EVTC - Earnings call transcript Q3 2020

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Operator

Good afternoon, everyone. And welcome to the EVERTEC Third Quarter 2020 Earnings Conference Call. Today’s conference call is being recorded. At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Kay Sharpton

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

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

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

Mac Schuessler

everyone. and as new highest our performance in good Kay, with as business. results economy Thanks, driven demand the afternoon, impact achieved from quarterly as consumer the the history, We company’s strong by well reopens

of and was year-to-date quarter, $XXX XX% of Additionally, through share million for execute EBITDA slide Latin XX% flow shareholders will increase an which $X.XX of four, initiatives, Beginning growth on revenue $XX $XX dividends. share million longer and year operating us million XX%. to returned compared for total to was we XXXX, per cash America position over third approximately on of increase an generated our our the the have an was continued increase term. earnings as million adjusted compared prior and to repurchases adjusted to We significant we the $XXX

was as of September our million. $XXX liquidity Additionally, XXth

on Puerto slide to five on for Moving our Rico. update

a the Government transaction We and revenue result for Rico of reopening the subsequent in September. see in growth XX%. continue tapering early significant of federal XX% further total programs The off of tax in Government in Puerto Merchant earlier the beginning and payments months timing further businesses. surged growth, July to restrictions over Puerto as stimulus Rico quarter, quarterly of revenue to the revenue a COVID reduced

demand recently benefit encouraged of the in rebuild of release That to expiration $XX economy. tempered the be federal are on term by said, will support. the has consumer the we announced funds the However, billion the infrastructure been a electric island, which by longer to stimulus

FEMA only would President’s by of expect week we outlined began immediate a from see as unemployment which additional distributed Additionally, to Executive weeks more $XXX the a few ago be Rico impact for benefit, Puerto week. approved by and order, the was per last to

provided Our Education, in computers recent we quarter. recently education $X.X contract to produced million a approximately Department in of the the onetime support revenue new which public of increase with and system,

ATH our from benefit to related to continue also the We network. channels digital

Movil continue ATH adoption Movil consumers encouraged superior Business both are and Our and by the to rate ATH deliver businesses. we growth and of

codes six, business. X,XXX We expanded in review through On have slide functionality over merchants the to July will Latin our QR from businesses I also XXX contactless today. American

the to with certain of many responses pandemic month Brazil and Mexico and of stabilized more restrictions. and trends stability. Chile different restrictions COVID-XX allowing re-openings. COVID-XX see to to lifted have a recently recently continue varying we their environment, merchants and are and than reopen, achieving the Regarding levels Colombia Brazil

virus. our the cautious on executing pandemic, given region, remain surrounding focused However, continuing the we growth initiatives. remain throughout Despite the the we about uncertainty the outlook LatAm on

new the in localizing as This and in well Costa the We new existing place to add Panama. our partner Rica gateway as to continue platform leverage transition by enabled to merchants. to pay has our banks investment e-commerce gateway, merchants

PayStudio Alelo new in in and Brazil customers, Uruguay. two production with ANDA acquiring is platform Our now in

wide deductions. largest such financial for which is in term provider the a clients the range our QX on incentives of benefits license Brazil, through services employee corporate payroll Both mentioned in management. in benefits, as specializing we As service call, nonprofit as and were medical, and ANDA serves one companies of agreements. Uruguay, largest a XXXX is expense other legal, services travel Alelo

We segment the continue be We the these to services processing the production to Chile our XXXX growth in America on our wins expect for all acquiring in by platform longer to end and with term. of contribute and of with our over collection Latin to in payments year. Santander Citibanamex anticipate

we have and through XX% participation despite as communities. survey we challenges our working and as areas the well in employee a satisfaction. in the significant Recently, survey improvements of COVID completed always, pandemic, of in in engagement continued to employees As the engagement saw many to we employee XX%, invest an increase

