Fourth Quarter 2024 Earnings Conference Call February 26, 2025 Forward-looking Statements Certain statements in this earnings release constitute "forward-looking statements" within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange ...

Group 1 - Evertec reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.62 per share a year ago, representing an earnings surprise of 20.83% [1] - The company achieved revenues of $216.4 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.91%, and an increase from $194.62 million year-over-year [2] - Over the last four quarters, Evertec has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has underperformed the market, losing about 5.4% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.78 for the coming quarter and $3.26 for the current fiscal year [7] - The Zacks Industry Rank indicates that the Financial Transaction Services sector is in the bottom 49% of over 250 Zacks industries, which may impact stock performance [8] Group 3 - The estimate revisions trend for Evertec is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for Q4 2024 was $216.4 million, an increase of 11.2% compared to $194.6 million in Q4 2023, with organic growth across all segments and contributions from acquisitions[5]. - GAAP Net Income attributable to common shareholders for Q4 2024 was $40.1 million, a 249% increase from $11.5 million in Q4 2023, resulting in $0.62 per diluted share[6]. - Adjusted EBITDA for Q4 2024 was $88.6 million, a 24% increase compared to the prior year, with an Adjusted EBITDA margin of 40.9%, up from 36.8%[8]. - Full year 2024 revenue reached $845.5 million, a 22% increase from $694.7 million in 2023, driven by acquisitions and organic growth[10]. - GAAP Net Income for the full year 2024 was $112.6 million, a 41% increase from $79.7 million in 2023, equating to $1.73 per diluted share[11]. - Adjusted EBITDA for the full year 2024 was $340.2 million, a 17% increase from the previous year, with an Adjusted EBITDA margin of 40.2%, down from 42.0%[12]. - Revenues for Q4 2024 were $216,395,000, an increase of 11.4% compared to $194,621,000 in Q4 2023[30]. - Net income for the year ended December 31, 2024, was $114,779,000, up from $79,876,000 in 2023, representing a growth of 43.6%[30]. - The company reported a basic net income per share of $1.75 for 2024, compared to $1.23 for 2023, marking a 42.3% increase[30]. - Adjusted EBITDA for the quarter ended December 31, 2024, was $88,610,000, up from $71,698,000 in the same quarter of 2023, reflecting a year-over-year increase of 23.5%[45]. - Total revenues for the year ended December 31, 2024, reached $845,486,000, compared to $694,709,000 in 2023, marking a growth of 21.7%[43]. Shareholder Returns - The company returned $95.2 million to shareholders through share repurchases and dividends in 2024[6]. - The company repurchased common stock worth $82,293,000 in 2024, compared to $36,096,000 in 2023, showing a substantial increase in share buybacks[38]. Acquisitions and Integrations - The company completed the acquisition of Nubity on November 19, 2024, enhancing its cloud services offerings in Latin America[14]. - The company is focused on integrating Sinqia S.A. and achieving expected earnings accretion, while facing risks related to political and economic instability in its operating regions[27]. Outlook and Guidance - The 2025 outlook projects total consolidated revenue between $889 million and $899 million, representing approximately 5.1% to 6.3% growth compared to 2024[20]. - Adjusted earnings per common share for 2025 are expected to be between $3.34 and $3.45, reflecting growth of approximately 1.8% to 5.2% compared to $3.28 in 2024[20]. - 2024 revenue outlook is projected between $889 million and $899 million, with a low estimate of $845 million[50]. - GAAP Earnings per Share (EPS) guidance ranges from $1.93 to $2.05, with a low estimate of $1.73[50]. - Adjusted EPS (Non-GAAP) is expected to be between $3.34 and $3.45, with a low estimate of $3.28[50]. Assets and Liabilities - Total assets decreased to $1,857,611,000 in 2024 from $2,060,263,000 in 2023, a decline of 9.8%[32]. - Total liabilities decreased to $1,338,350,000 in 2024 from $1,424,887,000 in 2023, a reduction of 6.1%[34]. - The company’s total assets decreased by $29,075,000 in 2024, contrasting with an increase of $128,067,000 in 2023, indicating a shift in asset management strategy[38]. Cash Flow and Expenses - Total operating costs and expenses for 2024 were $679,820,000, compared to $558,549,000 in 2023, reflecting an increase of 21.6%[30]. - Cash flows from operating activities for 2024 were $260,059,000, an increase from $211,194,000 in 2023, indicating a rise of 23.1%[36]. - Net cash used in investing activities decreased significantly to $118,282,000 in 2024 from $507,932,000 in 2023, a reduction of 76.7%[38]. - EVERTEC's cash and cash equivalents decreased to $273,645,000 in 2024 from $295,600,000 in 2023, a decline of 7.4%[32]. - Cash and cash equivalents at the end of 2024 were $273,645,000, down from $295,600,000 at the end of 2023, a decrease of 7.4%[38]. Currency and Adjustments - The company experienced a foreign currency translation adjustment loss of $152,851,000 for the year ended December 31, 2024[30]. - Total adjustments to reconcile net income to net cash provided by operating activities amounted to $145,280,000 in 2024, compared to $131,318,000 in 2023, reflecting an increase of 10.6%[36]. - Total adjustments to reconcile GAAP EPS to Non-GAAP EPS amount to approximately $1.41 to $1.55 per share[50]. - Share-based compensation and other adjustments contribute $0.88 to the adjusted EPS calculation[50]. - Merger and acquisition related depreciation and amortization adds $0.58 to the adjusted EPS[50]. - Non-cash interest expense contributes $0.04 to the adjusted EPS[50]. - Anticipated tax effect of non-GAAP adjustments is estimated at approximately 6% to 7%[51]. - Shares used in computing adjusted earnings per common share are approximately 65.0 million to 65.1 million[50].

