EVO Payments (EVOP) 8 May 202020 Q1 Earnings call transcript

Company Profile

Participants

Ed O'Hare	Senior Vice President, Investor Relations
Jim Kelly	Chief Executive Officer
Tom Panther	Chief Financial Officer
Darren Wilson	President, International
Brendan Tansill	President, Americas
Ben Budish	Barclays
Bob Napoli	William Blair
Tim Willi	Wells Fargo
Kartik Mehta	North Coast Research
George Mihalos	Cowen
Tien-Tsin Huang	JPMorgan
Tom Blakey	SunTrust
Ashwin Shirvaikar	Citi
Bryan Keane	Deutsche Bank
Mike Del Grosso	Compass Point

Call transcript

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Operator

Good morning and welcome to EVO Payments First Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the call over to Ed O'Hare, Senior Vice President of Investor Relations for EVO. Please go ahead, sir.

Ed O'Hare

Good morning and welcome to EVO Payments first quarter earnings conference call. call. webcast Investor a website Relations the of being available will shortly is completion the through section this call today replay and be after This of EVO’s you Please will will note of statements. forward-looking of that the consist hear our discussion some during today information may these COVID-XX statements on statements, to impact of results particularly our forward-looking from business. the information and currently due These materially available views on are actual based differ expressed in the

addition actual to to release our results of reconciliation on GAAP expressed the risk factors website. that release And additional periodic certain financial our provide with be SEC, includes our also measures the statements website. to may investors, For in our discussion reports non-GAAP financial our measures. and in differ earnings additional views explanation available the to cause information non-GAAP including can in nearest made information from available Relations today, today’s financial the on forward-looking most measures any our discussed XX-K on filed in Investor An please today’s factors refer these and to press found recent

provide will is first our we performance update quarter COVID-XX Today, the on impact having and business. discuss our on an

Tansill, is of Tom Kelly, Darren Brendan Officer; International the me Officer; on Joining Americas the call Chief President Panther, the and Jim segment; Financial Chief Executive Wilson, of segment. President

Jim. now will I the to over call turn

Jim Kelly

to and morning by everyone. company’s growth, growth March. impact the and February the which good revenue EBITDA January and in COVID-XX delivered beginning the performance you, Thank adjusted normalized in offset strong early of quarter, normalized mid Ed In first EVO XX% X% reflects

in the the been EVO respects start affecting with success world. our lives. pleased to The year, reacted spread in the daily proven as population continued rapid engulfed business of pandemic continuity devastating plans continue interruption. the our economy proud partners. unfolded ensure the and by and dedication our the many are crisis of all our overshadowed the situation, operations support merchants very to has quickly and the safety and that early and of to our quickly has of professionalism employees enabling without global profoundly and COVID-XX for am we virus’s employees While health our implementing strong our the adapting to markets the our has I

governments ease the to many COVID-XX restrictions, begun As to and local the guidelines office. enable return employees safely now to complying are we government related to our have with regulations the

Investor to decline Relations timeline beginning our in when in implemented the in began government volumes to We have a website on be of markets. our our early posted mid March restrictions

the Europe see, as slides number in of declines businesses improvements the late you to in the gradually April the jurisdictions Americas States in a in Europe also volumes of and As and United the our beginning can initial reflect recent both allow and number reopen. limited

business activity activity which volume While our early we will indicator active we resuming. are economic depressed, the is believe be overall of of number some indicators One resuming. of such positive merchants, seeing illustration an remains

affected nearly the details provide of Brendan number how the the as from has COVID-XX mi-April on As call. merchants May the X, and will process. reopening on increased active virus of Darren low segment jurisdictions began certain has later the XX% our

took to impact address pandemic. they and cost to sheet due our strengthen our our significantly to prolonged see we and as volumes potential decline of lower three to decisive began fixed the actions economic rapidly a Also, in mid-March, the deep balance

the in it company, expense eliminated spends First, the and protect and non-critical improve reductions cash cost with our and our personnel decline expenditures. implemented capital revenue. across we flows including moved third-party to aligning expenses by We recent

salary and payroll our April of many furloughs on have significantly of we our also have reduced expenses. we Beginning non-payroll X, through reductions costs and combination cut a

Madison the sheet our our balance $XXX Second, we investor, mid-April, revolver remaining long in time holding After investment from balance paid with the proceeds and receiving million Partners. we are these cash. Dearborn of were company’s the strengthened funds in

leverage has been to forma result this a as of pro Our reduced X.Xx transaction.

and announced morning’s our recovery. global the Finally, press this timing amended release, Xx as call. as on as three to we various leverage leverage we well will XXXX later actions uncertain of these EBITDA given cash discuss of the in through March our impacts this economic covenant the objectives flow Tom

resume emerge financial Taken together, we growth ensuring us to current positioned plans. will to our these actions able well and flexibility provide the crisis be weather

managing We as to we challenging supporting work situation. this through customers flows our and cash your actively committed are employees and

I will business. Darren? to our Darren over now European turn to discuss the call

Darren Wilson

Jim. Thanks,

market As the economic We Poland, experienced widespread impact you declines Ireland, commercial the the against social to in disruption, to as segment impact early implemented COVID-XX markets. our our our virus. of spread the was of government restrictions feel and the can European Republic, March, see all followed of first UK. Czech slow and the by Spain of across

as Our merchants, of volume national supermarket and as stores soften big goods the helped such gas declines diverse our portfolios from European and box portion management supply large volumes largest stations. our has are chains, derived home

and government represented by in lodging market most of the Prior concentrated X% which restrictions. pandemic, approximately our the primarily Spain, volumes to are the travel is impacted significantly and European

the and approximately closing widespread abruptly the the most year. declined versus borders XX% businesses, curve rapidly government actions prior to With

government businesses restrictions monitoring certain easing and carefully now reopen have the are been regarding and We seeing the process. our of markets begin recovery within decisions the

to reopen wearing allowing social equipment. distancing Poland, certain and example, to while Czech to Republic For protective Germany and related are adhering government guidelines the businesses

card we rather to debit opt than increase credit usage returns, and anticipate use merchants as and cards business to consumers As cash.