While Further, its from next. in to have engagement we on the we focused scores which able specific and in year. provided the governance year program, and and we STEM to we gender XX% of past recipients an and the we XX% balance commitment a agencies. particularly scholarship previous we continued almost were over areas over seen and environment, scholarships, have initiatives awarded on year, achieve have will Puerto the were we is feedback, In focus with our were and sixth still scholarship the of we of and we by increases the that across various XX% XXX Latin opportunity America, our male on social this year focused This delighted equality increase year, through rating Rico in Puerto efforts female and Rico.

will With areas over to of proud Joaquin. these citizenship. that, are call We of our on the progress I now turn important corporate

Joaquin Castrillo

and afternoon, Mac, good everyone. you, Thank

EVERTEC. the see million, you strong our for $XXX.X third $XXX.X consumer Total revenue quarter positively the third impacting back will million all was Turning nine, transactional the quarter XX%, bounce to to prior results consolidated the compared reflecting slide up year, for demand, revenue. in in

increase Education Adjusted this XX% prior EBITDA margin contract. from revenue Adjusted Mac transactional Total revenue of increase higher reflects $XX.X of a of onetime an the Department year. benefited additional million quarter XX.X%, from government. As was was mentioned, months year-over-year. also the basis nine primarily increase an new of with for was X% $X.X the we $XX for in the represents million, the and $XXX.X million, revenue XXX prior services margin increase point The and provided the to million in year. compared to EBITDA our

foreign EBITDA million, was benefited an from projects the of non-operating net $X EBITDA This was million increased re-measurement. prior adjusted prior partially driven cash reflecting interest. increase the income expenditures went and increase from $XXX.X we $XXX.X production Additionally, offset sheet an well Adjusted of adjusted XX% the as of to operating million, due X% approximately last year in in and $XX.X the lower to depreciation Year-to-date, gains million, balance and quarter year. as compared related was for by income to as this currency late the into prior amortization, year, primarily year. capital that key year, higher by

tax tax effective was an last was prior XX% in year increased and from year. in flat share $X.XX, of in adjusted of to on rate adjusted million $X.XX with the quarter was increase from business per expect rate the common to $XXX.X X% the and quarter income net year. and mix QX for adjusted QX. the mix $X.XX now EPS earnings approximately compared to depending Our Year-to-date, prior was the business. in range our XX.X%, We the Adjusted reflecting of XX% XX%

The high-single ticket more I Merchant slide from a volume. digits federal quarter. average by Adjusted COVID-XX. benefit a cover Merchant shifting to was results benefit programs of was to business, funding as due lower although and the Adjusted to third continued down credit the mix, demand, for distribution increased from and the segment year, sales well approximately higher basis as average quarter. result cards. to in by Acquiring. transactions average ticket, to due impact Merchant of increased remainder XX%. to year-over-year were local will with last the well XX% EBITDA consumer as as and this to for the normal primarily primarily revenue X% a card now on Acquiring of from up for reopening driven debit, of approximately as a to up the XX, to from July was revenue margin were In Spread The compared shifted we from million, results, driven $XX.X to over higher up transactions. as impact Moving points the the XXX quarter $XX.X year-over-year quarter, moderated expenses the mix quarter cards quarter our growth reflecting starting approximately EBITDA XX.X%, operating extra international during revenue segment net of with The lower the XX% high and million, began the pent-up

ticket margins elevated these see in quarter. likely decline will the normalizes average fourth as We

