EVTC - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the EVERTEC Fourth 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.

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

Mac Schuessler

afternoon Thanks everyone. and Kevin good

this lot summary walk-through business our would XXXX an a to a provide to have followed highlights will We with Beginning I cover I X, results by on and like our financial today. start of Slide overview for afternoon. call of a strategic evolved the next announcements I that of Popular Banco the since at provide relationship Latin color and on cover our related with today. announcements to will America. we how then has XXXX and our EVERTEC some transformation have occurred regarding

in XXXX some million call a XXXX. $XXX our and month and America. an an highlights Finally, the with our Beginning the QX Puerto year, Joaquin digital We on of December. to X, of viewpoint expansion our finish Santander increase in results. of Mercado let environment XX% our with growth record America. partnerships our a We cover had results growth year Most of outlook and Latin revenue, well I'll impressive and particularly me will a successful XXXX with the economic on as platform driven XX% for strong of our overview by was Libre, satisfying turn over provide LatAm Rico results expectations delivered from to the Central PlaceXPay XX% our including in I then above the with start QX Slide organic in as year-over-year. for

flow and growing with the growing performance XX%. impressive adjusted and cash even EBITDA adjusted earnings year XX% were more for Our EPS

In year highlights the approximately those addition repurchases. today as operating which $XX $XXX shareholders Popular well in continue returned I million generate significant the and to of will Latin we strong and America financials, we a in dividends include business cash announcements discuss In flow for to the as our XXXX to million share moment. regarding through

December Additionally, at $XXX remained of as strong our XX. million liquidity

strategy. we also $XXX are announce to have please provide today's imperatives. allocation our key has execute increased process announcement providing on five We To to our buybacks pleased capital been flexibility authorization X. of in million strategic context that to transformation included turn increased we Slide have XXXX, to of a that for Since the

improve execution invest metrics and to satisfaction. increase a improve and by infrastructure The service in designing first, better new to was customer and and organization our

In addition, and and infrastructure in capabilities. operations security we new information invested

existing well Second, M&A Colombia, there Latin in our as enter to our markets geographic Chile, through was which allowed in markets. America such a to presence expand Uruguay focus our of some us footprint as as deepen

effort within there's countries. to tools assess our across satisfaction Móvil a to Evolve the constituencies Puerto gateway we by to focused been to Fourth, that regarding relationship development. PayStudio service product ATH for and that into better ensure solely PlaceXPay platform products localized a multiple Third, and were strengthen wanted model new organization product implementing needed. client multiple our Popular, team We on accelerating innovation management customers This transformed in created that Rico we focused building dedicated and LatAm a the in development and bank.

we improved for and even were previously SLAs, that SLAs. services increased measured years penalties not have new the ones introduced our Over for missed

We encourage transformation mutual and have to That imperative extending tiers us fifth Popular. in brings the our certain with also collaboration largest the on growth. products and pricing agreements to established modifying customer our

this to Turning cover some details will I X, Slide of accomplishment.

First, long-term pleased stream we flow. We our drive with certainty are revenue provide and our this our through of cash in contracts. can extension the key payment growth predictable

extended Acquiring scheduled XXXX. an agreement in through Merchant additional Our years was expire to XX was which XXXX

also agreement consistent portfolio. to share us with that to Popular believe industry incentivize that grow revenue the modified provision include help will We practices a we

we're ATH additional agreement XXXX, and committing continued for XXXX network of inclusion issuance XXXX. ATH extending years our established of the requirement, exclusive minimums the services ATH services Popular agreement the the to annual the services through for processor expiring our services the their XXXX. MSA further through was through of clause support CPI in Our was the an three existing for extended including, master in of elimination and Modifications And which include Móvil. to adjustment network five years and

Popular future. changes, being strategic will partner a key to All for incentivize these believe of we continue the foreseeable

million. our return to single divesting client we Popular is desire by exchanging segments exclusively demonstrates for stock strategy. higher-growth that these them on are with assets are our focus while used EVERTEC's sale part long-term growth our with investment not and to This exposure approximately and Second, strategy. reducing EVERTEC assets, products consistent long-term of $XXX are certain In Popular to

be System. for Reserve to And Board of three Bank no a the oversight to transaction At and eliminate hurdles we longer EVERTEC to the no the regulatory be thus, period of a of deemed Act. believe shares after either the EVERTEC through will the Third, conversion investment and that point subject in their expect shares. will longer of we preferred of reduce Popular Popular we M&A for Holding Company necessary regulation be subsidiary sale Governors purposes Federal the activities. of of or X.X% voting interest nonvoting agreed to has the execute months to to close to over

increased aspect and announcement possible Given pursue and transactions our should regulations flexibility is investments provide make M&A increased beyond today's to competition the the what of growth. interest to and a agility permit this for key

to of America Latin our success We're implemented XXXX. partnerships in excited X. two key Slide on about highlights Turning the

subsidiary The the first payment Mercado is Mercado Libre. of Pago

in very that success we Mercado cards successful card recall, exceeded over had region Mexico you XXX%. Libre. have are we for confident this we As in further by launch a issued the initiative with projections debit where Based we on will opportunities the our of

