EX-99.1 2 d47865dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

EVERTEC REPORTS SECOND QUARTER 2015 RESULTS

REAFFIRMS ANNUAL 2015 OUTLOOK

INCREASES AND EXTENDS AUTHORIZED SHARE REPURCHASE PLAN

SAN JUAN, PUERTO RICO – August 5, 2015 — EVERTEC, Inc. (NYSE: EVTC) (“EVERTEC” or the “Company”) today announced results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

 

    Total revenue grew 2% to $93.2 million, as compared to the second quarter of 2014

 

    Adjusted EBITDA increased to $47.2 million, a 4% increase versus the prior year, and Adjusted EBITDA margin grew 80 basis points to 50.6%

 

    Adjusted diluted earnings per share grew 7% to $0.44 as compared to $0.41 in the second quarter of 2014

 

    The Board of Directors increased and extended the authorized share repurchase plan for a total of $65 million available for future use

Mac Schuessler, President and Chief Executive Officer, stated “We are pleased with our second quarter results and continue on-track with our annual expectation for 2015. With EVERTEC’s strong margins, free cash flow and balance sheet we have the flexibility for opportunistic stock repurchases, as well as investments in business development. Our focus continues to be ensuring we have the right assets and business processes in place to capitalize on EVERTEC’s significant market opportunity.”

Second Quarter 2015 Results

Revenue. Total revenue for the quarter ended June 30, 2015 was $93.2 million, an increase of 2% compared with $91.3 million in the prior year.

Merchant Acquiring net revenue was $21.2 million, an increase of 7% compared with $19.8 million in the prior year. Revenue growth in the quarter was driven by transaction growth including the benefit from an income tax amnesty established by the Puerto Rico Government to pay past due taxes during the second quarter of 2015. Merchant Acquiring revenue growth was partially offset by lower sales volumes for gas station and utilities mainly due to lower oil prices.

Payment Processing revenue was $26.8 million, an increase of 1% compared with $26.6 million in the prior year. Revenue growth in the quarter was primarily driven by an increase in transactions processed over our ATH debit network and accounts on file within our card products business. Payment Processing revenue growth was partially offset by the impact of a one-time benefit in the second quarter of 2014 of approximately $0.7 million of revenue from a Department of Education program in Puerto Rico.

Business Solutions revenue was $45.3 million, an increase of 1% compared with $44.9 million in the prior year. Business Solutions revenue growth was driven mainly by higher core banking services, offset by lower hardware and software sales.


Adjusted EBITDA. For the quarter ended June 30, 2015, Adjusted EBITDA was $47.2 million, an increase of 4% compared with $45.5 million in the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) increased 80 basis points to 50.6% compared with 49.8% in the prior year. The increase in Adjusted EBITDA margin was driven by a mix of higher revenue as well as flat expense compared to the second quarter of 2014.

Net Income. For the quarter ended June 30, 2015, GAAP Net Income was $20.2 million, or $0.26 per diluted share, compared with $18.6 million or $0.22 per diluted share in the prior year.

For the quarter ended June 30, 2015, Adjusted Net Income was $34.2 million, an increase of 6% compared with $32.2 million in the prior year. Adjusted Net Income per diluted share increased 7% to $0.44 in the second quarter of 2015 as compared with $0.41 in the prior year.

Share Repurchase

EVERTEC’s Board of Directors approved an increase and extension of the Company’s current stock repurchase program. The program was originally adopted in September 2014 for $75 million and was due to expire on September 30, 2015. The Board has increased the repurchase authorization to $100 million and extended the expiration to September 30, 2016. As of June 30, 2015, $35 million of the Company’s stock has been repurchased with a total of $65 million now available for future use. The Company may repurchase shares in the open market, through an accelerated share repurchase program or in privately negotiated transactions, subject to market conditions, business opportunities and other factors.

2015 Outlook

The Company reaffirms its financial outlook for 2015 as previously provided on the Company’s first-quarter 2015 earnings conference call:

 

    Total consolidated revenue between $368 and $372 million representing growth of 2 to 3%

 

    Adjusted EBITDA growth between 3 and 4% in 2015

 

    Adjusted diluted earnings per share guidance of $1.68 to $1.72

Earnings Conference Call and Audio Webcast

The Company will host a conference call to discuss its second quarter 2015 financial results today at 5:00 p.m. ET. Hosting the call will be Mac Schuessler, President and Chief Executive Officer, and Juan José Román, Executive Vice President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing (877) 407-3982 or for international callers by dialing (201) 493-6780. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 13613929. The replay will be available until Wednesday, August 12, 2015. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com.


