EVTC - Earnings call transcript Q1 2020

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Operator

Good morning everyone and welcome to the EVERTEC First Quarter 2020 Earnings Conference Call. Today's call is being recorded.

At this time, I'd like to turn the conference over to Kay Sharpton, Vice President of Investor Relations. Go ahead.

Kay Sharpton

Thank you and good morning. Mac Castrillo President our are Officer; Chief today Joaquin and Chief me Schuessler, and our Executive With Financial Officer.

I'd statement considered recent periodic begin, may earnings release statements we like report. Company's that our everyone Before most the this contained contain in forward-looking conjunction and in be SEC and should with cautionary remind call

www.evertecinc.com. per as included During are Relations section common Investor information and measures under financial company's today's constitute will non-GAAP income, GAAP to at management our call, Reconciliations earnings slides, the are of net rules share. will and adjusted such measures that adjusted additional which adjusted provide supplemental in related earnings in certain information certain release EBITDA, SEC available and today's also website

to I'll call hand the over Mac. now

Mac Schuessler

and everyone. good Gary morning Thanks

essential remotely who those have community thank the given sites, also their continued colleagues behalf regrets tirelessly of to roles. those lines Before diligently us all. workers have those of our to benefit In particular, to we as all with my medical and like I this are pandemic. those I want company, front lost on my are work who sympathies on our who for as and well the gratitude working in to the global to of on the want to of who my who begin, have share loved all ones been the by affected I'd express nature

organization. strong Just to this and making proud is demonstrating me honored as continually their adaptability, with hurricane values, persistence and the Maria, team EVERTEC lead incredibly

have even the and experiences we efforts and of cautiously e-solutions of resiliency with of the to quarter. successful to our We're impact the team on extreme to implement our call continue able fortunate people. COVID-XX, maintain we business be believe to this that While our the operations our our business past proven highlight during circumstances monitor

preparation enacted shelter-in-place for then, in highlights. COVID-XX, some measures. cover a social I'd the before government Since business March Turning which continuity plans on some days we like few operate a X, of our directive to distancing of country we types Rico to implemented has deployed In every these XXth. Slide Puerto the

support we a been but for colleagues has those the transitioned implementing our employees needed of to safety as also work-from-home on safety priority and critical environment, that were site. Our measures

to everyone our and able keep provide access the productive. equipment throughout well remote to our clear Through colleagues to initiatives, we direction informed and internal and as as focus were organization

as for developed gear, network the other who For as our we they our well all sanitation as increase the handling safe procedures implemented each the spaces on such distancing running, day, overall keep as temperature colleagues cash critical and building, provided and at check enter offices. needed site, operations to operations be our customers, safety protective

was of March, In clients our supporting well. evolving significant focus a needs as ours

increasing this the For us them over modifications transition of as modifying license charges, lines and phone tax our as it customer in and our our and clients as environment. from handling for new fees interest to to to calls, the customers, allow late projects related more well acceleration necessary numerous serve environment. of systems security other Adjustments our this capacity that largest customer require on communication, our business in functions included for other depend in of Many and the work-from-home to XXXX customers Popular, environment. we new assisted of employees

to support. with assisting The scholarship particularly to contributed Puerto as can over that severe years. students past we been need pandemic on Rico brought merchant have are promoting of clients we well to For as applying and finances the other are $XXX,XXX to are our mindful impacts them we remains. portfolio, commitment by we and greater the community the finding aid XXXX for in small the ways our business firmly throughout the over the provide application their for our these program, And already help has five footprint never which organizations

Puerto While Latin and this stakeholders we and in the our investment America, our of each our run. believe time of long relationship results the unwavering customers in quarter strengthens in pandemic, by employees, effects impacted the Rico with our communities were of during over crisis, our both

XXXX. Beginning million, highlights recent was on you quarter's an some compared update of financial increase Revenue provide an on Slide of X, $XXX Total the I'll cover developments. and X% with to

results revenue was on transactional with March, expectations, revenue track in in Our were mid our measures. by but February January impacted and COVID-XX

year. QX as last compared for February adjusted be We this paid Dividends significant flow Xth. year a year. last compared approximately prior our million will to June that Additionally, returned next April X% repurchases. by of generated or paid Board in was were was revenue a $X was and operating shareholders we $X.XX, the earnings share our the Xrd EBITDA million, for share to and year, a the per the dividend Adjusted headwind $XX decrease cash had one-time decrease approved through on X% and

Our $XXX liquidity over quarter was million. end

Slide that were Through establishment to business necessity for our at card a using a customers with chain can provide been our to we portal, in are implemented innovative new for able update the on Latin such Exito redeemable largest customers service pleased our the Colombia. continue online. X, America, onto Exito, new has solutions, first Moving supermarket that card as then or virtual in purchase we