Core Insights - Evertec (EVTC) is expected to report quarterly earnings of $0.72 per share, reflecting a 16.1% increase year-over-year [1] - Analysts forecast revenues of $214.44 million, indicating a 10.2% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst projections [1] Revenue Estimates - 'Revenues- Payment Services - Puerto Rico & Caribbean' are estimated to be $55.31 million, representing a 5.5% increase from the previous year [4] - 'Revenues- Payment Services - Latin America' is projected to reach $78.04 million, indicating an 18.3% year-over-year growth [4] - 'Revenues- Merchant acquiring, net' is expected to be $44.52 million, suggesting a 10.7% increase year-over-year [5] - 'Revenues- Business solutions' is forecasted to reach $59.90 million, reflecting a 3.7% year-over-year growth [5] Market Performance - Over the past month, Evertec shares have recorded a return of +0.6%, contrasting with the Zacks S&P 500 composite's -1.8% change [5] - Based on its Zacks Rank 3 (Hold), EVTC is likely to perform in line with the overall market in the upcoming period [5]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Evertec (EVTC) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][4][9]. Valuation Metrics - Evertec (EVTC) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a high-quality value stock [4]. - The current P/E ratio of EVTC is 10.98, significantly lower than the industry average of 26.18 [4]. - EVTC's PEG ratio stands at 1.27, compared to the industry's average PEG of 1.73, suggesting it is undervalued relative to its expected earnings growth [5]. - The P/B ratio for EVTC is 4.53, which is lower than the industry average of 9.07, indicating a solid valuation [6]. - The P/S ratio for EVTC is 2.77, slightly below the industry's average of 2.84, reinforcing its value proposition [7]. - The P/CF ratio for EVTC is 10.26, compared to the industry's average of 19.24, further suggesting that the stock is undervalued based on cash flow [8]. Investment Outlook - The combination of these valuation metrics indicates that Evertec (EVTC) is likely undervalued at present, making it an attractive option for value investors [9].

Core Viewpoint - The article compares Evertec (EVTC) and MasterCard (MA) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - Evertec has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while MasterCard has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting that EVTC has an improving earnings outlook [3] Group 2: Valuation Metrics - Evertec has a forward P/E ratio of 11.53, significantly lower than MasterCard's forward P/E of 36.63 [5] - The PEG ratio for Evertec is 1.34, while MasterCard's PEG ratio is 2.32, indicating that EVTC is expected to grow earnings at a more favorable rate relative to its price [5] - Evertec's P/B ratio is 4.52, compared to MasterCard's P/B of 64.97, further highlighting the valuation disparity [6] Group 3: Value Grades - Based on various valuation metrics, Evertec holds a Value grade of A, while MasterCard has a Value grade of D, indicating that EVTC is the superior value option at this time [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Evertec (EVTC) as a strong value stock based on various financial metrics [2][8]. Valuation Metrics - Evertec (EVTC) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential [4]. - The Forward P/E ratio for EVTC is 11.11, significantly lower than the industry average of 25.71, with a historical range between 9.59 and 14.36 [4]. - The PEG ratio for EVTC stands at 1.39, compared to the industry average of 1.71, with a historical range of 0.93 to 1.85 [5]. - The P/B ratio for EVTC is 4.53, which is favorable compared to the industry average of 8.95, with a historical range of 3.89 to 4.97 [6]. - The P/CF ratio for EVTC is 10.27, well below the industry average of 19.15, with a historical range of 9.22 to 15.38 [7]. Investment Outlook - The combination of favorable valuation metrics and a strong earnings outlook suggests that Evertec (EVTC) is currently undervalued, making it an attractive investment opportunity [8].