About EVERTEC

EVERTEC, Inc. (NYSE: EVTC) is the leading full-service transaction processing business in Latin America, providing a broad range of merchant acquiring, payment processing and business solutions services. The largest merchant acquirer in the Caribbean and Central America—and one of the largest in Latin America—EVERTEC serves 19 countries in the region from its base in Puerto Rico. The Company manages a system of electronic payment networks that process more than 2.1 billion transactions annually, and offers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, EVERTEC owns and operates the ATH network, one of the leading personal identification number (“PIN”) debit networks in Latin America. The Company serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com.

About Non-GAAP Financial Measures

This earnings release presents EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share information. These supplemental measures of the Company’s performance are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities, as indicators of cash flows or as measures of the Company’s liquidity. We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of the Company’s performance and believe they are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry. In addition, the Company’s presentation of Adjusted EBITDA is consistent with the equivalent measurements contained in the Credit Agreement in testing EVERTEC Group’s compliance with covenants therein such as the senior secured leverage ratio. We use Adjusted Net Income to measure the Company’s overall profitability because it better reflects the Company’s cash flow generation by capturing the actual cash taxes paid rather than the Company’s tax expense as calculated under GAAP, and excludes the impact of the non-cash amortization and depreciation resulting from our 2010 merger involving an affiliate of Apollo Global management, LLC (the “Merger”). For more information regarding EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share, including a quantitative reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net Income to the most directly comparable GAAP financial performance measure, which is net income, see Schedule 4: Reconciliation of GAAP to Non-GAAP Operating Results in this earnings release.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.


Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular for a significant portion of revenue; our ability to renew our client contracts on terms favorable to us; the effectiveness of our risk management procedures; our dependence on our processing systems, technology infrastructure, security systems and fraudulent-payment-detection systems, and the risk that our systems may experience breakdowns or fail to prevent security breaches or fraudulent transfers; our ability to develop, install and adopt new technology; a decreased client base due to consolidations in the banking and financial-services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH® network; reduction in consumer confidence leading to decreased consumer spending; the Company’s dependence on credit card associations; regulatory limitations on our activities due to our relationship with Popular and our role as a service provider to financial institutions; changes in the regulatory environment and changes in international, legal, political, administrative or economic conditions; the geographical concentration of the Company’s business in Puerto Rico; operating an international business in multiple regions with potential political and economic instability; increased compliance risks associated with operating an international business; operating in countries and counterparties that put us at risk of violating U.S. sanctions laws; our ability to execute our expansion and acquisition strategies; our ability to protect our intellectual property rights; our ability to recruit and retain qualified personnel; our ability to comply with federal, state, and local regulatory requirements; evolving industry standards; the Company’s high level of indebtedness and restrictions contained in the Company’s debt agreements; and the Company’s ability to generate sufficient cash to service the Company’s indebtedness and to generate future profits.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

Contact

Investor Contact

Alan Cohen

Executive Vice President

Head of Investor Relations

(787) 773-5442

IR@evertecinc.com


EVERTEC, Inc.

Schedule 1: Unaudited Consolidated Statements of Income and Comprehensive Income

 

     Quarters ended June 30,     Six months ended June 30,  
(Dollar amounts in thousands, except per share data)    2015     2014     2015     2014  

Revenues

        

Merchant acquiring, net

   $ 21,165      $ 19,827      $ 41,256      $ 39,118   

Payment processing

     26,759        26,618        53,136        51,843   

Business solutions

     45,317        44,888        90,181        87,805   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     93,241        91,333        184,573        178,766   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses

        

Cost of revenues, exclusive of depreciation and amortization shown below

     40,665        39,051        80,460        76,919   

Selling, general and administrative expenses

     8,948        10,463        16,651        18,525   

Depreciation and amortization

     16,006        16,390        32,834        33,004   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     65,619        65,904        129,945        128,448   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     27,622        25,429        54,628        50,318   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-operating income (expenses)

