EVTC - Earnings call transcript Q2 2019

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Operator

Good afternoon, and welcome to the EVERTEC, Incorporated, Second Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Kay Sharpton

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; and Joaquin Castrillo, our Chief Financial Officer. call available this X. Wednesday, of replay will until be August A Relations information listed on is Investor is the our of today's under Access replay which in for financial release, website section evertecinc.com. available

the to call July listening those replay, For was this held XX.

that presentation Relations it Investor this conference of our website. a is there's call, in accessible note accompanies Please the section and

to about that Before with may statements Securities any the as statements for recent statements update the to could reflect these reflect company's after to Private expectations contain Form Litigation of occur These All guarantees we from -- Act XX-K our any defined and begin, filed statement. XXXX. future the and to not uncertainty. differ I'd like performance forward-looking and statements today made current to obligation to remind expectations in events EVERTEC our call. future forward-looking everyone report materially that on forward-looking cautions this most only, of cause the Reform are results SEC Please this annual that call for known our refer actual are that performance. risks no by we statements factors forward-looking subject undertake unknown

today's measures constitute GAAP management and certain call, earnings. net certain release adjusted will such information related During earnings today's as EBITDA, and to measures information additional non-GAAP also that provide under will financial adjusted rules, supplemental adjusted in included SEC income Reconciliations slides. are and

Mac. over now I'll hand call to the

Mac Schuessler

Thanks, Kay, good and everyone. afternoon,

for are our our which therefore with our the XXXX, guidance exceeded full year. are quarter and results second for the pleased we of increasing expectations, We

benefit innovation and well, America our strategies recovery, Rico's and economic Puerto executing from are we Latin focus. continue to We our

on of developments. slide the on quarter's update provide and financial cover you with an some highlights recent I'll Beginning X,

Total increase to $XXX million, of was an compared XXXX. X% revenue

sales We're new across of and all services, hardware are growth pricing quarter. projects software solutions, this value-added segments. and managed our some deployment longer-term benefiting of some We the from seeing actions, completion

year, $XX Adjusted of earnings shareholders million We EBITDA per share year-to-date was approximately or our XX% and prior through and $X.XX, generated last significant increase share dividends flow growth was compared repurchases. million to to $XX year. over and adjusted the cash operating returned X% an

local Moving progress Latin X, first, are beginning Their on acquire on a an America, Colombian-based to to different our include on focused industries. service services gateway accept We agreement forms with other in and payment companies. regional exciting player in announce and and second-largest with customers digital enabling customers payment believe different slide PlacetoPay, we pleased are a presence competes the to provider. is of PlacetoPay

year, gateway waiting the offering anticipate this to we our of as our close for well in by Colombia. to for the the as become end We primary approval. regulatory anticipate digital strengthen transaction this We region are presence but

begin Colombia. we The growth. Next, this Citibank, also payment operational regional we anticipate this QX first currently the would agreement to collection in are is Guatemala. of and platform likely the with this platform a with agreement XXXX expanded for in modest include pleased Mexico recent to And impact under our will clients on expansion while provide our year,

product would introduction this with One clients to next their the of of expect we several the grow region. Receivable their Over years, Citibank's more across to

as Chile, announced quarter, to this the the bank we move market. Lastly, open their processing Santander our they X-year merchant country earlier in agreement acquiring largest with

and EBITDA as as new agreement Latin new growth expect the beyond. America in our Latin are revenue well agreements We These America XXXX our acquisition growth to this consistent contribute strategy. will and with

in provide markets open. to models and markets that be multiple multiproduct when so as the we that products intend pursue business profitable clients can agile to we in. these our localizing on do country focused are intend each evolve, solutions business We to We we

we the in operating markets indicated we that go are previously, in. currently deep to As have intend we

Rico on organic approximately in transaction actions. approximately first, X% grew growth progress of revenue growth by the to on slide and Moving in X, Puerto pricing and driven Puerto X% Rico Caribbean

producing positive In and a hardware addition, Solutions impact to the from and sales we contract had wins our in several revenue projects. well as software now as related revenue of Business segment completion

ATH in to positive Second, impact are regarding contribute are our products, anticipated almost we and growth ATH innovation, X% seeing Movil which XXXX. the of Business Movil of our revenue

be macro Also, new in will Third, a funding an May fiscal federal government additional Board total increase EBT $XX slight projection on $X.X in million support, the in to in relief for disaster the relief view, funding more PROMESA that August. approximately billion. plan for the X approved $XXX on billion June a available which with a included certified

sector. We well believe as in economy provide to that funds anticipated continue will federal positively as into Puerto window to public Rico the impact the of opportunity changes flow for the a

