EVTC - Earnings call transcript Q3 2021

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Operator

Good afternoon and welcome to the EVERTEC Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kevin Hunt of Investor Relations. Please go ahead.

Kevin Hunt

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

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

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

Mac Schuessler

everyone. afternoon quarter for good XXXX and call. us third earnings you Thank on our you Thank joining

higher We and significant well shareholders benefit through with we digital driven cash per of year-to-date of Rico, volumes. $X.XX, approximately year generated same tax EBITDA adjusted decrease sales million prior effect both an pleased pre-COVID strong for revenue dividends share a $XX compared drove as seeing increase line America, Adjusted recent the quarter earnings existing growth effective expected our In Beginning growth our than organic year-over-year, some of we was X, $XXX X% quarter Puerto seasonality implementations federal are Latin to repurchases. In the a quarter to to announce share and our expectations $XXX was roughly to return XXXX. adjusted our across approximately operating was and total from of and markets. the million volumes increased flow transaction million, funds, despite strong returned X% to continue strong as clients. We as third million we Slide a $XX by of in the on the third from rate. are another our results from usage, continued financial as strong

Our XX. liquidity of remained as million $XXX strong September at

to the down of are revenue The Rico from federal a Slide quarter. continued growth on ongoing and was we basis, for in above with preference was the and spending was We funds driver Acquiring growth which back-to-school volume is methods. to payment ticket in patterns. spending shift strong a coming year saw a continue stimulus we the our on for as volume to Móvil, third inflow earlier see average XX% to quarter, returning as Merchant on Moving but effect sales year-over-year ATH sign growth of year-over-year X, EBITDA a digital update remain a pre-COVID was and XX% remained in that the pickup the in in Puerto major August, pleased of growth approximately we up levels. pre-pandemic

territory of as vaccination fully to operating highest Delta back the Puerto level or U.S. a vaccinated, Turning with Hospitalization environment Rico, in rates normal the population CDC. reported continuing this peaks increase, to the us now XX% XX% with loosen in over the continue government moving state down to and more environment to the rates from restrictions. by is are a closer over variant August in

we rates third of the XXXX. first since since pandemic, The of the Puerto Rico the cruise ship also had occupancy saw dock and beginning quarter the March in highest hotel

growth see growth several to Now X, in Slide we from well Latin double-digit Latin countries. turning from benefiting as clients implementations strong we in America as still on organic to are continue recent America existing as

regulatory time Caja over They XXX recent a been deal XX% have approval. recently on on issuing, that rolling the we and for about CPM card and our announce Popular some received is they recently to terminals launched savings with pleased which X market nontraditional working platform, Mexico and to to increasing Mexicana loan in have cooperative representing point-of-sale our out members, then our are contract branches We with digital been that million for several largest just members Mexico, payment focused end, and credit payments, share. using issuing including will PayStudio. products methods ATM, be their in and

they the Chile goal in of XX,XXX XX,XXX a goal expectations. relationship reaching set launched above have ahead XX,XXX back by When Santander of customers in are Our XXXX. progress POS end the bank year-end. onboard our new bringing a already to and customers March, of had business its of They continues set by

also growth opportunities successfully of of up gateway, closed previously in These kind Chile. for have localized examples that PlacetoPay competition. the our open good We when markets exist are

as rates expect progress to across and continue vaccination reopenings to vary Chile encouraging Uruguay we and to While country, the widely see become seen vaccines region and continue country in available. a decrease cases have the in to

hybrid XX% of employees our Rico we headquarters vaccinated, XX. been Rico a over Puerto people, our EVERTEC October on offices to Turning at model our on have and now Puerto reopened

the We America. the program in on Puerto across and our in country. conditions months regions expect Rico other each offices We in remain to Latin scholarship will coming follow in committed based

to men year. Rico increase to again seventh We both Puerto Now of prior scholarships year, for once a we equal gender XX% in and its from Latin the women. students across and ratio, opportunities maintain providing able were XX-XX an awarded America, XXX

and X In Puerto awarded strong look proud results. past delivered Latin over in third continuing are for in support we to and the $XXX,XXX quarter forward We scholarships over have the summary, both education to America. careers of years Rico STEM

an outlook expected end that upper a once EPS range to are narrowed expectations. with the higher XXXX is revenue our our raising range of prior again We and

markets to we countries, monitor review detail. positive Joaquin the COVID-XX point, in and over call certainly this will our we towards our I results While in a remain the future. guidance of now cautious will hand to more different the certain the variants at have across view impacts and

