10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549 

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023 or 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

COMMISSION FILE NUMBER 001-35872

 EVERTEC, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 

Puerto Rico		66-0783622
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)
Cupey Center Building,	Road 176, Kilometer 1.3,
San Juan,	Puerto Rico	00926
(Address of principal executive offices)		(Zip Code)

(787) 759-9999

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EVTC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐  No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At April 21, 2023, there were 65,078,462 outstanding shares of common stock of EVERTEC, Inc.

TABLE OF CONTENTS

		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31
Part II. OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity in Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
SIGNATURES		35

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Words such as “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. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our business and could impact our business in the future are:

•our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our second amended and restated Master Services Agreement (“MSA”) with them, and as it may impact our ability to grow our merchant acquiring business;

•our ability to renew our client contracts on terms favorable to us, including but not limited to the current term and any extension of the MSA with Popular;

•our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised;

•our ability to develop, install and adopt new software, technology and computing systems;

•a decreased client base due to consolidations and/or failures in the 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;

•a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer spending;

•our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees;

•changes in the regulatory environment and changes in macroeconomic, market, international, legal, tax, political, or administrative conditions, including inflation or the risk of recession;

•the geographical concentration of our business in Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities, which are facing severe political and fiscal challenges;

•additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the government’s debt crisis or otherwise, including the continued migration of Puerto Ricans to the U.S. mainland, which could negatively affect our customer base, general consumer spending, our cost of operations and our ability to hire and retain qualified employees;

•operating an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability;

•the impact of foreign exchange rates on operations;

•our ability to protect our intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third parties;

•our ability to comply with U.S. federal, state, local and foreign regulatory requirements;

•evolving industry standards and adverse changes in global economic, political and other conditions;

•our level of indebtedness and the impact of rising interest rates, restrictions contained in our debt agreements, including the secured credit facilities, as well as debt that could be incurred in the future;

•our ability to prevent a cybersecurity attack or breach to our information security;

•the possibility that we could lose our preferential tax rate in Puerto Rico;

•the possibility of future catastrophic hurricanes, earthquakes and other potential natural disasters affecting our main markets in Latin America and the Caribbean; and

•the impact on our relationship with Popular after their exit of our common stock.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Part 1, Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2023, as updated in our subsequent filings with the SEC, and in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report. The Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless it is required to do so by law.

WHERE YOU CAN FIND MORE INFORMATION

All reports we file with the Securities and Exchange Commission ("SEC") are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available for download through our website at www.evertecinc.com as soon as reasonably practicable after filing such material with the SEC.

EVERTEC, Inc. Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share information)

	March 31, 2023		December 31, 2022
Assets
Current Assets:
Cash and cash equivalents	$	173,662	$	197,229
Restricted cash	19,015		18,428
Accounts receivable, net	127,876		131,080
Prepaid expenses and other assets	47,944		42,392
Total current assets	368,497		389,129
Debt securities available-for-sale, at fair value	2,179		2,203
Investment in equity investee	15,703		14,661
Property and equipment, net	56,858		56,387
Operating lease right-of-use asset	15,627		15,918
Goodwill	434,340		423,392
Other intangible assets, net	213,706		200,320
Deferred tax asset	7,926		5,701
Derivative asset	5,768		7,440
Net investment in leases	—		14
Other long-term assets	16,589		16,578
Total assets	$	1,137,193	$	1,131,743
Liabilities and stockholders’ equity
Current Liabilities:
Accrued liabilities	$	80,064	$	90,341
Accounts payable	47,647		46,751
Contract liability	19,737		15,226
Income tax payable	9,239		9,406
Current portion of long-term debt	20,750		20,750
Short-term borrowings	—		20,000
Current portion of operating lease liability	5,796		5,936
Total current liabilities	183,233		208,410
Long-term debt	384,550		389,498
Deferred tax liability	10,162		10,111
Contract liability - long term	33,284		34,068
Operating lease liability - long-term	10,592		10,788
Other long-term liabilities	4,231		4,120
Total liabilities	626,052		656,995
Commitments and contingencies (Note 14)
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; 65,078,462 shares issued and outstanding as of March 31, 2023 (December 31, 2022 - 64,847,233)	651		648
Additional paid-in capital	—		—
Accumulated earnings	507,563		487,349
Accumulated other comprehensive loss, net of tax	(446)		(16,486)
Total EVERTEC, Inc. stockholders’ equity	507,768		471,511
Non-controlling interest	3,373		3,237
Total equity	511,141		474,748
Total liabilities and equity	$	1,137,193	$	1,131,743

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share information)

	Three months ended March 31,
	2023		2022
Revenues (affiliates Note 15)	$	159,814	$	150,248
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	76,417		64,659
Selling, general and administrative expenses	23,875		20,384
Depreciation and amortization	19,432		19,160
Total operating costs and expenses	119,724		104,203
Income from operations	40,090		46,045
Non-operating income (expenses)
Interest income	1,133		667
Interest expense	(5,643)		(5,547)
(Loss) gain on foreign currency remeasurement	(4,864)		2,669
Earnings of equity method investment	1,155		570
Other income, net	1,010		637
Total non-operating expenses	(7,209)		(1,004)
Income before income taxes	32,881		45,041
Income tax expense	2,818		6,175
Net income	30,063		38,866
Less: Net income (loss) attributable to non-controlling interest	11		(32)
Net income attributable to EVERTEC, Inc.’s common stockholders	30,052		38,898
Other comprehensive (loss) income, net of tax of $(116) and $423
Foreign currency translation adjustments	17,605		2,214
(Loss) gain on cash flow hedges	(1,545)		9,725
Unrealized loss on change in fair value of debt securities available-for-sale	(20)		(27)
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders	$	46,092	$	50,810
Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders	$	0.46	$	0.54
Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders	$	0.46	$	0.53