Puerto is in for federal which island government, long-term. the changes create the the administration control fund increase confidence the the and build could ambiguity federal Rican the and over transparency hopefully flow Although on some and investment will there of currently more government, investors that private

receive timing short to the the term, to as FEMA draw to they that government have of funds the approval of disaster funds effect could over In the Rico an -- to events few on the last transpired notified relief have that draw have hurricane. on weeks would Puerto the funds related

sharing our you to strong my quarters. results, quarter this coming progress I In We thank and particularly with Rico. the the Puerto LatAm further financial summary, in forward are for and we in advancing colleagues pleased strategic with initiatives want to our look

turn call that, Joaquin. now will over I to the With

Joaquin Castrillo

I'll our of good second and XXXX afternoon, provide everyone. Mac, results. quarter a you, review now Thank

you million million, Total up the X, the see second quarter will $XXX.X to Turning year. second EVERTEC. to for the slide for results quarter prior $XXX.X for X% was consolidated revenue

relief for primarily last funding was EBT year's quarter from volume quarter. prior the ended sales that prior benefiting slightly year down to Our versus due volume

higher pricing related banking actions. by increase services. Business, network driven net offset benefited a in We've new lower Additionally, from managed we to Movil this and also and Movil ATH fees had services transactions on average spread ticket new increased quarter, by ATH core

lastly, a increased in hardware Total a lower an XX EBITDA completed our the X% $XXX.X to margin year sales mix last for X year. Adjusted up of of basis million. X% and as for Adjusted was decrease revenue year-to-date the $XX.X increase margin XX.X%, of and million And the as and EBITDA well year. software revenue Business was to elevated the was million, the in year-over-year. the quarter, of skewed margin drove and this year-over-year this $X.X in approximately million ticket that which revenues months was contribution. due $XX.X segment quarter impact decrease represents adjusted compared prior has from EBITDA reflects margin The margin the average primarily prior year a Solutions point to higher-than-normal that projects this

Additionally, we this platforms, to from adjusted continue Year-to-date, of EBITDA to impacted was $XXX.X our our $XXX.X technology year. increase costs approximately an related have $X million, investments the higher million in in negatively quarter. prior and us FX million X%

by to reflecting of $XX.X the quarter million, higher EBITDA, increased operating in offset income interest compared amortization. as X% increase the and prior primarily and depreciation the net was year an adjusted Adjusted

prior $X.XX rate to XX%, rate and in Adjusted anticipate compared effective to EPS the today. adjusted approximately was the now net grew we from for and was XX%. was the prior adjusted from year $XX.X up our in share year income Year-to-date, be our net million, XX% year. our $X.XX quarter X%, benefited per Our earnings quarter and X% share tax common repurchases the up income $X.XX, tax and adjusted was full

driven to to the The cover increased approximately quarter, our $XX.X million. second slide having both our Merchant revenue revenue, segment. on impacting and I'll primarily offset decline Moving to year-over-year by the benefit segment Merchant relief by starting prior EBT results In funding. volumes X, was increase now X% of our Acquiring pricing X% the spread year non-transactional net in related revenue a Acquiring with actions

prior EBITDA segment expectations margin the anticipate move a few million, lower next was over basis Adjusted this on continues approximately quarter. in ticket levels. of our was compared as approximately X%. reflecting average the points $XX.X normalized last impact Adjusted XXX with was more similar margin ticket as down EBITDA year line We Average versus declined the the for spend but to toward year, XX.X%, quarters. down margin to the X%

year. million, as to $XX.X up point XX.X%, a the the Revenue For to the quarter X% of same Merchant Payment to was see referenced in million Acquiring On adjusted segment as you due segment. margin up was Puerto the year-to-date primarily I decrease will X% compared year. $XX.X EBITDA X-month Adjusted quarter. and for for second the $XX.X slide last Caribbean the Services, basis to EBITDA results increased compared was X%. And approximately XXX Rico the reasons XX, the period, the in last segment million,

EBITDA to compared to million, last up approximately compared year. was last volumes benefit year. EBITDA grew new Adjusted segment for ATH points implemented that margin and transaction was we for $XX.X due services basis such last Transaction Business and approximately as XX% increasing as ATH from primarily the Movil Movil XX.X%, as Adjusted to fees. XXX to continue new year X%, we fees transaction

mentioned. year Year-to-date, points EBITDA XXX to the up EBITDA to same adjusted compared $XX.X margin as adjusted $XX.X reasons XX.X%, revenue year. approximately million, the was basis for XX% compared for previously last was and segment Year-to-date, last up was million, approximately as

full anticipate the this continue we now in consistent high year, segment the margins. to revenue be For deliver single-digits and growth to

to quarter approximately results and of as and sale Revenue you growth client for last service XX% X%, XX, services the year. occur by $XXX,XXX second intercompany this revenue and of that for license up our driven same be segment. consulting growth was did segment license to last attrition. see LatAm anticipated Services, by the $XX.X uneven organic implementations million, not offset year. in slide due in will partially the This Revenue approximately On the was compared continue will quarter revenue Payment to

eventually focus on of base. to this a model which we our and an earlier recurring Santander to quarter continue in revenue a of model, processing licensing growing shifting result on example more agreement announced the this executing is will We strategy a goal. And from