Joaquin Castrillo

afternoon and you, good everyone. Thank Mac

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

our XX.X%, in onetime positively year-over-year growth foreign year. Education income income Adjusted in Puerto remeasurement, and of primarily net currency last was contract margin. by continue EBITDA Adjusted mentioned, decrease decline $X a for to compared quarter prior in COVID-related ago. was benefit and $XX existing of year see which rate. EBITDA we increased slightly organic prior expense. basis the down year from income reflects year. the in reported in down As against inflow recent a mainly operating, Rico, QX from Department decline cash related Mac lower and the non-operating for earlier the to The both Lat adjusted X% margin effective million, The XXX clients. the impacted by growth was year’s double-digit and from the net federal the $XX impacted sheet comparison to margin points gains the million, $XX.X tax Am from partially million the transactions a from depreciation Adjusted adjusted higher was and amortization quarter due results balance million This transaction interest as stimulus more of to offset as implementations due to reflect of was in volumes business our a higher

year impact the expect a discrete prior $X.XX foreign compared be approximately rate full adjusted was quarter, And this quarter. EPS was to the a in XX.X%, rate tax effective quarter for of year. now X% We our adjusted tax to tax XX%. Our decrease the reflecting

was COVID increased a approximately results, with in more benefits the our our volume with X, with strong debit gradual continues offsetting to to we sales both offset higher revenue segment higher up year-over-year, increased a to month EBT the as noted will QX generated ticket mix million, normalized XX%, revenue XX approximately upside lower processed. to of normal activity starting product credit Slide on approximately pandemic-related year. drivers pre-pandemic a and more the EBITDA million, XX% expect though Merchant although cover the funds Adjusted average higher In relationship of Acquiring. a last by forward expenses, $XX.X funds Adjusted I in a by above of transactions driven revenue inflow beginning approximately now to for at patterns operating quarter, even decrease the Partially year Moving and and driven quarter the primarily of XX%, both due enhanced year-over-year margin volume quarter, spread, the local XX% and FirstBank EBITDA compared a September. was the mainly year-over-year growth and expanded to as points versus back-to-school was we to basis in the and down in versus month growth the the ticket, to third was of as Acquiring revenue due approximately The quarter. revenues ended and increased August, the Sales be international in net between a reduced ago. volume from as by decrease consumption levels, a remained of normalize. year federal Average $XX.X lockdowns transactions. continue unemployment return going segment Merchant

for Móvil million, XX, the revenue driven in POS revenues transactions on increased Revenue increased segment. the the transactional from see up approximately of to XX% increased to Caribbean Puerto our quarter XX%, was Payment year the when ATH ATH will approximately approximately network results and XX% adoption prior continue business as Turning for $XX.X the and the you third and Services segment Móvil. Slide channels. by compared year-over-year digital to see processing we ATH Rico

saw in increased implemented of being more During of million revenues platforms. the newly Lat as a the $X.X the segment of Am also we provided quarter, services to support result

America compared in see Latin for approximately increase highlighted increase was up have adjusted approximately This and relationships the the $XX.X as our an Slide million, basis past, was to offset primarily Santander for strong XX Payment increase due On the margin technology we these Chile, segment. million, Mac XX% EBITDA will up margin third last points. XX, EBITDA to in The in approximately in by XX%, compared was driven, last business increase as expanded the quarter to of services. in $XX.X to America increase. was results was XX% implementations by for transactions Revenue an as revenues partially increase growth, year. recent Services you expect approximately intercompany as discussed. part, like segment Latin We Adjusted the year, revenue segment gradually and the

Panama, strong to growth and customers, growth existing We from gateway, payment $XX mostly continue PlacetoPay, year-over-year. EBITDA Adjusted strong segment organic Costa in in our we localize million, existing also more of Rica the was as well countries. as as for X% saw our up from

impact favorable down Business of in the was The as margin to the basis results XXX liabilities margin Slide and will in mainly XX.X%, by EBITDA in points XX, compared year. assets you decrease of adjusted the denominated the for year was remeasurement prior U.S. On While Business segment. which due the million, down for driven from approximately third of find last Department quarter X% was the item approximately in to processing as prior revenue contract, of to Education well Solutions is as $XX.X to the and cash onetime benefit decline the a million. revenue. this year Solutions $X.X Most contributed decrease dollars.