        

Interest income

     127        79        231        154   

Interest expense

     (6,210     (6,501     (12,411     (13,410

Earnings of equity method investment

     84        343        199        664   

Other income

     764        385        1,049        2,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-operating expenses

     (5,235     (5,694     (10,932     (10,216
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     22,387        19,735        43,696        40,102   

Income tax expense

     2,120        1,962        4,366        4,123   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     20,267        17,773        39,330        35,979   

Other comprehensive (loss) income, net of tax

        

Foreign currency translation adjustments

     (87     794        802        (6,951
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

   $ 20,180      $ 18,567      $ 40,132      $ 29,028   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

        

Basic

   $ 0.26      $ 0.23      $ 0.51      $ 0.46   

Diluted

   $ 0.26      $ 0.22      $ 0.51      $ 0.45   

Shares used in computing net income per common share:

        

Basic

     77,457,322        78,410,554        77,631,339        78,393,042   

Diluted

     77,697,861        79,199,964        77,780,202        79,204,642   


EVERTEC, Inc.

Schedule 2: Unaudited Consolidated Balance Sheets

 

(Dollar amounts in thousands, except per share data)    June 30,
2015
    December 31,
2014
 

Assets

    

Current Assets:

    

Cash

   $ 38,837      $ 32,114   

Restricted cash

     6,262        5,718   

Accounts receivable, net

     71,091        75,810   

Deferred tax asset

     2,323        399   

Prepaid expenses and other assets

     21,678        20,565   
  

 

 

   

 

 

 

Total current assets

     140,191        134,606   

Investment in equity investee

     12,251        11,756   

Property and equipment, net

     31,627        29,535   

Goodwill

     368,911        368,837   

Other intangible assets, net

     317,431        334,584   

Other long-term assets

     9,880        10,917   
  

 

 

   

 

 

 

Total assets

     880,291        890,235   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current Liabilities:

    

Accrued liabilities

     29,275        26,052   

Accounts payable

     19,133        22,879   

Unearned income

     11,734        9,825   

Income tax payable

     81        1,956   

Current portion of long-term debt

     19,000        19,000   

Short-term borrowings

     4,000        23,000   

Deferred tax liability, net

     111        1,799   
  

 

 

   

 

 

 

Total current liabilities

     83,334        104,511   

Long-term debt

     638,530        647,579   

Long-term deferred tax liability, net

     19,255        15,674   

Other long-term liabilities

     2,856        2,898   
  

 

 

   

 

 

 

Total liabilities

     743,975        770,662   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity

    

Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued

     —          —     

Common stock, par value $0.01; 206,000,000 shares authorized; 77,487,933 shares issued and outstanding at June 30, 2015 (December 31, 2014—77,893,144)

     775        779   

Additional paid-in capital

     51,914        59,740   

Accumulated earnings

     89,347        65,576   

Accumulated other comprehensive loss, net of tax

     (5,720     (6,522
  

 

 

   

 

 

 

Total stockholders’ equity

     136,316        119,573   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

     880,291        890,235   
  

 

 

   

 

 

 


EVERTEC, Inc.

Schedule 3: Unaudited Consolidated Statements of Cash Flows

 

     Six months ended June 30,  
     2015     2014  

Cash flows from operating activities

    

Net income

   $ 39,330      $ 35,979   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     32,834        33,004   

Amortization of debt issue costs and premium and accretion of discount

     1,621        1,538   

Provision for doubtful accounts and sundry losses

     684        1,058   

Deferred tax expense (benefit)

     11        (430

Share-based compensation

     2,191        665   

Unrealized (gain) loss of indemnification assets

     (12     173   

Loss on disposition of property and equipment and other intangibles

     1        64   

Earnings of equity method investment

     (199     (664

Dividend received from equity method investment

     —          326   

Decrease (increase) in assets:

    

Accounts receivable, net

     4,342        (2,045

Prepaid expenses and other assets

     (2,460     (4,267

Other long-term assets

     (50     1,811   

(Decrease) increase in liabilities:

    

Accounts payable and accrued liabilities

     (1,602     (4,120

Income tax payable

     (1,875     1,542   

Unearned income

     1,909        2,903   
  

 