Uruguay you proprietary the technology XX,XXX. we've are now the Getnet country. expand have announcements in to bank These acquire Consequently, payment merchants Second using to Chile by has Santander's in over progress made enrolled Getnet expanded again in to merchants our as testament region. to enable the their we relationship with recall organically into for arm, projection gratifying exceeded the our

Rico regulatory over to as by country constructive in for also would of expect which XX,XXX is that in that Peru services mid-XXXX direct now customary Additionally will America integrated access to we services America Latin has larger Chile opens. the also opens we like to backdrop terminals. payment and BBR growth. it provide Puerto will customized us close country on our in to subject Puerto economic see BBR a us. environment than This a Slide BBR in opportunities allow terminals provide that in today over to turn better ahead Latin to I future we of to where been. ever The will a and to we Peru retailers which is Rico Starting fuel form believe duopoly the X. believe capabilities market further acceptance. expand we use us dominated a It transaction for the environment country by EVERTEC gives acquisition announced new growth acquisition approvals. of our XX.XXX a more

see will statistics now to pre-pandemic some indicators can and improve economic this you key cases in point As page. I out surpassed levels. on continue have two

rate the XX.X% is which is since level the The at first highest XXXX. of participation labor

As federal increased we funds inflow have resulting spending. in stimulus XXXX the consumer benefited mentioned in pandemic-related past, of the from

local in were We of federal banks. that are received noting portion now funds Rico deposited good Puerto in the

impressive years the additional $XX.X and to future into drive continue bank spending XX% translate $XX.X perhaps will this that that increased funds indicator are the These on billion. such is in deposits page to from which most have should billion over two As past Puerto Rico growth commercial EVERTEC. individual the for

federal Turning of to overview We'll Rico. funding provide Puerto for Slide an XX.

As impact significant you year see XXXX can from COVID-XX in the exceptional an funding was terms given relief. of

the federal expected benefits As we island's the federal COVID-XX to to you and are we of XX. bill to should economy to disaster stimulus This are strong infrastructure provide the the XXXX that into island. in inflows this flow XX% shows detail the will stimulus expected related and funds, that other GNP. that look to of are $XX relief, And approximately a forward, Slide economic continue in the approximately billion funds which funds both We turning finally through represents economy. level XXXX remain flow for believe flow encouraged

billion. as the back make investments components As economy, debt has to to government many the and health side which education, billion. left the measures do that that continue improve billion in $XX the place provides Rico judge annual the shows $X.XX cut Puerto The have roughly better by public business. will making a and Rican on of $X.X you of bankruptcy areas This this Puerto to will Rico Puerto will service from $XX approved billion proceedings. may half the debt to such been the debt the assigned approximately read PROMESA restructuring while reducing get to allow you And safety to stability slide from to to work island's

highlight to shows XX. is We primed that region Latin on growth. America for turning data Slide Now the some

continues in as our to for around we mature significant Credit in as Latin that core underbanked the have twice spend in a average the see consumer markets lower are card the compared past penetration we on more us world As on Rico. economies presenting US. as with these America significantly and markets cards opportunity when Puerto is than noted large be

company. Chile, particularly for and Colombia Mexico and example, are an of interesting focus As areas our

Next turning to Slide XX.

growth that nature opportunity compounded rate more EVERTEC employees have the well Since offices we have annual America. in have the doubled our a approximately $XX we in tripled $XXX and of our as revenues Latin region outlined been XX%. to than of XXXX from Given increased positioned million as ever is million, the we

all the the This like map We BBR Additionally, no be presence in at regional will we well grow what to to processing leader. positioned believe presence when is payments had acquisition America. XXXX with is contrast Peru. quite into a South this EVERTEC in looked our

forward. going extended of footprint a people established enviable for relationship and our regions. main flexible creating an in structure for and more now Popular M&A America also have in with reestablished products a and growth roadmap our We Latin We've

Given our a to XXXX and for are in thank strong of XXXX their our provide ingredient the expected for and our for transactions commitment more of optimistic to beyond. to In I'll we innovation comments successful key we it and closing dedicated team announced, from the results members and building high-performing our the ever key over foundation the our are on future. XXXX state Joaquin than throughout a I XXXX believe turn markets workforce. want some about growth benefits our and for all employees now company's that outlook.