XX, up Alelo, our the basis ATM the $XX.X and XX, for partially in revenue transaction the Movil for LatAm up revenue and the segment benefit primarily was Business points which compared last transactions for year. Acquiring the down to revenues, segment other was compared by project quarter offset adjusted ATH quarter third saw third Movil million was segment. contributed We ATH revenue to X% XX.X%, Adjusted the POS Year-to-date driven XXX% an $X.X re-measurement approximately of compared segment million, services. driven EBITDA X% approximately last volumes. adjusted Revenue Merchant EBITDA $X.X Payment compared compared by Adjusted benefit for was EBITDA as approximately non-functional segment ATH approximately a operating This as On year, to approximately Caribbean compared X% Services, due EBITDA was Year-to-date and of this you million, EBITDA to expenses Payment Revenue related decline and basis XX% Rico last last in up well will on $XX.X in $XX.X over percentage as as margin the well by related as and this compared Puerto segment as period, implementation an new XXX was due was $XXX,XXX. down was foreign margin year. approximately expenses. The cloud negative adjusted PlacetoPay, slide driven in as results effect increase other as impact XX.X%, was point Movil up $XX.X results repair to basis by incremental increase and currency will of quarter. of to anticipated For acquisition $X transactional approximately was last X% sheet revenue, the maintenance EBITDA Services was was see in of last for the nine-month down currencies compared million. higher last XXX a you was to expenses, year, adjusted million, this to Adjusted offset primarily points segment. and as year, to Adjusted higher up approximately year. in million, increase the X% approximately the as $XX.X higher On $XX.X last XXX by for this revenue margin higher margin XX.X to the as slide million, to $XX.X $X year-to-date million, EBITDA increased EBITDA of year. million XX% the of this year. negative partially the and million, for and XX.X%, impact down this points segment COVID-XX as see attrition balance to for million. XX.X%,

been EBITDA compared expectations. was coupled revenue in for primarily segment for was flat XX, re-measurement, in will was and XX% year. margin the Business the adjusted slide approximately adjusted increase have consistent up of $XX On the segment for was renewals. Solutions Solutions was EBITDA XX% government Excluding Education million with third approximately the our results XX.X%. approximately to EBITDA due find year’s the Year-to-date of $XX.X services this generally Popular as you for last margin to delays segment. $X.X government and and million, related million. last contracts, would to this $XX.X to new revenue Year-to-date, million, Business for Department the The increases quarter revenue adjusted quarter contract with

one-time adjusted driven compared to revenue, EBITDA was one-time primarily up revenue, $XX our of by XXX was year. margin expenses. was mid-XXs. basis which Business adjusted be Solutions adjusted and was segment million, margin would the percentage The points Year-to-date, with net revenue EBITDA recorded of range higher a quarter, the the was in $XXX.X was revenue, increase up normalize for $XX.X the margin. EBITDA Department EBITDA X% last and adjusted as If approximately million this margin adjusted the for normal XX.X% we EBITDA particularly million of For Education XX.X%,

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

year. prior million, $X.X compared Our negative a increase to third quarter of X% was adjusted an EBITDA

Our or compared as of due at EBITDA favorable quarter. the and XX prior a year, by revenue X% year. points in as to higher million our $XX.X a Year-to-date, of Corporate as approximately as adjusted basis to X.X% EBITDA last was percentage revenues primarily approximately favorable XX adjusted and total compared revenue was total Other basis percentage to points

our to cash XX. year-to-date on flow on Moving overview slide

of receivables computers by expenditures subsequent result of receivables the cash quarter. operating million year, as new were balance was including Net activities provided a was million, an $XXX decrease approximately compared which includes $XX Department contract. $XXX were a provided of paid end Capital by to these the cash approximately of Most cash the beginning million. in the $XX accounts to under Our $XX of year-to-date million, government prior restricted approximately Education million. the increase approximately

CapEx paid full of in and $XX share-based million We decrease approximately other million long-term net paid debt cash a taxes $XX continue of approximately $XX total approximately million resulted on $XX the downs, $X of withholding compensation in million. dividends million. we debt for pay debt payments, We Year-to-date, to year. which million anticipate $X of

the stock of not any million. $X year-to-date repurchases common did stock Although, in quarter, approximately were repurchase we total

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

balance $XXX it XX, approximately as and cash $XX million ending September Our of of was restricted million cash. includes