the segment Adjusted the now segment growth Total compared the segment considers adjusted revenue by million and the EBITDA to million, anticipated to $XX services approximately was million, $X.X as and and for sales Year-to-date to Puerto EBITDA mid-single year year. be offset of driven $X Rico, attrition client was last the digits XX.X%. full by lower margin the adjusted was to in million. segment up adjusted significantly last for intercompany Year-to-date, year for and revenue EBITDA XX.X%, FX. X% as was $XX.X LatAm million, was is $X for compared EBITDA margin to partially license up

due mid-XXs services the now For the we EBITDA revenue. margin anticipate license to in impact year, from adjusted to intercompany full the be and

slide Puerto was Revenue to the Business quarter, XX, in results both will the the you and the Solutions and Banco Popular Popular's for of from well $XX.X acquisition. and Rico resulting second quarter Business representing revenue was driven growth and approximately integration this $X.X Government as find Reliable segment million. in On segment. for other revenue Solutions million software new by services for primarily for the XX% sales completed the approximately Banco hardware projects as of up

was the For XXX and adjusted margin to $XX.X basis EBITDA last XX%, compared year. points adjusted as million, down quarter, approximately was EBITDA

Solutions was million the Business related revenue XX.X% with infrastructure to segment up sales increased XX%, EBITDA that $XX.X $XXX.X margin adjusted a for primarily negatively million, decrease expenses lower-margin in EBITDA and adjusted margin. driven was impacted quarter. was the the by hardware Year-to-date and The

anticipate at level. margins of remain continue mid-single and to anticipate growth We revenue this to digits

see XX, slide you will to on Other. a Corporate summary and Moving of

was take the impact in intercompany an and adjusted XX% quarter did million, prior EBITDA the not negative that increase of $X.X approximately million over year. eliminations includes related year. second prior negative Our $X.X a Corporate of Other to place

to this adjusted Corporate $X.X lower largely prior to EBITDA activities. Other lower reflecting $XXX,XXX year would of and million, post-hurricane impact, the Excluding spend related due an approximately the increase be in

impact due Corporate and revenue, was approximately X.X% XXX prior to and total the negative above primarily of eliminations. intercompany of point the percentage a basis the Other year, As

expense Corporate approximately be million a Other to a of basis. on to Other $XX.X total total of as Year-to-date, was year and as percentage anticipate and revenue. X.X% percentage our revenue a or continue full We X% Corporate

activities infrastructure including overview $XX beginning provided XX, primary Capital and were approximately new year-to-date development in approximately was and $XX were our our An $XX flow million. of critical of working cash operating million. to million includes spending. the slide contracts year-to-date as or settlement on million, $X balance and of Net year, $XX on drivers this million update of the decrease approximately Moving the our timing a was restricted cash announced cash compared other prior technology capital some impact related to approximately expenditures by year-to-date differences. cash to

expenditures, $XX million. and recent CapEx year the the contracts our to new range of Given full for a the million to in expectations be we're year-to-date capital $XX increasing

paid Next, paid payments, withholding debt total debt we decrease down of $XX paid $X approximately a debt approximately million $X shareholders. million scheduled cash $X net share-based $X returned compensation taxes for approximately in on other our million in million we $XX million, We've million. of of $XX and resulting a in common of repurchased to also dividends million and approximately total of stock

dividend another X, company's to We share through million under have December be of future repurchase August paid use on September record $X.XX approximately announced XX, program $XX shareholders X. available and of XXXX, the as XXXX, recently to we for

of million, approximately and million cash. cash $XX was included XX this ending of Our $XX balance restricted as June

will a XX, Moving to of summary of XXXX. debt slide XX, you find as our June

debt net million, was long-term quarter-ending the debt. million $XX million borrowings Our cash position and $XXX short-term of approximately approximately total and comprised of unrestricted of $XXX

interest rate was Our weighted X.X%. average approximately

net was debt-to-trailing terms, Agreement reflecting the Credit approximately net the debt adjusted limit cash applied which million. XX-month Our $XX the calculation EBITDA to X.Xx, to

includes $XXX cash XX, June This under excludes and borrowing of revolver. liquidity the million. restricted As was total available capacity our balance

update Moving provide now slide XX, our will to guidance. XXXX I an on

in for and and to the growth $XXX over political uncertainty reflects year year. We current of $XXX a our outlook last to improved Puerto increase to and remainder ambiguity. Rico our modestly in the to of some range range increasing The the X% results recent million, are revenue revenue developments the million representing QX related X% considers the

several the a contracts solution renewals. As reminder, government our require of current annual with business

adjusted estimate back results approximately EBITDA Regarding our This margin for will the in the date includes be XX% normal higher the expectation of anticipate the that year. overall and more margin, we year. margin to margin a half

