Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 07, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | EVERTEC, Inc. | |
Entity Central Index Key | 0001559865 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 001-35872 | |
Entity Incorporation, State or Country Code | PR | |
Entity Tax Identification Number | 66-0783622 | |
Entity Address, Address Line One | Cupey Center Building, | |
Entity Address, Address Line Two | Road 176, Kilometer 1.3, | |
Entity Address, City or Town | San Juan, | |
Entity Address, State or Province | PR | |
Entity Address, Postal Zip Code | 00926 | |
City Area Code | 787 | |
Local Phone Number | 759-9999 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | EVTC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 71,865,305 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 103,521 | $ 111,030 |
Restricted cash | 21,583 | 20,091 |
Accounts receivable, net | 95,305 | 106,812 |
Prepaid expenses and other assets | 39,904 | 38,085 |
Total current assets | 260,313 | 276,018 |
Investment in equity investee | 12,568 | 12,288 |
Property and equipment, net | 41,984 | 43,791 |
Operating lease right-of-use asset | 28,356 | 29,979 |
Goodwill | 394,498 | 399,487 |
Other intangible assets, net | 229,787 | 241,937 |
Deferred tax asset | 3,261 | 2,131 |
Net investment in leases | 554 | 722 |
Other long-term assets | 7,897 | 5,323 |
Total assets | 979,218 | 1,011,676 |
Current Liabilities: | ||
Accrued liabilities | 52,652 | 58,160 |
Accounts payable | 28,230 | 39,165 |
Unearned income | 18,138 | 20,668 |
Income tax payable | 9,190 | 6,298 |
Current portion of long-term debt | 14,250 | 14,250 |
Current portion of operating lease liability | 5,740 | 5,773 |
Total current liabilities | 128,200 | 144,314 |
Long-term debt | 490,844 | 510,947 |
Deferred tax liability | 2,957 | 4,261 |
Unearned income - long term | 32,037 | 28,437 |
Operating lease liability - long-term | 22,869 | 24,679 |
Other long-term liabilities | 39,627 | 27,415 |
Total liabilities | 716,534 | 740,053 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity | ||
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued | 0 | 0 |
Common stock, par value $0.01; 206,000,000 shares authorized; 71,865,305 shares issued and outstanding at March 31, 2020 (December 31, 2019 - 72,000,261) | 719 | 720 |
Accumulated earnings | 308,491 | 296,476 |
Accumulated other comprehensive loss, net of tax | (50,173) | (30,009) |
Total EVERTEC, Inc. stockholders’ equity | 259,037 | 267,187 |
Non-controlling interest | 3,647 | 4,436 |
Total equity | 262,684 | 271,623 |
Total liabilities and equity | $ 979,218 | $ 1,011,676 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 206,000,000 | 206,000,000 |
Common stock issued (in shares) | 71,865,305 | 72,000,261 |
Common stock outstanding (in shares) | 71,865,305 | 72,000,261 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues (affiliates Note 14) | $ 121,942 | $ 118,836 |
Operating costs and expenses | ||
Cost of revenues, exclusive of depreciation and amortization | 54,067 | 50,019 |
Selling, general and administrative expenses | 17,317 | 15,139 |
Depreciation and amortization | 17,795 | 16,273 |
Total operating costs and expenses | 89,179 | 81,431 |
Income from operations | 32,763 | 37,405 |
Non-operating income (expenses) | ||
Interest income | 363 | 259 |
Interest expense | (6,779) | (7,551) |
Earnings of equity method investment | 338 | 222 |
Other income, net | 108 | 208 |
Total non-operating expenses | (5,970) | (6,862) |
Income before income taxes | 26,793 | 30,543 |
Income tax expense | 4,518 | 3,809 |
Net income | 22,275 | 26,734 |
Less: Net income attributable to non-controlling interest | 64 | 90 |
Net income attributable to EVERTEC, Inc.’s common stockholders | 22,211 | 26,644 |
Other comprehensive income (loss), net of tax of $1,085 and $384 | ||
Foreign currency translation adjustments | (8,305) | 1,965 |
Loss on cash flow hedges | (11,859) | (4,055) |
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders | $ 2,047 | $ 24,554 |
Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders (in usd per share) | $ 0.31 | $ 0.37 |
Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders (in usd per share) | $ 0.30 | $ 0.36 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Other comprehensive income, income tax (benefit) expense | $ 1,085 | $ 384 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Earnings | Accumulated Other Comprehensive Loss | Non-Controlling Interest |
Beginning balance (in shares) at Dec. 31, 2018 | 72,378,710 | |||||
Beginning balance at Dec. 31, 2018 | $ 215,606 | $ 723 | $ 5,783 | $ 228,742 | $ (23,789) | $ 4,147 |
Changes in Stockholders’ Equity | ||||||
Share-based compensation recognized | 3,279 | 3,279 | ||||
Repurchase of common stock (in shares) | (618,573) | |||||
Repurchase of common stock | (17,486) | $ (6) | (3,129) | (14,351) | ||
Restricted stock units delivered (in shares) | 507,308 | |||||
Restricted stock units delivered | (5,928) | $ 5 | (5,933) | |||
Net income | 26,734 | 26,644 | 90 | |||
Cash dividends declared on common stock, $0.05 per share | (3,617) | (3,617) | ||||
Other comprehensive loss | (2,090) | (2,090) | ||||
Ending balance (in shares) at Mar. 31, 2019 | 72,267,445 | |||||
Ending balance at Mar. 31, 2019 | $ 216,498 | $ 722 | 0 | 237,418 | (25,879) | 4,237 |
Beginning balance (in shares) at Dec. 31, 2019 | 72,000,261 | 72,000,261 | ||||
Beginning balance at Dec. 31, 2019 | $ 271,623 | $ 720 | 0 | 296,476 | (30,009) | 4,436 |
Changes in Stockholders’ Equity | ||||||
Share-based compensation recognized | 3,483 | 3,483 | ||||
Repurchase of common stock (in shares) | (336,022) | |||||
Repurchase of common stock | (7,300) | $ (3) | (775) | (6,522) | ||
Restricted stock units delivered (in shares) | 201,066 | |||||
Restricted stock units delivered | (2,706) | $ 2 | (2,708) | |||
Net income | 22,275 | 22,211 | 64 | |||
Cash dividends declared on common stock, $0.05 per share | (3,600) | (3,600) | ||||
Other comprehensive loss | $ (21,017) | (20,164) | (853) | |||
Ending balance (in shares) at Mar. 31, 2020 | 71,865,305 | 71,865,305 | ||||
Ending balance at Mar. 31, 2020 | $ 262,684 | $ 719 | $ 0 | $ 308,491 | $ (50,173) | $ 3,647 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) - $ / shares | Feb. 20, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends declared (in usd per share) | $ 0.05 | $ 0.05 | $ 0.05 |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 22,275 | $ 26,734 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,795 | 16,273 |
Amortization of debt issue costs and accretion of discount | 621 | 415 |
Operating lease amortization | 1,173 | 1,472 |
Provision for doubtful accounts and sundry losses | 104 | 815 |
Deferred tax benefit | (1,080) | (882) |
Share-based compensation | 3,483 | 3,279 |
Loss on disposition of property and equipment and other intangibles | 81 | 22 |
Earnings of equity method investment | (338) | (222) |
(Increase) decrease in assets: | ||
Accounts receivable, net | 11,729 | 3,961 |
Prepaid expenses and other assets | (1,836) | (5,326) |
Other long-term assets | (2,477) | (2,558) |
Increase (decrease) in liabilities: | ||
Accrued liabilities and accounts payable | (20,662) | (18,339) |
Income tax payable | 3,307 | 191 |
Unearned income | 1,075 | 4,754 |
Operating lease liabilities | (1,409) | (1,281) |
Other long-term liabilities | 84 | 31 |
Total adjustments | 11,650 | 2,605 |
Net cash provided by operating activities | 33,925 | 29,339 |
Cash flows from investing activities | ||
Additions to software | (6,055) | (8,917) |
Property and equipment acquired | (3,357) | (5,071) |
Proceeds from sales of property and equipment | 0 | 32 |
Net cash used in investing activities | (9,412) | (13,956) |
Cash flows from financing activities | ||
Statutory withholding taxes paid on share-based compensation | (2,706) | (5,928) |
Net proceeds under short-term borrowings | 0 | 15,000 |
Repayment of short-term borrowings for purchase of equipment and software | (792) | (34) |
Dividends paid | 0 | (3,617) |
Repurchase of common stock | (7,300) | (17,486) |
Repayment of long-term debt | (20,560) | (3,563) |
Net cash used in financing activities | (31,358) | (15,628) |
Effect of foreign exchange rate on cash, cash equivalents and restricted cash | 828 | 0 |
Net decrease in cash, cash equivalents and restricted cash | (6,017) | (245) |
Cash, cash equivalents and restricted cash at beginning of the period | 131,121 | 86,746 |
Cash, cash equivalents and restricted cash at end of the period | 125,104 | 86,501 |
Reconciliation of cash, cash equivalents and restricted cash | ||
Cash and cash equivalents | 103,521 | 73,183 |
Restricted cash | 21,583 | 13,318 |
Cash, cash equivalents and restricted cash | 125,104 | 86,501 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 6,372 | 7,390 |
Cash paid for income taxes | 2,083 | 3,496 |
Supplemental disclosure of non-cash activities: | ||
Payable due to vendor related to equipment and software acquired | $ 1,482 | $ 893 |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation The Company EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) and its subsidiaries (collectively the “Company,” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, one of the leading automated teller machine ("ATM") and personal identification number ("PIN") debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core bank processing and cash processing in Puerto Rico and technology outsourcing in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely. EVERTEC's common stock is listed under the ticker symbol "EVTC" on the New York Stock Exchange. Basis of Presentation The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2019 , included in the Company’s 2019 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Risks and Uncertainties due to COVID-19 Pandemic In December 2019, the outbreak of a novel strain of coronavirus ("COVID-19") was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 100 countries, including every state and territory of the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and shortly thereafter, governmental authorities in Puerto Rico and the other countries in which EVERTEC operates declared states of emergency and implemented numerous public health measures to try to contain the virus, including lockdowns and curfews, school and business closures and restrictions on travel. COVID-19 presents material uncertainty and risk with respect to EVERTEC’s business, results of operations and cash flows, as well as with respect to changes in laws and regulations and government and regulatory policy. As the spread of the pandemic persists, entities are experiencing conditions often associated with a general economic downturn. The outbreak has disrupted global financial markets and negatively affected supply and demand across a broad range of industries. COVID-19’s impact on global economies could have a material adverse effect on (among other things) the profitability, capital and liquidity of the