 

   

 

 

 

Total adjustments

     37,395        31,558   
  

 

 

   

 

 

 

Net cash provided by operating activities

     76,725        67,537   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Net (increase) decrease in restricted cash

     (543     238   

Intangible assets acquired

     (6,757     (5,841

Property and equipment acquired

     (8,649     (3,895

Proceeds from sales of property and equipment

     11        3   
  

 

 

   

 

 

 

Net cash used in investing activities

     (15,938     (9,495
  

 

 

   

 

 

 

Cash flows from financing activities

    

Statutory minimum withholding taxes paid on cashless exercises of stock options and restricted stock

     (31     (770

Net decrease in short-term borrowing

     (19,000     (27,000

Repayment of short-term borrowing for purchase of equipment and software

     —          (1,200

Dividends paid

     (15,542     (15,680

Tax windfall benefits on exercises of stock options

     —          1,482   

Issuance of common stock, net

     —          54   

Repurchase of common stock

     (9,991     —     

Repayment of other financing agreement

     —          (82

Repayment of long-term debt

     (9,500     (9,500
  

 

 

   

 

 

 

Net cash used in financing activities

     (54,064     (52,696
  

 

 

   

 

 

 

Net increase in cash

     6,723        5,346   

Cash at beginning of the period

     32,114        22,485   
  

 

 

   

 

 

 

Cash at end of the period

   $ 38,837      $ 27,831   
  

 

 

   

 

 

 


EVERTEC, Inc.

Schedule 4: Reconciliation of GAAP to Non-GAAP Operating Results

 

     Quarters ended June 30,     Six months ended June 30,  
(Dollar amounts in thousands, except per share data)    2015     2014     2015     2014  

Net income

   $ 20,267      $ 17,773      $ 39,330      $ 35,979   

Income tax expense

     2,120        1,962        4,366        4,123   

Interest expense, net

     6,083        6,422        12,180        13,256   

Depreciation and amortization

     16,006        16,390        32,834        33,004   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     44,476        42,547        88,710        86,362   

Software maintenance reimbursement and other costs(1)

     455        563        929        1,109   

Equity income (2)

     (9     (15     (199     (338

Compensation and benefits (3)

     1,831        437        2,664        925   

Transaction and other non-recurring fees (4)

     411        1,999        732        2,516   

Purchase accounting (5)

     (9     (8     (12     173   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     47,155        45,523        92,824        90,747   

Operating depreciation and amortization (6)

     (6,638     (7,281     (14,099     (14,764

Cash interest expense, net (7)

     (5,309     (5,655     (10,642     (11,410

Cash income taxes (8)

     (981     (402     (3,601     (402
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

   $ 34,227      $ 32,185      $ 64,482      $ 64,171   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per common share:

        

Basic

   $ 0.44      $ 0.41      $ 0.83      $ 0.82   

Diluted

   $ 0.44      $ 0.41      $ 0.83      $ 0.81   

Shares used in computing Adjusted Net Income per common share:

        

Basic

     77,457,322        78,410,554        77,631,339        78,393,042   

Diluted

     77,697,861        79,199,964        77,780,202        79,204,642   

 

1) Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.
2) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.
3) Predominantly represents non-cash equity based compensation expense.
4) Represents fees and expenses associated with non-recurring corporate transactions.
5) Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.
6) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.
7) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.
8) Represents cash taxes paid for each period presented.


EVERTEC, Inc.

Schedule 5: Unaudited Income from Operations by Segment

 

     Quarters ended June 30,     Six months ended June 30,  
(Dollar amounts in thousands)    2015     2014     2015     2014  

Segment income from operations

        

Merchant acquiring, net

   $ 9,626      $ 8,777      $ 19,017      $ 17,181   

Payment processing

     14,511        15,314        28,220        30,031   

Business solutions

     13,467        12,113        27,241        23,537   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment income from operations

     37,604        36,204        74,478        70,749   

Merger related depreciation and amortization and other unallocated
expenses (1)

     (9,982     (10,775     (19,850     (20,431
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 27,622      $ 25,429      $ 54,628      $ 50,318   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1) Predominantly represents non-operating depreciation and amortization expenses generated as a result of the Merger and certain non-recurring fees and expenses.