year. $XX to margin Department For to quarter, as to Education adjusted primarily a last was basis EBITDA And EBITDA decline compared of prior due approximately XX.X%, million, contribution contract, a of XX%. which the significant was margin was The margin decrease was the approximately adjusted of XXX a EBITDA year. decline adjusted points

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

third $X.X X% prior was EBITDA million, revenue the adjusted year. as higher year. percentage a same than the Adjusted was X%, Our as prior total of EBITDA negative quarter a

balance on of cash Moving $XXX beginning on Slide million. to XX, flow overview million, $XX restricted our was including cash our cash approximately approximately

Capital net For to the nearly $XXX as by as compared higher period, million, hardware were through $XX a operating internally driven our developed by was year. approximately million activities software. $XX well innovation spend expenditures cash X-month continuous million, focus obsolescence increase approximately provided prior on

of CapEx for full continue million to approximately expect year. $XX the We

FirstBank we share-based million with $XX approximately purchased on in the debt and quarter. also extension approximately debt and payments, million of approximately our $X million $XX $X the in We $XX net shareholders. million securities, our million other long-term and during for and million common We taxes approximately paid which of first $XX recorded approximately in total repurchased approximately have of million. resulted million million both expansion returned decrease debt dividends relationship compensation paydowns, cash Year-to-date, total $X $XX a stock a in of of debt for paid $XX withholding of to approximately

for share future repurchase the available approximately million program. use $XX company’s We have under

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

to to X, paid X, November on recently of December dividend XXXX, XXXX. as Additionally, be of shareholders record $X.XX we announced another

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

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

weighted rate X.X%. was interest Our average

trailing to debt X.XXx. net XX-month adjusted was Our EBITDA approximately

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

provide million $XXX Slide on XXXX over last to representing will to compared now our a year XX% expect an growth to QX estimated. now adjusted primarily XX, I range million, previously results. update and Moving guidance, due be million to We to our million, $XXX of $XXX of to XX% to revenue $XXX in

the EBITDA adjusted Regarding for be the we full continue and margin between will year. overall margin, XX% anticipate XX% that our to

year expenses improvements incremental as as on product innovation. and initiatives executing we around specific the expect as the other well of continue We operational remainder around investments through

share have compared $X.XX $X.XX in $X.XX Our adjusted end been the or share adjusted XX%, increased to per to the to earnings earnings XXXX. per of common outlook XX% as lower growth on of range to a

notable. turning to to like not are are would to give I Now comment few items on guidance, while we a prepared XXXX, that

from XXXX, a and going the into Rico for then expect funds. First, level result was remaining of a benefit pandemic important Puerto we limited federal during and Puerto provided headwind Rico our which Payment a as significant the of Acquiring Processing fund Merchant segments, accelerator the inflow will be into an and XXXX

Although optimistic the to the of the Maria, from we we disaster do funds Hurricane not being level see are progress on made recovery expect about same impact.

Merchant to segment, year. the this FirstBank in relationship growth the contributed Acquiring Second, our expanded with

that anniversary during these some same and had XXXX. from transaction the year, contributed benefited more more the to will not significant projects continued growth. into of production important in will time minimums have beginning we went that announce this the on We first that the wins project of multiyear have contribute wins That into and LatAm, next year’s growth, quarter said, going In important over we impact to volume minimums of this as will which year.

index was September CPI for earlier the and announced Lastly, was month X.X%. this

public have As MSA our since a This Banca be becoming applied increase will annual reminder, increase to our caps with X%. Popular highest a we the company.

fees for these includes in Popular the the ensure which allows with challenged are disclosed, our a challenge MSA that previously As Popular in has market, provision past the of may review to and the future.

bank. generally third have the effectively situations summary, to able about strong us However, we and been resolve led these giving future, which results to open generated on full expectations again our with positive the quarter we In that, year detail call. look forward next questions. on more for remain and line raise guidance please to operator, we our XXXX the XXXX With our

Operator

Our We first Vasu [Operator now Instructions] session. question-and-answer the question KBW. with Govil from will begin comes

Vasu Govil

my for thank Hi, taking you questions.