Company, particularly if consumer spending levels are depressed for a prolonged period of time. While the rapid development and fluidity of the situation prevents management from having clear visibility into the medium and long-term impacts, management believes possible effects may include, but are not limited to, disruption to the Company’s customers and revenue, absenteeism in the Company’s workforce, unavailability of products and supplies used in operations, and a decline in the value of assets held by the Company, including, among other things, tangible and intangible long-lived assets, and increased levels in the Company's current expected credit loss reserve. Given the uncertain and rapidly evolving situation, management has taken certain precautionary measures intended to help minimize the risk of COVID-19 to the Company, its employees, and customers, including the following: • The Company deployed its business continuity plan for the entire organization a few days before the government of Puerto Rico enacted a shelter in place directive on March 16, 2020. Since then, every country in which the Company operates has implemented some type of social distancing measures. Management expects that the offices will remain closed for an undetermined period, until it is deemed safe by management to return and as permitted or advised by local authorities in each country where the Company operates; • In connection with the Company's business continuity plan, we transitioned most of the Company’s employees to a work from home environment. For certain critical employees who are required to remain working on-site in order to, among other things, maintain network operations oversight functions, cash handling and other critical operations for our customers, we have implemented safety measures including administering daily temperature checks upon entry into the work site, providing protective gear, developing safe social distancing workspaces and increasing overall sanitation at our offices; • As a precautionary measure, to increase the Company's cash position and preserve its financial flexibility in light of the current uncertainty resulting from the COVID-19 outbreak, the Company drew down $30 million on its Senior Secured Revolving Facility on April 8, 2020; • On May 1, 2020, the Company commenced deferral of payroll taxes as permitted under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act"); management anticipates a $2.7 million deferral of payroll taxes during the allowed time; • Management identified additional expense reductions that are intended to be implemented as necessary; and • Management has suspended all non-essential travel for employees. While the Company anticipates that the foregoing measures are temporary, management cannot predict their duration, and management may elect or need to take additional precautions as more information related to COVID-19 becomes available, including with respect to employees, customers, and relationships with the Company's business partners. The extent to which the COVID-19 pandemic and EVERTEC’s precautionary measures in response to it, may impact the Company’s business, financial condition or results of operations will depend on the ongoing developments related to the pandemic and its direct and indirect consequences, all of which are highly uncertain and cannot be predicted at this time. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued updated guidance for the measurement of credit losses on financial instruments, which replaces the incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The main objective of this update and subsequent clarifications and corrections, including ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2020-03, is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments affect the Company's trade receivables. Additional disclosures about significant estimates and credit quality are also required. The Company adopted this new guidance effective January 1, 2020, using a modified retrospective approach through a cumulative-effect adjustment to retained earnings, considered immaterial to the consolidated financial statements. Results for reporting periods beginning after January 1, 2020 are presented under the new guidance provided by Accounting Standards Codification ("ASC") Topic 326, while prior period amounts are not adjusted and continue to be reported under legacy GAAP. Refer to Note 3, Current Expected Credit Losses , for discussions of the implementation of ASC Topic 326 with respect to the Company’s consolidated financial statements. In August 2018, the FASB issued updated guidance for customer’s accounting for implementation, set-up and other upfront costs (collectively referred to as implementation costs) incurred in a cloud computing arrangement constituting a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The updated guidance does not impact the accounting for the service element of a hosting arrangement that is a service contract. The Company adopted this guidance prospectively effective January 1, 2020 with respect to all implementation costs incurred in a cloud computing arrangement constituting a service contract. In November 2018, the FASB issued updated guidance to clarify the interaction between the guidance for collaborative arrangements and the updated revenue recognition guidance. The amendments in this update, among other things, provide guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under ASC Topic 606, Revenue from Contracts with Customers . The Company adopted the amendments in this update effective January 1, 2020. All contracts after this date will be evaluated under the updated guidance. Recently Issued Accounting Pronouncements In March 2020, the FASB issued updated guidance for ASC Topic 848, Reference Rate Reform , to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met for a limited period of time in order to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments to this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating whether to elect the adoption of this guidance with respect to the consolidated financial statements. Accounting Pronouncements Issued Prior to 2020 and Not Yet Adopted In December 2019, the FASB issued updated guidance for ASC Topic 740, Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles set out in ASC Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. The amendments to this update are effective for fiscal years, and interim periods within such fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact, if any, of the adoption of this guidance on the consolidated financial statements. |
Current Expected Credit Losses
Current Expected Credit Losses (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Current Expected Credit Losses | Current Expected Credit Losses Allowance for Current Expected Credit Losses The Company has only one type of financial asset that is subject to the expected credit loss model, which is trade receivables for contracts with customers. While contract assets and net investments in leases are also subject to the impairment requirements of ASC Topic 326, the impairment loss identified for these financial assets is immaterial to the consolidated financial statements. To measure expected credit losses, trade receivables are grouped based on shared risk characteristics (i.e., the relevant industry sector and customer's geographical location) and days past due (i.e., delinquency status), while considering the following: • Customers in the same geographical location share similar risk characteristics associated with the macroeconomic environment of their country. • The Company has two main industry sectors: private and governmental. The private pool is comprised mainly of leading financial institutions, merchants and corporations, while the governmental pool by government agencies. The governmental customers possess different risk characteristics than private customers because although all invoices are due every 30 days, governmental customers usually pay within 60 to 90 days after issuance (i.e., between 30 to 60 more days than private customers). The Company provides to its customers a broad range of merchant acquiring, payment services and business process management services, which constitute mission-critical technology solutions enabling customers to issue, process and accept transactions securely. • The expected credit loss rate is likely to increase as receivables move to older aging buckets. The Company used the following aging categories to estimate the risk of delinquency status: (i) 0 days past due; (ii) 1-30 days past due; (iii) 31-60 days past due; (iv) 61-90 days past due; and (v) over 90 days past due. The credit losses of the Company’s trade receivables have been historically low and most balances are collected within one year. Therefore, the Company determined that the expected loss rates should be calculated using the historical loss rates adjusted by macroeconomic factors. The historical rates are calculated for each of the aging categories used for pooling trade receivables. To determine the collected portion of each bucket, the collection time of each trade receivable is identified, as well as, the proportion of outstanding balances per aging bucket that ultimately was never collected. This is used to determine the expectation of losses based on the history of uncollected trade receivables once the specific past due period is surpassed. The historical rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the receivables by applying a country risk premium as the forward-looking macroeconomic factor. Specific reserves are established for certain customers for which collection is doubtful. Rollforward of the Allowance for Expected Current Credit Losses The activity in the allowance for expected current credit losses on trade receivables during the period from January 1, 2020 to March 31, 2020 , was as follows: (In thousands) March 31, 2020 Balance at beginning of period $ 3,460 Current period provision for expected credit losses (19 ) Write-offs (1,386 ) Recoveries of amounts previously written-off 3 Balance at end of period $ 2,058 The Company does not have a delinquency threshold for writing-off trade receivables. Potential write-offs of trade receivables are discussed in the Reserve Committee, which is responsible for the review and approval of write-offs. Impairment losses on trade receivables are presented as net impairment losses within cost of revenue, exclusive of depreciation and amortization in the unaudited condensed consolidated statement of income and comprehensive income. Subsequent recoveries of amounts previously written-off are credited against the allowance for expected current credit losses within accounts receivable, net on the unaudited condensed consolidated balance sheet. |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consists of the following: (Dollar amounts in thousands) Useful life March 31, 2020 December 31, 2019 Buildings 30 $ 1,497 $ 