|
48,189 |
|
| EBITDA |
|
|
49,517 |
|
|
|
25,761 |
|
|
|
146,429 |
|
|
|
120,825 |
|
| Equity income (1) |
|
|
(238 |
) |
|
|
(155 |
) |
|
|
(179 |
) |
|
|
(413 |
) |
| Compensation and benefits (2) |
|
|
2,367 |
|
|
|
2,348 |
|
|
|
10,669 |
|
|
|
6,551 |
|
| Transaction, refinancing and other fees (3) |
|
|
454 |
|
|
|
974 |
|
|
|
2,917 |
|
|
|
1,254 |
|
| Exit activity (4) |
|
|
— |
|
|
|
12,783 |
|
|
|
— |
|
|
|
12,783 |
|
| Adjusted EBITDA |
|
|
52,100 |
|
|
|
41,711 |
|
|
|
159,836 |
|
|
|
141,000 |
|
| Operating depreciation and amortization (5) |
|
|
(7,365 |
) |
|
|
(7,969 |
) |
|
|
(21,909 |
) |
|
|
(23,126 |
) |
| Cash interest expense, net (6) |
|
|
(6,473 |
) |
|
|
(6,500 |
) |
|
|
(19,396 |
) |
|
|
(18,238 |
) |
| Income tax expense (7) |
|
|
(4,558 |
) |
|
|
(2,867 |
) |
|
|
(15,492 |
) |
|
|
(9,836 |
) |
| Non-controlling interest (8) |
|
|
(121 |
) |
|
|
(106 |
) |
|
|
(385 |
) |
|
|
(431 |
) |
| Adjusted net income |
|
|
$ |
33,583 |
|
|
|
$ |
24,269 |
|
|
|
$ |
102,654 |
|
|
|
$ |
89,369 |
|
| Net income per common share (GAAP): |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted |
|
|
$ |
0.31 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.89 |
|
|
|
$ |
0.67 |
|
| Adjusted Earnings per common share (Non-GAAP): |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted |
|
|
$ |
0.45 |
|
|
|
$ |
0.33 |
|
|
|
$ |
1.38 |
|
|
|
$ |
1.22 |
|
| Shares used in computing adjusted earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted |
|
|
74,657,100 |
|
|
|
73,093,718 |
|
|
|
74,123,431 |
|
|
|
73,090,012 |
|
|
_______________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
|
Represents 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.
|
|
2)
|
|
Primarily represents share-based compensation and other compensation expense of $2.4 million for the
both the quarters ended September 30, 2018 and 2017. Primarily represents share-based compensation and other compensation
expense of $9.7 million and $6.6 million for the nine months ended September 30, 2018 and 2017 and severance payments $1.0
million for the nine months ended September 30, 2018.
|
|
3)
|
|
Represents fees and expenses associated with corporate transactions as defined in the Credit
Agreement, recorded as part of selling, general and administrative expenses and cost of revenues.
|
|
4)
|
|
Impairment charge and contractual fee accrual for a third party software solution that was
determined to be commercially unviable.
|
|
5)
|
|
Represents operating depreciation and amortization expense, which excludes amounts generated as a
result of the Merger and other from purchase accounting intangibles generated from acquisitions.
|
|
6)
|
|
Represents interest expense, less interest income, as they appear on our consolidated statements of
income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of
discount.
|
|
7)
|
|
Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax
rate, adjusted for certain discreet items.
|
|
8)
|
|
Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles
created as part of the purchase.
|
|
|
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EVERTEC, Inc.
Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share
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2017 |
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2018 Outlook |
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Actual |
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| Revenues |
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$ |
448 |
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to |
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$ |
452 |
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$ |
407 |
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| Earnings per Share (EPS) - Diluted (GAAP) |
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$ |
1.16 |
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to |
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$ |
1.20 |
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$ |
0.76 |
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| Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: |
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| Share-based comp, non-cash equity earnings and other (1) |
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$ |
0.23 |
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$ |
0.23 |
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$ |
0.33 |
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| Merger related depreciation and amortization (2) |
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$ |
0.45 |
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$ |
0.45 |
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$ |
0.42 |
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| Non-cash interest expense (3) |
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$ |
0.05 |
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$ |
0.05 |
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$ |
0.07 |
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| Tax effect of non-GAAP adjustments (4) |
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$ |
(0.10 |
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$ |
(0.10 |
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$ |
(0.10 |
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| Non-controlling interest (5) |
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$ |
— |
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$ |
— |
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$ |
(0.01 |
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| Total adjustments |
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$ |
0.63 |
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$ |
0.63 |
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$ |
0.71 |
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| Adjusted Earnings per common share (Non-GAAP) |
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$ |
1.79 |
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to |
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$ |
1.83 |
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$ |
1.47 |
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| Shares used in computing adjusted earnings per share (in millions) |
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74.3 |
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72.9 |
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__________________________
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1)
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Represents share based compensation, the elimination of non-cash equity earnings from our 19.99%
equity investment in Consorcio de Tarjetas Dominicanas S.A., and other adjustments to reconcile GAAP EPS to Non-GAAP EPS.
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2)
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Represents depreciation and amortization expenses amounts generated as a result of the Merger and
other M&A transactions.
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3)
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Represents non-cash amortization of the debt issue costs, premium and accretion of discount.
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4)
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Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax
rate, adjusted for certain discreet items of approximately 13%.
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5)
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Represents the 35% non-controlling equity interest in Processa, net of amortization of intangibles
created as part of the purchase.
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Investors:
EVERTEC, Inc.
Kay Sharpton, 787-773-5442
IR@evertecinc.com
View source version on businesswire.com: https://www.businesswire.com/news/home/20181030005989/en/