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

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

Our weighted was average X.X%. interest rate

EBITDA approximately next our the XX-month the will in XX-basis-point provide Our net threshold multiple of debt times. times on X XX% a below rate to trailing adjusted in was our X.X improvement This quarter. debt interest

restricted balance which the remains of was excludes This approximately total capacity September and liquidity cash fully XXth, borrowing As $XXX includes available million. available. revolver, our under

on thoughts of this our as year, XXXX. to on for well initial moving Now some as the remainder comments

of the we there providing Although, mid significant the pandemic. COVID-XX, uncertainty we changes could not are growth we guidance, XXXX, QX impact revenue in continued single-digit if to are of in the given see no low believe

in revenue partially levels contracts, We be of COVID-XX should the see slowing anticipate well Puerto expect revenue as to onetime sales driven by do would revenue move significant average by to LatAm XX% the should the Business attrition. and delivering between comes as continued normal Rico, modest and the mid average and volume We normalizing. not growth XX% impact benefits Solutions single-digit anticipate growth, ticket Margins we quarter. as new growth more down, and ticket any in unlike offset QX,

to XXXX, several turning on like comment to I Now would considerations.

been our impact to agreement in First, LatAm, to in high-single we have with to new LatAm, are normalization are which assuming pleased that the growth low-teens COVID-XX recovering currencies some in anticipated a XXXX. of contribute headwind and

product this as We cross-sell we broader other the anticipate PlacetoPay with and gateway are to in expansion geographies. further pleased clients

now to that realized have client we in will some given these attrition similar in at stop updating to attrition be will delays XXXX. XXXX, plan likely which be we XXXX, in While levels XXXX

benefit on we the funds timing in COVID-XX. innovations positive will believe is investment, from unclear to the We solutions of federal continue still Second, to and our digital the focus to the us monitor rebuilding continue impact XXXX. impact the as Puerto potential and flow will but Rico, of remains economy and in

largely the to and will Business our Solutions CPI and updating executing quarter. X.X%, per the full next segment. our see against MSA Lastly, initiatives. revenues In benefit the well outlook to term was summary, announced which September October with look on for Index Popular XXth affecting agreement, results you as XXXX in gratifying our We are is longer QX we the forward it was

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

Operator

Yes. the Thank comes with And you. William first Bob Blair. Instructions] Napoli [Operator from question

Bob Napoli

thank job Yeah. on Nice you. afternoon. the quarter. Good

Mac Schuessler

Hi, Bob.

Bob Napoli

XXXX? Chile from Citigroup you and The do -- expect in what

Mac Schuessler

Yeah.

are this Mac we Bob, and to So, you. to is talk giving good not --

in transactions very processing those are on So still already we and some that this we for. year, have getting merchants are Chile, in implemented focused we fact,

that the give contribute to on will able giving contribute we projects at So like have those time guidance get the and feel end year. about we But what next done to we guidance been continue of not the until are to XXXX those by will this call. we

Bob Napoli

Okay. included, high-single Very good. And growth? it’s that in LatAm, I low-teens the revenue guess, to

Joaquin Castrillo

Correct, Bob. It is included in there.

Bob Napoli

the had strong then the Acquiring segment? quarter higher looking ticket, are in you the pretty And Okay. in And some Acquiring the for segment, Popular the spend. growth in as Merchant growth as the for Merchant just fourth Merchant Banco -- far segment growth in what

XX% debit that EVERTEC’s Does spend. card credit with match think up and business? I not the for quarter,

Joaquin Castrillo

I are see, right? we mean So numbers the mean, the due don’t more necessarily Popular to way it’s that correlate. -- for that one, transactions necessarily certain I

Bob Napoli

Okay.

Joaquin Castrillo

said A sales strong Board lot volume saw perfectly, mean, across the we that is QX. impacting a I we stimulus of very was obviously, on across and there and quarter, as the the call,

QX… into go we As

Bob Napoli

Right.

