Evertec(US:EVTC)2020-08-05 20:19Financial Performance - Total revenues for Q2 2020 were $117.9 million, a decrease of 3.3% compared to $122.5 million in Q2 2019[17]. - Net income for Q2 2020 was $15.6 million, down 42.7% from $27.1 million in Q2 2019[17]. - Operating costs and expenses increased to $92.3 million in Q2 2020, compared to $84.9 million in Q2 2019, reflecting a rise of 8.7%[17]. - The company reported a net income attributable to common stockholders of $15.5 million for Q2 2020, resulting in a diluted earnings per share of $0.21[17]. - Net income for the six months ended June 30, 2020, was $37.9 million, compared to $53.9 million for the same period in 2019, representing a decrease of approximately 29.6%[24]. - Total revenues for the six months ended June 30, 2020, were $239,879,000, a decrease from $241,384,000 for the same period in 2019, representing a decline of approximately 0.6%[112]. - Adjusted EBITDA for the six months ended June 30, 2020, was $106,491,000, compared to $115,393,000 for the same period in 2019, reflecting a decrease of about 7.7%[113]. - EBITDA for the six months ended June 30, 2020, was $94,798,000, down from $108,045,000 in the same period of 2019, a decrease of about 12.1%[115]. - Adjusted net income for the six months ended June 30, 2020, was $61.3 million, a decrease of 17.5% from $74.3 million in the same period of 2019[211]. - The company reported diluted adjusted earnings per common share of $0.84 for the six months ended June 30, 2020, compared to $1.01 for the same period in 2019, reflecting a 16.8% decline[211]. Cash and Assets - Cash and cash equivalents increased to $146.9 million as of June 30, 2020, compared to $111.0 million at the end of 2019, an increase of 32.3%[13]. - Total cash, cash equivalents, and restricted cash at the end of the period was $169.1 million, up from $77.5 million at the end of the same period last year, indicating a significant increase of approximately 118.5%[25]. - The company had cash and cash equivalents of $146.9 million as of June 30, 2020, with $60.8 million held in subsidiaries outside of Puerto Rico[185]. - Total assets as of June 30, 2020, were $1,011.7 million, slightly up from $1,011.7 million at the end of 2019[13]. - Current liabilities increased to $151.5 million as of June 30, 2020, compared to $144.3 million at the end of 2019[13]. - Long-term debt decreased to $487.6 million from $510.9 million at the end of 2019, a reduction of 4.5%[13]. - As of June 30, 2020, total debt amounted to $518.3 million, a decrease from $527.6 million as of December 31, 2019, representing a reduction of approximately 2.5%[56]. Expenses and Costs - Operating costs and expenses for the six months ended June 30, 2020, totaled $181,526,000, up from $166,291,000 in the same period of 2019, indicating an increase of approximately 9.2%[112]. - Cost of revenues for the six months ended June 30, 2020 increased by $8.4 million or 8% to $111.0 million, driven by increased headcount and special incentives related to COVID-19[155]. - Selling, general and administrative expenses for the six months ended June 30, 2020 increased by $4.6 million or 15% compared to the same period in the prior year[156]. - Non-operating expenses for the six months ended June 30, 2020 decreased by $3.5 million to $11.4 million, primarily due to a $2.0 million decrease in interest expense[158]. - Depreciation and amortization expenses for the six months ended June 30, 2020, were $35,634,000, compared to $33,468,000 for the same period in 2019, reflecting an increase of approximately 6.5%[115]. Dividends and Shareholder Returns - The company declared cash dividends of $0.05 per share, totaling $3.6 million[20]. - Cash dividends declared on common stock were $7.2 million for the six months ended June 30, 2020, slightly down from $7.3 million in the same period of 2019[24]. - The company declared a quarterly cash dividend of $0.05 per share on July 24, 2020, to be paid on September 4, 2020[116]. - The Company declared quarterly cash dividends of $0.05 per share on February 20, 2020, and April 21, 2020, paid to stockholders on April 3, 2020, and June 5, 2020, respectively[95]. Impact of COVID-19 - The company has implemented precautionary measures in response to COVID-19, including transitioning most employees to a work-from-home environment to minimize risks[32]. - The Company drew down $30 million on its Revolving Facility in April 2020 to increase cash position and preserve financial flexibility, which has since been fully repaid[35]. - Management anticipates a $2.7 million deferral of payroll taxes under the CARES Act, with $0.8 million deferred through June 30, 2020[35]. - The company anticipates revenue attrition in Latin America of approximately $3 million to $4 million due to previously disclosed migrations[134]. - Consumer preference for digital payment solutions has increased during the pandemic, benefiting the company's transaction volumes[141]. - The ongoing shift from cash to electronic payments presents substantial growth opportunities in Latin America and the Caribbean[129]. Segment Performance - The company operates in four segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America, Merchant Acquiring, and Business Solutions[101]. - Revenues for the Payment Services - Puerto Rico & Caribbean segment decreased by $3.0 million to $27.5 million for the three months ended June 30, 2020, primarily due to a decline in transaction volumes from COVID-19[172]. - Payment Services - Latin America segment revenues decreased by $1.3 million to $19.8 million, impacted by foreign exchange losses and client attrition due to COVID-19[174]. - Merchant Acquiring segment revenues decreased by $2.0 million to $24.8 million, primarily due to decreased sales volumes from COVID-19, but adjusted EBITDA increased by $1.1 million to $13.4 million[175]. - Business Solutions segment revenues increased by $0.3 million to $55.5 million, while adjusted EBITDA decreased by $0.2 million to $24.0 million due to increased operating costs[176]. Accounting and Compliance - The Company has adopted new accounting guidance effective January 1, 2020, impacting the measurement of credit losses and implementation costs in cloud computing arrangements[37][39]. - The expected credit loss rate is likely to increase as receivables move to older aging buckets, with historical credit losses being low[45][46]. - The Company is currently evaluating the impact of recently issued accounting pronouncements on its consolidated financial statements[43][44]. - The secured leverage ratio as of June 30, 2020, was 2.12 to 1.00, indicating compliance with the 2018 Credit Agreement[205].