Investors with an interest in Financial Transaction Services stocks have likely encountered both Evertec (EVTC) and Equifax (EFX) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look. We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style ...

Investors interested in Financial Transaction Services stocks are likely familiar with Evertec (EVTC) and Equifax (EFX) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look. There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimat ...

Financial Data and Key Metrics Changes - The company reported revenue of $212 million for Q2 2024, a 27% increase year-over-year [4] - Adjusted EBITDA was $86.1 million, up approximately 16% compared to the prior year, with an adjusted EBITDA margin of 40.6%, down from the previous year [4][12] - Adjusted EPS for the quarter was $0.83, reflecting a 17% year-over-year increase [5][12] - Operating cash flow for the first half of the year was approximately $131 million, with liquidity at $452 million as of June 30 [6][19] Business Line Data and Key Metrics Changes - Merchant Acquiring revenue increased approximately 10% year-over-year to $45.3 million, driven by increased volumes and improved spreads [13] - Payments Puerto Rico revenue grew approximately 7% year-over-year, with ATH Movil Business experiencing high teens growth [14] - Latin America Payments & Solutions revenue surged 91% year-over-year to $74.7 million, primarily due to the Sinqia acquisition [15] - Business Solutions segment revenue was $62.3 million, up approximately 9% from the prior year, driven by a one-time project [16] Market Data and Key Metrics Changes - The Puerto Rico macro environment remains supportive, with total employment up 1.8% year-over-year and an unemployment rate of 5.8% [8] - In Latin America, revenue growth was significantly impacted by the Sinqia acquisition, although there was softness in the software market in Brazil [9][28] Company Strategy and Development Direction - The company is focused on integrating Sinqia and expanding its service offerings in Brazil and the rest of Latin America [10][21] - Management emphasized the importance of margin optimization and cost efficiencies across all segments [40] - The company plans to maintain its revenue guidance for 2024 at $846 million to $854 million, reflecting growth of approximately 22% to 23% [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth prospects in Puerto Rico and Latin America, despite current macroeconomic challenges [10][45] - The company is actively managing pricing strategies and expects to see benefits from these initiatives throughout the year [22][23] - There is a focus on modernizing platforms and enhancing customer relationships to drive future growth [30][34] Other Important Information - The company returned approximately $76 million to shareholders through share repurchases and dividends in the first half of 2024 [17] - The net debt position at year-end was $735 million, with a net debt to trailing 12-month adjusted EBITDA ratio of approximately 2.28x [19] Q&A Session Summary Question: Sustainability of improved spreads and transaction growth in Puerto Rico - Management indicated that pricing initiatives are expected to continue benefiting spreads through the end of the year, with growth driven by pricing, sales volume, and non-transactional fees [22][23] Question: Update on legacy LATAM business performance - The legacy LATAM business continues to grow in the low double digits, consistent with historical performance [25][26] Question: Impact of software market softness in Brazil on Sinqia - Management acknowledged a slowdown in growth rates attributed to the political situation and inflation in Brazil, but remains optimistic about future growth through customer engagement and modernization efforts [28][29][45] Question: Timeline for modernization efforts at Sinqia - Modernization is a multiyear project already in progress, with immediate benefits being observed from current investments [33][34] Question: M&A pipeline for Sinqia - The M&A pipeline remains strong, with a focus on expanding product offerings and market presence beyond Brazil [35] Question: Margin leverage and future margin expansion - Management highlighted ongoing efforts to optimize margins across segments, with expectations for continued margin improvement in legacy businesses [39][40]

Core Insights - Evertec reported revenue of $211.98 million for the quarter ended June 2024, marking a 26.9% increase year-over-year, with EPS at $0.83 compared to $0.71 in the previous year [1] - The revenue exceeded the Zacks Consensus Estimate of $209.4 million, resulting in a surprise of +1.23%, while the EPS surpassed the consensus estimate of $0.69 by +20.29% [1] Revenue Performance by Segment - Payment Services - Puerto Rico & Caribbean generated $54.20 million, exceeding the average estimate of $53.66 million, reflecting a year-over-year increase of +6.7% [3] - Payment Services - Latin America reported $74.67 million, below the average estimate of $78.80 million, but showed a significant year-over-year growth of +91.1% [4] - Merchant acquiring, net revenues were $45.32 million, surpassing the estimated $42.62 million, with a year-over-year increase of +9.9% [5] - Business solutions revenues reached $62.34 million, exceeding the average estimate of $58.75 million, representing a year-over-year growth of +9.4% [6] - Corporate and Other segment reported revenues of -$24.55 million, worse than the average estimate of -$22.89 million, but still showing a year-over-year improvement of +16.8% [7] Stock Performance - Evertec's shares have returned +4.1% over the past month, contrasting with the Zacks S&P 500 composite's decline of -0.4% [7]