Operator

moment. I one am sorry,

ahead. go may You

Vasu Govil

my long-term questions. Puerto question or taking I been because it usually uncertain, guys. and the revenue situation more know Rico the now provide for you seems growth high you you macro level Mac a is targets, Hi, don’t has for but stable. macro in thank earnings environment Joaquin, just very

the end Because guide, growth just If we You say quarter some the And most about growth pace Joaquin, your pretty Merchant the accelerated of funds Thank a revenue could in you some for LatAm trends follow-up, of color the continue you should saw then segment? quarter? the you from algorithm internally? the next of think may terms in globally, should of think some how and sort quarter, into are the obviously, as segment any to how in expecting trends the X has backdrop, across federal fourth X about you talk you in those in have of digitization Payment that third Services the years? about Acquiring you. tailwinds EVERTEC strong provide segment, some fourth that over how the The if With coming stimulus markets. in. of including could

Mac Schuessler

and question. thanks Vasu, thanks Hey, for the

over will first answer hand then his Joaquin at So, then question. I a comments and and to the it it stab question, on I second to the to take will give

will also out, and give first point guidance do do years. want guidance Puerto pointed as guidance, and funds the the in to And been annual Number question, through pointed larger out, Oriental on we pandemic. left mean, call. stabilization both are XXXX economy, have from we’ve to we the share and Maria from market as seen local Oriental environment, of the that customers, have we’ll federal we On banks from some have I able you I you give company, am dynamics international banks. I past the company long-term all we operate the Rico, out, banks, give coming give our the – markets capture as But – benefit over our sorry, don’t in Those additional for the benefited the and and that Popular because of and of And the island. the improved we in FirstBank both next have the the recently. from have one, that that

share like years, So operate, term, feel we continue in – in stable Puerto and can past. economy next increase Rico few the than we we’ve short to here in do a great which do the a we stable the in environment in have hopefully more our seen that, have market

great we property. Primarily, And by intellectual ago, the when duopolies that of set Secondly, fortunate these the years the have if where payments. arrived were and I company markets a Latin we markets for you opened, closed. own been operated they now America, we’ve monopolies look at X at have products and were

Alelo. added that when to increase continues we Libre, Chile, Mercado have We customers Santander rolodex a of

we at compared LatAm grow with should good that as well. past believe Popular business a Mexicana, Now to our Caja the pace

So guidance, you give we we won’t give won’t Vasu. numbers long-term and

will But have point, – next Latin and America, the we stabilized. well markets give guidance We your In Joaquin? to to to have executed our those it you of on XXXX case I has of now of opportunities. take care believe call. take the advantage those opened

Joaquin Castrillo

Yes.

in XXs quarter. fourth specific in in also look of terms are would have and say any that in expecting of In the different when terms as to into for in is I how trends the see piece low would growth terms we kind say lack kind the general. goes of Business for Vasu, usually is high-teens, the of we single-digits. the segment, expect to past, QX are in Merchant that of segments of we QX we kind of terms to that mid expecting solutions, grew will in saw segments question, low production, still sustain the other I second Acquiring of high-teens communicated the what in NAV in And America, a that there the of at we when we growth. Latin be low-XXs project to

obviously, those we expect of kind of the script to segments provided where down, we about thinking that kind breaks the that just in So range be.

Vasu Govil

Great. Thank you was very much. helpful. super That

Joaquin Castrillo

Thanks, Vasu.

Operator

next from question comes Bank. Our Deutsche with Marcello Korey

go may ahead. You

Korey Marcello

Thanks taking for guys. Hey, my questions.

the guys September, the to kind volumes transaction how the a transactions about or trended us bit into little wanted saw little kind of spoke Can bit in talk obviously, spike give you October a October. timeframe? growth, volume the you Just a sense of you of and about

Joaquin Castrillo

back-to-school. I meant with Korey, August, think you the

see... did we So

Korey Marcello

August. Yes,

Joaquin Castrillo

that of enrollment expected, to we schools, it’s and back. continue see of when something to of And to was what Puerto going in come I prior again that back normal coming that compare something back the of that year. that to reflected rates We strong we to September. would the sort and kids see of vaccination similar positive. Rico going would get I against but we off we say most that’s with see kind say volume the saw actually kind October, obviously, the did

Vasu’s be overall. to on Merchant I XXs mean, question, mentioned teens, expecting Acquiring low just I we’re in as high the So

strong on still based that’s So QX. volumes in

Korey Marcello

helpful. think then of ATH to slowed Móvil, XX%. it. That’s Got And kind I

there I you us can of out is give what quarter, tougher business quarter. the comps is was growth but that right you for And of in believe rate XX% growth there, last of mentioned I kind the normalized sense coming pandemic? a You think know the