Moving our be to depreciation, on forecast. to timing anticipated our came approximately million of It $XX projects. which operating completed earlier now to slightly in due is primarily the above

of to earnings to as range Our XXXX. which benefit represents outlook common to a been X% share $X.XX, compared reflects $X.XX QX X% in well results adjusted has This increased $X.XX the the to per change as as and lower XX% rate, tax mix incorporates resulting to effective revenue share repurchases from to Puerto be the of expected count made on share year-to-date shift result in the to a businesses. tax Rico a as now closer lower

like while Now would not guidance, prepared we turning to are the XXXX, to give pending comment on agreements considerations. to recent acquisition, other I and

in is have approval. acquisition, details and we're deal provide our excited the presence we'll after gives main this additional and about prospects the further PlacetoPay small regulatory a tuck-in it of Nonetheless, we us some First, of markets.

pilots, with agreements complete insight. in our will all we LatAm contribute the Santander and further and along are growth further Second, on Citibank, our to Chile XXXX. Citibanamex as anticipated get we And implementation to share

client have in anticipate we XXXX attrition million further $X will we XXXX from in million. be LatAm, while benefited to delays attrition in $X between in Third,

model XXXX, organic will will we licensing continue provide transition from Fourth, growth to processing our unevenness in revenue LatAm the a our in throughout in which year. some a

it was Lastly, In rebuilding to quarter of a in federal the to from potential and continue funds economy for Puerto summary, flow Rico, the impact EVERTEC. the we positive investment. will and strong monitor

longer-term on are initiatives, well I executing and to updating our forward We progress. our against you look

call go now will and the ahead We questions. Operator, the open for open line. please

Operator

go Napoli with comes question The Blair. first Instructions] Please ahead. from William [Operator Bob

Bob Napoli

opportunity think says to I be good was that I what question. – expect maybe Thank in The presentation then a I to that with some you you. I Chile, for have Kay. hoping -- in Joaquin afternoon was it profitable Santander Mac, the And get TAM, business? you and I just think XXXX. hoping and to follow-up your just get is think

Mac Schuessler

Sure.

Bob, color we on of the what's the deal so Chile struck. So on sort bit let of little and give me market, people understand that a in just that going

Transbank contracts. So owns the in merchant right now Chile, of all

Payments people entering merchant when because had immediately EVO bought own of a like when or revenue they immediately look actually a Global contracts, of countries, different entered they Elavon book Spain, the contracts, and earnings. at So you lot they or had

bit merchant a is all are contracts owned because different Chile Transbank. the by

deals can are there you X do types of So Chile. in

to investment You a of revenue what's could you have merchants. board do involved, going new -- to with do try a And JV to a there's at bank. you're happen significant time a with type going is $X JV add that but as

portfolio. buying you're a actually So not

bank and slow investing from a a You're ramp picks merchants be going JV, as share Transbank. away that up it's to in the their takes and

Our processing It's deal. deal a a is bit different.

are with So switching sorry, management, services our deal actually management. I'm switching providing merchant and is and that Santander or we -- Santander. services, authorization fraud Transbank authorization

we are contract cases, market because going there for time some to and that the we pick may banks up some and take a So actually share be, actually in to of we the processor, these it's force. know have minimums price in

in So Puerto nice same have we we thing. what segment good to is have mean our here. Chile Rico in very business. processing that That's we processing in the have a I similar much strategy a

banks, also other So other clients. time and banks Santander, like with multiple do the merchant we in processing contract market. the over is Santander minimums other we other acquirers our with and to to have have Chile with plan And products intent today we on hope offer to in we these and arrangements

Bob Napoli

what for ramp of revenue can revenue? that and... from mean of the I you -- you Would size the Can potential and feel any up kind give like Santander

Mac Schuessler

-- working well negotiations We not some this this but signed. prepared on We're we're -- getting for time. focused We've to give I started actually been on can when contract before now XXXX. so you just coy, saw this very implemented. we be for not guidance right

So year. market year on next of the actually we the are focused end and in piloting the before early being

right Santander the is we hit up the can so getting banks, sure making portfolio. running, grow that they So focus now and features have our we making sure to their

on as more We what ourselves. more it's And confident get there. It's you and if of excited. time we'll -- want at impact But milestones, business Rico don't then Puerto ahead because is. a we get think as as of XXXX Xx I a GDP just the give then on that have we're you clarity those guidance, have we look line good have to the we we incredibly that, Chile, already

We XXX now have market and been partnering the with Santander has market. employees. customer a we while, biggest over to up actually are a bank in for the open the

So milestone that it's helpful add will to year. I a reputationally, next segment that EBITDA think going but and to it's great also revenue be

Bob Napoli

is And the or Colombia the do is you're the think us just you And PlacetoPay about can and market, gateway what time? TAM that over business opportunity for the tell what that acquiring? you

Mac Schuessler

Yes.

stronger as is that think One does hoped, it is a longer very not team acquisition but the they been the I with us there about the even have opened for -- we on, market has country. and our we've been pleased in bit has have gives twofold: Chile. we Colombia us I mean past. as been talked And What -- what working had in in So Colombia in role we've and we're that than and market an presence quickly little this

partner that we given even open, time as our in-country we'll will market of a So presence. more considered choice over believe do be

us region our us and PlacetoPay you've well. our Chile we helped the ago, seen, expand e-commerce Santander that has Citibank. give win second very portfolio cross-sell X the an similar it win we throughout region, were and years really strengthen will to will The helped the processing of win acquisition, relationship does acquisition in The trying businesses set banks. of to product a gateway didn't thing would that business, with product big is business now as The have PayGroup. the us product offerings it's PayGroup when as

in of in-country So now presence suite and the to offer fronts, that all our can the it's complementary customers. products both of we on Colombia also

Bob Napoli

Thank appreciate it. I Great. you

Mac Schuessler

Thank you, Bob.