Joaquin Castrillo

I we information, people to average the that to a saw stimulus whether figure normalized economy, go is and big extent the going that’s be a to and the come to margin come as that what there’s are well. still back spending receiving But seeing levels in to actually obviously another coming stimulus, down something well. think happen we segment were are as of we we normalize, expecting driver quarter the let’s more to without start say, are throughout we the impact which and and to QX. we not have to uncertainty from the … as in trying that does that, get continue package down have to And

normalize Acquiring everything. expect as So segment QX we the move we into start considering Merchant the also would margin to for to

Mac Schuessler

stimulus the the for things Puerto unemployment, Government… are certain. Rican Bob, But, One the two $XXX is,

Bob Napoli

Yeah.

Mac Schuessler

have and those started putting those the already island they approved into into the and system. has …

The huge have every the a like digital, company second we thing is shift. just other following, shift probably to seen are

we we to to for significant business quarter. on saw have that about Movil them, hand But And think were between codes, and Starbucks, card Business the growth XXX% it ability talked about the for and not over up, I a else. actually McDonald’s, increase go over ATH to too out and we in PXP to two the and QR BXB. So pull transactions to demand then the and Burger ATH to someone between both BXB King Movil as transactions the of and talked it’s XXX% the

We by have our we increased demand. the are number of call and since locations significant XXX% still last seeing

So the of are merchants merchants code -- of we merchants form X% of shift ATH they a significant accept they rolling and merchants. And the of number them now, as week are higher continue. activity now, speak, so will digital out are some every we QR that

Bob Napoli

massive Yeah. in That Rico you was again, It was shift, yeah, digital ATH, quarter the my next million that revenue was like, Puerto ATH? set and color up from a on that. And question. $X.X for thank for the the the seems the

Joaquin Castrillo

No.

So in growth the that and QX. to the business of our BXB both was contribution the

generated not by products. revenue So those actual the

Bob Napoli

So that the $X.X million or the quarter? year the was the growth in dollars prior over prior

Joaquin Castrillo

quarter. Over the prior

Bob Napoli

what... Okay. me And tell you can

Joaquin Castrillo

The growth the over quarter. growth over third -- the

Bob Napoli

from what the total prior quarter the Okay. the In that is revenue quarter? and in

Joaquin Castrillo

the from quarter… do we so Well, prior Oh! year

Bob Napoli

quarter. Okay. Prior year

Joaquin Castrillo

Yes. Year-over-year. [Inaudible]

Bob Napoli

Okay.

you. it. Appreciate Okay. Thank

Mac Schuessler

Thanks, Bob.

Operator

you. from the question Thank Raymond John next And with James. Davis comes

John Davis

last long supposed Puerto $X and being update next, for the HUD week, in in How on one assume, couple unemployment? how Hi. also the to think, $XXX released. the Rico that of any $XX in hear the Encouraging the layer a supposed last funding to then limbo? billion that’s billion that I to Good here, still, And is over afternoon, years of is I guys. a

Joaquin Castrillo

was that a And pretty to last go U.S. of the that terms on actually the $XXX million going August. and much started is the of in there that retroactive the our is the program as about for week payment beginning and another back In month. same understanding will

Mac Schuessler

have competitive the going investment, of and the that’s more to rebuilding But direct going about to I the to biggest economy. doing electric. grid. Hopefully, billion two the long-term are time. on electrical $XX asking to to workers. costs you have series one electrical That’s to things. to the One of And were going have utilities you here you the be do the to economy be then going do a stimulus hopefully grid make effect -- also competitive the the there’s is mean, and and over business then and continue then the place broader is business. it trickle to of a And

John Davis

Rico about breaking year maybe targeting kind helpful? you mean, in I any of to are helpful. any, into No. then, Puerto this broader Chile end That’s other next some and outside Puerto progress we of or some consortiums the for potentially toward of other it’s of bank here What uptake be beginning this markets, think has I there focused just note the just events And of ramp year. Okay. Chile I further whether that Rico, are on growth is been point, as of Rico at the markets up or guess, would ex-Puerto of an outside