Colombia. card community is service COPX,XXX purchases This For to time XXth, PlacetoPay. support relief payment acquired that the our This during is a April recently digital of gateway, is Exito fund. through new challenging creative contributed solution helpful this supported a the COPXX,XXX in every to

their of operating payments. for facilitate to an implemented as pickup. also card-not-present America large delivery e-commerce a in us Central We support further home critical our COVID-XX, retailer easily payments they These became solution as and result

XXX,XXX This Additionally, the program implemented community Republic pandemic. the both over Government, card helped Xst over the which families Dominican by for families un-banked $XX needs to we implemented in impacted to program distribute distributing those virtual by which was April benefit and by a million, the has impacted banked economic with aid population.

now our of on American with Chile successfully pleased are have acceptance and Santander project progress Express. the we the tested Lastly,

do, We more work still to is but milestone. this a have significant

delayed testing as do We date this time preparation closed to with an few most and further using Santiago, our implementation are just we're merchants go-live months. to and have a expected in

may growth to are products continue see We to COVID-XX interest opportunities. in and timelines although we our extended be seeing due

Latin We our have differentiated and and as we competitors we our through unique in ourselves focus, a will our our customer provider believe service payment America. service investments, emerge from

their of is businesses to just significant the are Rico, and in billion in employee workforce. Government The own package, are Federal small to approximately continuing Puerto the Aid $XXX in Puerto million. environment we challenging Rico the aid Puerto of unemployment the Rico $X government through provided which included receive government Moving that has to seeing is on the struggling. also increases local world, the CARES like rest anticipated and economy supported

As opening COVID-XX the this by week, for allowed segments economic few which earlier business, provide reopening industries of resume on of cases the May is some to is several Puerto additional activity. weeks. next developed how Rico, positive depending to over evaluating the business XXth, government were The

opportunities they serving on the our continue to executing will arise. and focus clients' on as We on innovation, needs,

those given March, rest the duration results provide pandemic the challenging clearly they will annual The it to and provide is month guidance uncertainty share in far time. QX. on of impact Turning at an of of business depth to of trends the while XXXX can Joaquin the preliminary impact COVID-XX the our was will is impact are April. we continue this to best illustration evident the around how provide trends they in we share perspective to seeing the if so in our and

the reopening would released expect implemented. of the by government see plans We the economy improvement to we gradual as are these for encouraged recently some planes and

a Fortunately, with balance we strong leverage. to continue sheet have low

the to modeled continue have we have under cash adequate the have flow, weather to expect positive storm. all we believe we liquidity to and We scenarios

prevail Our or longer ahead a U are will turbulence and the the one in term in we our for or to Whether recovery will based on our us. keep W, future is steady focus this will commitment continue to V spirit's a view thing to opportunities is we the remain over challenges, With of human understanding, confident on on a believe it ability to continue was. become better to with we we adversity. previous values focus and the this

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

Joaquin Castrillo

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

revenue will Turning the first to for the quarter for Slide the to which X% million, was revenue million million. in benefit Total compared of EVERTEC. quarter up onetime first a $X.X included prior $XXX.X you X, year, $XXX.X results see consolidated

some and volume were year expectations Latin of first Rico well modest America months with progress Our overall transaction some Puerto sales saw the performance the as in good two growth as over projects. as in and we line in our key of

Merchant, however, transactional. are and our by business Rico in of some Beginning affected Payment business were of lines segments of solutions our some the that the mid-March lines of pandemic directly Payment Puerto business --

negatively impact in to approximately to America We the Latin COVID-XX $X also revenue segment was that Our affect. by impacted related million. the estimate was quarter

are business decrease the $XX.X million, to million The $XX.X America increased represents Adjusted in margin XXX for and impact the of Business in and from which well prior XX.X%, point revenue. year. decrease, the primarily of reflects lower EBITDA project a margin the margin Adjusted prior was year one-time as in prior decrease quarter compared revenue, X% in the EBITDA the as basis transactional the of Solutions decrease was this year-over-year Latin year. mix

adjustments year, net amortization, as cash as lower The a charge a depreciation transactional interest increased also expense. offset the the adjustments fees. normal and to operating as compared in in partially quarter the income well was for primarily $X.X to of share-based $XX.X decrease the and included prior equity quarter million, and Adjusted reflecting adjusted by EBITDA XX% EBITDA our lower related non-cash adjusted for compensation million include

the effective of tax $XXX,XXX. Our of of impact quarter the business reflecting discrete on in the as primarily was well mix COVID-XX the tax adjusted item as approximately rate XX.X%,

tax to the impact business. prior decrease year. quarter mix of due full and our of compared We to COVID-XX effective expect our primarily for year EPS higher the than rate was Adjusted be to to a $X.XX year, prior X%