Evertec (EVTC) came out with quarterly earnings of $0.83 per share, beating the Zacks Consensus Estimate of $0.69 per share. This compares to earnings of $0.71 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 20.29%. A quarter ago, it was expected that this payment processing company would post earnings of $0.67 per share when it actually produced earnings of $0.72, delivering a surprise of 7.46%. Over the last four quarters, t ...

Evertec (EVTC) shares ended the last trading session 5.4% higher at $31.20. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 9.8% loss over the past four weeks. Increased optimism over an accelerated shift to digital payments may have driven the stock higher. Evertec is capitalizing on the digital trend by enhancing its digital solutions, such as Placetopay (an e-commerce gateway), ATH Movil and ATH Business. It has ...

[Part I. FINANCIAL INFORMATION](index=6&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The unaudited Q1 2024 consolidated financial statements show **28% revenue growth to $205.3 million** driven by the Sinqia acquisition, but net income decreased to **$16.0 million** due to higher operating and interest expenses Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $293,666 | $295,600 | | Goodwill | $777,932 | $791,700 | | Other intangible assets, net | $490,188 | $518,070 | | **Total Assets** | **$1,996,486** | **$2,060,263** | | **Liabilities & Equity** | | | | Total current liabilities | $354,432 | $298,313 | | Long-term debt | $941,717 | $946,816 | | **Total Liabilities** | **$1,444,589** | **$1,424,887** | | **Total Equity** | **$511,239** | **$598,408** | Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $205,318 | $159,814 | | Income from operations | $32,803 | $40,090 | | Interest expense | ($19,939) | ($5,643) | | Net income | $16,387 | $30,063 | | Net income attributable to EVERTEC, Inc. | $15,979 | $30,052 | | Diluted EPS | $0.24 | $0.46 | Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $35,975 | $54,511 | | Net cash used in investing activities | ($21,994) | ($36,637) | | Net cash used in financing activities | ($16,350) | ($40,579) | | Net decrease in cash | ($6,137) | ($22,980) | - The company completed the acquisition of Sinqia S.A. on November 1, 2023. During Q1 2024, adjustments were made to the provisional amounts for assets and liabilities related to the acquisition. The preliminary purchase price allocation includes **$341.8 million** in goodwill and **$291.0 million** in other intangible assets[30](index=30&type=chunk)[31](index=31&type=chunk) Total Debt Outstanding (in thousands) | Debt Component | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | 2027 Term A Loan | $443,736 | $449,450 | | 2030 Term B Loan | $521,848 | $521,233 | | Revolving Facility | $80,000 | $0 | | **Total Debt** | **$1,071,635** | **$997,553** | - As of March 31, 2024, the company had four interest rate swap agreements to convert a portion of its variable-rate term loan payments to fixed rates, hedging against interest rate risk[44](index=44&type=chunk)[45](index=45&type=chunk) - On March 6, 2024, the company entered into an accelerated share repurchase (ASR) agreement to buy back **$70 million** of its common stock. An initial delivery of approximately **1.5 million shares** was received on March 8, 2024[60](index=60&type=chunk) - Revenue from the company's single largest customer, Popular, Inc., represented approximately **31%** of total revenues for the quarter ended March 31, 2024, down from **37%** in the same period of 2023[69](index=69&type=chunk) Segment Revenues and Adjusted EBITDA - Q1 2024 vs Q1 2023 (in thousands) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | Q1 2024 Adj. EBITDA | Q1 2023 Adj. EBITDA | | :--- | :--- | :--- | :--- | :--- | | Payment Services - Puerto Rico & Caribbean | $53,031 | $48,429 | $30,352 | $27,875 | | Latin America Payments and Solutions | $74,216 | $35,317 | $16,297 | $10,355 | | Merchant Acquiring, net | $43,099 | $40,347 | $16,220 | $15,626 | | Business Solutions | $58,128 | $55,695 | $23,039 | $22,367 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, noting **28% revenue growth to $205.3 million** from the Sinqia acquisition, but an **18% decrease in income from operations to $32.8 million** due to higher costs, and a decline in operating cash flow to **$36.0 million**, while Adjusted EBITDA was **$78.2 million** and Adjusted EPS was **$0.72** Comparison of Operations - Q1 2024 vs Q1 2023 (in thousands) | Line Item | Q1 2024 | Q1 2023 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $205,318 | $159,814 | $45,504 | 28% | | Cost of revenues | $102,448 | $76,417 | $26,031 | 34% | | SG&A expenses | $35,626 | $23,875 | $11,751 | 49% | | Depreciation and amortization | $34,441 | $19,432 | $15,009 | 77% | | **Income from operations** | **$32,803** | **$40,090** | **($7,287)** | **(18)%** | - The