Financial Performance - Revenues for Q3 2024 reached $211.8 million, a 22.3% increase from $173.2 million in Q3 2023[14] - Net income for Q3 2024 was $25.2 million, compared to $10.0 million in Q3 2023, representing a 152.5% increase[14] - The company reported a net income attributable to common stockholders of $24.7 million for Q3 2024, compared to $10.0 million in Q3 2023[14] - The company reported a net income of $25,202,000 for the three months ended September 30, 2024, compared to $9,956,000 for the same period in 2023[109] - Net income for the nine months ended September 30, 2024, was $74,112, compared to $68,069 for the same period in 2023, representing an increase of 4.9%[18] - Adjusted net income for the nine months ended September 30, 2024 was $157.2 million, compared to $144.7 million for the same period in 2023[190] Operating Costs - Operating costs for Q3 2024 totaled $170.3 million, up from $133.6 million in Q3 2023, reflecting a 27.5% increase[14] - Total operating costs and expenses for the three months ended September 30, 2023, were $133,636,000, compared to $511,387,000 for the nine months ended September 30, 2024[104][107] - Operating costs and expenses for the nine months ended September 30, 2024, rose by 33% to $511.4 million, up from $385.7 million in the prior year[138] Cash and Assets - Cash and cash equivalents were $275.4 million as of September 30, 2024, down from $295.6 million at the end of 2023[11] - Total assets decreased to $1.89 billion as of September 30, 2024, down from $2.06 billion at the end of 2023[11] - The company’s cash, cash equivalents, and restricted cash at the end of the period totaled $326,282, compared to $215,546 at the end of the same period in 2023, reflecting a growth of 51.5%[18] - As of September 30, 2024, the company had cash and cash equivalents of $275.4 million, with $214.0 million held in subsidiaries outside of Puerto Rico[164] Shareholder Equity and Dividends - The company’s total stockholders' equity decreased to $502.6 million as of September 30, 2024, from $594.3 million at the end of 2023[11] - Cash dividends declared on common stock were $3,199,000, maintaining a rate of $0.05 per share[15] - The company declared quarterly cash dividends of $0.05 per share on February 15, April 18, and July 18, 2024, with payments made to stockholders on March 15, June 7, and September 6, 2024[93] Debt and Financing - Total liabilities decreased to $1.35 billion as of September 30, 2024, compared to $1.42 billion at the end of 2023[11] - The unpaid principal balance of the TLA Facility and TLB Facility at September 30, 2024, was $435.6 million and $540.0 million, respectively[41] - The Company prepaid $60 million of the outstanding balance on the TLB facility in the fourth quarter of 2023[40] - The Company has four interest rate swap agreements with a total notional amount of $600 million, converting variable interest payments to fixed rates[179] Revenue Segments - The company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Latin America Payments and Solutions, Merchant Acquiring, and Business Solutions, each contributing to overall revenue growth[95] - Payment Services - Puerto Rico & Caribbean segment revenues increased by $1.2 million to $52.8 million for the three months ended September 30, 2024, driven by growth from ATH Movil and increased POS transactions[153] - Latin America Payments and Solutions segment revenues rose by $29.9 million to $76.0 million for the three months ended September 30, 2024, benefiting from the Sinqia acquisition and organic growth[154] - Merchant Acquiring segment revenues increased by $4.9 million to $45.4 million for the three months ended September 30, 2024, primarily due to improved spread and sales volume growth[156] - Business Solutions segment revenues grew by $4.6 million to $61.1 million for the three months ended September 30, 2024, driven by completed projects[157] Tax and Compliance - The current tax provision for the three months ended September 30, 2024, was $8.7 million, compared to $8.2 million for the same period in 2023, reflecting an increase of approximately 6%[85] - The effective tax rate for the nine months ended September 30, 2024, was 4.0%, down from 6.3% in the comparable 2023 period[144] - The company estimates a potential decrease in uncertain tax liabilities by approximately $2.7 million in the next 12 months due to the expiration of the statute of limitations[89] Acquisitions and Growth - On October 31, 2024, the company acquired 100% of Grandata, Inc., enhancing its product offerings in data analytics[114] - The Sinqia acquisition contributed to revenue growth in Latin America, alongside better-than-expected volumes in the GetNet Chile relationship, resulting in a one-time revenue recognition of $1.8 million[132] - The ongoing shift from cash to electronic payments presents significant growth opportunities in Latin America and the Caribbean, where penetration remains lower than in the U.S.