$XX.X revenue primarily increased million. X, approximately last approximately Merchant first lower in then two in with results by In starting I'll approximately and quarter, X% March weeks now on driven year-over-year single-digits segment Slide through our Moving cover decreased net by Acquiring. The to volume February year-over-year. of sales Merchant revenue low XX%, to the Acquiring decreased the XX%

of Puerto March essential and All their day. homes of for for other distancing businesses out such supermarkets, measures and or to only a visit closed remain and hospitals. Rico groceries, pharmacies, of have stations, XXth buy businesses banks, allowed remain time could doctors as to medications and only gas open began period social on only limited people go to

These voting stabilized drove periods measures purchases for by which driving for sales to declined supermarkets in Average their that March shift. towards in and down time. however, categories, longer in increased except driven January has by and by for larger mainly remain them in February, Spread, the behavior consumer homes of enabled changes ticket pharmacies. business mix

Adjusted mostly basis EBITDA XXX approximately Adjusted compared variable million, was business. X%. year, this of down last margin segment down $XX.X mix and segment. Expenses the EBITDA lower the the are transactional to points impact for revenue of as in reflecting was XX.X%,

quarter approximately you project of last first year. down Caribbean was segment. for the primarily to Payment Services, last XX, will Slide On and the in Puerto million compared results $XX.X to year, due million, one-time $X.X as segment Rico X% revenue Revenue the the the see

we mainly the our had impacted that reasons segment addition, for same year-over-year, growth In merchant negative after transaction March XX. COVID-XX

single Movil ATH as ATH by transaction last new business We incremental growth, new offset interim in growth partially mid quarter. benefits saw Medicaid the service as POS with approximately of as and well well. down were volumes XX% experienced transaction a drop transactional February and These transaction from Movil month off volumes the and revenue digit March. January similar recognized in discussed then range, the on and we

to post to margin fixed as compared compared year, from was infrastructure. year, segment implementation basis lower EBITDA points EBT and costs related $XX.X primarily XX% to expenses operating XX.X%, last this down high segment revenue XXXX costs the for mostly has adjusted million last project. Adjusted to over due to This technology related was EBITDA decreasing

of was $XX.X approximately million, Payment On segment. you in quarter. first XXX,XXX for driven as X% attrition our Revenue by year. as this This results Services for see PlacetoPay the the well growth by in growth was approximately offset Slide was the to last in organic This XX, segment partially acquisition LatAm as quarter of growth. will up compared the

as versus Chilean Now all Real, XXX,XXX the approximately than impact the declined included XX% LatAm effects special these peso revenue. a which started distancing license to in later of March some COVID-XX year effects Other segment Colombian we from a strict of intercompany our of a also the year. in are countries impact one-time the operate Prior were the that of was social measures Brazilian in limited, less prior month peso, and

of many and also have have or revenue based And accounts component our a contracts fire minimums on plastics on issues.

are some more of moving the of expecting us get based implementation some and we We projects have impact QX to significant trends our been on following, delayed.

We in revenue to the down quarter. year, we year well margin for environment and last the to adjusted driven EBITDA XXXX in and this attrition segment the now of intercompany the as impact license that X was as compared given XXX was million. attrition XX.X% EBITDA between high the million Adjusted points $X.X to by the million as in approximately basis some attrition the anticipate may anticipate be now delays X see current margin one-time

you quarter Revenue new growth implementations revenue well the for will first by results quarter projecting the the segments the Popular to by $X.X XX, Business million. solutions business million. Slide impacted approximately approximately as up in segment. for X% was find $XX.X as solutions that the was driven services for On

the in margin For as revenue and the primarily XXX adjusted The was quarter, approximately was the XX.X% quarter. adjusted EBITDA $XX.X to driven EBITDA in points by million increased up last year. adjusted margin EBITDA increasing compared basis was

Moving XX, see other. corporate will on of and to you summary Slide a

of first adjusted to points XX of compared revenue, a decrease million, quarter total was the basis year' and Our EBITDA year. percentage approximately to X.X favorable as negative X%, as prior a X.X% prior

approximately balance timing flow million, Slide million, impact million. cash and provided compared million and year-to-date Net settlement on Moving as was $XX beginning year including XX, working unfortunately on approximately $XX restricted by the our operating a includes differences. $XXX prior to overview $X other our of to was capital this cash cash cash increase of activities

other year-to-date $XX an trade million. related million included $XX share-based total a flow expenditures net approximately We $X cash million generated over our taxes certain against down, feature $X payments medium to the debt in cash approximately a paid approximately pay million. $X Capital level and withholding compensation payment loan. agreement which resulting excess a paid to debt of sweet on $XX were be million a of supply in in decrease

dividends available be of of We did use common $X not payment April another X. on repurchase June quarter approximately pay repurchased the cash dividends as of approximately We in million now share recently future on X, the have quarter occurring due million Xrd. record under we to the and timing XXXX end the after program for shareholders May to $XX $X.X to Company we've of paid stock,