Joaquin Castrillo

you everyone. and Thank Mac afternoon good

fourth XXX Latin quarter compared to from driven revenue basis sales Total $XX.X our the of above to well while was an software and benefit continued as mainly quarter grow approximately result margin year cost Slide Rico transaction both prior continued the normal million, was LatAm sales. first for we And to very continue and increase the by Fourth early The America the EBITDA segment for growth. an increase to a in of revenue at the quarter, which well results growth as of XX%. and the organic in funds, to of in points healthy XX% hardware for and margin was partially quarter from $XX.X sales results year-over-year. a in patterns, increased and onetime as Turning client as for quarter software to more the completed offset EVERTEC. increased year up XX% to Payments adjusted higher quarter. million, the of spending I'll as year. see XX.X%. expectations fourth was adjusted costs year XX% in the prior Puerto as Adjusted full in $X.XX, our by benefits million, quarter net related review Rico income seasonal highly Revenue increase hardware are Adjusted scalable were $XXX.X an of was by Puerto quarter implementations for XX% the revenue EPS as personnel return well EBITDA XX. higher federal

increase from of year and substantial in of COVID-related Adjusted the Solutions the was all-time strong The have the we was year record presence. higher the increase ATH was EVERTEC. $X.XX million, the customers an the For was Adjusted in our an from growth expansion and of basis increase was high channels. FirstBank a growth by segment $XXX.X an from and XX%, net reported inflow of Rico million, prior and growth from our of and existing XX% digital revenue of countries of XXX prior adjusted of an we a revenue efficient the XX%. from all now of increase our million scalable the business for with total payment out expansion year, and many an increase XX% the XXXX. a with across ATH year that which The higher $XXX.X in the in PlaceXPay impact in margin year growth from and the of increase EBITDA income Latin segments in relationship Business our from federal in Móvil Puerto in reflects management categories. organic driven prior cost a localized transactions, full where volumes our in rolled continued benefit The driven EBITDA have early acceleration the funds primarily payment $XXX.X America increase point represents increased new also EPS margin gateway year-over-year clients level XX% by the X%

a Moving by increased to sales fourth approximately that driven patterns of Slide Revenue spending also XX, saw quarter towards as holiday segment higher XX% our XX% volume to $XX.X I normalized more will an now Acquiring. cover to increase results verticals. million we with beginning year-over-year volume shifted by Merchant return season in spread

the year we of benefits XXXX. the FirstBank expansion in the will saw earlier in QX, also We anniversary and which

at was the Rico approximately and of was quarter XX% growth in by the of Caribbean transaction. an have to prior the per confidence year-over-year the was continue incremental The XX been by an increase continue shopping. POS revenue. to drove consumers million Adjusted spread and year. On with growth adjusted EBITDA We a a from million, the Payment increase grow year. we EBITDA strong XX results a Puerto segment. average Movil ATH well also XX% was per patterns basis prior by of spread spending margin driven ATH margin physical all $XX.X XX% the primarily an Revenue going revenue the seasonal Business seeing return from million back Services have increased driven level the and consistent which up year. transaction XX% what contributing ticket Slide points The high revenue higher-than-normal reflecting are of transaction for was increase $X to and in and of $XX.X higher and segment

adjusted million, XX% compared XX.X% and year by from that revenues we $XX.X in EBITDA Adjusted Revenue quarter America increased to growth adjusted earlier year as from flat XX processing Rico basis of as year are margin fees the with up points the revenue as quarter up Latin XX% $XX.X processing from XX% was deliver margin quarter. growth. their the for increase expenses. Puerto by million the third-party EBITDA segment supporting increase prior into quarter. went new and Latin costs the effect $XX.X our the existing prior organic offset cloud-related We growth in year intercompany year-over-year was margin offset implementations relatively well from processing clients. XX XX.X% EBITDA services EBITDA XXXX, prior primarily On up with increase client Payment to over up partially also was prior Adjusted in monitoring when revenue benefited was personnel Payment of from Services And as was driven the by Services the the America. in million, The Slide partially was fees to an services due segment. results transaction for production higher the

Turning of of points the to by segment. was million, Solutions software hardware increase from increase banking for down to year an new was we mix quarter will year operating revenue year. in a shift driven decrease EBITDA the results the entered online as contracts higher services digital our approximately the in of prior as you margin X% with roughly was during $X prior expenses. was increase The to adjusted channels, see sales the Slide change XX from $XX.X the well result benefit year. XX.X%. as million the basis from Business onetime the XXX and margin as from while well from The was prior million Adjusted an printing and flat as EBITDA Revenue of in to benefit continue business $XX.X the a

Adjusted a down Corporate Moving with in revenues to effectively corporate negative quarter expectations. X.X% XX continue year expenses total we EBITDA you a of was will as prior million our to summary of our and percentage the see manage line X% a and Other. $X.X Slide as from

in of debt We $X million $XX million fourth the expansion $XX million on approximately were through repurchases on to Slide XXXX the in as the prior down refresh a and $XX as Moving record from repurchased operating FirstBank increase on well No $XX $XX share activities from $XXX million we as million, an million existing to and divestiture cash returned business. our innovate and shares cash million increase was $XX XX. and flow from a paid infrastructure. Net year. invest We our received continue spent were million overview Capital the from quarter. dividends. expenditures Ticketpop

$XX XXXX. year-end was from an increase XXXX for of million balance cash $XXX million ending Our

XX. Moving to Slide

year-end Our debt, comprised net debt short $XXX.X and position $XXX.X of unrestricted total of cash. million offset at by was in million million term $XXX.X long