Mac Schuessler

Sure.

couple on we a about as we One, in seeing the and the that seeing calls, broken are already seeing, with now end like as we of for processing Santander Bob, the we up talked several trends. by we talked some getting track Chile we Argentina or Transbank. are either monopoly do have merchants on So implement sold transactions have then we opened. have to are are have of And about year,

where are seeing monopolies willing are people of to outside sort you duopolies. shift a move the of So or

have new is fintechs are issuing those second and thing and some services to customers becoming are provide The of banking so seeing payments can as our they licenses -- we well. really regulators

we year of Rica, Costa beginning in Mexico on as in Colombia, tucked talked acquisition. Chile, we localizing we that PlacetoPay and think, are this about, focused the platforms I our the very last So at and

of going in at which e-commerce purchase. we are gateway now Colombia have forward PlacetoPay, We and as that to in continue time is going the our to Ecuador invest

existing Panama Because, Central that Costa existing Rica have we some level product not they had to and our them Now the PlacetoPay and the product to at -- PlacetoPay of as it’s and new localize that we are looking much platform America frankly, also wanted merchants are to sell are a platform where the we in Rico to new they to clients. them is was platform given plans their they because both provide as really well, improved. and have allowing in we merchants well. them this migrating existing localized for now and to the Puerto Chile And

those sort now and and So, thing are we is issuing mean, business. countries, making of have key are the we running -- the product we the on now it risk have acquiring and to -- the products, where localize we are investments product, the payments the I the great gateway across then based got to

John Davis

increase That’s you an guys. So for of volume, anything that’s do stats and help be Rico, of at are for Puerto same-store mean, a to in dimensionalize the has BPOP can just helpful? or either happening look in you -- the at, you directionally XX%? we or have up would transactions what all shift then currently on just stats one to electronic sales Okay. seeing any do was see, what payments is been? sort me, in if Rico I last think example, basis, any more Thanks you helpful. us than Puerto X kind super percent increase card And have like, you penetration

Joaquin Castrillo

really a source. is John, there stat, specific one a is mean I

debit have in direction, seeing of taking that of seeing obviously, consumption different and some to into data terms many seeing from perspective across give points we credit here volumes that also we report kind are sales and every up going here we are a volume they We category are consideration the banks increase. are

digital the all of We the well driven use are day. these channels of at the all increasing as cards by end the seeing of are and use

as us way we Movil very to economy. which the of so to to is us here part in ATH continue see inroads make business to big get be said, Puerto And Rico, and kind big a cash additional for the continue to ATH the of And Movil continues into kind continue best opportunity a Mac to penetration. Business for of

Mac Schuessler

little the sort John, more because penetration there’s underground economy rates still would you a at and you the have of like I say, sophisticated states, thing a Latin country, American Yeah. an bit still this you look unofficial looks And if versus -- a have still economy. large more

quarter, categories gas would have stations opportunity electronic as BXB, volume seeing earlier, the traditional was breaking you see into like big is that’s the service that is over which was PXP lot. the well, we even you or that where up with paying are But penetration up or so payment restaurants, significant Movil trucks, lower for contractors, Movil where opportunity primarily And right? it markets, you new XXX% than Bob Business, supermarkets a business, if told with I might a are as of level is at ATH you for if look we are XX%, where So mean, -- ATH in U.S. quarter. I new a across And you which the food look

still So of a opportunities. lot there’s

John Davis

guys. All helpful. right. Thanks Very

Operator

with question Susquehanna. Thank from Friedman James you. comes And the next

James Friedman

you results week a focus some dead wanted you attrition by be that similar stimulus. just ask beat what sounds said remarks prepared in to know going give -- was to in on and in ‘XX remind enduring the then and ask upfront, you. this it if you in us you like a see that I I mean you client a second would $XXX because going will XXXX? horse team. And to you Thank the your Can just in out sense Good are you guys. how XXXX. to to is Joaquin, not I my us, your one just just are prior that, that how you it but could that I Hey, last? referenced long of question. you But called don’t

Mac Schuessler

Yeah.