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

summary our XXXX. March XX, a you'll XX, debt of Slide find to of Moving as

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

interest was weighted-average Our X.XX%. rate

under Our of A EBITDA our times point months net debt will provide XX XX% the adjusted threshold approximately first two times multiple on below time. to in our trailing two a for rate interest XX improvement debt. basis was

the given EBITDA impact to likely go in related COVID-XX. above on will the multiple QX we two-time However, adjusted

revolver was are our and the of under although revolver. over liquidity. the the a available XXst will cash end we million. and on expense At further March our to draw interest $XXX quarter, position, excludes capacity restricted buffer and on liquidity minor revolver have of given our cost balance confident decided uncertainty As impact the our borrowing includes for of seemed million total The cash we liquidity the our This draw $XX to prudent the of environment. of

and COVID-XX Moving revenue we provide some to our are just the how view quarter estimated very of pandemic, study suspending to for adjusted second nature purposes sharing unique is of showing on these impacting levels. business, Slide given But are COVID-XX XX, guidance. on disability revenue April the and impact our a the annual EPS preliminary our we perspective

in down from this, be million XX% $XXX or XX% costs. margin of total prior revenue revenue will share down per Adjusted and approximately total an Based EBITDA on would resulting adjusted is be approximately in EPS year, $X.XX estimate fixed assuming QX.

Although we potential COVID-XX be offset are for possible some illustration, focusing most which of limited impact. we on where of cost levers, will containment purpose this by have

these levels, to expect about deliver adjusted EBITDA. at $XX That said, million we in

open and week to This transactions. an As volumes remarks, Government and Monday. positive Puerto over in is in days past several begin his could have improvement that, Rico Mac mentioned this terms announced seen verticals few business the last the we of certainly

much economy still uncertainty there's consumer economy opening COVID the to However, behavior future is and will control. cases and to impact also the have on pandemic this as under remaining what the of subject

monitor to COVID-XX breadth continue on and business. the to have pandemic when depth we update the provide will the clarity impact We greater of and an situation our

continue note, times on even mode. remaining in positive And we the results, we but the three cash near positive still now a leverage uptick our ratio, lowest in On flow would levered. depending see to anticipate an

challenging but believe we execute benefit in guess a will longer continue In beyond. continue I our summary, to it we and XXXX initiative well. to was quarter,

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

Operator

is [Operator Vasu ahead. Instructions] Our from Go Govil from first KBW. question

Vasu Govil

May of are the that end seeing the Can and for much within Hi. my sort month towards healthy. my were if and that you and us talk improvement? the that the you within April through, talk you saw but on It's is changes guess for I things what the that trends question. in early gave safe taking to into of glad the good us, and you all Thanks to improvement everyone month. question, magnitude you first

Joaquin Castrillo

Sure is Vasu. Joaquin. This

for a And little in I two Rico XXth, weeks of decline March, you say of going so, bit have That in April I'll so everybody first March thirties. a shelter-in-place been high the to we In got volume more grew into started seeing. just walk half the initiative. order the getting would serious as second kind we activity really March of what through saw Puerto the

low low there thirties. end April. we So, weeks stabilized high the and saw to coming it two of forties slightly through first down the It improved thirties, towards

remarks, Monday. have in And now, stability but seen much it's don't few this I commonly open days We prepared days, high past been that we've of businesses as because up the said to several twenties. governor the in of teens, low allowed a only couple a

a in are So, hopefully stage see more May control positive able continues XXth. opening how this to we of businesses continue the would develop, cases we and of expect open, kind but the extent continue need the trend, positive still early. to sectors and that next see to it's of we To to to

So, we're this closely. looking very at definitely

Vasu Govil

helpful. Mac, some a to we it really economies life many is as the that trying were going certain be is structurally Rico in think hearing multiple that in seeing that cash cases. Are Puerto LatAm the you pandemic higher in for of particular that coming that growth high of That's new you sort the rates And the Thanks. years for in very a EVERTEC? by do of people what And ways. evidence to across out digital acting of And more of focused? shift industry the the at many accelerating will of payments be level, way digital in