[126] Miscellaneous - The company processed over six billion transactions annually through its electronic payment networks in Puerto Rico and Latin America[118] - The company has increased its share repurchase authorization to allow for up to $220 million in stock repurchases by December 31, 2025[124] - The company recognized $22.4 million in share-based compensation expense for the nine months ended September 30, 2024, compared to $18.8 million for the same period in 2023[68]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was approximately $212 million, an increase of approximately 22% compared to Q3 2023 [7][18] - Adjusted EBITDA was approximately $87 million, an increase of approximately 11% year-over-year, with an adjusted EBITDA margin of 41.3%, which is approximately 420 basis points lower than the previous year but above expectations [7][19] - Adjusted earnings per share was $0.86, an increase of 8% from the prior year [7][19] - Year-to-date operating cash flow was $185 million, with approximately $92 million returned to shareholders through dividends and share repurchases [8] Business Line Data and Key Metrics Changes - In Puerto Rico, Merchant Acquiring revenue increased approximately 12% year-over-year, driven by higher sales volume and spreads [9][20] - Payments Puerto Rico revenue was up approximately 2%, influenced by growth in ATH Mobile and POS transactions [9][21] - Business Solutions segment revenue increased approximately 8%, attributed to projects with Popular that have gone into production [9][24] - LATAM segment revenue was up 65% year-over-year, primarily due to the Sinqia acquisition, with a one-time revenue from GetNet Chile impacting results [12][23] Market Data and Key Metrics Changes - The macroeconomic environment in Puerto Rico remains stable, with employment up 1.9% year-over-year and a low unemployment rate of 5.7% [10] - Travel and tourism trends in Puerto Rico are positive, with international airport arrivals up approximately 19% year-over-year [10] Company Strategy and Development Direction - The company has closed the acquisition of Grandata, enhancing its product offerings and relationships with key fintechs in Latin America [14] - Cost efficiency initiatives are being executed to offset the anticipated impact of a 10% discount on certain MSA services starting in October 2025 [11][32] - The company aims to maintain competitive pricing and drive business growth despite the upcoming discount [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects in both LATAM and Puerto Rico, despite facing currency headwinds [28][34] - The company expects revenue growth of approximately 21% to 22% year-over-year for 2024, with adjusted EBITDA margin expectations between 39.5% to 40% [28][31] - Management highlighted the importance of ongoing modernization and re-pricing initiatives to enhance margins and revenue growth in the Sinqia segment [40][49] Other Important Information - The company has a strong liquidity position with approximately $469 million as of September 30 [8][27] - The company has committed to a scholarship program in Puerto Rico and Latin America, awarding approximately $1.4 million over ten years [15] Q&A Session Summary Question: Insights on pricing power and volume trends - Management noted that pricing initiatives have been implemented, but some will anniversary in Q4, and volumes have remained consistent without significant acceleration [36][37] Question: Details on the Grandata acquisition - Grandata specializes in leveraging behavioral data for credit risk insights, particularly in Mexico and Brazil, and complements the company's existing issuing platform [39] Question: Update on Sinqia's performance - Management highlighted three focus areas: re-pricing contracts, modernizing platforms, and margin optimization, which are expected to drive growth and improve margins [40][49] Question: Cost initiatives to offset MSA contract changes - The company has identified cost-cutting measures to offset the anticipated $18 million impact from the MSA contract changes, ensuring margin stability [42][52] Question: Client attrition in LATAM - Management acknowledged some client attrition due to regulatory changes and other factors but remains optimistic about growth driven by Sinqia and Grandata [58] Question: Capital allocation strategy - The company plans to be opportunistic with share repurchases, maintaining flexibility in capital deployment strategies [60]

Core Insights - Evertec reported revenue of $211.8 million for the quarter ended September 2024, reflecting a year-over-year increase of 22.3% [1] - The company's EPS was $0.86, up from $0.80 in the same quarter last year, exceeding the consensus EPS estimate of $0.73 by 17.81% [1] Revenue Performance - Payment Services - Puerto Rico & Caribbean generated $52.76 million, slightly below the estimated $53.58 million, marking a year-over-year increase of 2.2% [3] - Payment Services - Latin America reported $76.03 million, significantly above the previous year's figure, with a year-over-year growth of 64.7%, although it fell short of the $79.49 million estimate [3] - Merchant acquiring, net revenues reached $45.44 million, surpassing the average estimate of $43.53 million, representing a 12% increase year over year [3] - Business solutions revenues were $61.10 million, exceeding the estimated $57.73 million, with an 8.1% year-over-year growth [3] - Corporate and Other segment reported -$23.53 million, in line with estimates, showing an 8.8% improvement compared to the previous year [3] Stock Performance - Over the past month, Evertec's shares have declined by 2.9%, contrasting with a 0.7% increase in the Zacks S&P 500 composite [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]