this solutions. merchants well Our mobile are to contactless, use terminals and consumer the of e-commerce behavior in to respond equipped anticipated shift through

and are improving to it we As are you an multi-week a that year see which that XX% down have our last we the improvement from roughly can trajectory. volumes, seen in slide, appears now compared on

of across our which increase seeing further are also markets, of improving. many merchants that are provide encouragement active trends the We number

we For recovery the nearly in volumes increased XX%. flat merchants of begun where low see XX% bottoming example with number active and the have approaching to point, of volumes at XXXX versus nearly currently after pre-COVID-XX around in a Poland, decreased level $X.XX

our our remain been network, merchant during have in industry actively and we organizations this to industries our assist coordinated merchants Additionally, period challenging and this managing trade we across with portfolio have to remained ensure through time. contact well

EuroBic an banker these began our provide to initial were like quarter. unfortunately, discussions result discussions but February agreed XX. which delayed would Portugal, a next acquire we the by I as announcement, pandemic of interrupted resume and on expansion into to was update banker’s on We announcement the following the to with have a Finally, discussions

who to over Americas Brendan? will on turn I call will segment. provide now our the updates Brendan

Brendan Tansill

Darren. Thanks,

Our decline the payment in spread. occurred progression the trends to volumes Americas X the steep week given later of European businesses demonstrated similar approximately although our viruses

you from Americas As mid-April. volume XX% our see our can approximately slide declined by in

seen have have steady XX% with year. as only reopen we to improvement down approximately volumes businesses begun from now However, a prior the

predominantly Our merchant SMEs. mix is in the U.S.

which by However, crisis these our been reasonably has BXB the withstood declines somewhat well. business, have offset

stations, Americas business, which Mexico our large stores, and including volume segment. in have for the grocery we our merchants, In gas many national supercenters decline processed softened

reopening them with ease for as and the actively activity with state we and our we restrictions local to are and states crisis this ease this prepare support reopen to seen in to plan. have as restrictions anticipate contact the merchants to their a government return. To-date, to have have enable to working progress authorities issued and many We most over states businesses we weeks economic through trend coming regular been

especially monitoring the MCC that activation are rate the We of improvement understand volumes than the U.S. level we states order rates In a at in have reopen, are increased by certain XX% in and market X allowed both by past a to weeks. merchants state experiencing, are merchant to the number in industry encouraged better where more of and active have we businesses trends and verticals.

states, as this adapted also are place orders more environment. in economic we where still Importantly, this are in businesses stay-at-home to evolving seeing

with joint venture in Chile continue we BCI. progress launching to our towards Lastly, make XX:XX

to we preparing conduct payments based Latin process and platform the have in established our the through will in Mexico legal business. which under are We market American entity

will this venture American any not our imbedded require cash in platform, will Latin leverage year. costs fixed investments joint the As already significant it the

regulators waiting We are approval address a is for their the now acquiring as merchant final market. to questions regulatory independent in with frequent the in and concept dialogue are new

With that, turn more now I will who over cover Tom financials to will the Tom? detail. the in call

Tom Panther

X% revenue grew everyone. prior the continued points and fee weaken XXX revenue termination a basis the BNP currency FX morning XXX quarter, neutral euro polish good expanded constant to in as and adjusted last excluding when Brendan EVO delivered basis growth by zloty basis, EBITDA to peso, of impacted negatively the year. year. On margin currency you, points. X% and from compared the Thank

XX% Through XXX financial performance our guidance. and increased previous was line However, with in basis normalized margin adjusted EBITDA points. February, grew well our

the in volume and However, significantly our reduced growth. March in beginning EBITDA decline revenue steep

course effect cost in As operate fixed have comprised, the largely resulted and material the April, salary of on of over of which a cash to specific a we Jim on our allow anticipate implemented we reductions that in mentioned, flow that beginning decline in costs will X. result went approximately the economic April downturn. expenses Payroll into this is reduction basis reductions and positive furloughs two-thirds us

actions, have significantly have costs. The our reduced SG&A approximately on or spend of focus and We XX% reduced per also $X combination these non-payroll by these month. million expenses

we only significantly our In confidence forecasted will is the year. than implemented the decline time actions expenditures reduction results. less desired taken approximately expect our CapEx to which processing decline addition, we have XX% include we our critical volume capital compared us in back to initiatives, deliver last to and at The the gives current scaled that have projects expense severe we

that remained eventual and to the it’s of of the economic this important mind recovery the economic keep However, in pace duration decline uncertain.

to continue cash our revenues as resumes and flows will actively markets. on activity economic our our based expenses in We manage

our activity. with from secure local of working significant any authorities increase to minimize also losses. with financial are have merchants to manage government and closely order benefits markets, our and Across daily we also charge-back we a and in profile Thus not risk activity comfortable our our monitoring We diversification, in our the employees remain profile order given programs. of portfolio closely in risk programs seen all these assistance far, related margin charge-back the for are to utilize