Mac Schuessler

I stores. the the preferred with There's Movil I digital what So, particularly of we've small mean, with Movil It's hearing payment method many our you seen ATH a peers. we for grocery become of move some tell small to will payments. businesses, from business. the ATH and what you're agree

more seen So, to we held create as environment. we trying card has even when in digital that talked virtual that trend Exito about up. business in a Columbia, a talked have make We've about and it seen shopping we to

in to trend. the Movil ATH will happy seeing we've are and continue we've out are investment in invested that that coming accelerate that, we that we and COVID-XX PlacetoPay. do made So, then We also think of trend very

where given liquidity in perspective, period, this sort need this a from during So, invest to of we technology. are we

So, it come stronger. out of this

Operator

ahead. Deutsche question next from Marcello from is Korey Go Bank. Our

Korey Marcello

could on then mix the merchant there, Hey Korey small a guys, maybe little this that just as merchants maybe well. first, of talk a ask to it's wanted base, Keen. if you and about merchant have for the is you online bit kind Brian volume I of

could Just any color give you around that?

Mac Schuessler

first. Yes. I'll take it

in travel remember weighted Puerto we're to entertainment. and got less where You've Rico, on

have local lot economy. of We a the

a pharmacies, are got supermarkets we've utilities lot So, customers. our the of the the

type payments that our piece, we seen of relative on So, in digital and that's you've some businesses break stability separately. don't why segments. the out And of the

call. growth were have some on of the ACH given We we the rates in on past this not

gone hand your said become earlier, you the on one the paid local the is But the with they your pay place front of small cell door I line, and pizza you've and methods out as another you up preferred you ability door phone your businesses. and you. that of to to to pizza I order that's payment personally, show the to phone walk the already them places

our But sort is processing. if So, economy of you seeing digital of of I the the part gives you of of we a Joaquin. add anything know want that don't waiting the understanding are an sort core lot increase. to

Joaquin Castrillo

portfolio. to give around some the just color you Yes, additional

to pretty all that closed. have required shift, have significant the and businesses We are seen mainly the remain that other to open businesses were ability driven a because by remain

this a we "businesses" stations essential and throughout pharmacies are continue So, that are and seeing as could towards do period. those to supermarkets, mainly shift significant gas the this

important or be guess, in would It increase average key an seeing ticket. I the series, we're factors other also

within last the to margin in saw weeks, ticket what seeing larger of longer these make that's and out few at a can go least we so are period the mentioned, people homes or I supermarket script businesses, their homeowner as time. purchases, average in So, as for stay although these the are they lower we

some lower bit towards a the that little seeing offsets businesses. we're of of margin these kind that So, shifts

all digital period, to Mac should this I add right. said, these throughout grow to there and alluding would that whole continue Then channels even just what

given are transactions physical as So, they grow and transactions PXP the payments, a the of some continue we seen to and do card have shelter-in-place, this and taking slowdown business hit in year-over-year. present payments other

Korey Marcello

I some for upcoming kind around potential guess, as outcomes mentioned of quick the a quarter follow you EBITDA. guys up,

Just think related curious, six I that was cars. some to

I'm maybe So, you into could of take some just type curious taking out could you versus out. how detail that guys if what, that and potentially what benefit go controls are cost you that laid the expectation

Joaquin Castrillo

Sure.

we've as the So, a margin past, a run we some high basis industries. very seen in the on normalized best of

for are cost we and levers run very So, we so Company, significant of really there and conscious lean cost, continuously, are not the very us.

always line those are where focus and we on identify to given and for we more to can efficient impact to the those be we However, will execute. as we areas continue top the obviously looking continue

Mac Schuessler

of Yes, take our employees going our of so focused on very just our into taking and care this, employees, let say care were we customers. me

for of up had site. to sure acceleration in we and compensation some we a then that to those an So, for actually continue saw making additional expenses setting had environment work on virtual

So, and we were focused to investing make perform that productivity. sure to operation continued very very the we were focused well on very, on

closely But continuing being our around working. course, to the that offset into marketing digital budget to to good we try went back make down. in and training that travel we some did if invest back budgets said, are the we’ve in cost very others We're the sure managing We're remote Of as down, budget we incremental incurred Chile, make we which T&E So, moved other of to this is platforms. that period. our we invest progress offset that and Santander to was on even call, during continuing

to sure Going the closely of manage future in opportunities, we company really with in a the But we're expenses. in possible the we manage continue cut growth. without expenses, diligent don't to margin at that enters and Company. discretionary will that future be those forward, expenses look some new sacrificing of making want countries discretionary those interesting as going we sure of Because very markets, as to at expense some growth it's the emerging as make we with

Operator

next from Our question from Go William is ahead. Bob Blair. Napoli

Bob Napoli

April and holds hear have the up Good so of the you. for everybody's and the you everybody on -- well. April the trend on what the are well, trend assuming XXth, good you doing Thank the morning, rough you through your guys, Or to about get guys million On just to the are do quarter doing throwing $XX to quarter? EBITDA? of trend you and is that thought kind

Mac Schuessler

on is subject just April April. what May, the continuing I few the that's open said, as this in same view, trends there's this we really assumes and our continue. obviously of sectors again, that preliminary No, But additional a might saw governor opened in sectors the a time business to based the so and at up COVID-XX, to so --

Joaquin Castrillo

Bob, short yes. the is answer

Bob Napoli

Okay.