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

to EBITDA Our from X.Xx a XX-month year ago. adjusted X.Xx trailing net down debt was approximately

of borrowing $XX million from As total $XXX.X capacity cash December a ago. roughly restricted includes excludes which our was and million up liquidity year XX,

Slide review of of impacts the Now Popular. turning some agreements the to to XX. I'd like with financial

to we business clients key of over our focus significant to what our very as of agreements growth. a Puerto are shareholders strategic are on this certainty extensions Rico. creates with and that extend the based medium consider term able we we areas were largest with and long in pleased First, portion our These

on As extended work expand to revenue XX-year decline and in extension XXXX, to revenue we agreement that Mac as will and mentioned term together interest XXXX in and of the we have of result be Rico This closing. Acquiring This MAB a a a post margin share Popular share to expiration align Merchant a expansion segment with comes focus our share innovation will as better the original our through and Puerto from an XX.X payments today. treated years Caribbean. expense in from will our our

extended expiration enhanced issuer also our presence. payment X to with have network's our X-year expect its advance we out with participation an and number Popular expansion This today. agreement that largest and further form from agreement ensures XXXX through years products commitment of the a in further rolling debit original Rico Puerto strengthens will ATH We the XXXX, from network additional X.X

This extension them a expiration our us hand an has they providing XXXX Banco original to the while experience. with from years flexibility focus from clients Popular working as XXXX extension also with hand extended increased X.X MSA X-year largest and in customer on gives with today. opportunity through continue Our been the additional

extension XXXX-XXXX XXXX. of the for X, on the considered commenced we CPI period that part As this have X% October

Popular segment. will mainly Solutions will This extent a the Rico retroactively transaction and crediting agreement margin XXXX, in segment the Puerto lesser for much part headwind closes. once our Business in our a We CPI represent to be of to Payment

MSA reflected our Business X.X% which XXXX Additionally going in CPI are services mostly our from forward, X% cap Solutions we have reduced segment. on to through

allowing introduced As and we the invest. together this interests our have on future focus us want to and those to where part of through aligning minimums in grow also areas XXXX we of into both agreement, working

execute This of to approximately conform on to to The Popular customer in a and also As MSA have we used experience aligned an back will don't assets segment Solutions certain we EVERTEC in long-term strategic margin on strategy. are result with to described of million solely by their million all paid the at of sale approximately post be our average to revenue assets decline them $XX. our that goals assets XX% decided approximately The transaction. approximately initiatives and shares. sell in shares result closing. Solutions an and X% generate X.X our annualized consideration in million decline $XXX will to changes our assets $XX Business These shares Business to approximately these basis. approximately that from sale of our closing of price represents will of XX% outstanding outstanding of ownership approximately Popular's upon the

longer allocation under no as Our a our deemed subsidiary the agreement its mentioned, enable the interest open believe which nonvoting convert to purposes over then provides M&A or be priority. Company point through of for as us Popular subsequent will Popular to which of to market the sell Bank determination strategy grown to Act. in Mac agile on the we has we we reduce voting This capital first execute at for will their months be Holding stock as shares three X.X% shares into

our We the expect credit need under point ratio basis points basis. impact to in segment. Merchant by we this X.Xx and approximately segment the XXX to our an Business between In And to leverage close be even at distributed any an annualized on to agreement post-closing extensions relatively transaction our Solutions provisions expected Acquiring midyear all, range will margin current also effective. XXXX transaction EBITDA will from our executed which the will of a without XXX transaction be adjusted amendment. expect This increase for become

this With over growing to our done, efficiencies our always have move I that which to XXXX highly on consider we As our all and margin driving scalable time. provide across will focus and by Slide increase we will XXXX. XX regions on midyear transaction outlook our closing products efforts

range range earnings We $X.XX impacted Popular XX.X% to million an and expect foreign the transaction, $X.XX. EBITDA and by gains the between share spread per assumes $XXX between revenue a million continued average mainly $XXX margin year decline The adjusted between ticket XX.X% to expected our to This and expected have consumption our rate to adjusted prior currency not to and for the in XX%. benefited XX% a and normalizes effective behavior is range tax between XXXX.

share anticipated from assumptions GAAP earnings excluding potential will highlight we to Our for effects basis per is underlying XXXX be now have between $X.XX onetime of transaction. outlook. and key Popular that some I the $X.XX the this considered

range. expect to generate our in revenue growth terms We're period. making segment in coming low XXXX mid-single-digit top and of volumes a comparable a historic margin overall the year sales We Acquiring off growth, to Merchant

federal We by anniversary to anticipated the of in we these volume And although driven benefit funds FirstBank in continue influx will be expansion anticipated are QX. levels. a at increased to sales part expect lower from