With respect basis last margin to grew expanded segment XXX XX%, adjusted normalized points to profit segment performance, X% segment in profit and year. while increased over our revenue compared Europe,

and per expenses million were share $X leverage also a to increased to revenue Turning constant we XXX operating grew increase margin segment grow had to quarter $X to was neutral share prior by adjusted expenses. increased compared to basis in year ago. profit the currency year. period ago. were while year basis. quarter, adjusted which million including the able net stable XX compared $X.XX, approximately driven XX% income a year the corporate Adjusted XX%, as $X flat we expanded last operating points million, to currency over to which on revenue operating for X%, net which both maintaining million the general classes securities, compared by Americas, the and is expenses a increase is increase while of end compared income all dilutive was Adjusted strong due outstanding, At and of shares an an was This X%

Going will be preferred our in the which stock, on closed April XX, shares forward, diluted shares included underlying convertible outstanding. the

trailing ended we stock XX the to the the month, our ratio X.Xx Turning months our improved leverage, leverage adjusted last receiving preferred EBITDA. quarter X.Xx. to proceeds Upon with

As borrowing capacity. of us repaid million have the $XXX provides which we Jim noted, available revolver

XXXX by to to XXXX. our we and morning, group actions covenant leverage have the increase to combination forward. XX The year liquidity EBITDA approval end. of our us last significant provides the from covenant strong months Xx Xx was down this received quarter throughout flexibility step of announced through scheduled leverage financial revolver As first the these Previously, lender to going

our update Lastly, I provide like an on outlook. would to

this at will we revenue forecast providing Given or current uncertainty, not or EBITDA QX full year global for time. economic XXXX the be

volume to the and and in provide metrics assist we performance. our modeling with trends markets we these our understand continue economic of normalized, seeing the to are provided have specific updates has help in quarterly However, you operating details we Until to trends our business. activity CapEx financial reduction recent will cost

call back will Jim. the With that, Jim? turn over I to

Jim Kelly

all to Tom. unprecedented delivering you, remains Thank stakeholders our responsibilities focused on on EVO and time. this during commitments

to stronger While disruption the uncertain, we pandemic balance the the the actions early strategy. the merchant expansion that impact and ability am us gradually sheet duration to with to to a markets. remains and also remain seeing trends took of continue the our in crisis of activity in address economic resume encouraged emerge economic from position our I volumes counts recent active we continue will optimistic are our by the and the

call I the will the now question-and-answer turn session. Operator? operator over begin the to to

Operator

question [Operator the head. go Instructions] Please line Barclays. from And your of from comes first El-Assal Ramsey

Ben Budish

virtual strategy I Hey, guys little I going selling you that? kind might then about Ramsey. had merchants to on guys. the and think of bit This kind you to the have wanted of everything is able expect based continue a or that Budish to over that kind being for for understanding to you been coming in bank Ben Europe, make how to products. your like hold things any changes other with with to on to along same, go-to-market telesales of it’s switch is banking there bank long and that our more cross Have commercial ask

Darren Wilson

it’s Hi, terms banks. because to pivot cash activity the Yes, question. across all here. type fallen the ATMs. Yes, a Darren online of has to usage, I e-commerce model with terminal referrals it their for almost bank of markets. of operating through there. transactions, different alliances Banks has business lockdowns Thanks know the cash have our is very significantly continued European in much customers been encouraging virtual

channels we not banks terms our type the through our similarly our doing of card pivot So their of terminal in and omni-channel about and solutions have leveraging business selling tech-enabled of campaigns card transactions, merchant from all as your been have opportunities new afforded merchant to in solutions also markets to and across tech-enabled so opportunities present e-commerce through states but usual. strongly kind present with UK

Ben Budish

of of could And we thing assumption? you for if past would not guidance the great. differential the Okay, with volumes, and know quarter, revenue helpful ask growth some could sort expect same fair that between are given color but kind I what transaction the in giving a I have you be on growth, the

Jim Kelly

down. yes, in reason volume can effect, be sense on This recovery. get now that the business move. example little say, prices seeing extent, that we good these could we people of could a is move would Jim. Volumes gave gas I a up, the some to but are so misleading petroleum continue our to just where for They depending also charts move a

but the proxy. could I where swing So one purchase purchase cost think it’s but I the significantly, of of of think gas enough good the is purposes one pretty value transaction, for of today we a are

Ben Budish

you all Okay, well much hope thanks so and staying safe. are

Jim Kelly

Thanks.

Operator

question And Please William your next ahead. go line comes Bob Blair. Napoli with of from the

Bob Napoli

Good talk morning, everybody. you. to to Good

Jim Kelly

morning, Good Same. Bob.

Bob Napoli

maintain? are are you would of and type slightly type thoughts, now margins the what What be, on the Tom just think are place do in EBITDA Jim – assuming margins of they you your or would what trends that ability you could as EBITDA stable that improving or think

Jim Kelly

cost reductions the the April. we beginning of place we in that into Well, described as have put

furloughs. including and a are non-payroll, combination of some We payroll

the reduction. future sustainable for that of part is So though foreseeable are margins I pretty result EBITDA significant the the that recognizing of payroll think

point returned So those as business back at get the returns. some will

where his As we as back to these return in the up. they the as revenue the Tom return as levels inflection to said before be the may and normal in in points There kind salaries markets crisis. comments of open volumes were

where international month I most So think most playing as in our is volume it not market we've basis is on for but at as open revenue we one this Tom improve EBITDA very it improvement time worst it of last basis close our we're seen significant what's comments in started by a his where was volumes necessarily a market that really markets on the month year significant in see Poland as a volume to said in important volumes up. to

the once think I resuming effects we of to around people else normal comfortable to see start everybody lives. commerce restrictions are this feel like their on the So are relaxed and government waiting call the and world

Bob Napoli

as clear those trends, I these get volume the at in look in volume in on would line trends be line to the the trends? revenue fair. versus the where revenue revenue we That’s wasn’t is with tracking how volume difference

Jim Kelly

because. Bob, necessarily, Not

Bob Napoli

Yes.