So on -- you the the think I $XXX, it’s are right.

be funding amount that is currently it’s weeks, than do have it’s of The You think open I of to portion a executive that local was here, it the an still couple the match remains President probably more government the and we seeing of that a smaller federal out that’s coming by weeks are that but couple was this continues, going of to If next though, that by economy a mean, duration government. will less -- unemployment the of has impact. and approved but and for order previous helpful. the the amount

Joaquin Castrillo

What the your James? part question, other was of

Mac Schuessler

attrition. On

James Friedman

Can you talk...

Joaquin Castrillo

Yeah.

million this and $X million On for is said, we million year. impact we -- attrition $X the quarter the we $X year, about to this are this see to going

have as million million. has in And made to We we for in a originally said we delay $X reference that’s years. calls, down $X coming slight previous to a expected which attrition, been few why a

expecting are year. on next level $X a quarterly given And we same that move and to $X additional keeping kind that at are the trying basis. million -- We to away it’s from of million updating an

James Friedman

it. Got

Okay. All Thank best. you, guys. the

Joaquin Castrillo

Okay.

Mac Schuessler

Thank you.

Operator

Thank James the question Morgan you. Faucette from And with comes next Stanley.

Priscilla Russo

Hi. on This Russo is Priscilla for James.

the to from perhaps on of GDP your are Just Rico, how any exposure what devices, spend businesses portion And outsized buying been quick that you, direct on talk would doing, understand health generally Thanks. Can wanted just trends the or transaction American you of may color travel, of though pivot so they about not been the and you these merchants have normalization helpful? more seeing within using and you Puerto there? two uplift are have in obviously questions, even I as travel a up. opening be have POS markets the is then Latin there on terms growth products to

Joaquin Castrillo

Yeah. Yeah.

hotels exposure. have are exposure direct a we have that terms processing corporate of we or in the we to airlines Rico past, our just overall portfolio Puerto in any as significant the have usually transactions In mentioned Most through and don’t tourism, processor.

direct tourism limited have economy. we part So Puerto a is exposure. of the bigger Obviously, Rico

a concerned that that up Rica, mean, getting we online. I on the past, in getting mentioned we four Costa and this are into overly that Although, getting pretty it’s sure merchants sales that first seen having And by processing an closer retail ourselves haven’t Chile, again, but continues down, as and nothing And general also impact Many client position of inactive that in in the little X% countries platform volumes bring indirect to percentage to onto over terms kind toward to running, terms to expand back so continue Mexico that in started making are difficult a and in in we continue GDP have maybe state future. the showing higher merchants, normalization, have Colombia, to seen really Latin bit that and terms really we our and process it’s every quarter. a back we can move with it in our the platform focus the these to of in processing we we really of more merchants And of terms, in even in or said, slightly have it’s portfolio general those look, much margin are of we off through of putting a business, restaurants to though having the sales. platform of said, of Santander, category. we the America, as has up success and And countries.

Priscilla Russo

Thanks.

Operator

Thank the next Mihalos from you. question Cowen. And comes with George

George Mihalos

taking I Hey, make for am two clarification about want guys. I Thanks sure, things to some Really of me, correctly. these thinking for points my just questions.

think, you on had to single have million do said, moderation kind from need just to would sort I September. of continued am acquiring then of think, moderated into up adjust come normalized there? So, kind up think just anything I high and am then single-digit of to a we from that high any kind relates and $X as was October, DOE I the the it then just backing digits I margin? trends those the have seen in else you curious, July I the with the in if side, million, a you called to onetime And it math? another margin I that $X.X XX% like EBITDA, of XX%

Joaquin Castrillo

kind really items taking called of margin that that we you That’s that and consideration kind George. that main to higher correct, out the are impact we should into be of onetime Those reported. two

-- was of question, part terms In first and George? what of the the

George Mihalos

in… I to you it segment, think, acquiring relates As the said,

Joaquin Castrillo

Oh! Yeah.