Móvil ticket expect Puerto moving spread on also to digits a to growth our as our mix in well of in moderated levels a expect driven will towards year in Móvil which to grow Payment a terms from POS and be XXXX. ATH pandemic funds. mainly the our to as of we and ATH the importantly ATH mid-single to continue as come more Business Additionally, products revenue is headwind the continue previous but the margin result In we contribution as be of transactions, and Rico and pace. related expected off continue XXXX we average pre-pandemic at more a historic to year by from transactions cards relief

expected federal the that other as be revenue Payment high programs such benefited in lines year of last segment enhanced current be in will growth some mid is not region, business have Solutions across Latin to expected the stimulus growth teens available Business driven primarily the reset and Additionally, a to to the pipeline year acquisition in year. anticipated the of and from Popular our America EBT. BBR healthy the a driven by of second single-digit mid organic the to transaction. from the contribution the by is half business high for

X% we results. Regarding to with of approximate consistent these expect revenue corporate XXXX expenses total

cadence Popular relates to expect to to will transaction half second on trends the our As the in of effects quarterly BBR and we in the the see quarter mid-single we point first it of X%. quarter And second the the this approximately year the impact revenue expect grow acquisition. digits. January the Starting based from the grew

Our operating depreciation and to transaction. $XX from to to reflecting anticipated Popular the amortization $XX spend is primarily million the million CapEx increase by increased approximately offset our partially reduction anticipated

expense made XXXX. in increase an as by expecting are well with the partially line our payments We as expectations interest of cash repayment scheduled in impact market offset the mandatory in

and approximately include share retirement share additional any transaction the has buybacks. swap. approximately for full been XX As a the the through interest be reminder, our Popular debt of the assumes an without year of fixed XX% to rate received This guidance average in million shares diluted

are innovation. Our in in approximately ongoing technology to localization investment reflect capital Latin expenditures products for expected our in continued $XX America be and investment million XXXX, our and of

remains Our unchanged. capital allocation strategy

investments growth well as M&A. to through internally We on will focus as continue

While cash. on is focused questions. have evaluating we we best M&A please timing our currently higher-than-normal a uncertain line With of the are and open for cash the constantly that, use balance of operator

Operator

[Operator ahead. William question today Bob from first Blair. come Instructions] Please Our go Napoli will with

Bob Napoli

partial guidance Banco on Popular does going XX.X% a for margin you and to the now the a Nice year of lot to extension XX.X%, on figure good of change year full or impact that agreement? the only next A trying see -- EBITDA gave you. there. the quarter the is out that that -- all effects impact Thank to year in

Joaquin Castrillo

Bob. Hi

Popular includes XX.X% taking to XX.X% effect transaction of the So the impact midyear. the

Bob Napoli

said reduction of that that is mean rate. that XXX I full release your your in I amount of mean would impact. basis -- XX.X% a XX.X% Okay. Because run XXX to points be to from is year a you

So it's than actually that basis. full a reduction year of more on a

more year XXXX basis on a basis it's points. to closer So like full

XX%? equal margin XXXX ongoing EBITDA all to into going say going else your to closer is So be

Joaquin Castrillo

Bob. No

running we're break at. have QX or we're where rate at to better down that that So it to right? as basis So look of rate try you is kind to coming of of our gives of me terms going we're And run less what an post of let to in off saying you point impact if little to QX we're transaction seeing points as closing what you a kind more you run data forward. bit So a where a gives for is right? going XXX XXX ballpark the that

Mac Schuessler

basis. On an annualized

Joaquin Castrillo

correct. On an basis annualized

Bob Napoli

on in Because EBITDA XX% XXXX you margin. did Okay.

Joaquin Castrillo

the in And like mix card back of and some -- next And from our some kind effect pre-pandemic as are have I'm Merchant as expecting levels expecting I average of also for we're margin remarks the coming interrupt to those gains Acquiring We're One not this think we some right? highlights segment we as of of sorry that travel. benefited start currency our year. foreign right see while we direct spread. and to our remarks part gave the trends of more the some year to part ticket on a

Mac Schuessler

So is Mac. Bob this

really changes fundamentals and the the part is and come transaction a of So XXXX. Popular we the margin some XXXX it the impact. in a what with business Part of you're of as is off in the in seeing the strong

Bob Napoli

Right.

kind So you're think so normalized an a viewing you're a as little is over looking margin? at you low XXs margin XX% what the as or in of about 'XX EBITDA

Joaquin Castrillo

get of going we're of just think of trying what obviously then impact not and if the point. XXXX dimension points you the running of we're And we kind transaction QX I at an We're mean I is. mentioned impact again at into where you idea. look kind this QX, basis guidance to this the Well

Bob Napoli

Okay.

So Is The revenue XQ XXX primary your changes guess basis as normalized points you revenue basis, what is on on less was is full view full revenue from on margin. it XXX from the EBITDA a if effect? what XQ, share? to a effect it 'XX I year the year

Joaquin Castrillo

Right.

right the just So clear the the line. Bob revenue impact be other component top to won't share

we just post discussed. XXX points is will that impact that And expense our XXX that an that So basis segment. is treated be Merchant included the in Acquiring the to in as closing

we line which an for In annualized number the terms just Solutions, about is Business the sold. of that assets effect is $XX top million

Bob Napoli

the Okay. reduction? In stock count which reduction the -- share you're getting

Joaquin Castrillo

you the to of those in just -- because the also and And of CPI Solutions will margin In be concession. Right. assets right? Business have terms a also impact sale complete of

Bob Napoli

Appreciate Thank Okay. it. you.