Operator

Govil Vasu The next with question from Please ahead. go KBW. comes

Vasu Govil

taking quarter, a and of all. question Hi to congratulations thanks was lot This my America. for you making a Latin progress good in

Mac Schuessler

Thank you.

Vasu Govil

for seem near what there to expect we as guess coming about in think And across to this following I Mac, Chile, wait region of develops. more deals increase the in as doesn't one-off Latin an you could it more you, pipeline like there Or relative was we'll was deal question had Chile. So term? clients of sort of the is how was happening a America, and in in the decision-making I the to see so of just on be have this based and situation pace

Mac Schuessler

at I'm by X optimistic information, this call, in we Prisma. the mean about served on are bit knew guidance markets for talked owned the more more public where the company. opportunities was in banks previous Prisma some of I opportunities. is know it I little the these that we on years with have I I now we Santander saw mean the call was X a looking the So Chile than on other set year-end been It early leaving. to for we that that and Advent. And movement We year.

people alternatives think trend hopeful It's is are, again, years the a continue look for I say will but the will throughout be region. that continuing Chile we country coming moving, would by now country. to this So the over accelerate. market to trend the I'm that

multiple the opportunities countries at noise year, been intent would where look within the I couple the movement years, the place. would you if that this speculation. And taking transaction, last desire see actually I and again, Prisma the trade there's and and for But a seeing now this of and you're it's say we just and it's trend, say not past country one of lot

uncover line open when have can't a markets market. we where can't in will you But of opportunities trying the opportunities. So to I those in each give predict investments, we're it, time I engaged

Vasu Govil

an of Puerto One, Bank was yours or made That's acquisition Oriental very client and in just great. Scotiabank I X partner Rico, ones. And quick with of yours. think a guess know Oriental I I

So does any you that implications have guys? for

pullback second any was political that economic way? a seen Was your situation. Or lot the there it just have quarter was I one of in had reflected And a in happening related that in a all following that that we've the protests was the quick sales to second activity July trend? press articles been volumes

Mac Schuessler

So what I'd and they're say Oriental, on customers. Scotia actually both

I network, So any future but members are the ours. of They're and in ATH customers do business of see don't significant we the immediate both change, both those of with both.

So I don't see any -- change. immediate impact and in that that

-- On Juan, headlines there impact San the the Old I was mean ships saw in that in. didn't definitely some cruise because economic news the you in come the

more So I'll let there he'll Joaquin, if to impact. that. a bit speak was some little economic

Joaquin Castrillo

is that would Yes. Obviously, I some much stabilizes. but That we as is, We're what how July forward trend economic call, in Mac There sales Vasu, volume. of seeing down impact said said in continue we government nothing is on to we're were that the as on the right. still year-over-year well. as we mean impact July expect as numbers. really to the monitoring directionally,

Vasu Govil

thank very Great much. you

Joaquin Castrillo

Thank you.

Operator

George Mihalos go Cowen. comes ahead. next The Please question with from

George Mihalos

guys. afternoon good Hey

kind business, Just drove pricing the wanted impacted was again are quarter of What us the you EBITDA the positive think the puts for that pricing said margin and given growth, square takes declined can to just where -- the benefit? why the I that Merchant Acquiring there? it you

Joaquin Castrillo

Sure.

mainly now some this seeing year Even very quarters so and year, average volume last a ticket, from something declining also and saw been that had down come we're -- that we that take So a a something I the prior spread, We've year. that's funding to EBT at the impacts of we back we it couple perspective, average that and ticket. a been that That's if would elevated in don't say EBT, that's we've look we have different -- and seeing expecting. normal. we've year-over-year, were you said

impact to our spread. a So that has direct

but overall that a ticket, Our a negative initiatives net margin, negative spread are from is average is pricing the and positive. some to declining our volume offsetting overall of effect and

George Mihalos

of would I And the expect that the Okay. assume would throughout course some year. you improvement

Joaquin Castrillo

margin. our of terms In

George Mihalos

Yes.

Joaquin Castrillo

still similar we're levels, ticket down expecting of remainder QX EBITDA in for margins the above still to what slightly. June is average come in to we year. It pre-hurricane Well, saw expecting the we are our and

George Mihalos

to And LatAm helpful. opportunities be then to the you maybe side, hold business? of feel there again, to again on are that's which some out. pushed attrition that that of kind Okay, the on Mac, do continues increased

Mac Schuessler

Yes.