Joaquin Castrillo

open the week. in seeing, slide in businesses, is And does the the speak in factor this assumption but assuming you're that and opening. We're governor the that that economy is then quarter week to next already we as not continuing

those also open could they is then businesses close So, again, right. could but but -- and it

is months So [indiscernible] April. three of -- quarter but

Mac Schuessler

Yes.

Joaquin Castrillo

is But bank One of we are a continued we already are opening we are seeing accounts, the governor money seeing things. seeing the hitting also the and couple unemployed, economy.

Bob Napoli

And there growth is you. mix. rate Thank the and card-not-present Okay.

that given of of up, helpful your businesses to of kind and haven't especially would your you payments understand growth in said is? you the this rate business, be card-not-present, and that what think really that I what percentage environment,

Joaquin Castrillo

this not But given the through environment. is your every And we'll is becomes Yes, the it's a at great a it look future. day even future. doing and growing point. prepared a What you in business to doing may the bigger it's that. good the consider that we news right we're I that in is, of disclose feedback, take But piece now, would tell

Bob Napoli

In Santander use have to want to for question. do last that overtime? broader thoughts of? Just on is build strategy be, you Chile, what Chile what that that your And are of off the you the to revenue out

Joaquin Castrillo

Yes.

we what the extent, is said with on what you we Puerto products broad base a Chile a time, Rico platform. hopefully, our customers of we Merchant calls. in lot processing retailers This payment broad in some is tell goal over Acquiring of of already merchant several would and replicate Chilean is And have I and have what So of customers to and banks that's a on set to previous customers. one clients. And our as bill

So of and base sort we set. solution broad to have a customer plan

Santander is and that previous Chile, would specific [teed] to in what this revenue as significant segment given be to haven't of double-digit really helped we up call the We segment. to at to pre-COVID-XX on be growth the it we said contribute going carve-out for that a of but year, the part did XXXX

Operator

next Davis Our is ahead. Raymond James. from Go from question John

John Davis

good Rico. I afternoon to penetration, little or morning. on in a just guys Puerto touch bit card wanted Hey, maybe good

give expect the know today? card I I a card. little maybe think data many of Rico COVID accelerate to bit Puerto cash in idea you an is difficult, can the but looks like what penetration

Joaquin Castrillo

Puerto a trying tell in informal cash of that obviously economy focused digital economy, get the pie of on additional to there products to that of avenues through is been piece but an you, have part continues I to is What some create is, large be our very unofficial would we of that John to Rico.

but that business some you under and ATH it's are of we dent some and penetrating in products, digital is we're for out definitely to those like putting percentage, in exists to we're that a that, there, seeing tell us ATH products here. of that rates non-card tough So, growth specific through Movil that the making that can economy be Movil I what

Mac Schuessler

economy. of this point, There's of think still would sort on the What several the definitely also, Joaquin's accelerating to I significant add the to technology. questions the adoption a reiterate it's less of penetrated theme of than I the informal And U.S. is call,

So, in use, people to who ATH past is more Movil, forced didn't there that try even adoption, are business people application, of of rapid didn't try to in businesses. Movil think pace use each to being because ATH a the our people I

Zoom, own different can the technologies. more and are really physicians can what work people from more with We've home envelope of within pushed our be, more comfortable company and what

consumer seeing we're with So, well. that actually base as our

the down is So, pace. digitize electronify a I close faster at gap, actually be hopefully do think going to payments or catalyst, a and to this

John Davis

the it the from the great. on Okay, coming the helpful. kind This just update any be update of it to up, there of other that or approved slowed down, And hurricanes? funding any of any kind aid sped was Island HUD would then

Joaquin Castrillo

construction There's business was no real one Monday. to last construction or areas back was the this John. able sector the update, I that the to mean, go of business side

work our this an and to from will seeing that back call and reconstruction, so, looking more we specific call. inflow last get see that nothing looking back are closely funding. people of out getting And we to obviously very of if But from I are at now that not

John Davis

thanks. Okay,

So then one more maybe for Mac.

ever the obviously now, a here, appetite M&A side talking things for best I little a evaluations, better, on but been about stabilize sheets Just it little your think, bit, of maybe or shape balance your once not bit other right in. the of kind look COVID get

the pipeline and from you talk about M&A forward So about going think how just here? you maybe