1,542 Data processing equipment 3 - 5 119,428 116,950 Furniture and equipment 3 - 20 6,660 6,936 Leasehold improvements 5 -10 3,007 2,814 130,592 128,242 Less - accumulated depreciation and amortization (89,916 ) (85,780 ) Depreciable assets, net 40,676 42,462 Land 1,308 1,329 Property and equipment, net $ 41,984 $ 43,791 Depreciation and amortization expense related to property and equipment for the three months ended March 31, 2020 amounted to $4.2 million compared to $4.0 million for the corresponding period in 2019 . |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 15): (In thousands) Payment Payment Merchant Business Total Balance at December 31, 2019 $ 160,972 $ 54,571 $ 138,121 $ 45,823 $ 399,487 Foreign currency translation adjustments — (4,989 ) — — (4,989 ) Balance at March 31, 2020 $ 160,972 $ 49,582 $ 138,121 $ 45,823 $ 394,498 Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company may test for goodwill impairment using a qualitative or a quantitative analysis. In the quantitative analysis, the Company compares the estimated fair value of the reporting units to their carrying values, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the fair value does not exceed the carrying value, an impairment loss is recorded for the excess of the carrying value over the fair value, limited to the recorded balance of goodwill. In the first quarter of 2020, global equity markets conditions deteriorated in reaction to the COVID-19 pandemic resulting in a corresponding decrease in the Company's stock price and market capitalization. As a result, management performed assessments as to whether the fair value of reporting units was less than carrying value as of March 31, 2020 and concluded that it was more likely than not that the fair value continued to be in excess of the carrying value for all reporting units. No impairment losses were recognized as of March 31, 2020 . The carrying amount of other intangible assets at March 31, 2020 and December 31, 2019 was as follows: March 31, 2020 (Dollar amounts in thousands) Useful life in years Gross Accumulated Net carrying Customer relationships 8 - 14 $ 343,557 $ (226,905 ) $ 116,652 Trademarks 10 - 15 41,874 (33,360 ) 8,514 Software packages 3 - 10 259,121 (175,230 ) 83,891 Non-compete agreement 15 56,539 (35,809 ) 20,730 Other intangible assets, net $ 701,091 $ (471,304 ) $ 229,787 December 31, 2019 (Dollar amounts in thousands) Useful life in years Gross Accumulated Net carrying Customer relationships 8 - 14 $ 344,883 $ (220,434 ) $ 124,449 Trademarks 2 - 15 42,025 (32,456 ) 9,569 Software packages 3 - 10 256,220 (169,974 ) 86,246 Non-compete agreement 15 56,539 (34,866 ) 21,673 Other intangible assets, net $ 699,667 $ (457,730 ) $ 241,937 Amortization expense related to other intangibles for the three months ended March 31, 2020 amounted to $13.6 million compared to $12.2 million for the corresponding period in 2019. The estimated amortization expense of the balances outstanding at March 31, 2020 for the next five years is as follows: (Dollar amounts in thousands) Remaining 2020 $ 37,989 2021 46,130 2022 40,887 2023 36,191 2024 28,071 |
Debt and Short-Term Borrowings
Debt and Short-Term Borrowings | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Short-Term Borrowings | Debt and Short-Term Borrowings Total debt at March 31, 2020 and December 31, 2019 follows: (In thousands) March 31, 2020 December 31, 2019 2023 Term A Loan paying interest at a variable interest rate (LIBOR plus applicable margin (1)(2) ) $ 196,693 $ 207,261 2024 Term B Loan paying interest at a variable interest rate (LIBOR plus applicable margin (1)(3) ) 308,401 317,936 Note payable due April 30, 2021 (1) 143 175 Note payable due January 1, 2022 (1) 1,339 2,231 Total debt $ 506,576 $ 527,603 (1) Net of unaccreted discount and unamortized debt issue costs, as applicable. (2) Applicable margin of 2.00% at March 31, 2020 and December 31, 2019 . (3) Subject to a minimum rate ("LIBOR floor") of 0% plus applicable margin of 3.50% at March 31, 2020 and December 31, 2019 . Secured Credit Facilities On November 27, 2018, EVERTEC and EVERTEC Group (“Borrower”) entered into a credit agreement providing for the secured credit facilities, consisting of a $220.0 million term loan A facility that matures on November 27, 2023 (the “2023 Term A Loan"), a $325.0 million term loan B facility that matures on November 27, 2024 (the “2024 Term B Loan”), and a $125.0 million revolving credit facility (the “Revolving Facility”) that matures on November 27, 2023, with a syndicate of lenders and Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 Credit Agreement”). The 2018 Credit Agreement requires mandatory repayment of outstanding principal balances based on a percentage of excess cash flow, provided that no such payment shall be due if the resulting amount of the excess cash flow multiplied by the applicable percentage is less than $10 million . On March 5, 2020, the Company repaid $17.0 million as a result of excess cash flows for the year ended December 31, 2019. The unpaid principal balance at March 31, 2020 of the 2023 Term A Loan and the 2024 Term B Loan was $198.3 million and $311.9 million , respectively. The additional borrowing capacity under our Revolving Facility at March 31, 2020 was $116.9 million . The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility. Notes Payable In December 2019, EVERTEC Group entered into two non-interest bearing financing agreements amounting to $2.4 million to purchase software and maintenance. As of March 31, 2020 and December 31, 2019 , the outstanding principal balance of the notes payable was $1.5 million and $2.4 million , respectively. The current portion of these notes, which totaled $0.8 million at March 31, 2020, is included in accounts payable and the long-term portion is included in other long-term liabilities in the Company's unaudited condensed consolidated balance sheet. Interest Rate Swaps As of March 31, 2020 , the Company has two interest rate swap agreements, entered into in December 2015 and December 2018, which convert a portion of the interest rate payments on the Company's 2024 Term B Loan from variable to fixed: Swap Agreement Effective date Maturity Date Notional Amount Variable Rate Fixed Rate 2015 Swap January 2017 April 2020 $200 million 1-month LIBOR 1.9225% 2018 Swap April 2020 November 2024 $250 million 1-month LIBOR 2.89% The Company has accounted for these agreements as cash flow hedges. As of March 31, 2020 and December 31, 2019 , the carrying amount of derivatives included in other long-term liabilities on the Company's unaudited condensed consolidated balance sheets was $27.4 million and $14.5 million , respectively. The fair value of these derivatives is estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 for disclosure of losses recorded on cash flow hedging activities. During the three months ended March 31, 2020 , the Company reclassified gains of $0.2 million from accumulated other comprehensive loss into interest expense. Based on current LIBOR rates, the Company expects to reclassify losses of $4.7 million from accumulated other comprehensive loss into interest expense over the next 12 months. The cash flow hedges are considered highly effective. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements Recurring Fair Value Measurements The Company's interest rate swaps are the only financial instruments measured at fair value on a recurring basis. The fair value is estimated using Level 2 inputs under the fair value hierarchy. These derivatives were on a liability position with balances of $27.4 million and $14.5 million as of March 31, 2020 and December 31, 2019 , respectively. The following table presents the carrying value, as applicable, and estimated fair values for financial instruments at March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 (In thousands) Carrying Fair Carrying Fair Financial liabilities: Interest rate swap $ 27,401 $ 27,401 $ 14,452 $ 14,452 2023 Term A Loan 196,693 185,366 207,261 206,388 2024 Term B Loan 308,401 264,108 317,936 324,163 The fair values of the term loans at March 31, 2020 and December 31, 2019 |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Equity | Equity Accumulated Other Comprehensive Loss The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the three months period ended March 31, 2020 : (In thousands) Foreign Currency Cash Flow Hedges Total Balance - December 31, 2019, net of tax $ (16,872 ) $ (13,137 ) $ (30,009 ) Other comprehensive loss before reclassifications (8,305 ) (12,050 ) (20,355 ) Effective portion reclassified to net income — 191 191 Balance - March 31, 2020, net of tax $ (25,177 ) $ (24,996 ) $ (50,173 ) |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | Share-based Compensation Long-term Incentive Plan ("LTIP") In the first quarter of 2018, 2019 and 2020, the Compensation Committee of the Company's Board of Directors ("Board") approved grants of restricted stock units (“RSUs”) to executives and certain employees pursuant to the 2018 LTIP, 2019 LTIP and 2020 LTIP, respectively, all under the terms of the Company's 2013 Equity Incentive Plan. Under the LTIPs, the Company granted restricted stock units to eligible participants as time-based awards and/or performance-based awards. The vesting of the RSUs is dependent upon service, market, and/or performance conditions as defined in the grants. Employees that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee is providing services to the Company on the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant date and ending on February 28 of each year for the 2018 LTIP, February 22 of each year for the 2019 LTIP, and February 27 of each year for the 2020 LTIP. For the performance-based awards under the 2018 LTIP, 2019 LTIP, and 2020 LTIP, the Compensation Committee established adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance measure while maintaining focus on total shareholder return through the use of a market-based total shareholder return ("TSR") performance modifier. The TSR modifier adjusts the shares earned based on the core Adjusted EBITDA performance upwards or downwards (+/- 25% ) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1 of the year of the grant and ending on December 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additional two-year service vesting period. Performance and market-based awards vest at the end of the performance period that commenced on February 28, 2018 for the 2018 LTIP, February 22, 2019 for the 2019 LTIP, and February 27, 2020 for the 2020 LTIP. The periods end on February 28, 2021 for the 2018 LTIP, February 22, 2022 for the 2019 LTIP and February 27, 2023 for the 2020 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting. The following table summarizes nonvested restricted shares and RSUs activity for the three months ended March 31, 2020 : Nonvested restricted shares and RSUs Shares Weighted-average Nonvested at December 31, 2019 1,592,755 $ 20.71 Forfeited (139,854 ) 