George Mihalos

up kind of singles? … high

Joaquin Castrillo

some has moderation so I I slight that October, of there in say, No. sales would volume. terms mean, in Yeah. been

sales fairly volume. a strong to continue We see

year. We slight however, than continue start we a prior as we But seen ticket or said we ticket, down come usually have before, recovery be come as so improvement lower have the down. side, average to average the and seen go those to transactions hand-in-hand, transactional the from seen have that

a volume seen well. we sequential and So was that reflecting there, ticket that something itself that saw is as average even July high down come we October that it’s basis, have in on sales in the though

George Mihalos

it. Thank you. Appreciate

Operator

question And with Deutsche Marcello you. comes next from Bank. the Korey Thank

Korey Marcello

Hey, taking my guys. question. Thanks for

quite give of just have level code of am the you ramping curious You some could the quickly. I thoughts that’s where just and mentioned X% high kind now on ATH kind of QR if merchant bit you transactions, a penetration to QR of on importantly, deeper? that transactions And lift more do about a versus see forward? that guys trying going see code other just you per little merchants kind think

Mac Schuessler

Sure.

our more we the the also we we product level have product of the this and would the how that we like in to seen pretty understand a electronic two And is, merchant more network. QX of I of to significantly the other we So rapid. the with analyzing, so convert of to volumes of things. adoption the tell like changes, of trying you is because quarter, types because we during what want merchant, that’s are One to at launched of our use would now to velocity debit payments, like versus and previous -- is because to ATH ease do transactions would transactions convert transactions

have of volume So increasing and increased as we location or we we that the analyzing process noticing. locations number well. it QR in are by is within the code the tendency Yes, that XXX% in and appears use are the each to of the

volume. to end the as is of much XXXX get goal of by the Our

larger then merchants. and and smaller up we for and running hands the get the them easier of finding chains, process merchants of sort focus their largest hold and So an on we are way the in

focus are think but relationship increase only own. these electronic and an we payment significant that We process ATH merchants our testing, will for then an so us of payment. of it’s not But can on is because with product the reinforces be it implement it payments, a sort it when the they already will it electronic in their

Korey Marcello

a and Got you could it. there more to That’s very helpful. if markets positioned And how take general a Puerto EVERTEC serve, then just the talk I years? and curious next am some little in of in terms seeing about of on the e-comm the e-con is couple are trend like, what bit opportunity Rico in to e-comm you e-comm you -- just over of

Mac Schuessler

Yeah.

our seeing So, I we talked mean, all whether of it’s whether are as that trend payment about providers. gateway, other the the it’s ATH, again, we it’s like

as has Our focus really the been e-commerce gateway. our PlacetoPay product

seen… have We

Korey Marcello

Yeah.

Mac Schuessler

existing would the convert going the also growth of a Rico, … the in that then I be have region. we the new we across in during static felt grow Costa had, Panama, future are base rate because has gateway we they to with will product. -- volume like acquisition the previous localized sort that previous just it but really seeing In we merchants, and the banks significant those the and like is we could will incredibly company. and the adding product product they had we the Ecuador you now not success Puerto told Because to not and again, that Rica quarter been are for it’s when with product we like that PlacetoPay product, a successful

Korey Marcello

Thanks, Okay. guys.

Mac Schuessler

Thank you.

Operator

And to more for questions, I closing comments. you. there to like any Thank as are would Schuessler floor Mac return the no

Mac Schuessler

you safe. virtually I of months forward and with we pandemic. forward connecting look to good the Thank thank really once seeing night. you. each again you over want look everyone I coming in person you remain past and And We Thank to and the joining hope to for get the call. your families you

Operator

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

disconnect your lines. now You

EVERTEC (EVTC) 1 Nov 202020 Q3 Earnings call transcript