Mac Schuessler

the we adopted digital move will payments. – we’re as give they What I said, is, people And significant we pandemic, – technology, Let now continuing. continue saw we that increase it we’ve to call. now of as that trend the encouraged would won’t to the we me next XXXX then are sort using again, And more have to guidance frequently. see say during people that

We are adoption. good seeing of a velocity

do the we future. to expect the So past it your point, the meaningfully of hard. comps to grow in are But

Korey Marcello

And guidance think I more they in, merchants you that? and I Chile. that, just incremental sneak guys. mentioned in Santander, appreciate guys. No, see start past we could minimums point benefit what to kind if I from maybe upped At the Thanks, XX,XXX of on one do move the to

Joaquin Castrillo

to What this the that Korey, some weren’t for types these and Santander, past. see us, open to go. the when necessarily it’s encouraging obviously, say, some penetrate at still way of of we I overall, for point, we markets there that opportunities would minimums, within But exist have the in are out we and

that are to of continuing they to platform. continue excited in the the progress to about put terms going making be we’re So on clients

Mac Schuessler

only for for exceeding marquee our And mean, performing as about pipeline good brands as but that us, the naming not talk and expectations, a I publicly, their is think these our customers now future. I in company, they and

we not that it’s only a do So expectations. business, it’s that only building we our exceed financial but reputation also results of but customers’ win the on the contract, impact not specific

Korey Marcello

Thanks, guys.

Operator

with from comes Blair. question Napoli next Our Bob William

may ahead. You go

Bob Napoli

that the Joaquin, business and can business of Mac of you mean business? issuer I just color CPM the and that a processing the so and kind the the Mexico, have and issuer on geographically, little you size you – a Thank give processing in pipeline business, in win, afternoon. maybe good that

Mac Schuessler

Yes.

both – issuing doing We Caja customers we’re Libre we customers, we were debit cards. in our previously they Mexicana, announced kind cards. They Mexico, in is country. debit issuing about This the we on have and their branches. So because largest both assist Mercado business. issue are the credit cards And XXX which had that, excited Bob, credit our almost Popular million of X it’s

working. are they product the in the So already market with

to But out that us publicly We’re have is announced for any can slowly we significant product in sure and kinks. that is they operating, work this make moving the Mexico. already the it is in a win market, this

Bob Napoli

more And just maybe, in that you mean, color business. I some do pipeline have Mexico? Or on is maybe that – momentum in the

Mac Schuessler

Yes.

pipeline numbers are customers’ I I I what announcing pipeline on giving say, like we by our generally, have would – announcements. perspective and those expectations lines, own said we the say, on been Santander our Santander seeing would their based I Chile, an we’re ever are that and are fact the you services, mean, around is we Bob, are our is I where two And and are So been. the exceeding wins, that healthier previous than region good publicly. impressed it’s organic mean people news with healthy. Chile they around demand announced But only is yes, but think It’s I the throughout biggest the see numbers we interest. the we acquiring have are comment from organic issuing processing not

Bob Napoli

Great. liquidity $XXX to million And so have of you getting liquidity. then close –

From are what see M&A You to There on? opportunity what you do seems America. You that add Latin certainly to serving business the where the – you focused America. in perspective, a a Latin be opportunities have of to broadened pipeline. in an lot And out your biggest markets inorganically? you’re

Mac Schuessler

Yes.

changed has So our thesis M&A on significantly. not

we’re solely month. pipeline opportunities still America, working we’re are every in looking and We focused Latin at America, on and Latin in

actively we’re when are looking And America at will still but opportunities still Latin we’re M&A. announce something evaluating. I we in said, have that So it, like we there

Bob Napoli

guess, where on or could just see product X? year are your development investing we to product road or the next over your I you then And expansions map, lastly, internally? expect What product

Mac Schuessler

Yes.

going PayGroup, bit talked this XXXX, we at little about processing a that I the Colombia, creating we So about Because in we it Costa the for countries: business to in Rica. and issuing. XXXX acquiring end just think and – a early we a talked bought invest Mexico, were we model localize to have we named XXXX, And processing to our turn of business. for Chile, wanted we the

we’ve and we so in looking the at are And invested as We’ve the past, those PlacetoPay. investments that make continue in new heavily investments platform countries those that to in in made and countries well. also

we the pandemic, our – we right gateway. recently PlacetoPay, So which e-commerce on is before closed

So now – and already operating as Puerto in was Rica, now. Rico in It we we’ve that have Colombia, well. localized Costa so in it and localized in Chile

also So around our Móvil, of Bob, that’s it’s well, that, believe and P&L. we significant off gateway transactions and that, digital our as paid because we’ve ATH very e-commerce you is else, e-commerce we a very, know, focused and investments, on important, our that then our become made gateway everyone are as primary and and part lead And product.