Operator

next today come go of will Friedman from James Our Please Susquehanna. question ahead.

James Friedman

Hi, congratulations and you thinking the in may to wrong. there on Santander a contract were because year I used And the then as remember a be production some work XXXX? minimums you I quarter of great on for Santander a how a relieved thought when great I those here. lot you well. minimums. saying one about are that full good that's it But mode, be

Mac Schuessler

Yes.

that the minimums the duration year be still the So as year make the Santander of the and had we'd ramped, processor. contract for And able contract. we're to that so in some first this was -- given money that

And benefit through from XXXX the duration contract. so XXXX that the we'll for of

James Friedman

it. Got

that just because size your maybe how dynamics about about you. it your you you of in said for comments then And through ticket some could but of know I if the already terms of kind again? step that? you real the refresh is Thank thinking some relevant always walk Could you're yields. of Okay.

Joaquin Castrillo

Jamie. Sure

the a year in right of and mean So flow and the ramp-up of past terms I a to saw of a we some to Merchant kind that really Acquiring of average this benefits We consumption Rico. and high ticket. Puerto federal takes obviously in slide on puts put us

saw restrictions the some travel which a a shift overall towards In also us. to for of product that for more and addition a debit shift us to spread yield more profitable is also that transactions because a higher local of we

is like expecting slow ticket into variables something from to come seeing to basis. the And has are or And continued to than benefit continue forward. on sequential some travel funds that back. although a a we to normalize expecting saw we obviously going We're those move next that's to lower start see Fed average start down we're of year then them we going XXXX. As in what be

Rico we're the is starting impacting cards also see hit to Puerto yields. those and some So of international that

those looking think three main that at. I the So things are we're

James Friedman

it. jump the in will queue. Got I you. Thank back

Operator

come will Please ahead. of today KBW. question from Govil next go Our Vasu

Vasu Govil

so BPOP of Rico I my and taking contract. for on the question the extension Puerto that for on you new congratulations slides love thank thank also Hi, well. the you as

on all good Just BPOP first for stuff. Mac extension just the question you

the risk sort on on BPOP's exclusivity is slight a scope Solutions the that was Just thinking potentially part. of what Any of with Business the the on And modification there? comment long term relationship side? the on

Mac Schuessler

Yes.

we I'll services right under or through a Today And software and they do contract of to whether going give to that of that the are those be something or performs And applications. may to explain a have with with have service want new that type the then to go don't have And exclusivity they the in not that service, of services something to you if process new the of But new us to do. Today how of be today the with still go in service me category may the how through after have want the there's that actually set better it's else. we though or services refusal. they they explain sort it whether works the we close. EVERTEC. us there's us first let to exclusive somebody that be not So perform not -- that's process even we may to today.

and somewhere there's relationship new sense ROFR they'll regardless it end So the right? up process if going else under to do vendor that at the in makes it more creates going friction through the of stuff quickly. able So be another to deal it's

the relationship. for better it's So commercial

increased are pretty primarily And that so services we mean infrastructure. accommodations I for We've hard today we either future other them to now or shares Going themselves. some pretty we're we've And invested that as -- in we in of as to we making where know them worked are right? sold that CPI and been forward a That keep we giving really up SLAs. past. got our be services We in We've vendor may they why hope there with the was exchanged have those they we possible. existing do performing assets the price much good and the purchased. things there On another that the assets. aggressive today want the on some by the pricing

be today will be EVERTEC. not Now well the would things to but they some want there by leave, may doing things that we that that road down there performed we're are also believe

you with. MAB time. a on on the so business long years very think to able we now do that or the we five us performing business provide a organization with pricing we with a do through Popular the performing that five high think extension And very years get business want services ATH do will I have were a opportunity for We're to worked they -- hard manage over -- MSA when fact at frankly X.X And a at building years three the ultimately competitive we will minimums be have to those can competitive and years. really the look we're on level. that next as we're to last XX-year give EVERTEC provider that over We a not

Vasu Govil

how guess issue the just Joaquin obviously know I sense. comp follow-up Stimulus you for if I my for could inflation you on about makes a is impact. the There's is guidance. thought variables. out just probably all guys. that you tougher -- lay No all some

versus could solid conservative? track outlook we you have you've the being record really out? drivers laid be about drivers should think downside versus historically that of a how the But what Just obviously upside

Joaquin Castrillo

significant mean I think to been of pieces dimension reality last to and are and that's directly funding different backdrop that But Rico the coming yes of type a a Puerto is were than Rico positive. complicated all funding going amount working try is of off Look Puerto and have people's I the we a a right? that Again, moving been year better pockets. and we into did it's see

