Evertec(US:EVTC)2020-05-09 01:59Financial Data and Key Metrics Changes - Total revenue for Q1 2020 was $122 million, a 3% increase compared to $118.8 million in Q1 2019 [13][25] - Adjusted EBITDA was $56 million, a 2% decrease from the prior year, with an adjusted EBITDA margin of 46.2%, down 230 basis points year-over-year [14][27] - Adjusted earnings per share (EPS) was $0.46, an 8% decrease compared to the previous year [14][29] - The company generated significant operating cash flow and returned approximately $7 million to shareholders through share repurchases [14] Business Line Data and Key Metrics Changes - Merchant Acquiring net revenue decreased 3% year-over-year to approximately $25.1 million, with a significant decline in March due to COVID-19 [30] - Payment Services in Puerto Rico and the Caribbean segment revenue was $29.9 million, down approximately 7% year-over-year [34] - Payment Services in Latin America segment revenue was $21.6 million, up approximately 4% year-over-year, driven by the acquisition of PlacetoPay [37] - Business Solutions revenue increased approximately 9% to $55.9 million, supported by new services for Popular [40] Market Data and Key Metrics Changes - The impact of COVID-19 on revenue was estimated at approximately $3 million for the quarter [26] - Puerto Rico is expected to receive $5 billion in Federal Aid through CARES, with an additional $800 million from the local government [19] - The government of Puerto Rico has begun reopening several industries, which is expected to provide some economic activity [20] Company Strategy and Development Direction - The company is focusing on digital payment solutions and has seen increased adoption of its ATH Movil service during the pandemic [58][80] - There is a commitment to continue investing in technology and digital platforms to enhance service offerings [59][93] - The company aims to differentiate itself from competitors through customer focus and service [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to challenges posed by COVID-19 [7][12] - The company is suspending annual guidance due to uncertainty but expects to maintain positive cash flow [49][52] - Preliminary trends for April indicate a decline in revenue, but there is optimism about gradual economic recovery [51][72] Other Important Information - The company has a strong balance sheet with over $220 million in liquidity, excluding restricted cash [48] - The net debt to trailing 12 months adjusted EBITDA was under two times, which may improve interest rates on a portion of the debt [47] Q&A Session Summary Question: Trends in April and early May - Management noted a decline in volume in March, stabilizing in early April, with slight improvements as businesses began reopening [55][56] Question: Digital payment trends - There is evidence of a shift towards digital payments, with increased usage of ATH Movil among small businesses [58] Question: Merchant base and online volume - The merchant base is heavily weighted towards essential businesses, which have remained open during the pandemic [61][63] Question: Cost control measures - The company is focused on managing discretionary expenses while ensuring future growth opportunities are not compromised [66][69] Question: ATM exposure - ATM volumes have seen a decline due to shelter-in-place orders, but improvements are expected as businesses reopen [100] Question: M&A appetite post-COVID - The company remains focused on M&A as a growth strategy, although the current environment has slowed down potential deals [84]