Jim Kelly

Not you volume a right in necessarily, lot large because the trends of merchants. now have

XX% our to like example volume back are for we aren’t although So normal yet Poland, or of merchants probably prior year active – levels.

people So, type Spain the and those of important other DCC are our as in business European piece big box to organizations markets DCC. of items. purchase Poland more less border is an cross and

and So revenue is business that into I when a the have people all just but good There this and come exactly other the be is reopen, recover. don’t starts volumes first governments the because play, think going back, spending resume same. to are the to that are it’s EBITDA to necessarily things same indicator

Bob Napoli

it. Appreciate you. Thank

Jim Kelly

Thank you. Good.

Operator

your And go Please ahead. question the Willi from Tim comes Fargo. next of line with Wells

Tim Willi

The operational I about earlier, efficiency, I quick or questions what guess sort have learned environment, I I had That’s late, that sort current then about side guess, on guess of of just I the business what EVO’s customer And resiliency question number apologize just you maybe the of talk a follow-up. you jumped sort could the but service? I other the maybe one. it’s about beyond are operational on learnings applicable of the around productivity, this side here of

Jim Kelly

buildings is others BCP it good unfold think our a learning Well, facility we a March within matter not a all amazing anymore. need been two, Okay. or It’s and XX, to as started lose biggest that most say any week. I were to quite plans whether morning. Probably, this in like of

was like amazing it the have at people the have active so yet in from at could days, the been in I as of XX say call years and employees, we not probably partners companies, were deterioration the was an service. amazing EVO of number that but last particular days, I were comments in and least remotely, work in feat. businesses, but requisite I able not zero this – same tell So pivot, quite as that XX time can I about for seen over laptops we are you VPNs, think centers early active most the industry customers, quite to resiliency EVO service

have – remotely, the that anything again integral work in So prepare we all the event learnings BCP I think an to going one of way were the think this we again. or to comes how learned was I be that and part viewed now fall in that’s like this resumes

Tim Willi

you stay Do probably you permanent of this have semblance ultimate there are about positives get think that margin how other with terms the normal? terms of whatever think in structure EVO would you in of to maybe been enhanced back we the that on profitability staffing of side or some

Jim Kelly

it long still early mean, I furloughed we clearly to recover, look those employees. how had to Yes, total and the of at it take but will XXX have is we if see employees, you roughly X,XXX

operate in lower me continuing a – So beginning the I have to asked we you would that much are have than at happened. could have would level of January

think situation, the to people everybody into senior access. feels are are that the regularly across I a what feeling hear of the unfortunate are that organization. meet So learned markets. I just team – but your kind and in limits with I has limits to of and person think pressed really everybody when pulled all we did with the you obviously you get I how all action, Actually this And that week are together. you And web

found have we new operating think model. a I So,

am where to all evaluating as the offices. things this offices I company still come open to the life, know look our that in I come on the early are get as our specifics allowing – to to is leadership to of are but real a going No, cost extent good estate. is somebody’s is fixed don’t in office back basis are are return the to We voluntary relates it again. the forward jurisdictions and team the we we initially. It’s of what’s to our going on But business. of want from days I today, they it one in to the I back this think in heard know the

furloughs of of remotely, people lot have normalizes, we and a different are question have able markets, to definitely a the all size I apply will that reduction reductions. the been ability have them the it, deficiencies the we a side you to was how going honest are – – we at hire mobility look a this because and without facilities, we gained was lot seen will related We of not do those two-thirds because gained here Tom efficiencies me and out of been facilities, salary to but here, forward. of working efficiency take might third payroll look of reach once and into keep the from When the at spread that previously related this issues think people to

efficient So timing very back as ‘XX. into as come carefully to to look going and we as going be the possible and of try are those they

Tim Willi

time. you the appreciate Thank thoughts. very much the for Great. I

Jim Kelly

Thanks.

Operator

next your the of Mehta Research. with comes North question And go ahead. Coast line Please Kartik from

Kartik Mehta

could COVID-XX. like I Hey, going know this post the after good morning. acquisition but environment sound an wondering like am just odd be question, to I what is

some you think price? in maybe or better we you a opportunity reduction will If see assets have a will

Jim Kelly

still around financial we but ‘XX/XX world EVO was from one early were to ‘XX/XX it. good crash clearly highlighted global – crash, So, of When ‘XX the been reasons successful when that a we because equity think reason, question. very the now, April raise EVO that’s wasn’t is that part the in EVO since recovering is speak I of so We in crash. has but International did or the the that only

and know to saw going I for bankruptcy. fell filed that are I an have we So, J.Crew although exactly market that for don’t bankruptcy even

year, very there new had into unfortunate is Darren opportunities. for think the that and M&A maybe team, we and what’s us opportunity Brendan busy this So were going a really on I pipeline strong

to company. It’s the to touch harder there these stay I chance they opportunities on in the extent significantly think we capabilities behaviors are will when that change that his on banks their somewhat enhanced, continuing payments phone business. guess days that banks have to focused is harmed obviously get them those can. of more need, because yes, the people their opportunities to or is of those for the type are to it’s And conversation as with we opportunities, otherwise comments just of are to the on a part consumer of execute be will in balance because is leverage. in operating that where the tends sheet Tom either and of very DNA maybe this something said of look will for good failures as borrowers be been shape good But to raise we those business and capital pretty a I We