So it We were I retain a likely. to mean able the bit quarters longer to business. a announce we less couple were the of goes, able of that ago little

We still keep services, will likely we see if now, right it's sell and can that them will to But I will to on We're our improve hopeful it, we other business. but mean new -- about continue services to not the it's we're hopeful continue more believe them not. more the that to we continue try. job do best they we leave can than

George Mihalos

great, you. thank Okay

Joaquin Castrillo

Thanks, George.

Operator

comes Susquehanna. go James with Please Friedman question from next The ahead.

James Friedman

and remarks. Susquehanna. you, It's made prepared Kay. thank your just couple a want Tim, Mac, of and at in Hi the comments I revisit you Jamie to Mac

What's me company's significant how cases works that Let about? is start opportunity? some use that us how and with the to could services. give managed If about that the you

Joaquin Castrillo

Jamie, so it's Joaquin.

specifically management a had managed recovery we disaster announced cases, to case government. Rico et relate the those infrastructure communications, in in that services government contracts this So relate some that with some of services, and cetera. air we either they previous to the have applications, year In won Puerto

some for that from us to to see And now. contracts takes take -- it And and revenue of begin time some most of reflected, signing those to time usually contracts implementation. actually actually some see to those we're beginning

that of a couple we contracts some to announced quarters related is this So ago.

Mac Schuessler

types and some managed customers after hurricane. of close these services sell picking demonstrated for do examples to how after you thank of this Thanks. would ability our hurricane, to able is contracts. of government the took up I resiliency And want several what What other after we quickly. very -- Jamie, Hi. is the have very, and our did Really, recover Mac. we I to picked notice we the up were those stock. the say those

James Friedman

about over? finite And Joaquin, half in prepared like second that Or year? project remarks, completions. into or and talked be your something Mac the also that's Is you will that and you said next long-term through continuing

Joaquin Castrillo

revenue case how in it's say, more to have projects is we've have now see And will we've and recur. middle, They working we're related somewhere some not pieces in a year out will a to they it. for implementation portion phase. phase, over I Jamie. cases, be calling So that which able what we But time. What recognized recurring we can some recurring implementation or projects and on that a that an the These been you're this in ended of seeing more. phase, have and smaller are X fees to implementation are

James Friedman

then the that agreement collections how above? that I'm wondering regional If Okay. credit question give is? that us Is or my about or maybe you process business for collections does can And consumer how just collections. the work? idea any is Citibank all about last of

Mac Schuessler

Yes.

accounts the some to So it's partners that. to we paid to One those concentrate then and get vendors post And management managed of are of product group got treasury of and called out of sort And their their it engine capital. effectively a from group. that cash allows they've their Receivable, them for into customers and be large manage to their bills cash their their or able bills online different and

it, out in excited we're pretty Colombia. it rolled originally about So and we

hope it we've these roll X got we region. the countries, throughout out to Now and

and Citibank's core America. treasury So strategy management -- to in strategy and payment it's Latin really

James Friedman

number Okay great guys. you. good Thank here

Mac Schuessler

James. Thanks you. Thank

Operator

Raymond The Please John from ahead. James. go with is Davis question next

John Davis

to good on opportunity maybe afternoon beyond Hey Mac, wanted touch Santander. the guys. I Chile

the actually their an think banks processing to for banks these you you build front-end opportunity of for mentioned to capabilities. thinking acquiring, do there have get relationships. don't to some the the maybe potential other So I resources some opportunity of some Is smaller smaller funding out

So similar where in for do option in could term process the you you do longer do that what banks. some Puerto but you for also banks an acquiring front-end Rico, Is Chile? you other

Mac Schuessler

do I historically interesting it's acquiring think because investment the with fallen because merchant mean really you I love Yes. and has followed the them businesses own pricing. really community

in a Payments. Global I where of You organic and do get myself lot the sort that's growth, background of had

Merchant and actually company, Puerto business around is for the you payments: Rico One Rico as look higher one EVERTEC two in Rico at the us, Puerto is If business, margins. processing processing And we have has segments a in Puerto Acquiring. the

view So they're mean these and it to is small. you Chile margin compared can relatively smaller each very it's look in a be of I at markets business, if a our good Spain, market. much

many out a we've and So of these as and is in a business that of we on financial discussed Rico, just the we what some And our Citibank in and product management retailers format. build also the by Chile. Puerto these America. that collection that's we're with out do that's in product that we already multi-client, profitable done risk institutions plan way multi-product. to rolling think And what We've in in have rolled Chile, we to being we customers cloud-based Latin

technology their a So piece bigger spend. which with this extending relationship we're doing acquiring of is even process, just that so that of is Chile, Santander an evolution now their

up has The want but And we allow said, Santander contract, it business. get entrants It I that plan us, the course it focused getting getting or other over merchant right, after to partners. very do and we're processing acquiring institutions who like to does mean the -- financial into to new the does go I contract, very, on or or banks minimums. of other with

sense exclusive think not financial be to. make -- take right time this the a, which you're you our Instead pricing a acquiring won't of you're we subject So a war, way so may that makes that, buying merchant betting Chile. to to going actually strategy. in Again, because be just having which many money; like joint country that's venture, we b, is a an is be again that c, on win book; business and one institution, more better

the that's what we that's we other to markets. replicate So enter the way market, to in plan the and chose

strategy then different, if for there's Again, where excited is it. our we're and merchant portfolio sale, acquiring there's that a strategy. pretty big entry be market about our Chile, But another maybe for this would