19.26 Vested (305,531 ) 19.84 Granted 378,135 31.84 Nonvested at March 31, 2020 1,525,505 $ 23.77 For the three months ended March 31, 2020 , the Company recognized $3.5 million of share-based compensation expense, compared with $3.3 million for the corresponding period in 2019 . As of March 31, 2020 , the maximum unrecognized cost for restricted stock and RSUs was $26.3 million . The cost is expected to be recognized over a weighted average period of 2.3 |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into primary geographical markets, nature of the products and services, and timing of transfer of goods and services. The Company's operating segments are determined by the nature of the products and services the Company provides and the primary geographical markets in which the Company operates. Revenue disaggregated by segment is discussed in Note 15, Segment Information. In the following tables, revenue for each segment is disaggregated by timing of revenue recognition for the periods indicated. Three months ended March 31, 2020 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total Timing of revenue recognition Products and services transferred at a point in time $ 5 $ 431 $ — $ 297 $ 733 Products and services transferred over time 20,633 19,809 25,121 55,646 121,209 $ 20,638 $ 20,240 $ 25,121 $ 55,943 $ 121,942 Three months ended March 31, 2019 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total Timing of revenue recognition Products and services transferred at a point in time $ 2,677 $ 70 $ — $ 877 $ 3,624 Products and services transferred over time 20,073 18,678 25,974 50,487 115,212 $ 22,750 $ 18,748 $ 25,974 $ 51,364 $ 118,836 Contract Balances The following table provides information about contract assets from contracts with customers. (In thousands) March 31, 2020 December 31, 2019 $ 1,191 Services transferred to customers 922 Transfers to accounts receivable (546 ) March 31, 2020 $ 1,567 The current portion of contract assets is recorded as part of prepaid expenses and other assets, and the long-term portion is included in other long-term assets in the unaudited condensed consolidated balance sheets. Accounts receivable, net at March 31, 2020 amounted to $95.3 million . Unearned income and unearned income - long term, which refer to contract liabilities, at March 31, 2020 amounted to $18.1 million and $32.0 million , respectively, and generally arise when consideration is received or due in advance from customers prior to performance. Unearned income is mainly related to upfront fees for implementation or set up activities, including fees charged in pre-production periods in connection with managed services. During the three months ended March 31, 2020 , the Company recognized revenue of $5.2 million that was included in unearned income at December 31, 2019 . During the three months ended March 31, 2019 , the Company recognized revenue of $6.1 million that was included in unearned income at December 31, 2018 . The estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at March 31, 2020 is $288.7 million . This amount primarily consists of professional service fees for implementation or set up activities related to managed services and maintenance services, typically recognized over the life of the contract, which varies from 2 to 5 |
Income Tax
Income Tax | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Tax The components of income tax expense for the three months ended March 31, 2020 and 2019 , respectively, consisted of the following: Three months ended (In thousands) 2020 2019 Current tax provision $ 5,598 $ 4,691 Deferred tax benefit (1,080 ) (882 ) Income tax expense $ 4,518 $ 3,809 The Company conducts operations in Puerto Rico and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three months ended March 31, 2020 and 2019 , and its segregation based on location of operations: Three months ended March 31, (In thousands) 2020 2019 Current tax provision Puerto Rico $ 1,679 $ 1,813 United States 155 112 Foreign countries 3,764 2,766 Total current tax provision $ 5,598 $ 4,691 Deferred tax benefit Puerto Rico $ (88 ) $ (476 ) United States (25 ) (372 ) Foreign countries (967 ) (34 ) Total deferred tax benefit $ (1,080 ) $ (882 ) Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements. As of March 31, 2020 , the Company has $67.4 million of unremitted earnings from foreign subsidiaries. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested. As of March 31, 2020 , the gross deferred tax asset amounted to $19.8 million and the gross deferred tax liability amounted to $19.5 million , compared to $12.8 million and $15.0 million , respectively, as of December 31, 2019 |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | Net Income Per Common Share The reconciliation of the numerator and denominator of the income per common share is as follows: Three months ended March 31, (Dollar amounts in thousands, except per share information) 2020 2019 Net income attributable to EVERTEC, Inc.’s common stockholders $ 22,211 $ 26,644 Less: non-forfeitable dividends on restricted stock 6 6 Net income available to EVERTEC, Inc.’s common shareholders $ 22,205 $ 26,638 Weighted average common shares outstanding 72,012,648 72,378,532 Weighted average potential dilutive common shares (1) 1,280,357 1,391,534 Weighted average common shares outstanding - assuming dilution 73,293,005 73,770,066 Net income per common share - basic $ 0.31 $ 0.37 Net income per common share - diluted $ 0.30 $ 0.36 (1) Potential common shares consist of common stock issuable under the assumed release of restricted stock awards using the treasury stock method. On February 20, 2020 , the Company's Board declared a quarterly cash dividend of $0.05 per share of common stock, which was paid on April 3, 2020 , to stockholders of record as of the close of business on March 4, 2020 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss would be insignificant. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The following table presents the Company’s transactions with related parties for the three months ended March 31, 2020 and 2019 : Three months ended March 31, (Dollar amounts in thousands) 2020 2019 Total revenues (1)(2) $ 54,572 $ 49,030 Cost of revenues $ 618 $ 523 Operating lease cost and other fees $ 1,981 $ 2,128 Interest earned from affiliate Interest income $ 89 $ 28 (1) Popular revenues as a percentage of total revenues were 45% and 41% , respectively, for each of the periods presented above. (2) Includes revenues generated from investee accounted for under the equity method of $0.3 million for each of the periods presented above. At March 31, 2020 and December 31, 2019 , EVERTEC had the following balances arising from transactions with related parties: (Dollar amounts in thousands) March 31, 2020 December 31, 2019 Cash and restricted cash deposits in affiliated bank $ 58,445 $ 64,724 Other due to/from affiliate Accounts receivable $ 41,493 $ 39,095 Prepaid expenses and other assets $ 5,341 $ 4,211 Operating lease right-of use assets $ 19,751 $ 20,617 Other long-term assets $ 43 $ 57 Accounts payable $ 2,007 $ 7,250 Unearned income $ 36,056 $ 35,489 Operating lease liabilities $ 20,054 $ 20,905 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions. The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions) and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file. The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services. The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value. The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e. savings or checking accounts, loans, etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring. In addition to the four operating segments described above, management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented within the “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as: • marketing, • corporate finance and accounting, • human resources, • legal, • risk management functions, • internal audit, • corporate debt related costs, • non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity, • intersegment revenues and expenses, and • other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting , given that it is reported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the accompanying unaudited condensed consolidated financial statements. The following tables set forth information about the Company’s operations by its four business segments for the periods indicated: Three months ended March 31, 2020 (In thousands) Payment Payment Merchant Business Corporate and Other (1) Total Revenues $ 29,887 $ 21,640 $ 25,121 $ 55,943 $ (10,649 ) $ 121,942 Operating costs and expenses 17,406 17,651 14,706 33,617 5,799 89,179 Depreciation and amortization 3,249 2,757 499 4,296 6,994 17,795 Non-operating income (expenses) 113 754 154 387 (962 ) 446 EBITDA 15,843 7,500 11,068 27,009 (10,416 ) 51,004 Compensation and benefits (2) 231 742 216 436 1,875 3,500 Transaction, refinancing and other fees (3) — — — — 1,786 1,786 Adjusted EBITDA $ 16,074 $ 8,242 $ 11,284 $ 27,445 $ (6,755 ) $ 56,290 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software sale and developments of $1.6 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.1 million . (2) Primarily represents share-based compensation. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received. Three months ended March 31, 2019 (In thousands) Payment Payment Merchant Business Corporate and Other (1) Total Revenues $ 32,017 $ 20,831 $ 25,974 $ 51,364 $ (11,350 ) $ 118,836 Operating costs and expenses 14,215 17,573 14,718 32,910 2,015 81,431 Depreciation and amortization 2,643 2,196 468 3,854 7,112 16,273 Non-operating income (expenses) 581 2,634 21 186 (2,992 ) 430 EBITDA 21,026 8,088 11,745 22,494 (9,245 ) 54,108 Compensation and benefits (2) 237 166 220 554 2,262 3,439 Transaction, refinancing and other fees (3) — 2 — — 47 49 Adjusted EBITDA $ 21,263 $ 8,256 $ 11,965 $ 23,048 $ (6,936 ) $ 57,596 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.2 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software sale and developments of $2.1 million from Payment Services - Latin America to the Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $4.8 million . (2) Primarily represents share-based compensation, other compensation expense and severance payments. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received. The reconciliation of EBITDA to consolidated net income is as follows: Three months ended March 31, (In thousands) 2020 2019 Total EBITDA $ 51,004 $ 54,108 Less: Income tax expense 4,518 3,809 Interest expense, net 6,416 7,292 Depreciation and amortization 17,795 16,273 Net income $ 22,275 $ 26,734 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 21, 2020 , the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on June 5, 2020 to stockholders of record as of the close of business on May 4, 2020 |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