Joaquin Castrillo

to a to is what terms The PayStudio, becoming taking Bob, actually Mac is only goes a and with add product referred thing and And platform issuing is CPM, in which which I of both mentioned that you would acquiring. that processor.

as the get across kind put clients that a and into we we As we’ve countries of platform functionality advantage products putting on feedback we’re localized of taking different platform that in. it, continue really now that in we’re of to terms and

that So where I the three investing. are those main we’re say areas would

Mac Schuessler

a CPM, wins, PayGroup we’re these from we all the which investments the Chile, announcing are wins. now now and Libre, getting Santander when by of payback when these product these announced PayStudio that acquisition, is And we’ve we announced the Mercado made and

Joaquin Castrillo

continue product just of we remarks in just what remarks, in are part as right, efficiencies I I quarter. also to the and some we’re my mentioned around And investments development. products, guidance the I fourth that that’s add, in would Bob, OpEx our around as hit said efficiencies enhance to operation these going the making around for

Bob Napoli

Great. it. Appreciate Thank you.

Mac Schuessler

Bob. Thanks,

Operator

from Our next George Mihalos with question Cowen. comes

go may ahead. You

George Mihalos

taking my afternoon, Thanks question. Hi, guys. good for

know change what I trend you any ask relates are one, volumes Just curious, talked Acquiring Just as ending. of just wanted moved sort and seen you it business, September October? you exited of curious unemployment to there? benefits have in as ground to in Merchant the about into on you I’m some the sort seeing

Joaquin Castrillo

year-over-year, again, of I when we continues really verticals. mean, be unemployment the much look across, that I still at had September. say, pretty I is, What half And would end enhanced strong we – in it see all started second to George, would to it say, QX when

through. say, average in applies come basis, some the also that funding look saw the are normal level. So in we what within that the at takes we But we is pre-pandemic. of to quarter I there the of a from Merchant of move different somewhat It’s the sequentially, funds high of significant past, would that slowdown it there still as slight when down was Acquiring a kind third saw more of starting as that of we’ve sequential some ticket early to we tracking coming push on QX, some said terms is away still a to of a slowdown.

George Mihalos

you. thank Okay,

Mac Schuessler

George. Thanks,

Operator

question comes Davis John with from Raymond next Our James.

You may go ahead.

John Davis

bit little start, guys. wanted a on LatAm. just to afternoon, Hi, hone Maybe to in good

We’re seeing really there. strong growth

LatAm for that to going growth understand as growth, kind – but you of think kind that guess, driving what’s to what’s right and what’s for exceed I just going geography continue want an think have guys understand lot you growth called for area area guys growth? just right? of have on. competitors larger our what’s going I kind your, highlighted can as I that want of estimates in A of out to a

Mac Schuessler

correct? growth, What’s driving our

John Davis

Correct.

Mac Schuessler

because you competitors. Okay, mentioned our

little mentioned X, what EVERTEC or would these X that, in I to a last bit markets we And was say comments, years I once earlier as our so position, did yes, products, really in ago, where to would my years, is closed. over were the we our And previously, markets open. improve services. a need So X X the again, needed

in is, So Advent, of deal EVERTEC getting what starting Santander to now sold well one, going Prisma the markets say with is beneficiary I we that what I would mean, for these the did Chile. opening, is we’re

opportunity great invest willing Latin a now are markets to who’s for it’s these in anybody So America. opening, so

I Chile with and tell the market of to And if can X now it, products, But pipeline, from mean executed, win pipeline talk how was into largest winning opportunities, execution country business, would business about get clients going out the be winning that implement and implementations, And difficult. we on the and is first Because, calls that well. to ago, the I are and the you our business. on implementing perspective. What’s that now in Popular how now one well so we to sales say Latin remember, more a incredibly these was that I to – have already the then with Mexico using Mexicana. going in proud same e-commerce the when like sales Caja player ability we’re is Libre, opportunity to and of from do a move is America, I our thesis Mercado the are now that years all seeing we’re sell to much you is we and the ability build business, it scratch that with playing how seeing

a partner is, what market the from in can So help a say different players to would them products technology partner them processing. interest with help and technology with issuing I that around that can again, back

contracts. book in own to banks want to noticed, still they own so As the Chile, of business, of their some want own the you’ve merchant