John Davis

Okay, maybe just a the market second. touch and for then Colombian on

you guys couple a did the of back. very kind of obviously I years acquisition quiet. think been It's

getting think this deal? Or market Was opportunistic? to of Is closer earlier, timing anything slow everyone there that the mentioned behind -- market frustrating to I Colombian actually do this we're just for the think you and it's open. you opening.

Just any kind commentary there. of

Mac Schuessler

of speculation where still again the knew we There's see Chile year to a the was be market. there's -- talked and when There's -- not lot alternatives knew I the so -- interest market. we change No. about -- lot by see are. we mean in to launched going There's in I banks signal stated that someone still we we saw don't what open. has publicly there of trading. was Prisma an a indicative a

in business is So nothing What stable there's I a that's Colombia tell that as positioned good, would again, you solid revenue. we were ourselves to has much positioning and Chile, in imminent. have we're

We're money. already making

We are -- can say that is interact looking remind roll the there, on products movements products business. this that say to localizing want not with PlacetoPay, regulatory our as the any team got we're I big through We and get did approval, can have every We at PlacetoPay, like we Santander time. but an always. that banks, a little the earlier TBD. we executive to do closed. we And the But out bit you on

John Davis

to off here. going let I'm Joaquin, And not the hook you

you being the Or you have quantify going guidance your to high So maybe as I any about in? in numbers. not the just coming how know of on protest, way aid, this protest. talk expectations -- much change aid expectations I little the aid think XXXX. and about from this raise impact a But into aid not much or protest impact level able And just to an pace signals But we have qualitatively on year of guide? in impact kind pretty think go was there forward the but me the that the the give -- think very you're about the

Joaquin Castrillo

Sure.

guidance half, what reflects modest a for you happened everything go now we look course, put is second just have additional that's need that for said and our in FEMA that aid out that fact consider. as we the reflected to at the that to hurdle improvement and through we something So of we the -- an that our original But expectations.

-- our the cautious. coming total We -- being terms aid through don't end expectation to we're don't be I what's have Puerto But Rico, think have continue what a what at we expecting to reflected year. of the this we is and obviously, of point. seeing In in we're change in we the our actuals

we're the slow to continue delayed. disbursements, monitor with guidance be continue We to that have and for But be the we year. continue which comfortable full to the

because strip Juan In spend ships mentioned, a coming have terms of the island. couple couldn't that they impacted Obviously, Old closed for really of protests, San Mac been larger were people there, cruise and as there's of were protesting some and was the some to mall days. the

that and impact out And trend, so have would to numbers. it's very that's a long-term think we a specific. is nothing in that Nothing call as our something we going

John Davis

thanks Okay all right guys.

Joaquin Castrillo

Thank you.

Operator

Jim with Please The next go question is from Schneider Sachs. ahead. Goldman

Jim Schneider

of maybe to afternoon. and moved they of clarity question. or helpful the some And what And on closer what just assumptions can year? your of up their getting for kind whether now? any through that and around we're be were details funds now my would taking Mac, are Thanks any the they relief bit kind Good little a kind walk timing, we enter as directionally, quantification more down. you

Mac Schuessler

Yes. I'll hand that to Joaquin.

Joaquin Castrillo

repeat you that. I Sorry, catch didn't can that?

Jim Schneider

the that or what to of your the timing it your kind you maybe it's now? more with of assumption respect is on worse? into clarity year? the of and relief funding guidance of terms magnitude there's heading front, and was whether clarify In that it, now can it better directionally And What

Joaquin Castrillo

I since that beginning, the related in the a approved as that the to don't funding that in the I for around question, given modest $XXX the EBT an months hasn't -- think will in that August. ago. guided changed just seeing had think complexity and reality EBT we knew previous here we're said in that was controls additional I always an additional starting island. and funding except of dispersed aid million There's the get delays a we for couple the level of to

year, previous from billion, funding, the amount If going $X.X impact is funding EBT relief and it's you to the of was compare to of that which half the this year. half the

in segment might So guidance Merchant as that to it's numbers. stands. the And our that offset And the positive impact we it in any considered other aid. through that should flow will Acquiring is see significant, that but definitely very not something delay our all potential is

Jim Schneider

talked several comment kind a a action referenced Thanks. before. as about just maybe potentially room as pricing That's for you on you follow-up, further we kind helpful. But go-forward you benefit pricing and And of there's head the segment, actions whether on benefiting either into kind that you of would them and additional maybe then basis XXXX? of that can an