The Company | The Company EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) and its subsidiaries (collectively the “Company,” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, one of the leading automated teller machine ("ATM") and personal identification number ("PIN") debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core bank processing and cash processing in Puerto Rico and technology outsourcing in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely. EVERTEC's common stock is listed under the ticker symbol "EVTC" on the New York Stock Exchange. |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2019 , included in the Company’s 2019 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Risks and Uncertainties due to COVID-19 Pandemic In December 2019, the outbreak of a novel strain of coronavirus ("COVID-19") was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 100 countries, including every state and territory of the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and shortly thereafter, governmental authorities in Puerto Rico and the other countries in which EVERTEC operates declared states of emergency and implemented numerous public health measures to try to contain the virus, including lockdowns and curfews, school and business closures and restrictions on travel. COVID-19 presents material uncertainty and risk with respect to EVERTEC’s business, results of operations and cash flows, as well as with respect to changes in laws and regulations and government and regulatory policy. As the spread of the pandemic persists, entities are experiencing conditions often associated with a general economic downturn. The outbreak has disrupted global financial markets and negatively affected supply and demand across a broad range of industries. COVID-19’s impact on global economies could have a material adverse effect on (among other things) the profitability, capital and liquidity of the Company, particularly if consumer spending levels are depressed for a prolonged period of time. While the rapid development and fluidity of the situation prevents management from having clear visibility into the medium and long-term impacts, management believes possible effects may include, but are not limited to, disruption to the Company’s customers and revenue, absenteeism in the Company’s workforce, unavailability of products and supplies used in operations, and a decline in the value of assets held by the Company, including, among other things, tangible and intangible long-lived assets, and increased levels in the Company's current expected credit loss reserve. Given the uncertain and rapidly evolving situation, management has taken certain precautionary measures intended to help minimize the risk of COVID-19 to the Company, its employees, and customers, including the following: • The Company deployed its business continuity plan for the entire organization a few days before the government of Puerto Rico enacted a shelter in place directive on March 16, 2020. Since then, every country in which the Company operates has implemented some type of social distancing measures. Management expects that the offices will remain closed for an undetermined period, until it is deemed safe by management to return and as permitted or advised by local authorities in each country where the Company operates; • In connection with the Company's business continuity plan, we transitioned most of the Company’s employees to a work from home environment. For certain critical employees who are required to remain working on-site in order to, among other things, maintain network operations oversight functions, cash handling and other critical operations for our customers, we have implemented safety measures including administering daily temperature checks upon entry into the work site, providing protective gear, developing safe social distancing workspaces and increasing overall sanitation at our offices; • As a precautionary measure, to increase the Company's cash position and preserve its financial flexibility in light of the current uncertainty resulting from the COVID-19 outbreak, the Company drew down $30 million on its Senior Secured Revolving Facility on April 8, 2020; • On May 1, 2020, the Company commenced deferral of payroll taxes as permitted under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act"); management anticipates a $2.7 million deferral of payroll taxes during the allowed time; • Management identified additional expense reductions that are intended to be implemented as necessary; and • Management has suspended all non-essential travel for employees. While the Company anticipates that the foregoing measures are temporary, management cannot predict their duration, and management may elect or need to take additional precautions as more information related to COVID-19 becomes available, including with respect to employees, customers, and relationships with the Company's business partners. The extent to which the COVID-19 pandemic and EVERTEC’s precautionary measures in response to it, may impact the Company’s business, financial condition or results of operations will depend on the ongoing developments related to the pandemic and its direct and indirect consequences, all of which are highly uncertain and cannot be predicted at this time. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued updated guidance for the measurement of credit losses on financial instruments, which replaces the incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The main objective of this update and subsequent clarifications and corrections, including ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2020-03, is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments affect the Company's trade receivables. Additional disclosures about significant estimates and credit quality are also required. The Company adopted this new guidance effective January 1, 2020, using a modified retrospective approach through a cumulative-effect adjustment to retained earnings, considered immaterial to the consolidated financial statements. Results for reporting periods beginning after January 1, 2020 are presented under the new guidance provided by Accounting Standards Codification ("ASC") Topic 326, while prior period amounts are not adjusted and continue to be reported under legacy GAAP. Refer to Note 3, Current Expected Credit Losses , for discussions of the implementation of ASC Topic 326 with respect to the Company’s consolidated financial statements. In August 2018, the FASB issued updated guidance for customer’s accounting for implementation, set-up and other upfront costs (collectively referred to as implementation costs) incurred in a cloud computing arrangement constituting a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The updated guidance does not impact the accounting for the service element of a hosting arrangement that is a service contract. The Company adopted this guidance prospectively effective January 1, 2020 with respect to all implementation costs incurred in a cloud computing arrangement constituting a service contract. In November 2018, the FASB issued updated guidance to clarify the interaction between the guidance for collaborative arrangements and the updated revenue recognition guidance. The amendments in this update, among other things, provide guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under ASC Topic 606, Revenue from Contracts with Customers . The Company adopted the amendments in this update effective January 1, 2020. All contracts after this date will be evaluated under the updated guidance. Recently Issued Accounting Pronouncements In March 2020, the FASB issued updated guidance for ASC Topic 848, Reference Rate Reform , to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met for a limited period of time in order to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments to this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating whether to elect the adoption of this guidance with respect to the consolidated financial statements. Accounting Pronouncements Issued Prior to 2020 and Not Yet Adopted In December 2019, the FASB issued updated guidance for ASC Topic 740, Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles set out in ASC Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. The amendments to this update are effective for fiscal years, and interim periods within such fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact, if any, of the adoption of this guidance on the consolidated financial statements. |
Current Expected Credit Losse_2
Current Expected Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of allowance for credit losses on trade receivables | The activity in the allowance for expected current credit losses on trade receivables during the period from January 1, 2020 to March 31, 2020 , was as follows: (In thousands) March 31, 2020 Balance at beginning of period $ 3,460 Current period provision for expected credit losses (19 ) Write-offs (1,386 ) Recoveries of amounts previously written-off 3 Balance at end of period $ 2,058 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment, net | Property and equipment, net consists of the following: (Dollar amounts in thousands) Useful life March 31, 2020 December 31, 2019 Buildings 30 $ 1,497 $ 1,542 Data processing equipment 3 - 5 119,428 116,950 Furniture and equipment 3 - 20 6,660 6,936 Leasehold improvements 5 -10 3,007 2,814 130,592 128,242 Less - accumulated depreciation and amortization (89,916 ) (85,780 ) Depreciable assets, net 40,676 42,462 Land 1,308 1,329 Property and equipment, net $ 41,984 $ 43,791 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of changes in carrying amount of goodwill allocated by reportable segments | The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 15): (In thousands) Payment Payment Merchant Business Total Balance at December 31, 2019 $ 160,972 $ 54,571 $ 138,121 $ 45,823 $ 399,487 Foreign currency translation adjustments — (4,989 ) — — (4,989 ) Balance at March 31, 2020 $ 160,972 $ 49,582 $ 138,121 $ 45,823 $ 394,498 |
Summary of carrying amount of other intangible assets | The carrying amount of other intangible assets at March 31, 2020 and December 31, 2019 was as follows: March 31, 2020 (Dollar amounts in thousands) Useful life in years Gross Accumulated Net carrying Customer relationships 8 - 14 $ 343,557 $ (226,905 ) $ 116,652 Trademarks 10 - 15 41,874 (33,360 ) 8,514 Software packages 3 - 10 259,121 (175,230 ) 83,891 Non-compete agreement 15 56,539 (35,809 ) 20,730 Other intangible assets, net $ 701,091 $ (471,304 ) $ 229,787 December 31, 2019 (Dollar amounts in thousands) Useful life in years Gross Accumulated Net carrying Customer relationships 8 - 14 $ 344,883 $ (220,434 ) $ 124,449 Trademarks 2 - 15 42,025 (32,456 ) 9,569 Software packages 3 - 10 256,220 (169,974 ) 86,246 Non-compete agreement 15 56,539 (34,866 ) 21,673 Other intangible assets, net $ 699,667 $ (457,730 ) $ 241,937 |