Mac Schuessler

I To Company, not on we the our that has of of sheet other feel the payment to Yes. performance point, peers. how and grow balance Company. your about the about in fairly the changed mean, particularly we thesis compared part good perspective do the

we organic with a growth. tell prospects. calls ours. still still still having focus it's We're I of So, whether, can you, are even

complicated M&A aren't willing more America because bit inorganic people in several it with We've calls price. had it's and leaders distressed a a necessarily completely the some it's a slower, to on potential side, side on sell bit clients, South the

be some what shaking that and it's story we to So, a continue there or to our important out incredibly, look of like. part sort focus. But of valuations place normalization of it's have may

Operator

is Our Morgan Faucette from Go James Stanley. ahead. from next question

James Faucette

what as bases and regions you're seeing geographies, touch economies been to the terms different wanted terms in has to of people or as that variance in much Just you're levels you there serve seeing improvement and across how activity impact open up have, and your rate looking much flow? stimulus on seeing within start of a the from of are business if you government any,

Mac Schuessler

I and what us course would in each it's again, our is businesses are each difficult because guess to different monitor country. of I country for say, different

a to apples others, from do base of between than pandemic place don't sell apples country countries than have into business we each apples we had a went others. but So, broad more necessarily, have some in faster to some

a have operates. we difference country So, in sort seen of each how

to into we've every moved can moved in have we We country, a complete where workforce. a remote

So, different it's been country. been our each from same the and has been but sure protecting philosophy it country-to-country coming out from has focused, our employees, making different of they're

several in we countries. seen have stimulus But

talked course, population to the Dominican to Puerto bank seen distribute there those about the not the Of we've We've support funds in I earlier also said the only the Republic, unbanked. what government in as Rico. we but of

like I the have Rico trends occur. starting the piece those think just of dollars to country, countries seeing we a for Puerto now where that's business significant flow through

James Faucette

And in payments your development as you for always potential lot at the the of both talked you're me. of permanent of and think there's part future of impacting what and adoption in the has kind potential a opportunity been that like I may the is and shifting as looking sense that own current makes wondering trajectory how I'm of be then, talk about that electronic how for about a shift reprioritizing just and been of And a to if at all? product thoughts important set M&A M&A. environment EVERTEC, light. well

Mac Schuessler

electronic to ship was I PlacetoPay a going asked this the seen we was then I And and it mean we that expenses. to was and was that online, tell because historically question knew we think goes you natural I be previously our of back products to just a in the bought will evolution. that one have about reasons payments

as now I technologies reopening because to don't But economies is people of what With time. is gradual the if be the again, occurs pandemic for to adoption particularly going a said extent faster, period COVID-XX, or then to earlier are the of longer going of we those adopt to are shelter-in-place know. we you know slow

investment, be initiatives. places different cautious only some do different we from our in is into very and So, more perspective continue not we we investment an invest, to to accelerate going move our quickly approach to and projects but on make sure we,

us, -- to in cases areas, be some invest those in it's me to continue not accelerate the to for going So, investment. to

Operator

next John Our from from Go question ahead. is Instructions] [Operator Coffey Susquehanna.

Jamie Friedman

you’re XX. right. Jamie Friedman, large Business thank actually Solutions, worse that voices. than well, growing, you you Really is to that still segment to is Glad is hear interesting for it's this and Slide guys, good your for slide be which Hey, incremental, not but

realize that it now decelerating, businesses, maybe is helpful? Solution So business characteristics question is think my so if may the less you could Business of and -- every be that suffering would some but be I sensitive, about merchant, I talk of economically that

Mac Schuessler

Yes.

most Popular. So just to right, their to volatility a office that of lot of on a provide basis. backbone back Banco systems some some of impacted services of kind banking are services, within which number of those the of core on by of and accounts file, and based which or segment, we really give cetera, number loans, et context, key our aren't are transactional And a the

of so some questions and work before actually that Mac's as them environment. in channels managed on support for line these from channels seen also some have their digital that to that into COVID-XX, of that, And the addition channels helping the that we've increases we've point projects In business. terms bank, of home run going digital also of in we to some those and of those supported some are in And also do users we the networks and gotten. we the

a And of and a of printing, again and like perspective printing I are from lot businesses volatility. this regulatory other by is even if isn't and helping all see growth slight also things you say would impacted we which on from the into go of stability that what sheet. And a the mailing, those our some we do

do We clients. are for pieces our more some have that here small discretionary

some So seeing where a actually overall, those of segment already and have some do there expecting seen growth. it in lines with actually to processing are we but some business come cash we processing specific down. stable them And where a like lines is transactional we're we've deceleration, item

on why we're X% that's there. So seeing that

Jamie Friedman

ATM investor exposure. Okay, thanks the a about your if I'm then for that can't I details, going but was about could that. bit? little the I you to And And got talk a say, question from remember

