Evertec(US:EVTC)2023-02-23 03:14Financial Data and Key Metrics Changes - Adjusted EBITDA for 2022 was $270 million, down approximately 9% year-over-year, impacted by the Popular transaction and noncash foreign currency remeasurement losses [4][11] - Adjusted EPS for 2022 was $2.42, a decrease of 12% compared to the prior year [4][11] - Total revenue for Q4 2022 was $161.8 million, a 4% year-over-year increase, with full-year revenue reaching $618.4 million, up 5% from the previous year [18][25] Business Line Data and Key Metrics Changes - Payments Puerto Rico revenue increased by $6 million or 14% year-over-year, driven by POS transactions and ATH Móvil growth [5] - Business Solutions revenue decreased by approximately 9% year-over-year due to asset sales related to the Popular transaction [5][28] - Payment Services Latin America revenue for Q4 was $34.9 million, up 23% year-over-year, with strong organic growth from existing clients [13][98] Market Data and Key Metrics Changes - Puerto Rico received 50% less federal funds in 2022 compared to 2021, with federal stimulus funds expected to remain flat in 2023 [6][21] - The unemployment rate in Puerto Rico trended down throughout 2022, indicating a strong employment picture [21] - Inflation in Puerto Rico was estimated at 6% in December 2022, slightly lower than the U.S. [20] Company Strategy and Development Direction - The company aims to focus on organic growth opportunities and pursue M&A to diversify its operations outside of Puerto Rico [23][64] - EVERTEC plans to continue expanding its presence in Latin America, with a goal of increasing the revenue contribution from this region [39][64] - The company completed two tuck-in acquisitions in 2022 and announced the acquisition of PaySmart in Brazil to enhance its service offerings [8][57] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment remains supportive of growth despite some economic headwinds [21][62] - The company expects revenue growth in 2023 to be in the range of $638 million to $647 million, representing a year-over-year increase of 3.2% to 4.6% [57] - Adjusted EBITDA margin is expected to be between 42% to 43% for 2023, reflecting a slight contraction compared to the previous year [57][88] Other Important Information - The company returned approximately $110 million to shareholders in 2022 through dividends and share repurchases [49] - EVERTEC's liquidity remained strong at $371 million as of December 31, 2022 [19][30] - The company refinanced its credit facilities, improving capital flexibility and reducing interest rates [56] Q&A Session Summary Question: Can you provide insights on the macro perspective and guidance for 2023? - Management indicated that while there are economic headwinds, employment remains strong, and they expect federal funding to be similar to 2022 levels [35][62] Question: What is the opportunity for EVERTEC in Latin America? - Management emphasized the importance of M&A in Latin America and expressed confidence in accelerating growth in the region [39][64] Question: How is the integration of the BBR acquisition progressing? - The integration is going well, with additional products being cross-sold into existing markets [90] Question: What are the expectations for margin contraction across segments? - Management noted that margin contraction is expected due to the impact of the Popular transaction and the shift in business mix towards Latin America [87][88]