Summary of estimated amortization expenses | The estimated amortization expense of the balances outstanding at March 31, 2020 for the next five years is as follows: (Dollar amounts in thousands) Remaining 2020 $ 37,989 2021 46,130 2022 40,887 2023 36,191 2024 28,071 |
Debt and Short-Term Borrowings
Debt and Short-Term Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of total debt | Total debt at March 31, 2020 and December 31, 2019 follows: (In thousands) March 31, 2020 December 31, 2019 2023 Term A Loan paying interest at a variable interest rate (LIBOR plus applicable margin (1)(2) ) $ 196,693 $ 207,261 2024 Term B Loan paying interest at a variable interest rate (LIBOR plus applicable margin (1)(3) ) 308,401 317,936 Note payable due April 30, 2021 (1) 143 175 Note payable due January 1, 2022 (1) 1,339 2,231 Total debt $ 506,576 $ 527,603 (1) Net of unaccreted discount and unamortized debt issue costs, as applicable. (2) Applicable margin of 2.00% at March 31, 2020 and December 31, 2019 . (3) Subject to a minimum rate ("LIBOR floor") of 0% plus applicable margin of 3.50% at March 31, 2020 and December 31, 2019 . |
Summary of interest rate swap transaction | As of March 31, 2020 , the Company has two interest rate swap agreements, entered into in December 2015 and December 2018, which convert a portion of the interest rate payments on the Company's 2024 Term B Loan from variable to fixed: Swap Agreement Effective date Maturity Date Notional Amount Variable Rate Fixed Rate 2015 Swap January 2017 April 2020 $200 million 1-month LIBOR 1.9225% 2018 Swap April 2020 November 2024 $250 million 1-month LIBOR 2.89% |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of carrying value and estimated fair values for financial instruments | The following table presents the carrying value, as applicable, and estimated fair values for financial instruments at March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 (In thousands) Carrying Fair Carrying Fair Financial liabilities: Interest rate swap $ 27,401 $ 27,401 $ 14,452 $ 14,452 2023 Term A Loan 196,693 185,366 207,261 206,388 2024 Term B Loan 308,401 264,108 317,936 324,163 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of changes in balances of accumulated other comprehensive loss | The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the three months period ended March 31, 2020 : (In thousands) Foreign Currency Cash Flow Hedges Total Balance - December 31, 2019, net of tax $ (16,872 ) $ (13,137 ) $ (30,009 ) Other comprehensive loss before reclassifications (8,305 ) (12,050 ) (20,355 ) Effective portion reclassified to net income — 191 191 Balance - March 31, 2020, net of tax $ (25,177 ) $ (24,996 ) $ (50,173 ) |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of nonvested restricted shares and RSUs activity | The following table summarizes nonvested restricted shares and RSUs activity for the three months ended March 31, 2020 : Nonvested restricted shares and RSUs Shares Weighted-average Nonvested at December 31, 2019 1,592,755 $ 20.71 Forfeited (139,854 ) 19.26 Vested (305,531 ) 19.84 Granted 378,135 31.84 Nonvested at March 31, 2020 1,525,505 $ 23.77 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of disaggregation of revenue | In the following tables, revenue for each segment is disaggregated by timing of revenue recognition for the periods indicated. Three months ended March 31, 2020 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total Timing of revenue recognition Products and services transferred at a point in time $ 5 $ 431 $ — $ 297 $ 733 Products and services transferred over time 20,633 19,809 25,121 55,646 121,209 $ 20,638 $ 20,240 $ 25,121 $ 55,943 $ 121,942 Three months ended March 31, 2019 (In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total Timing of revenue recognition Products and services transferred at a point in time $ 2,677 $ 70 $ — $ 877 $ 3,624 Products and services transferred over time 20,073 18,678 25,974 50,487 115,212 $ 22,750 $ 18,748 $ 25,974 $ 51,364 $ 118,836 |
Summary of contract balances | The following table provides information about contract assets from contracts with customers. (In thousands) March 31, 2020 December 31, 2019 $ 1,191 Services transferred to customers 922 Transfers to accounts receivable (546 ) March 31, 2020 $ 1,567 |
Income Tax (Tables)
Income Tax (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) | The components of income tax expense for the three months ended March 31, 2020 and 2019 , respectively, consisted of the following: Three months ended (In thousands) 2020 2019 Current tax provision $ 5,598 $ 4,691 Deferred tax benefit (1,080 ) (882 ) Income tax expense $ 4,518 $ 3,809 |
Segregation of income tax expense based on location of operations | The following table presents the components of income tax expense for the three months ended March 31, 2020 and 2019 , and its segregation based on location of operations: Three months ended March 31, (In thousands) 2020 2019 Current tax provision Puerto Rico $ 1,679 $ 1,813 United States 155 112 Foreign countries 3,764 2,766 Total current tax provision $ 5,598 $ 4,691 Deferred tax benefit Puerto Rico $ (88 ) $ (476 ) United States (25 ) (372 ) Foreign countries (967 ) (34 ) Total deferred tax benefit $ (1,080 ) $ (882 ) |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of numerator and denominator of income per common share | The reconciliation of the numerator and denominator of the income per common share is as follows: Three months ended March 31, (Dollar amounts in thousands, except per share information) 2020 2019 Net income attributable to EVERTEC, Inc.’s common stockholders $ 22,211 $ 26,644 Less: non-forfeitable dividends on restricted stock 6 6 Net income available to EVERTEC, Inc.’s common shareholders $ 22,205 $ 26,638 Weighted average common shares outstanding 72,012,648 72,378,532 Weighted average potential dilutive common shares (1) 1,280,357 1,391,534 Weighted average common shares outstanding - assuming dilution 73,293,005 73,770,066 Net income per common share - basic $ 0.31 $ 0.37 Net income per common share - diluted $ 0.30 $ 0.36 (1) Potential common shares consist of common stock issuable under the assumed release of restricted stock awards using the treasury stock method. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Summary transactions with related parties | The following table presents the Company’s transactions with related parties for the three months ended March 31, 2020 and 2019 : Three months ended March 31, (Dollar amounts in thousands) 2020 2019 Total revenues (1)(2) $ 54,572 $ 49,030 Cost of revenues $ 618 $ 523 Operating lease cost and other fees $ 1,981 $ 2,128 Interest earned from affiliate Interest income $ 89 $ 28 (1) Popular revenues as a percentage of total revenues were 45% and 41% , respectively, for each of the periods presented above. (2) Includes revenues generated from investee accounted for under the equity method of $0.3 million for each of the periods presented above. |
Summary of balances of transactions with related parties | At March 31, 2020 and December 31, 2019 , EVERTEC had the following balances arising from transactions with related parties: (Dollar amounts in thousands) March 31, 2020 December 31, 2019 Cash and restricted cash deposits in affiliated bank $ 58,445 $ 64,724 Other due to/from affiliate Accounts receivable $ 41,493 $ 39,095 Prepaid expenses and other assets $ 5,341 $ 4,211 Operating lease right-of use assets $ 19,751 $ 20,617 Other long-term assets $ 43 $ 57 Accounts payable $ 2,007 $ 7,250 Unearned income $ 36,056 $ 35,489 Operating lease liabilities $ 20,054 $ 20,905 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of information about operations by business segments | The following tables set forth information about the Company’s operations by its four business segments for the periods indicated: Three months ended March 31, 2020 (In thousands) Payment Payment Merchant Business Corporate and Other (1) Total Revenues $ 29,887 $ 21,640 $ 25,121 $ 55,943 $ (10,649 ) $ 121,942 Operating costs and expenses 17,406 17,651 14,706 33,617 5,799 89,179 Depreciation and amortization 3,249 2,757 499 4,296 6,994 17,795 Non-operating income (expenses) 113 754 154 387 (962 ) 446 EBITDA 15,843 7,500 11,068 27,009 (10,416 ) 51,004 Compensation and benefits (2) 231 742 216 436 1,875 3,500 Transaction, refinancing and other fees (3) — — — — 1,786 1,786 Adjusted EBITDA $ 16,074 $ 8,242 $ 11,284 $ 27,445 $ (6,755 ) $ 56,290 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software sale and developments of $1.6 million from Payment Services - Latin America to Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.1 million . (2) Primarily represents share-based compensation. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received. Three months ended March 31, 2019 (In thousands) Payment Payment Merchant Business Corporate and Other (1) Total Revenues $ 32,017 $ 20,831 $ 25,974 $ 51,364 $ (11,350 ) $ 118,836 Operating costs and expenses 14,215 17,573 14,718 32,910 2,015 81,431 Depreciation and amortization 2,643 2,196 468 3,854 7,112 16,273 Non-operating income (expenses) 581 2,634 21 186 (2,992 ) 430 EBITDA 21,026 8,088 11,745 22,494 (9,245 ) 54,108 Compensation and benefits (2) 237 166 220 554 2,262 3,439 Transaction, refinancing and other fees (3) — 2 — — 47 49 Adjusted EBITDA $ 21,263 $ 8,256 $ 11,965 $ 23,048 $ (6,936 ) $ 57,596 (1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $9.2 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software sale and developments of $2.1 million from Payment Services - Latin America to the Payment Services - Puerto Rico & Caribbean. Corporate and Other was impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $4.8 million . (2) Primarily represents share-based compensation, other compensation expense and severance payments. (3) Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% |
Reconciliation of income from operations to consolidated net income | The reconciliation of EBITDA to consolidated net income is as follows: Three months ended March 31, (In thousands) 2020 2019 Total EBITDA $ 51,004 $ 54,108 Less: Income tax expense 4,518 3,809 Interest expense, net 6,416 7,292 Depreciation and amortization 17,795 16,273 Net income $ 22,275 $ 26,734 |
The Company and Basis of Pres_3
The Company and Basis of Presentation (Detail) $ in Millions | May 01, 2020USD ($) | Apr. 08, 2020USD ($) | Mar. 31, 2020country |
Change in Accounting Estimate [Line Items] | |||
Number of countries where the company provides a broad range of merchant acquiring, payment processing and business process management services (in country) | country | 26 | ||
Subsequent Event | |||
Change in Accounting Estimate [Line Items] | |||
Expected payroll taxes deferral | $ 2.7 | ||
Subsequent Event | Senior Secured Revolving Credit Facility | Credit Facility | |||
Change in Accounting Estimate [Line Items] | |||
Revolving credit facility draw down | $ 30 |
Current Expected Credit Losse_3
Current Expected Credit Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |
Balance at beginning of period | $ 3,460 |
Current period provision for expected credit losses | (19) |
Write-offs | (1,386) |
Recoveries of amounts previously written-off | 3 |
Balance at end of period | $ 2,058 |
Property and Equipment, net (De
Property and Equipment, net (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property and Equipment, net | |||
Property and equipment, gross | $ 130,592 | $ 128,242 | |
Less - accumulated depreciation and amortization | (89,916) | (85,780) | |
Depreciable assets, net | 40,676 | 42,462 | |
Land | 1,308 | 1,329 | |
Property and equipment, net | 41,984 | 43,791 | |
Depreciation and amortization expense related to property and equipment | $ 4,200 | $ 4,000 | |
Buildings | |||
Property and Equipment, net | |||
Useful life in years | 30 years | ||
Property and equipment, gross | $ 1,497 | 1,542 | |
Data processing equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 119,428 | 116,950 | |
Data processing equipment | Minimum | |||
Property and Equipment, net | |||
Useful life in years | 3 years | ||
Data processing equipment | Maximum | |||
Property and Equipment, net | |||
Useful life in years | 5 years | ||
Furniture and equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 6,660 | 6,936 | |
Furniture and equipment | Minimum | |||
Property and Equipment, net | |||
Useful life in years | 3 years | ||
Furniture and equipment | Maximum | |||
Property and Equipment, net | |||
Useful life in years | 20 years | ||
Leasehold improvements | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 3,007 | $ 2,814 | |
Leasehold improvements | Minimum | |||
Property and Equipment, net | |||
Useful life in years | 5 years | ||
Leasehold improvements | Maximum | |||
Property and Equipment, net | |||
Useful life in years | 10 years |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill by Segments (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Changes in the Carrying Amount of Goodwill | |
Beginning balance | $ 399,487 |
Foreign currency translation adjustments | (4,989) |
Ending balance | 394,498 |
Payment Services - Puerto Rico & Caribbean | |
Changes in the Carrying Amount of Goodwill | |
Beginning balance | 160,972 |
Foreign currency translation adjustments | 0 |
Ending balance | 160,972 |
Payment Services - Latin America | |
Changes in the Carrying Amount of Goodwill | |
Beginning balance | 54,571 |
Foreign currency translation adjustments | (4,989) |
Ending balance | 49,582 |
Merchant Acquiring, net | |
Changes in the Carrying Amount of Goodwill | |
Beginning balance | 138,121 |
Foreign currency translation adjustments | 0 |
Ending balance | 138,121 |
Business Solutions | |
Changes in the Carrying Amount of Goodwill | |
Beginning balance | 45,823 |
Foreign currency translation adjustments | 0 |
Ending balance | $ 45,823 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment of goodwill | $ 0 | |
Amortization expense for intangible assets | $ 13,600,000 | $ 12,200,000 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Other Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross amount | $ 701,091 | $ 699,667 | |
Accumulated amortization | (471,304) | (457,730) | |
Net carrying amount | 229,787 | 241,937 | |
Customer relationships | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross amount | 343,557 | 344,883 | |
Accumulated amortization | (226,905) | (220,434) | |
Net carrying amount | $ 116,652 | 124,449 | |
Customer relationships | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 8 years | 8 years | |
Customer relationships | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 14 years | 14 years | |
Trademarks | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross amount | $ 41,874 | 42,025 | |
Accumulated amortization | (33,360) | (32,456) | |
Net carrying amount | $ 8,514 | 9,569 | |
Trademarks | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 10 years | 2 years | |
Trademarks | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 15 years | 15 years | |
Software packages | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross amount | $ 259,121 | 256,220 | |
Accumulated amortization | (175,230) | (169,974) | |
Net carrying amount | $ 83,891 | $ 86,246 | |
Software packages | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 3 years | 3 years | |
Software packages | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 10 years | 10 years | |
Non-compete agreement | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Useful life in years | 15 years | 15 years | |
Gross amount | $ 56,539 | $ 56,539 | |
Accumulated amortization | (35,809) | (34,866) | |
Net carrying amount | $ 20,730 | $ 21,673 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Estimated Amortization Expenses (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remaining 2020 | $ 37,989 |
2021 | 46,130 |
2022 | 40,887 |
2023 | 36,191 |
2024 | $ 28,071 |
Debt and Short-Term Borrowing_2
Debt and Short-Term Borrowings - Total Debt (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Total debt | $ 506,576 | $ 527,603 |
Note Payable due on April 30, 2021 | Notes Payable | ||
Debt Instrument [Line Items] | ||
Note payable | 143 | 175 |
Note Payable due on January 1, 2022 | Notes Payable | ||
Debt Instrument [Line Items] | ||
Note payable | 1,339 | 2,231 |
Term A due on November 27,2023 | Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility | $ 196,693 | 207,261 |
Term A due on November 27,2023 | Credit Facility | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin interest rate | 2.00% | |
Term B due on November 27, 2024 | Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility | $ 308,401 | $ 317,936 |
Term B due on November 27, 2024 | Credit Facility | LIBOR | ||
Debt Instrument [Line Items] | ||
Minimum variable rate | 0.00% | 3.50% |
Debt and Short-Term Borrowing_3
Debt and Short-Term Borrowings - Additional Information (Detail) | Apr. 08, 2020USD ($) | Mar. 05, 2020USD ($) | Mar. 31, 2020USD ($)agreement | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)agreement | Jan. 31, 2019USD ($) | Nov. 27, 2018USD ($) |
Debt Instrument [Line Items] | |||||||
Number of interest rate swap agreements | agreement | 2 | ||||||
Gains reclassified from accumulated other comprehensive loss into income | $ 200,000 | ||||||
Losses expected to be reclassified from accumulated other comprehensive loss into income in the next 12 months | 4,700,000 | ||||||
Credit Agreement 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Mandatory prepayment trigger, maximum value of excess cash flow | $ 10,000,000 | ||||||
Credit Facility | Credit Agreement 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, payment | $ 17,000,000 | ||||||
Notes Payable | January 2019 Financing Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Number of financing agreements | agreement | 2 | ||||||
Non interest bearing financing agreement | $ 2,400,000 | ||||||
Notes payable | 1,500,000 | $ 2,400,000 | |||||
Notes payable, current | 800,000 | ||||||
Term A due on November 27,2023 | Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Secured credit facilities | 198,300,000 | ||||||
Term A due on November 27,2023 | Credit Facility | Credit Agreement 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum amount under credit facilities | $ 220,000,000 | ||||||
Term B due on November 27, 2024 | Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Secured credit facilities | 311,900,000 | ||||||
Term B due on November 27, 2024 | Credit Facility | Credit Agreement 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum amount under credit facilities | 325,000,000 | ||||||
Senior Secured Revolving Credit Facility | Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Additional borrowing capacity available under the revolving facility | $ 116,900,000 | ||||||
Senior Secured Revolving Credit Facility | Credit Facility | Credit Agreement 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum amount under credit facilities | $ 125,000,000 | ||||||
Subsequent Event | Senior Secured Revolving Credit Facility | Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility draw down | $ 30,000,000 |
Debt and Short-Term Borrowing_4
Debt and Short-Term Borrowings - Summary of Interest Rate Swap Transaction (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
2015 Interest Rate Swap Agreement | |
Derivative [Line Items] | |
Notional Amount | $ 200 |
2015 Interest Rate Swap Agreement | 1-month LIBOR | |
Derivative [Line Items] | |
Fixed Rate | 1.9225% |
2018 Interest Rate Swap Agreement | |
Derivative [Line Items] | |
Notional Amount | $ 250 |
2018 Interest Rate Swap Agreement | 1-month LIBOR | |
Derivative [Line Items] | |
Fixed Rate | 2.89% |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Financial liabilities: | ||
Interest rate swap | $ 27,401 | $ 14,452 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - Carrying Value and Estimated Fair Values (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Financial liabilities: | ||
Interest rate swap | $ 27,401 | $ 14,452 |
Carrying Amount | Credit Facility | 2023 Term A Loan | ||
Financial liabilities: | ||
Senior secured term loan | 196,693 | 207,261 |
Carrying Amount | Credit Facility | 2024 Term B Loan | ||
Financial liabilities: | ||
Senior secured term loan | 308,401 | 317,936 |
Fair Value | ||
Financial liabilities: | ||
Interest rate swap | 27,401 | 14,452 |
Fair Value | Credit Facility | 2023 Term A Loan | ||
Financial liabilities: | ||
Senior secured term loan | 185,366 | 206,388 |
Fair Value | Credit Facility | 2024 Term B Loan | ||
Financial liabilities: | ||
Senior secured term loan | $ 264,108 | $ 324,163 |
Equity (Detail)
Equity (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Beginning balance | $ 271,623 |
Other comprehensive loss before reclassifications | (20,355) |
Effective portion reclassified to net income | 191 |
Ending balance | 262,684 |
Foreign Currency Translation Adjustments | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Beginning balance | (16,872) |
Other comprehensive loss before reclassifications | (8,305) |
Effective portion reclassified to net income | 0 |
Ending balance | (25,177) |
Cash Flow Hedges | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Beginning balance | (13,137) |
Other comprehensive loss before reclassifications | (12,050) |
Effective portion reclassified to net income | 191 |
Ending balance | (24,996) |
Total | |
Changes in Accumulated Other Comprehensive Income (Loss) | |
Beginning balance | (30,009) |
Ending balance | $ (50,173) |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expenses | $ 3.5 | $ 3.3 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum unrecognized cost for stocks and RSU's | $ 26.3 | |
Unrecognized compensation cost, weighted average period of recognition | 2 years 3 months 18 days | |
Time Based Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Awards with Performance Conditions | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance adjustment percent | 25.00% | |