Kartik Mehta

just a little And use credit of question talked about then and you in a bit like Darren, Europe you, for debit. or cash

that? you So what in and pandemic might could the are on seeing contactless done growth I for do you you have wondering, share statistics the any have am

Darren Wilson

again, Hi, Kartik. in lockdown, in e-commerce of inevitably terminal question. the kind It’s seeing initial for the – days through of been of the have of and in many transition lockdown lot so early period thanks transactions virtual countries being numbers, the Yes, based. kind

you traffic are opening markets the the seeing in out. as up, are certainly we increase As exactly contactless calling are an

stores the numbers of terms of etcetera. specifically where kind reopening XX% of the card XX% substitution of seeing So seeing I think the from early the there and is contactless XX we cash from are kind Poland devices of terminal to are still in rife is we to

as say I odd post or think lockdown being being see of buying expect as all we behavior – but that taper caution should is the just transactions kind let allowed COVID of kind the out down will kind would I normalize, applying. of we COVID

see So, contactless but the facilitator albeit cash I conversions. a big high probably is to levels think cast-to-card that this we normalize will

Jim Kelly

Whole night and I Yes. food I Pay. was shopping Foods at used Apple my last

here it’s So too. happening

Kartik Mehta

Thank you. appreciate I’d it.

Jim Kelly

Sure.

Operator

go question the with of Please Cowen. And from George your next line Mihalos ahead. comes

George Mihalos

doing my well are you Hey, taking for and guys. all Glad thanks questions.

Jim Kelly

Thanks, George.

George Mihalos

those know maybe look put for or million you those furloughs start that you the and portion in going about wanted – a ‘XX it’s you that what I have savings early, be of have do a and cost to somewhere off, we be just are but looking permanent I sense, I $X reinstituting might place maybe rough guys what into think forward to been some month of are costs curious thereabouts, going said beyond? as to

Jim Kelly

the Yes, thanks for question.

We will volumes. to carefully continue monitor our

We of are actually volumes daily and monitoring around reports our things our We and daily business counts nature. on basis. that get a mid

I thing costs and and expenses pricing blend to our happening a volume about from back forward our perspective we on base is cost markets structured going So, that good based the payroll dial think how the non-payroll within both of will is and we be able what from a perspective.

a earn. that merchant but that it’s proxy, perfect is there in affects because mix we As Jim good elements not mentioned earlier, volume there proxy, a a is spreads

to I very point am think our sale question that we based of what will premature, perspective you I your give that with have perspective. in where what’s the mindful we positioned the into be is environment very of seeing ourselves, revenue XXXX nimble volume point we as ourselves going so think And but at the this based have be believe as merchants. to happening we positioned adapt I on not both on able well and to be to from are be on to with I from at position a point view any would a a

George Mihalos

from mix correct other a U.S.? come should if the you little just again pressure Mexico have could XQ, of about just to talk trends Tom, from bit And ones, perspective tremendous a quarter guys. modeling in it given one Thanks that to then seen a the you XQ think two Okay, revenue as is merchants Brendan, that’s question under helpful. per quick at to – we transaction versus the larger just for that a and look

Tom Panther

Yes.

like briefly big e-com So, that, that’s are are superstores, of our yes, that’s in is spreads fair because I things volume what we one, terms based, box first think thinner. that our little highly seeing where on grocer,

So, while time back some come was volume take bit will a to SMEs are the the where for encouraging, higher levels. pricing it trends little

you of a it perspective. right from think I So modeling on are top

Operator

next question… your And

Jim Kelly

George, good morning. me, just for

So I will talk quickly here seeing what we in are Mexico.

grocery largest would because and the So what U.S. in portfolio here of defensive we the the of many is in more looks a market rather different up service than Banamex, or make Mexico the our in industries like in our pronounced. exposure bank Mexico industry those partner have we much lot to merchants more

volume. clearly are we peak am impact on America. I further Costco, would pandemic you the and from Costco The than the impact its more see then in behind the as see South service peak then volume you They to U.S. the ultimately aware you The Mexico on in weeks U.S. Asia the and market. well what moderate also sure And in into So, Europe down would is to U.S. and moved Europe X and into are probably Central at

So difference magnitude timing, there – difference well. magnitude the impact is then and a timing as a

Operator

Tien-Tsin Please from question next comes line the your go ahead. with JPMorgan. Huang of And

Tien-Tsin Huang

even or going little guys. you for that Hey, would curious Jim, bit not? you that banks open back tricky, just deal Glad up little I but you consider to are being know that the thank with up the for timing say want you is if up wake a for coming. with outsourcing. activities there guys the agree a pandemic curious would is more of a Good to call actually. demand be or pent morning, bit in market office might

Jim Kelly

depends up don’t who took comes if strategy damage and look some to behind know a to quickly to how like it question need a little long, raise I how how relative at do are yes, impossible. they will you ‘XX how Yes, anybody it nearly those much ‘XX and but the for open while, without on it but capital, along build scratch one it deep to impossible, X-ball from feels payment but trying of not

those on to of partnership able reasons they to on go both make positioned cost therefore, way is as the the that’s to we be sure the opportunities coming and and reductions this So why of again out present. to the additional wanted capitalize well one are equity we

Tom Panther

well. for And or capital Tien-Tsin, also raising can you activity financial the as opportunity that see institutions the

So is for financial also and way efficient this capital. be very depending long a perspective this on for can to how from credit them a loss institutions, painful generate

