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Evertec(EVTC) - 2024 Q4 - Earnings Call Transcript
EVTCEvertec(EVTC)2025-02-27 04:39
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Financial Data and Key Metrics Changes - Total revenue for 2024 was 845.5million,a22845.5 million, a 22% increase year-over-year [8] - Adjusted EBITDA was 340.2 million, up approximately 17% year-over-year, with an adjusted EBITDA margin of 40.2% [10][26] - Adjusted EPS was 3.28,anincreaseof163.28, an increase of 16% from the previous year [11][27] - Operating cash flows for the year were approximately 260 million, with 95millionreturnedtoshareholdersthroughsharerepurchasesanddividends[12][39]BusinessLineDataandKeyMetricsChanges−MerchantAcquiringrevenuegrewby1195 million returned to shareholders through share repurchases and dividends [12][39] Business Line Data and Key Metrics Changes - Merchant Acquiring revenue grew by 11% due to pricing initiatives and increased sales volume [9] - Payments Puerto Rico revenue increased by 6%, driven by higher transaction volumes and strong performance from ATH Movil [9] - Business Solutions revenue grew by 7%, attributed to key projects recognized throughout the year [9] - LATAM revenue surged by 62% year-over-year, primarily due to the full-year contribution from Sinqia and organic growth [10][17] Market Data and Key Metrics Changes - Economic conditions in Puerto Rico remained stable, with total employment at its highest since 2009 [13] - Passenger traffic at San Juan Airport grew approximately 9% year-over-year [14] - Puerto Rico received approximately 7 billion in reconstruction funds in 2024, with a similar amount expected for 2025 [16] Company Strategy and Development Direction - The company aims to focus on organic revenue growth, margin optimization, and capital allocation in 2025 [7] - Continued execution of acquisition strategy with two tuck-in deals closed in Q4 2024 [6] - The company is diversifying its revenue mix outside of Puerto Rico, with LATAM contributing approximately 33% of total revenue in 2024 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic conditions in Puerto Rico supporting business growth in 2025 [16] - The company anticipates revenue growth of 5.1% to 6.3% for 2025, with adjusted EPS expected to grow between 1.8% and 5.2% [42][43] - Management is confident in navigating the upcoming 10% discount on services starting in October 2025 through cost efficiencies [72] Other Important Information - The company generated a strong liquidity position of approximately 468millionasofDecember31,2024[12][41]−Thenetdebtpositionatyear−endwas468 million as of December 31, 2024 [12][41] - The net debt position at year-end was 706.8 million, with a weighted average interest rate of approximately 6.45% [40][41] Q&A Session Summary Question: Can you provide midterm guidance for future growth? - Management is currently focused on providing guidance for 2025 due to several moving pieces and changes within the company [56] Question: What is the expected performance of Sinqia in 2025? - Management is optimistic about Sinqia's growth reacceleration, focusing on technology upgrades and customer engagement [63] Question: How is the integration of EVERTEC's processing business into Brazil progressing? - Management is seeing reacceleration in existing businesses and is optimistic about future payment product interest [70] Question: What was the contribution from pricing in the Merchant segment? - The growth in the Merchant segment was approximately one-third from pricing, one-third from volume, and one-third from non-transactional fees [90] Question: What is the state of the M&A market in Latin America? - Management has a good M&A pipeline and is focused on diversifying the company through smart deals [94]