I funding we've that pockets. coming waiting expected like funds that's But continues this is some to that credit etcetera. some the these the incremental for be tax of reconstruction been incremental funding employment that's the think child infrastructure we've laid some year time. directed again expected to into out and are also people's And Rico credit Puerto

We of lot see on continue money towards putting to to the progress a working work. government

And the an that from to we're economic that. index are an perspective some trends perspective starting activity reflect showing of employment from

good So but And growth. expecting We're are we about pipeline. some when to of we'll I still high-teens that Payment America see those as said very -- have outflow think optimistic think we through main Latin high we the in some -- our aspects. we're segments. And teens a

Vasu Govil

Great. Thank you much. very

Operator

come Stanley. ahead. will Faucette of go question next Our from Morgan James Please

Jeff Goldstein

Goldstein on Thanks my Jeff is James. for This taking guys. Hey for question.

into year opportunity? you now ability of services On or any the since that partnership we're relationship sense approaching new to a onset that geographies? contract are further Mercado Libre just that expand on the the that thinking Just about whether how

Mac Schuessler

Sure.

But and the going that's I extensions focused earlier is, geographic and with you call. partner. we're with lead they're our product announcing we deals talked production. to we've on So very exceeded Mercado that can actually to confident in not as And tell on exceeded about both very, expectations specifically what theirs Libre very until we're that

about incredibly So with working excited them. it's we're

Jeff Goldstein

And about your investment it's more talk new helpful. then I whether about priorities can how key sneak for could that? one you 'XX, about just focus That's we internal areas if or in. it. should Just geographies? just think new Got thinking And capabilities in then

Just we segment? strokes should margins year, about how thinking the about margins any broad for think next by Thanks. on

Mac Schuessler

Sure.

first So question. that question and of part Joaquin I'll take then thoughts margin of answer the let on give then and the sort his the

we focused growth. on allocation capital are So very

in We're PlaceXPay the Uruguay. about have our Mercado in footprint the Chile roll we've many As throughout for products footprint, generally. countries it localized rolled a and within our for to out out going America South in region. that Libre Latin now notice we we've now and our PAYS excited platform great you gateway we're Santander America

America. we So than we've have set relates more do competitive history had in feel company product as to the we of a it Latin the like

We M&A. are now on good such we focused sheet. still very we balance do And that a believe have

rid that get that certain we always focused are just to be that historical continue gets to contingency, advantage new takes look -- authorized that lever. us products. have be the and that and now of region very And types on flow and the extensions Outside we can scale we We same have three countries leverage this other on we buyback great -- of these in we There regulatory our million. that to we $XXX now the we'll new other one the provides M&A focused have M&A at of also increased or we M&A into will things. with that cash of

we'll be So, focused throughout on allocation the capital year.

Joaquin Castrillo

the we just question And the call impact the XXX deal. is to walked factors the XXX that points of whole that just the right margin impact the So to the all in that transaction we of through different on Popular then on clarify mentioned basis the right? is post-closing

QX, of of back Now what at we we're how we going and a that to take where to Bob gives what kind overall in coming to a as kind deal. post-closing be should to terms margin off and of I look forward take in our post at kind look if mentioned you impact of going baseline this that QX

break at going revenue if bucket about of we down about from revenue is CPI perspective, XX% looking a Now the talk and forward, really to it way that it reduced our in to subject addition we're cap. these

hedge sales of our to ATH actually Merchant Móvil comprised inflation volume which of is The continued other against increase. business a revenue that Acquiring revenue have XX% our because

suppliers that's CPI suppliers have get our our And forward. which CPI longer cap will We been key perspective, an our cap try been subject we has ATH where we case regions if plan because for different been we're margin-focused. always technology when to here some and margins. have and probatory And able terms work we've is we've Rico levers revenues some in with presence in actively and needed. better and other to to jobs look locally We've we what arbitrage are to use strategically some even labor of X% reduce done with working countries our maximize our with done to leveraging -- our segment. our our expand in of going doing as Puerto our we been then which of strategically pricing very our can the all landlord business expense contracts been that our these in we've continue we've continue as in getting investing From look to then and footprint Payments where been

expand the margin plan is in So a again here to to get time. over position ourselves

Mac Schuessler

was It's -- I that quarters we We assets couldn't Joaquin, to have of the I ago leverage important with not have Popular point. of Rico. sold X couldn't an That opportunity. And that that a things use didn't mean applications think a we but A today, it's The Puerto four investing were sold we things than that the of them and in scale. outside use We lot more other them customers. asset couple It leverage. sold can Ticketpop. scale we didn't business.

invest we and those margin throughout PAYS region. the we can should because those as PlaceXPay accretive So, leverage be in the on