Joaquin Castrillo

the time, to don't going some done for looking something you always hadn't action the think do we're which a growing EBT to we we're take I pricing both having I case, tell to it would continue margin. now that of that our advantage in for we to was and ways from our In lever. previous was it's thought -- for good moment right volume us XXXX. a year, mean given and I different it in in impact this end top

as perspective, XXXX, services. giving a that we to pricing the always at discuss we're aspects new fees the on but will We transaction current different new from of business, or closer guidance complement get looking to both services

Mac Schuessler

Joaquin. I What Right. would say, just I would compliment

job PCICs, I we we think he's return want analyzing profitability we're the making an segments, they're in repricing the making of them are raising good the opportunity. services, as we them are like appropriate, value-added there's where profile, certain market, some look they on done our a a sure sure of a very take taking that risk within at look the making at based

has credit year. which give would for of the about being more disciplined that, him again, benefited lot a So I much

Jim Schneider

thank Great very much. you

Operator

Instructions] Morgan go ahead. Stanley. The Please from [Operator next Faucette James with question comes

Priscilla Russo

Hi, James. is Priscilla on This for

How growing questions. about Latin quick offerings overall? in small. two radically It's still your still do think e-commerce quite developing America, Just but it's you

So versus how when you're it you online? do about think point sale prioritizing of

Mac Schuessler

a that's mean I question. Yes. great

market to use transition. segment. we your product even making online Rico, which capturing that on ATH not have the even but a would and is to phone, done quick that seeing mobile and our what In good we'll So we're shift Movil is mobile, job very ability a with to Puerto mobile only you to sure the I tell continue we've focus

hasn't or part a better of a we one better better the for offering. alternative merchants do processing see think the make we had was them And their openings captured as rationale U.S., but growth We by improve of a I rate a that investment in see is our of we online that to It PlacetoPay. payments. trying services to do the network, with could our you has the is have same have significant amount gateway acquisition and think as of the the we that provide PlacetoPay ATH so in to to in give occurred But an one product. shift. opportunities it for that digital to And gateway, the using

Priscilla Russo

you update to any you markets? to it And other of an development, especially terms that from expand try on And give merchants you think in received about then it. are you've feedback Got can product and you so far? where do us the as pvot

Mac Schuessler

Sure.

So for this an do, pvot. on tell as we specifically What you I'll update is said before, we road we a call we've don't have have map.

the year. piloting be months, rolling that and We of be application have in we'll end that by couple restaurant a will out a of the

on new be that we're we're the market. development add pipeline, we continue we very what the seeing acceptance with is the to So that in features, so to pleased and focused segments, new continue

Priscilla Russo

you. thank Great

Mac Schuessler

Thank you.

Operator

Please go question is Blair. follow-up Napoli with William next Bob The a from ahead.

Bob Napoli

you. Thank

year X% to color this -- adds revenue think that get the -- could the and more what and trends a Movil for you Just mobile next just trying growth feel and think over as I revenue get want in you add ATH said to few to for business to it The a the and trends well. the on years. little

Mac Schuessler

Sure.

So I'll to I'll and hand it it, take Joaquin. then

Bob, show innovating, and able impacted we're As ATH on services, to excited want Movil plus that And are be that new ATH really products, we show we why are technologies. you making Movil in testing new you to time together, know, Business. business, that's the that's sure we have as we investing spent new to focused we how pretty now

Movil, contributing ATH of our now growth both So year. X% this is products

we too want the if it continue to products opportunities other and anything I expect to you some of investing XXXX, as So don't Joaquin, else. in we're provide growth well. add know, to

Joaquin Castrillo

to comment monetization remind half Well, fees the year. only some thing just second I Bob, of just the last on, is everyone would these of of began

of half innovation ATH that, that in of Having continue grow we eventually look over in today will Movil seeing Business July. to laps That terms see in both happen we said well. current which first for we growth. that ATH really the we're But different So a high terms and fees in different of to uses right, the over year, time. that reflected that's do get Movil transactions, new continue continue and of and to continue generate also number something features of add to either as to

Bob Napoli

addition then for. question, -- forecast the raised what this your for wondered just you And year CapEx just last and was the

Joaquin Castrillo

good part just and to which and those So investing through it's growth, that these infrastructure. as of obviously we required and we're of in like production into hardware that pricing CapEx. that as of And advantage soon make this we of get for is we big strategy ourselves growth, through in to push some of both took some invest capital mainly as allocation for Citibank, M&A required our were terms possible, contracts having type to due, actually -- refresh development, did mentioned, we Santander,

Bob Napoli

you. Great, it. appreciate I thank

Joaquin Castrillo

Thanks Bob.

Operator

question-and-answer turn conference I Mac any session. back closing remarks. would our to over for like Schuessler concludes the This

Mac Schuessler

different you different listening seeing So you look Thank night. everyone, the the you, good visits. call. for today. you joining at thank I'd coming I us like for and over forward and months, to to conferences Thank

Operator

today’s presentation, is conference Thank attending now may The concluded. you now for disconnect. you

EVERTEC (EVTC) 4 Aug 192019 Q2 Earnings call transcript