increase in operating costs was primarily driven by the addition of Sinqia, higher personnel costs, and increased software amortization[120](index=120&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk) - Non-operating expenses increased by **$8.9 million**, mainly due to a **$14.3 million** rise in interest expense from debt used to finance the Sinqia acquisition[124](index=124&type=chunk) - Payment Services - Puerto Rico & Caribbean: Revenue grew **$4.6 million (9.5%)** driven by higher POS transactions and strong growth in ATH Movil[135](index=135&type=chunk) - Latin America Payments and Solutions: Revenue surged by **$38.9 million (110%)** due to a full quarter contribution from the Sinqia acquisition and organic growth[136](index=136&type=chunk) - Merchant Acquiring: Revenue increased by **$2.8 million (6.9%)** due to higher sales volume and an improved overall spread[137](index=137&type=chunk) - Business Solutions: Revenue rose by **$2.4 million (4.3%)** from growth across several lines of business[138](index=138&type=chunk) - As of March 31, 2024, the company had cash and cash equivalents of **$293.7 million** and **$114.0 million** available for borrowing under its Revolving Facility[139](index=139&type=chunk)[140](index=140&type=chunk) - Net cash from operating activities decreased to **$36.0 million** in Q1 2024 from **$54.5 million** in Q1 2023, primarily due to lower net income and decreased collections[143](index=143&type=chunk) - Net cash used in financing activities was **$16.4 million**, a decrease from **$40.6 million** in the prior year, mainly due to an **$80.0 million** draw on the Revolving Facility, partially offset by a **$63.7 million** increase in share repurchases[145](index=145&type=chunk) - The Board declared a quarterly cash dividend of **$0.05 per share**, paid on March 15, 2024, and declared another for payment on June 7, 2024[147](index=147&type=chunk) Reconciliation of Net Income to Adjusted Net Income (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $16,387 | $30,063 | | **Adjusted EBITDA** | **$78,177** | **$67,135** | | **Adjusted net income** | **$48,004** | **$45,587** | GAAP vs. Non-GAAP EPS | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.24 | $0.46 | | Adjusted Diluted EPS (Non-GAAP) | $0.72 | $0.69 | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company identifies primary market risks as interest rate fluctuations, foreign currency exchange volatility, and inflation, with a **100 basis point** interest rate increase potentially raising annual interest expense by **$5.2 million**, and a **$4.5 million** foreign currency remeasurement loss in Q1 2024 - A hypothetical **100 basis point** increase in interest rates on outstanding variable-rate debt as of March 31, 2024, would increase annual interest expense by approximately **$5.2 million**[171](index=171&type=chunk) - The company is exposed to foreign exchange risk from its Latin American operations. In Q1 2024, it recognized a non-cash unrealized loss of **$4.5 million** from foreign currency remeasurement[175](index=175&type=chunk) - Inflation risk is present in the geographies where the company operates, potentially impacting input costs like wages and benefits, which may not be fully recoverable from customers[176](index=176&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2024, excluding the recently acquired Sinqia business which is currently being integrated - The CEO and CFO concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective[178](index=178&type=chunk) - The assessment of internal controls over financial reporting excluded the recently acquired Sinqia business, with integration into the company's control environment currently in progress[179](index=179&type=chunk) [Part II. OTHER INFORMATION](index=42&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising from the ordinary course of business but does not expect them to have a material adverse effect on its financial condition, results of operations, or cash flows - Management believes that the aggregated liabilities, if any, from various lawsuits and arbitration proceedings will not have a material adverse effect on the Company[182](index=182&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2023 have been reported[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In March 2024, the company repurchased **1,516,793 shares**, primarily through an accelerated share repurchase (ASR) agreement, and the Board increased the total share repurchase authorization to **$220 million**, with approximately **$150 million** remaining available Share Repurchase Activity - Q1 2024 | Period | Total Shares Purchased | Approx. Dollar Value Remaining Under Program | | :--- | :--- | :--- | | March 2024 | 1,516,793 | $150,000,000 | - The Board increased the share repurchase authorization to an aggregate of **$220 million**, valid through December 31, 2025[184](index=184&type=chunk) [Other Information](index=42&type=section&id=Item%205.