Some don’t.

with so And to able types. been we’ve both partner

ability ability services, and to acquiring with other that is say product what very the localize to that So business able There given wanting business also with with to think It’s learned those acquiring more opportunities. our and that we’ve PlacetoPay, our of But fin-techs, symbiotic our real I in I to entrance markets options in implement win a well. that execute been opening. is we as additional have our ability would and on integrating has timing dedication to the and I seeing across are issuing PayGroup. we’ve acquisitions, to region markets people and interest that the with going what more experience that’s and Latin regulators the market the quickly that organic. good is now job done and believe allowed get acquisition double-digit America, with in all to we’ve that’s this year growth us our

John Davis

X.Xx Okay. That’s leverage just under now. very helpful then sheet, color. obviously, the maybe balance And is switching to

have year-to-date, to guys generated you have or free shareholders. of a so returned lot cash would million and flow think Just $XX I the

is the no refinance we kind cash surprised And first, still because maybe, balance of to free what just comfort debt, X.Xx cost and there just are shareholders, about a there it level leverage I see Also, read potential horizon, you and that sensitivity? to is finally, kind down returning bit the think So then low. your year-to-date buyback, kind of is there a with which opportunities at bring if Just you’re think pretty where that, discrepancy, curious on remind of price leverage your there, us M&A sheet flow look little your the to leverage of is what big I into is should is from of a any to X.X%? perspective.

here, thoughts the anything maybe So, a and at to sheet potential refi just from do debt that curious, on rate? lower balance

Joaquin Castrillo

here. John, Joaquin Hey,

So kind target said on X to we’ve look, Xx. of leverage our before is range

an we said when part, mean you as changed, at at we make for that couple of really look strategy have as that a M&A. now before what under and had key that, capital for now, And we’ve that said as say of always Having a pipeline. looking structure good Mac quarters, capital that I that, to said, said, and is I is that, deployment efficient. here hasn’t trying Mac because perspective. more performance under and in been from our focus the the our would EBITDA And we’ve We’re we’re

in And at priority buyback main to looking with to buy those time be program from We’re strategy, repurchase continues trying did that every targets QX We target a our some hit. the this consistent don’t we at around, growth. look formal we lower quarter. QX. or opportunistic And really but quarter back perspective, also shares and a have have And we’re did perspective. we for deploying a an capital from

have We increased CapEx. our also

in So kind balance Latin at results that’s even point, we in products this have where America. to which we though of us And own invest given sheet. are a has continue strong we our

John Davis

that’s Okay. me. Alright, it for guys. Thanks,

Operator

James from Our next Faucette question Morgan Stanley. with comes

You may ahead. now go

James Faucette

as thanks have though, thing. much like on obviously, things for stimulus, very is also year, with of to taking to have of and pick you and you’re that next think you components we going Wanted kind that we and And the we ask, time afternoon flip that into some different think you I’m Thank kind puts particularly starting highlighted, of benefited us. And wondering, this abates and takes, kind etcetera. levels? the you side, of tourism outlined the to trying to are of XXXX that How assumptions what back the through up when just like can should get back planning like. about year? like for the this

Joaquin Castrillo

remarks, see, and than just from that we not one saw in stimulus It’s you on of them, And terms one getting is on in now, economy we still said but XX% of some is tourism Puerto tourism, Rico, still hit actually the But the to normalized obviously in out You I’ll terms back X% of different year. there, being X%. closer of move that remind which to previous look, that tailwind our is Puerto extent a is we left of factors GDP. as the them. in Rico less itself, this to right

part to just we recovery next economically. continues definitely though which, will provide model and into that of recover assumptions our year, we That funding, we as we are how more Rico to continue point, then and track detail. at our through will that come definitely important this XXXX see is all an optimistic of the go even We Puerto

in macro to we need we’ve there. stimulus a a environment, from see to backdrop isn’t are time in normalize this better all once but been We how some starts than

James Faucette

And be kind looking the they still been details of clear, those or as of on, there. packages you’re and are have distribution far as off being and signed for already you’re some waiting at, to just contemplated