Tien-Tsin Huang

and things be was acquire yet Can list but past. higher might The it the really the in perspective, like from we times, how do now? nature Yes, omni couple just of makes M&A you prioritize sense. would the at now done have and that out go deals of end middleware make sense, an to e-com that and M&A you and that of assume asked that you

Jim Kelly

that’s Yes, with I learning have through aligned this. institutions we mean, traditionally financial definitely internationally.

others And more a are to to and so that’s been oriented of see to business more face and our that stock you can face face. face

they buying opportunity. the hasn’t into that though and finding So markets it capabilities, It’s globally, I plentiful not the been in but focus, in are diversification it the e-commerce think right all has a platforms, not just as it's been.

we too been and be as a am of will market will technology of that around continue point kind new base it bank business to will than be capabilities provide previously, a have into one great a more the expecting portfolios to that plentiful pursue had but optimistic we we years I as build that. are entry think our which I probably

Tien-Tsin Huang

you. Great. Thank

Jim Kelly

Thanks.

Operator

go from And of our SunTrust. Tom next with question ahead. Please line comes the Blakey

Tom Blakey

guys. Hi, good morning

Jim Kelly

Good morning.

Tom Blakey

BXB it reporting maybe terms provide you. if you helpful? so. period BXB or you with strength the other or strength, would Thank I are seeing you in in as that wondering could was just changes mentioned be this and some different peers relates of your any seen last mix disruptive to have think of week industries we yours I in in

Brendan Tansill

Brendan morning, here. it’s good hi, Yes,

positioned how what from the seeing see or and recently absolutely you the but So not at first in insights revenue even businesses. when right, balance then mix look know trends and particularly than in a shift IFC we April, defensively But and quarter first we the U.S. that the more more of not quarter much, is perspective where volume that BXB see first performed noticeably, are growth. more we more you its past changed much would business terms as in resilient. much, has are moderate I look then ever relative fact to some we provided in we into impact on BXB of volume you volume again one quarters business a quarter considerably of think enjoyed best much The proving the e-commerce

Tom Panther

Tom, And this is Tom Panther.

Just of obviously to first on Brendan said, and were around pandemic hit based somewhat that U.S. comment that’s put the less around when impact, from channel the little the Brendan’s a quarter, we BXB revenue immunized growth in XX% the sensitive too. as dimension just timing volumes and around the revenue growth but the saw it the in

what was in despite month on a by the And the was going quarter the so it of healthy being distracted last market. quarter

Tom Blakey

much. very you Thank

Tien-Tsin’s question, XX time. the question, the changed motion days regard the last just Just kind kind to with curious with it’s go-to-market of in opportunities on months How but your an on there? banks, a the the odd it’s odd in of last pipeline heels X.X changes has of

Jim Kelly

is and early. Yes, be days strategy time going just since been I and middle an need like of time house the non-core reality have with looks we now either of most do we the is looking top we through phoning to where would wasn’t pull my A people at. it raise are it’s XX ‘XX impression downturn, it in but start with or are trigger. raise the banks around the equity the capital the people for some it’s started consistent still the that sell it and to payment to dealing says mean still assets

fee are that clarity are masks partner. XX to so run and ago. Presidents to or on were but little just talking they I XX kind – that that where discussions. things hit we the of with with obviously are all in people the don’t longer, to are until going people the of wearing for days talking Hopefully and talking a one brakes discussions happening the there EVO pandemic were or for days around. a maybe at I was the see they reengaging moving Those about normalizing, we need we actively our are with means that pipeline was pipeline have the not in way find greater We the but either stuff,

but I where – the us right might and be resuming but conversations it for early. now, think are So others, with to were I little then conversations may start in still already a place, a relationship, bit new

Tom Blakey

related smaller monitoring just important discount from the on, helpful. rate are think players. quick That’s we investments And is merchant earlier specifically question Poland, market a in pressure I with an

expectations already out know on about but you. have liquidity I Thank That’s early, or crisis the this regard be helpful? to the of We with commented call in merchant me. all any and will Poland potential it’s coming therein rate there changes for discount

Jim Kelly

would growth the look in we published I at have No, for downturn you see strong particular, for again, say Europe, you that weeks stats Poland. that the if the that’s preceding

So, Poland has continues competitive world. leader to in in and Europe Pricing growth. of be been a terms a it’s

not the just are I So, but pandemic the little was we bit sold anything new pricing aggressive. think was run specific Poland. nothing seeing there to aggressive that but player a is of to mill, always one – who more prior than maybe more is was There particular in there,

Operator

ahead. line And comes Citi. of go from your question next Ashwin Please with Shirvaikar the

Ashwin Shirvaikar

to Good folks. all hear are fine. you Hey, doing

Jim Kelly

Good morning, Ashwin.

Ashwin Shirvaikar

thing. morning. that a weekly the question morning. actually volume my is by regular should the good in make charts Good cost, yes, Appreciate Good geo, those are

Jim Kelly

charts gave definitely can valley but we out we was seen already pandemic helpful we you it I and it there would has the are going would weren’t this we be Tom reductions to you but forever, think are a thought helpful we subsided. do guidance. the We we giving valley. cost which of the see in there, the climbing be until that don’t clarified thought I know have

Ashwin Shirvaikar

yes. yes, Yes,

cost sort of that am you through but side So, completely currently? traditional know I definitions? was talk cost fixed your And to people’s it fixed what trying though, or of or just considered pandemic and where before the changed, variable is remind on you what versus thoughts the think to could is understand I distribution

Jim Kelly

Yes.