Joaquin Castrillo

ballpark some expectation because impact to just I these the Business assets, have is Solutions to on of our XXs the I and thing plus And Solutions be The our and Merchant add low margin. the because you -- have Most for kind impact lower low margin Business the is segment to and Merchant Solutions and our the mid-XXs the here give Acquiring RevShare for know would of segment we in margin then I the Acquiring between of is Business the sale we mentioned CPI type only this post-deal to segment. the MAB segment remarks. by right said in segment cap. of on The and the mean

of that impact. we're from going So see of ballpark where you a to gives the segment kind a perspective

Jeff Goldstein

you. very Got it. helpful all Thank color. that was

Operator

[Operator Please today James. Raymond question Davis from John will Instructions] come Our ahead. next of go

John Davis

impact going a transaction as million $XX of of just I'm but maybe on math Joaquin our here to at X%. call guys. horse By and it, afternoon the with good it just BPOP, it you look outlook way. call dead the the EBITDA Hey different a beat

to kind put or top more at of transaction right just we're looking on I about is 'XX that $X.XX million of want breakeven so, think a line outlook? to I think EPS $X.XX impact about to EPS on it? $XX less the EPS And finer the if the is the like impact say, to the neutral it or way point has fair

Joaquin Castrillo

that to you Can John? repeat was trying follow the I different...

John Davis

Yes.

Sorry.

like a headwind -- EBITDA million our the so to $XX out EBITDA. which line X% your $XX roughly the of it's math or is is you sorry revenue really impacts top about million margin So given called and the

talked a the a impact that just not wanted headwind to margins call to I take the this line, included of range I'm anything I the to getting $X.XX transaction way in EPS of so and somewhere all lot bit it low $X.XX kind kind And $X.XX of from the to once just it down outlook. like EPS We maybe about and missing on guys want focus I'm but little I line? have top from make you on the sure this. bottom

Joaquin Castrillo

haven't in from EBITDA And aren't way we that I there etcetera mean way. when I you're impacts. right getting to a down tax think perspective No. broken about below the EPS think it significant to any really John it

give not absolute of the EPS of a that into the effect. So almost down. that's it cents the underneath into But broken retirement if you're margin should we're shares you that obviously impact how of giving consideration perspective receive everything consideration million and $X taking going from think kind you taking the number I the to we've

John Davis

here free highlighted being balance cash And much really You very on good had is guys flow over of M&A company enough. years? good and here. Mac Clearly couple bigger-picture subsidiary. obviously of of How Fair no an a longer impact considered then one that Okay. last has the question bank holding you a sheet generation. have positives the

trying So a that's from M&A acceleration M&A perspective of that scenes has Behind to hang-up pace some improve? to of can can And the of just once removed? expect the the we how expect been? understand an much like we

Mac Schuessler

Sure. It's a great question.

and hasn't the say take been much leverage So really those we tucking very we've historically been focused deals an could company. that in it what I would because across on where of it exclusive impediment

entered products. We've great bought we So countries.

hindered more the great flow have I hasn't past. cash say in the more a believe and can competitive we do lever great and such we that future certain these in have What have been becoming very generally, that in have sheet believe we given given that where it a we balance now us we extensions would do is and cash a it could the so, -- and And challenge we M&A that position future.

up to certainty out So this deal get done of cash does this is for the the we think to the opportunities get time right regulatory get to flow it really way the this open future. of because hurdle

John Davis

Okay. And the in us Xx comfort I somewhere range two to on remind leverages think code? ZIP just

Joaquin Castrillo

right. That's

John Davis

And then last me. question for

Just of success Business I XXXX. mentioned the you in and Mac Móvil ATH think

would you be helpful? maybe you kind full on there Just there Just traction any curious number? success or XXXX of that's if of and you guys share trended updates how stats kind kind have can recently update the year had a or any of more or

Joaquin Castrillo

John say I what is mean giving been update ATH some can -- this becoming is contribution. Yes. revenue of I total X% we and to the Móvil point. we've almost our think at

this to little it's material. a become starting XX% grew last bit So It quarter. more

here much entering physical so As more comps we still saw tough we end towards just see started because year. that pandemic we pretty ATH some activity mentioned of pretty the active, last obviously, traffic to we're of of kind was when the Móvil

went we're that a state. here of rates growth sustain to we from we've these don't think But to clear stay. to products been right? expect necessarily adoption normal is high digital still good I So we growth expecting That those back as kind more

John Davis

it. Okay. Appreciate

Joaquin Castrillo

you. Thank

Operator

time turn Schuessler Ladies this like Mac conclude closing and remarks. question-and-answer gentlemen back conference I'd for over any at session. to the will we to our

Mac Schuessler

we've colleagues. thank proud my all of Again, you. I I'm Thank want incredibly what of accomplished. to

to Operator, the next you today's for we speaking conferences As Together growth at We ahead, everyone forward extended years. call. again the Also, call. close we look to in my thank coming the want I'm look please contract Board to look joining to with on the us ahead. the has delighted forward company the for future. I three once

Operator

you. for lines. we conference The may today's now your now thank you disconnect And attending Thank you presentation and concluded. has do

EVERTEC (EVTC) 26 Feb 222021 Q4 Earnings call transcript