Joaquin Castrillo

in cases, distributed. Puerto the hasn’t $XXX the transmission that here a awarded. most new has private that Rico recently, close electric money is Actually, but already it for in of been lot managing million out being are allocated, of In authority been projects to public company announced the

funds. still starting to some the some last way that to of local be billions, Board But that more both we some getting we’re also context to plan, we’ve said, the the amount that administration these direction actually some go. we’re right is the fiscal the in in see of quarters, the with again, is announced. saw that and said federal XXXX. been things in which in the But as movement in So right government, are the And seeing few process the expect as have from to of we in the there

our more what and expectations can guidance, we as we as our to call are. bit we little to actually go details of So into detail get closer XXXX discuss our next a that the hope

James Faucette

Great.

potential deals. date inhibitors the to lastly, of have And Are those to more just you seeing for categorize what or to as guys us clearly, acquisitions kind what sorry, finish flow line? on like see been front, expect of or things you you of to good the a can there across get would happen are back a that few would

Mac Schuessler

I mean, I can generally. just describe

pandemic be be them assets aligned shareholders valuation trade institutions. they frothy be that because never actually that mean thought That could multiple happened, country, are we I it’s the may gotten then. when shareholders there and since get the could really an to and fairly started opportunity. for valuations it expectations. originally have the if very in It are Sometimes, don’t difficult financial

a to has multiple our quickly. If us acquisitions, you allowed been historical very able that at we pay realize look benefit have to

love the years is our later, our great investing investment And X are we so great those to that, Joaquin business. looking have in are products invest winning have excited We said, region. look And bigger we barriers, at first two but incredibly around ourselves. been acquisitions of still And as products. that in the we’re

else. still But focused which anyone companies, and we’ve deal a only the have integrated those other capital. will done, when Second deals, we want But and do is and as of as we much we’re our levers fairly will the something on. right buying we it. And then M&A announce we deploying well is

James Faucette

detail, the for Thanks everybody. great. That’s

Mac Schuessler

you. Thank

Operator

[Operator Susquehanna. Instructions] with James Friedman comes Our question from next

go may ahead. You now

James Friedman

about we’re hearing BPOP’s structure, that Hi, trying is CPI a And thing to to or the with Joaquin, good is Susquehanna. about I’m structure out, X%, a contract bad It’s to good the the comments there globally. capped your risk you’re contract, because and Jamie results the here inflation at rising? guys. of at is just lot regard figure it margin

Joaquin Castrillo

or neither it’s I I negative. positive don’t think mean – so

that the very we’re being think say I factual margin X%. CPI does at cap conscious. what of in contract and are would the terms we says, I contract

margins. have We great

has real We that are be to is and thing, through. going manage a looking efficient. it’s to cost for been Obviously, labor inflation will of always something ways up, we and continue

James Friedman

over win minimums new But may you, terms next mean But you’ll in persist not is off those in that year, of maybe your you’re minimums, and good you’re questions increased in then terms with minimums, out get probably goal, I calling And right? presumably, of the that to you though some contracts. of realize your proliferation this. payments Mac, on I – at to Latin have infrastructure, America these

Mac Schuessler

Santander right? You’re Chile, specifically, about talking

James Friedman

Yes.

Mac Schuessler

Yes. Okay.

right, look, I that the processing so and are for deal, of people story, deal reason to we sort mean, when we the it just a Chile, announced we loved the where new So the Santander the actually deal throughout have we of merchant the the loved first minimums money the But what contract. make because that we about they year own is contracts. duration was in

by they So ramp bound we quickly how new could weren’t merchants.

will surpass minimums, will margins. our what we revenue as they add the those minimums get volumes pay to Now for, above incremental and then which increase as right, the

generate some fact the contract. the we exceed the that, even minimums, and point, their So will more means they expectations off they at are exceeding will revenue that

do guidance any their our I are that mean – significantly we given X-year we haven’t think minimums on exceeding what we those are, expectations. expectations what It’s be. a contract. will own But We and timing

would So the during minimums, will how how any big period. dimension given and are impact that around that they beneficial to sort flow us should of when X-year the this through X-year haven’t period. be we But

James Friedman

perspective. Thanks Got it. for the Alright.

Mac Schuessler

James. you, Thank Great. Okay.

Operator

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

Mac Schuessler

to joining conferences afternoon for the look just this time to I from everyone we next quarter. Thank to forward you. seeing over in time want you and us thank

Operator

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

now You disconnect. may

EVERTEC (EVTC) 28 Oct 212021 Q3 Earnings call transcript