%20Other%20Information) On March 5, 2024, the company's President and CEO, Morgan M. Schuessler, terminated a Rule 10b5-1 trading arrangement that was originally adopted on August 30, 2023 - On March 5, 2024, CEO Morgan M. Schuessler terminated a Rule 10b5-1 trading arrangement that had been established on August 30, 2023[188](index=188&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various award agreements and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $205.3 million, a 28% increase year-over-year, driven by strong growth in the Latin America segment and a full quarter contribution from Sinqia [57][61] - Adjusted EBITDA was $78.2 million, up approximately 16% compared to the prior year, with an adjusted EBITDA margin of 38.1%, down from the previous year [67][57] - Adjusted EPS for the quarter was $0.72, reflecting a 4% year-over-year increase [5][57] Business Line Data and Key Metrics Changes - Payment Services in Puerto Rico and Caribbean segment revenue was $53 million, a 10% increase year-over-year, driven by transaction growth of 7% and a 27% increase in ATH Móvil transactions [6][58] - Merchant Acquiring net revenue increased by approximately 7% year-over-year to $43.1 million, with sales volume up 6% [14] - Latin America Payments & Solutions revenue was $74.2 million, up approximately 110% year-over-year, reflecting contributions from Sinqia and organic growth [15] Market Data and Key Metrics Changes - The unemployment rate in Puerto Rico remained low at 5.7%, with employment levels at 1.1 million, the highest since 2009 [64] - Airport arrivals in Puerto Rico increased over 10% year-over-year in Q1 [64] Company Strategy and Development Direction - The company is focused on integrating Sinqia while delivering strong results from payment businesses in Puerto Rico and Latin America [50] - There is an emphasis on technology modernization and customer-centric initiatives, with plans to invest in platforms to enhance offerings and capture market share [65][66] - The company aims to optimize margins and improve operational efficiencies across all segments [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the supportive macro environment in Puerto Rico, which is expected to aid growth [85][64] - The company raised the lower end of its revenue outlook for 2024, now expecting a range of $846 million to $854 million, representing growth of approximately 22% to 23% [17][71] - Management acknowledged the challenges in the integration of Sinqia but remains optimistic about long-term growth potential [39][40] Other Important Information - The net debt position at the end of the quarter was approximately $793 million, with a net debt to trailing 12-month adjusted EBITDA ratio of approximately 2.51x [8] - The company returned approximately $3 million to shareholders through dividends and entered into a $70 million accelerated share repurchase program [4] Q&A Session Summary Question: What are the updated thoughts on the accretion opportunities for Sinqia? - Management remains excited about Sinqia and is focused on execution discipline, with a new leadership structure aimed at improving sales and implementation processes [73][74] Question: Can you provide color on the segment guidance changes? - Merchant Acquiring was moved up to mid-single digits growth, while LATAM was adjusted down to low 70s growth due to various market factors [76] Question: How does the technology spending and demand environment look in Brazil? - Brazil is described as a dynamic market with significant technology spending, and the company is focused on repricing contracts and improving margins [90][91] Question: What is the confidence level regarding the macroeconomic environment in Puerto Rico? - Management acknowledges the uncertainty in the economy but believes the current supportive factors are beneficial for growth [92][94]

Evertec (EVTC) reported $205.32 million in revenue for the quarter ended March 2024, representing a year-over-year increase of 28.5%. EPS of $0.72 for the same period compares to $0.69 a year ago.The reported revenue represents a surprise of +2.28% over the Zacks Consensus Estimate of $200.75 million. With the consensus EPS estimate being $0.67, the EPS surprise was +7.46%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Evertec (EVTC) came out with quarterly earnings of $0.72 per share, beating the Zacks Consensus Estimate of $0.67 per share. This compares to earnings of $0.69 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 7.46%. A quarter ago, it was expected that this payment processing company would post earnings of $0.65 per share when it actually produced earnings of $0.62, delivering a surprise of -4.62%.Over the last four quarters, th ...