So obvious rents. fixed is

it those really end – was just hysteria to people give are So put early that able the X other we the volume-based. we contracts for as that would of have least didn’t were you a you us would affect That fixed, happen. view going rents, lease but not you there to didn’t really at months And at and off that are term.

contract, it’s the sense And so is is variable as it the volumes came in down, fixed the volumes. while it to that related

sizing would the coming that fixed really the we the on focused the payroll. area to be as viewed that that structure same cost charts because first to was biggest organization are the saw adjusted and otherwise the is get on looking payroll new And volumes based the was was on based think at the right, we charts These this I down. reality. we size I

level XX% And X%. so a between the highs, we took the directors between to and down I on the team lowest lows average the is think say executive the

support side the was that the earlier employees we payroll government and then two-thirds cost as of were they programs with said reduction. roughly had where stayed to opportunities furlough of employees that majority to I vast where the company that the For of were furloughed

took through the service side, the eliminate we the literally XXX of vendors to specifically it’s… related each either EVPs and impacted, vendors of those renegotiate it’s out XX% the or to On top was our the or them I All-in, to to try roughly XXX worked altogether non-payroll think it. SG&A cost I think assigned

Tom Panther

Yes. Yes, our SG&A % of about impacted. was XX

two-third the around base. variable cost about do on and said between our Ashwin kind we As comments your to think a versus non-staff overall we staff structural how back costs within question and of one-third, fixed question

you about to of the of of just that filed look we on XX% revenue that area base so was total morning, we out services XX% components – XX% be expense, looking the and the item, cost back expense K view – we line took base. later that really will at overall at that variable heavily this when our fluctuates our as expense of Q the and that’s on you about that is focused XX%. the based drive SG&A expense that Our

fixed of that predominantly is that base. of we Some variable, but think as

see of rest amortization up CapEx and is, the XX% we stay that the rotate is Obviously, what it years spending going expense off think is depreciation our fixed. that’s of tighten So over higher roll variable necessary it and on is within down could years spending as off time fairly just over roll have to we you some as time. and total and on, base, lower

Ashwin Shirvaikar

Okay.

your it this right, continuing quite Now you is the are information. of clarification, quick those incremental own And I mean temporary might are is useful still the productivity, sorts the pace initiatives systems those incremental? of be it’s on consolidation done one things, internal but stuff

Jim Kelly

That’s correct.

people and leave the So maybe on of number Europe a We their instances you projects XX stuff company. and we back know in that required touch and them houses. some cut to operating stop adjusted we had didn’t

standup related So those obviously will couldn’t end And work integrations afford, the month. but be to the by has anything ready there of this of to conversions, Chile. a think testing I lot been

was Chile and moved Chile offices as as too, So, those forward etcetera. has dealing you especially could. when of fast borders, have it regulators are we been with Part closed, close

more down, efficient naturally that they ever, you employees they not they that know now from just home heard because it slowed their there I anecdotally been are. and be are sitting have – can of Some easily contacted, because at than but no no, knows got has everybody this they vacation. a is are where

though even right usual it’s So, a bit it’s it’s usual little now. – new business as

Ashwin Shirvaikar

thanks. well, guys. stay Yes, Yes,

Jim Kelly

Thank you, Ashwin.

Operator

comes question Please the And Keane ahead. with from Deutsche go Bank. Bryan line next your of

Bryan Keane

Good active there. morning. you talking know about I Hi, merchants guys. increases were and some

So in guess come about like is and I what going just as thinking we I churn out. look general this am to

merchants bankruptcy So, are what rate of guys understand us versus you what churn happen kind U.S. rate out? maybe as And you here even kind or of percentage think pre-COVID the Europe we what come still then inactive the help will of could in and levels?

Jim Kelly

and kind think and very He for into that’s M&A all a good there active this positive his very David active almost so down back has the is has data the slowed two one we who have I And he while. been as digging a of we Goldman I focused was runs for business as So in lockstep question. us, merchant. on think what’s were volume merchants. very there volume seen shifted come who

see big markets open box was have – merchants smaller merchants. to about small in the as that it’s that pushed Brendan or was U.S. seeing and large So we speak customers, in the – you not are our where the government our up of like talking many out money the we these the simply to

open activation in the open see rates for the starts the each our restaurant to as the the starting on restrictions to U.S. are merchants markets. We side in side and of retail the

if So the they charts same lockstep. the almost same moving are gave if the charts for and almost at a you I look are active with you merchants they

sign. to I the each or merchants. local countries support asked How has are but is and good by bankruptcies to are support the the a just that’s of governments So, support the this to programs there European question at be United not the many States actually citizens, been going yesterday in a like has the the team what

Obviously, is So once everybody it’s that will didn’t. see who is what pandemic to to and normalized question be going who some fully wait the fallout. a survived that’s there answer the

us. We no diverse portfolio one incredibly material to have merchant and is an

to that that. we seeing to burdensome some, know have don’t but we overly I now hearing us be it’s not So, going if or about anything right that are

Tom Panther

Recession Great level government from U.S. there And stimulus in financial think the Bryan the that that institutions, I financial that stimulus. didn’t here right exist of during wasn’t

ability bankruptcies to hopefully curb that there an isn’t the they lifeline so given that intentions the I think out high play bankruptcy the will has those the that are So I the government’s that way, and that’s yet may dimension you of have they need, level play programs certainly is level. that out that think so to

Bryan Keane

it mean No, idea the how in been you are to they speaking smoothed that’s or guys out? effective seemed there helpful. has And or be PPP program the have I then do clients an prostrations still U.S. to