Awards with Performance Conditions | 2018 LTIP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Performance measurement period | 1 year | |
Requisite service period | 2 years |
Share-based Compensation - Nonv
Share-based Compensation - Nonvested Restricted Shares and RSUs Activity (Detail) - Restricted Shares and RSUs | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Shares | |
Beginning balance (in shares) | shares | 1,592,755 |
Forfeited (in shares) | shares | (139,854) |
Vested (in shares) | shares | (305,531) |
Granted (in shares) | shares | 378,135 |
Ending balance (in shares) | shares | 1,525,505 |
Weighted-average grant date fair value | |
Beginning balance (in usd per share) | $ / shares | $ 20.71 |
Forfeited (in usd per share) | $ / shares | 19.26 |
Vested (in usd per share) | $ / shares | 19.84 |
Granted (in usd per share) | $ / shares | 31.84 |
Ending balance (in usd per share) | $ / shares | $ 23.77 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 121,942 | $ 118,836 |
Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 733 | 3,624 |
Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 121,209 | 115,212 |
Payment Services - Puerto Rico & Caribbean | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 20,638 | 22,750 |
Payment Services - Puerto Rico & Caribbean | Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5 | 2,677 |
Payment Services - Puerto Rico & Caribbean | Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 20,633 | 20,073 |
Payment Services - Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 20,240 | 18,748 |
Payment Services - Latin America | Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 431 | 70 |
Payment Services - Latin America | Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 19,809 | 18,678 |
Merchant Acquiring, net | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 25,121 | 25,974 |
Merchant Acquiring, net | Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | 0 |
Merchant Acquiring, net | Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 25,121 | 25,974 |
Business Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 55,943 | 51,364 |
Business Solutions | Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 297 | 877 |
Business Solutions | Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 55,646 | $ 50,487 |
Revenues - Contract Balances (D
Revenues - Contract Balances (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Revenue, Contract Balances [Roll Forward] | |
Beginning balance | $ 1,191 |
Services transferred to customers | 922 |
Transfers to accounts receivable | (546) |
Ending balance | $ 1,567 |
Revenues - Performance Obligati
Revenues - Performance Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Accounts receivable, net | $ 95,305 | $ 106,812 | |
Unearned income | 18,138 | 20,668 | |
Unearned income - long term | 32,037 | $ 28,437 | |
Revenue recognized that was included in unearned income | 5,200 | $ 6,100 | |
Transaction price allocated to performance obligations that are unsatisfied or partially satisfied | $ 288,700 | ||
Professional Services, All Other Contracts | Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Revenue, remaining performance obligation, period of expected timing of satisfaction | 2 years | ||
Professional Services, All Other Contracts | Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Revenue, remaining performance obligation, period of expected timing of satisfaction | 5 years |
Income Tax - Components of Inco
Income Tax - Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Current tax provision | $ 5,598 | $ 4,691 |
Deferred tax benefit | (1,080) | (882) |
Income tax expense | $ 4,518 | $ 3,809 |
Income Tax - Tax Expense Based
Income Tax - Tax Expense Based on Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Current tax provision | ||
Puerto Rico | $ 1,679 | $ 1,813 |
United States | 155 | 112 |
Foreign countries | 3,764 | 2,766 |
Total current tax provision | 5,598 | 4,691 |
Deferred tax benefit | ||
Puerto Rico | (88) | (476) |
United States | (25) | (372) |
Foreign countries | (967) | (34) |
Total deferred tax benefit | $ (1,080) | $ (882) |
Income Tax - Additional Informa
Income Tax - Additional Information (Detail) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Unremitted earnings from foreign subsidiaries | $ 67.4 | |
Gross deferred tax asset | 19.8 | $ 12.8 |
Gross deferred tax liability | $ 19.5 | $ 15 |
Net Income Per Common Share - R
Net Income Per Common Share - Reconciliation of Income Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | Feb. 20, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Earnings Per Share [Abstract] | |||
Net income attributable to EVERTEC, Inc.’s common stockholders | $ 22,211 | $ 26,644 | |
Less: non-forfeitable dividends on restricted stock | 6 | 6 | |
Net income available to EVERTEC, Inc.’s common shareholders | $ 22,205 | $ 26,638 | |
Weighted average common shares outstanding (in shares) | 72,012,648 | 72,378,532 | |
Weighted average potential dilutive common shares (in shares) | 1,280,357 | 1,391,534 | |
Weighted average common shares outstanding - assuming dilution (in shares) | 73,293,005 | 73,770,066 | |
Net income per common share - basic (in usd per share) | $ 0.31 | $ 0.37 | |
Net income per common share - diluted (in usd per share) | 0.30 | 0.36 | |
Cash dividends declared (in usd per share) | $ 0.05 | $ 0.05 | $ 0.05 |
Related Party Transactions - Tr
Related Party Transactions - Transactions with Related Parties (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Transactions with Third Party | ||
Total revenues | $ 54,572 | $ 49,030 |
Cost of revenues | 618 | 523 |
Operating lease cost and other fees | 1,981 | 2,128 |
Interest earned from affiliate | ||
Interest income | 89 | 28 |
Earnings (losses) of equity method investment | 338 | 222 |
Popular | ||
Interest earned from affiliate | ||
Earnings (losses) of equity method investment | $ 300 | $ 300 |
Popular | Customer Concentration Risk | Total Revenue | ||
Interest earned from affiliate | ||
Total percentage of revenues from Popular | 45.00% | 41.00% |
Related Party Transactions - Ba
Related Party Transactions - Balances of Transactions (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Related Party Transactions [Abstract] | ||
Cash and restricted cash deposits in affiliated bank | $ 58,445 | $ 64,724 |
Other due to/from affiliate | ||
Accounts receivable | 41,493 | 39,095 |
Prepaid expenses and other assets | 5,341 | 4,211 |
Operating lease right-of use assets | 19,751 | 20,617 |
Other long-term assets | 43 | 57 |
Accounts payable | 2,007 | 7,250 |
Unearned income | 36,056 | 35,489 |
Operating lease liabilities | $ 20,054 | $ 20,905 |
Segment Information - Operation
Segment Information - Operations by Segments (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating business segments (in segment) | segment | 4 | |
Revenues | $ 121,942 | $ 118,836 |
Operating costs and expenses | 89,179 | 81,431 |
Depreciation and amortization | 17,795 | 16,273 |
Non-operating income (expenses) | 446 | 430 |
EBITDA | 51,004 | 54,108 |
Compensation and benefits | 3,500 | 3,439 |
Transaction, refinancing and other fees | 1,786 | 49 |
Adjusted EBITDA | $ 56,290 | $ 57,596 |
Consorcio de Tarjetas Dominicanas S.A. | ||
Segment Reporting Information [Line Items] | ||
Equity investment | 19.99% | 19.99% |
Payment Services - Puerto Rico & Caribbean | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 20,638 | $ 22,750 |
Payment Services - Latin America | ||
Segment Reporting Information [Line Items] | ||
Revenues | 20,240 | 18,748 |
Merchant Acquiring, net | ||
Segment Reporting Information [Line Items] | ||
Revenues | 25,121 | 25,974 |
Business Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenues | 55,943 | 51,364 |
Operating Segments | Payment Services - Puerto Rico & Caribbean | ||
Segment Reporting Information [Line Items] | ||
Revenues | 29,887 | 32,017 |
Operating costs and expenses | 17,406 | 14,215 |
Depreciation and amortization | 3,249 | 2,643 |
Non-operating income (expenses) | 113 | 581 |
EBITDA | 15,843 | 21,026 |
Compensation and benefits | 231 | 237 |
Transaction, refinancing and other fees | 0 | 0 |
Adjusted EBITDA | 16,074 | 21,263 |
Operating Segments | Payment Services - Latin America | ||
Segment Reporting Information [Line Items] | ||
Revenues | 21,640 | 20,831 |
Operating costs and expenses | 17,651 | 17,573 |
Depreciation and amortization | 2,757 | 2,196 |
Non-operating income (expenses) | 754 | 2,634 |
EBITDA | 7,500 | 8,088 |
Compensation and benefits | 742 | 166 |
Transaction, refinancing and other fees | 0 | 2 |
Adjusted EBITDA | 8,242 | 8,256 |
Operating Segments | Merchant Acquiring, net | ||
Segment Reporting Information [Line Items] | ||
Revenues | 25,121 | 25,974 |
Operating costs and expenses | 14,706 | 14,718 |
Depreciation and amortization | 499 | 468 |
Non-operating income (expenses) | 154 | 21 |
EBITDA | 11,068 | 11,745 |
Compensation and benefits | 216 | 220 |
Transaction, refinancing and other fees | 0 | 0 |
Adjusted EBITDA | 11,284 | 11,965 |
Operating Segments | Business Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenues | 55,943 | 51,364 |
Operating costs and expenses | 33,617 | 32,910 |
Depreciation and amortization | 4,296 | 3,854 |
Non-operating income (expenses) | 387 | 186 |
EBITDA | 27,009 | 22,494 |
Compensation and benefits | 436 | 554 |
Transaction, refinancing and other fees | 0 | 0 |
Adjusted EBITDA | 27,445 | 23,048 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Revenues | (10,649) | (11,350) |
Operating costs and expenses | 5,799 | 2,015 |
Depreciation and amortization | 6,994 | 7,112 |
Non-operating income (expenses) | (962) | (2,992) |
EBITDA | (10,416) | (9,245) |
Compensation and benefits | 1,875 | 2,262 |
Transaction, refinancing and other fees | 1,786 | 47 |
Adjusted EBITDA | (6,755) | (6,936) |
Payment Processing | Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Revenues | 9,000 | 9,200 |
Payment Processing | Corporate and Other | Payment Services - Latin America | ||
Segment Reporting Information [Line Items] | ||
Revenues | 5,100 | 4,800 |
Software Sale And Developments | Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 1,600 | $ 2,100 |
Segment Information - Income fr
Segment Information - Income from Segments to Consolidated Net Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting [Abstract] | ||
Total EBITDA | $ 51,004 | $ 54,108 |
Less: | ||
Income tax expense | 4,518 | 3,809 |
Interest expense, net | 6,416 | 7,292 |
Depreciation and amortization | 17,795 | 16,273 |
Net income | $ 22,275 | $ 26,734 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Apr. 21, 2020 | Feb. 20, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Subsequent Event [Line Items] | ||||
Cash dividends declared (in usd per share) | $ 0.05 | $ 0.05 | $ 0.05 | |
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Cash dividends declared (in usd per share) | $ 0.05 |
Uncategorized Items - evertec10
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (74,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (74,000) |