Mac Schuessler

Sure.

the -- saw ATM process would payments shelter-in-place, Rico, segments. big ATMs and we because is Rico ATM deceleration businesses So, really volumes. of wasn't part POS, in Puerto the growth Puerto actually our say, out cash and there year-over-year need negative a very We like we I most to of of and a on a wanting much a ATM to Again, closed. were people get most

open like now seeing week, some expectation beginning just are we will first businesses to in the very that open trends, what to those seeing of improvements we And up similar that see starting But are trends POS those we're businesses with back start is the this is POS. negative still kind cannot in to year-over-year. up, of come

Jamie Friedman

Got it.

but the We a been fintects. has Mac. anyone. of the better than theme for state-side quite not same guys business big I it's you category, was wondering, for the saw, one just small last probably some EBT PPP know me, Let that participation

first be. that could talk in you a I you anyway, on To like guess helpful? if are you what I degree bit little would involved So comment my a slide, distributions? think that would but did question about have be SBA

Mac Schuessler

on Puerto on June, to timeframe. were perspective, disaster take banks are supported recovery I'll Jamie. actually funds program PPP through have acceleration were specifically from The Sure. small that businesses, those loans, run in ones that is we here the the of year really July last I that in involved loans some SBA and that to in one, of mean EBT aren't seen an approved any we what of an the terms in Rico making distribution. of

Some of as of were those accelerated a result COVID-XX.

regular these of to really of But all is an what are add-on unemployment we impact the unemployment. that monitoring obviously are benefits

part these that self-employed. in the also government we of into have, it's The money. replacements people's CARES receiving because as people of also would some local an working. So, pockets put especially obviously, self-employed had initiative money Act these through generated mix otherwise And an interesting have are all funds the that

all what impacts not of PPP, on how see need distribution. that involved we to wait we're transactional so, businesses. in our specifically any and And And directly

Operator

William Our Blair. from from is Go question ahead. next Bob Napoli

Bob Napoli

your Hi. XX% a BPOP's was? the called in to in that. just you're I in I listened credit We would understand on nearly decline Merchant I And earnings business call last would and a trying as week Acquiring up. trying Popular to so than was be not not lower. as just debit is business -- your lower spending follow bad was out much wanted and they Banco April. lot why card

Joaquin Castrillo

know our I They we manage used are their those Obviously, mean, but mean. side don't also take correlating cards credit in balances. from into I I here, of credit both, perspective, the don't terms those from issuing which consideration portfolio,

Mac Schuessler

be It's their hard at to looking do apples-to-apples. spend. They may international

So when business don't their issuing some of customers side, on the at spending Islands manage. the credit we are off

to it's So, apples-to-apples. compare hard

Bob Napoli

your of mix is it primarily debit? much How debit? Is versus credit

Joaquin Castrillo

debit. primarily is It debit. It Yes. is primarily

Mac Schuessler

So if issuing side, the debit. it's on you it look at primarily

both. On the we process MAB side,

Bob Napoli

mentioned I there have, because a couple ago lot discussion. was maybe get a a and up BPOP quarters follow contracts significant XXXX a you through they're that your you think I mean, on question just Then pricing you. when Thank as revenue, a the of this relationship part you

is to call somewhat out. felt but it need you normal, the said You

I mean Just any any you went And long tied you before like how discussions? that it? extremely pricing with seem update BPOP. would renew on in contract obviously to terminates,

Mac Schuessler

some would us. to good say think is we've demonstrated it's Popular, a So, we fact the Bob. is, similar Maria we pricing -- that dispute we say behind the what did question, say I let partner where Hurricane we Banco actually. a very, me and remotely their We manage just the that got cut work on made. I help would this quickly do implement these them disbursements workforce to We very being their checks programs some to lot a how are of behalf. We important of and new do mobilize are.

demonstrating in the how And feedback as perform renew the like want focused is future. do said in since future we're how we on of a possible I day important we've feel to in that well as every much gotten So, we partner as are. bodes always the I think they we because,

Operator

more have we questions. time, this no At

remarks. it So, to back like conference Schuessler concludes to over the turn now our for question-and-answer closing would I session. Mac

Mac Schuessler

Thank you.

just to the appreciate you of the reiterate some colleagues, want all again. of of our customers, look some our Thanks So, making we work on and speaking to virtual on coming I I focus that sure again, of conferences hard forward to up.

Operator

The you Thank today's conference now concluded. for presentation. is attending

You may now disconnect.

EVERTEC (EVTC) 8 May 202020 Q1 Earnings call transcript