Jim Kelly

as in but through got us, start they much to through and old thousands the come didn’t to a will is first knew not it our we opportunities might but merchants. as for it, I even it be I is it so early then closer of of gathered our where pushed if days Brendan network hundreds dealer We though he the out was weren’t better details, – think positioned basis. the I on but Yes, they go we since merchants, if have since otherwise, first size that up latest down serve the was they think and information smaller

know left So, was but really don’t as we in we to it me New Brendan as Atlanta together, to is I merchants in who It much its the and York. not with facilitate put is know banker I he try here to could.

bit Do So to you we pick remote that? are here. up little want a from

Brendan Tansill

went active did numbers sure. declined peak activity Yes, out. at declined, And when listen reached merchants we we Yes, merchant XX%. dormant, those merchant the so by circa see

amounts periods our weren’t hearing expectation our is particularly So, our levels requests. through channels what we each say going dormant that of obscene other and in remain on the history. We four were we huge merchants what’s temporarily merchants and open. in elevated and was we vis-à-vis are getting experiencing those many instances that And engaged of to to talk in to closure weren’t were attrition

plan I worked. So PPP the generally has think

I we ones previously forward that’s great. If seeing XX% those are fast third ago, roughly of a I closed. moments active today mentioned now you that that to the merchants And that versus again,

of are the seeing concentrated concentrated sates merchant you we see obviously where reopen is lines our merchants are along across U.S. as generally and So the base would

than We are are generally no merchants where different dispersed.

California are like to New active close and our relatively remained York merchant going impact rate. that states So

TBD, when some basically that smaller of had bit them from many of reopen from trends for So the from will we the it. a the having where and are but allow experience extrapolating outreach our have these are is hypothesis is sample temporarily shuttered dialogue we this of it’s size, are states we that merchants that

Bryan Keane

safe and for thanks the Okay, color stay and healthy.

Jim Kelly

Thank you.

Operator

final question Compass Mike Point. go comes from the Del ahead. line Grosso Please your with of And

Mike Del Grosso

on the morning. and you Thank quarter. charts appreciate the Good questions for taking this incremental my disclosure

Jim Kelly

Thank Sure. you.

Mike Del Grosso

an percentage could impacts and the if on the in the geographies impact other that update provide in certain you of I questions as called have market are historically in some well? Mexico, seeing then maybe you but you geographies, out a My of larger on travel know

Tom Panther

Hey, Mike ahead, Tom. Yes, it’s you Brendan take can go you it.

Brendan Tansill

support As we the hotel normalized I chains, travel Air have some service, less we we only declined of total do X% it travel mean, a but would Mexico, Mexico, customer that’s did basically represents travel were exposed seen last than a in volume you real so here relates We question, no and year, environment ours got X% any particularly in total it. and to have in almost as of material the to way no U.S. but travel that in

So of that the XX% ago a also XX%. example travel roughly a – roughly year grocery small being you ago gone. was would today is But it’s say travel largely year and the for being quiver

but to one necessarily larger alluding Jim of of those was are we questions, mix merchants, on migrating volumes to in relatively shift types the that he Mexico earlier that volumes So one because that your seeing When profits to shifts modest. said is the call. impact the are mix and and don’t travel to correlate specific

Tom Panther

you on Yes. me that charts X%. the Tom, see see it’s that And we travel let callout total on was of it’s EVO total will top MCCs, our box chart think a of pickup that you also you some off of Mike, the I posted, company of one shows and know

of the result zero Darren only Spain small you has Spain can just in of the is Of market see his a and traveled but shutdown, in above virtually economy as because it’s said been obviously that gets X% as a course the it’s Spain. gone portion, in to hardest really where comments impacted

involved the strength broader will and the the of we diversification leave verticals point of with that specific our one concentration. is you just in just I of different all of EVO the lack think I is flywheel are

management I been something to picked this. have fallen will think portfolio it’s a stores you of but strength learnings real focused the that where weather diversified a overall from of what environment. been expect up, of of we have a be of do you restaurants continue business able regardless because remain certainly and can basis, have back, focus process ours us forward through it’s but this to ours And that, that’s Grocery a enables we to an perspective advantage to think one a economic on those on go ours.

Mike Del Grosso

that and That’s is about suppose then talking cross-border seeing thank what percentage should Okay, of travel are it have helpful. specifically to when you. decline more cross-border? I volume clarified due you I I was

Tom Panther

Obviously, and what I in a a impact necessarily in lot Europe sensitive DCC many revenue the Brendan of but revenue closed, activity to a just of affects our from rather cross-border just are of volume, fair just the nothing the Poland of were see overly activity terms cross-border isn’t the the from more amount, volume But from overall into that lack of because cross-border because just Spain. else, of but and there as we that. is in some just overall degree, more DCC in not in will modestly about said some borders particularly activity kind we just than perspective lack some talking

Jim Kelly

period. of normalized Mexico, that international cards to Yes. a in circa dimensionalize in makeup XX% And just volume

Mike Del Grosso

Okay, that’s helpful.

Jim Kelly

for The head because Yes. Russia China. and is us would be that only I for to tends market there a Spain, and it’s cross-border would say Europe vacation heavily

because travel market to recover. last be it’s just because the also probably and restrictions down that of So is the that that will is business been closed, but deepest

Operator

Kelly Mr. remarks. And closing Thank any I for turn to Jim it now, would to you. back like over

Jim Kelly

Thank call for stay you, operator again. you and interest EVO. all thanks on safe thank continued and this joining the morning and Please your

Operator

today’s concludes conference this gentlemen, and Ladies call.

now may You disconnect.

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