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share information)

	Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated  Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2022	64,847,233	$	648	$	—	$	487,349	$	(16,486)	$	3,237	$	474,748
Share-based compensation recognized	—	—		5,557		—		—		—		5,557
Repurchase of common stock	(187,976)	(1)		—		(6,268)		—		—		(6,269)
Restricted stock units delivered	419,205	4		(5,557)		(321)		—		—		(5,874)
Net income	—	—		—		30,052		—		11		30,063
Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,249)		—		—		(3,249)
Other comprehensive income	—	—		—		—		16,040		125		16,165
Balance at March 31, 2023	65,078,462	$	651	$	—	$	507,563	$	(446)	$	3,373	$	511,141

	Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated  Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2021	71,969,856	$	719	$	7,565	$	506,051	$	(48,123)	$	4,056	$	470,268
Share-based compensation recognized	—	—		4,279		—		—		—		4,279
Repurchase of common stock	(521,643)	(5)		(6,193)		(14,981)		—		—		(21,179)
Restricted stock units delivered	251,085	3		(5,651)		—		—		—		(5,648)
Net income (loss)	—	—		—		38,898		—		(32)		38,866
Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,598)		—		—		(3,598)
Other comprehensive income	—	—		—		—		11,912		248		12,160
Balance at March 31, 2022	71,699,298	$	717	$	—	$	526,370	$	(36,211)	$	4,272	$	495,148

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands) 

	Three months ended March 31,
	2023		2022
Cash flows from operating activities
Net income	$	30,063	$	38,866
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,432		19,160
Amortization of debt issue costs and accretion of discount	396		404
Operating lease amortization	1,626		1,450
Provision for expected credit losses and sundry losses	2,371		59
Deferred tax benefit	(2,208)		(702)
Share-based compensation	5,557		4,279
Loss on disposition of property and equipment	159		91
Earnings of equity method investment	(1,155)		(570)
Loss (gain) on foreign currency remeasurement	4,864		(2,669)
Decrease (increase) in assets:
Accounts receivable, net	10,044		7,060
Prepaid expenses and other assets	(5,388)		(5,573)
Other long-term assets	(261)		(3,319)
(Decrease) increase in liabilities:
Accrued liabilities and accounts payable	(13,417)		1,773
Income tax payable	(639)		2,248
Contract liability	3,089		4,387
Operating lease liabilities	310		23
Other long-term liabilities	(332)		714
Total adjustments	24,448		28,815
Net cash provided by operating activities	54,511		67,681
Cash flows from investing activities
Additions to software	(9,257)		(8,669)
Property and equipment acquired	(4,063)		(5,621)
Acquisitions, net of cash acquired	(23,317)		—
Net cash used in investing activities	(36,637)		(14,290)
Cash flows from financing activities
Withholding taxes paid on share-based compensation	(5,874)		(5,648)
Net decrease in short-term borrowings	(20,000)		—
Repayment of short-term borrowings for purchase of equipment and software	—		(806)
Dividends paid	(3,249)		(3,598)
Repurchase of common stock	(6,269)		(21,179)
Repayment of long-term debt	(5,187)		(4,938)
Net cash used in financing activities	(40,579)		(36,169)
Effect of foreign exchange rate on cash, cash equivalents and restricted cash	(275)		766
Net (decrease) increase in cash, cash equivalents and restricted cash	(22,980)		17,988
Cash, cash equivalents and restricted cash at beginning of the period	215,657		285,917
Cash, cash equivalents and restricted cash at end of the period	$	192,677	$	303,905
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	173,662	$	283,610
Restricted cash	19,015		20,295
Cash, cash equivalents and restricted cash	$	192,677	$	303,905
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,874	$	5,666
Cash paid for income taxes	6,119		4,287
Supplemental disclosure of non-cash activities:
Payable due to vendor related to equipment and software acquired	$	5,282	$	1,260
Accounts payable related to business acquisition	$	881	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - The Company and Basis of Presentation	6
Note 2 - Business Acquisition	6
Note 3 - Debt Securities	6
Note 4 - Property and Equipment, net	7
Note 5 - Goodwill and Other Intangible Assets	7
Note 6 - Debt and Short-Term Borrowings	8
Note 7 - Financial Instruments and Fair Value Measurements	10
Note 8 - Equity	11
Note 9 - Share-based Compensation	11
Note 10 - Revenues	12
Note 11 - Current Expected Credit Losses	13
Note 12 - Income Tax	14
Note 13 - Net Income per Common Share	15
Note 14 - Commitments and Contingencies	15
Note 15 - Related Party Transactions	15
Note 16 - Segment Information	16
Note 17 - Subsequent Events	19

5

Note 1 – The Company and Basis of Presentation

The Company

EVERTEC, Inc. and its subsidiaries (collectively the “Company” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management services. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, which we believe is one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico and technology outsourcing and payment transactions fraud monitoring in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations, and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely.

Basis of Presentation

The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Note 2 – Business Acquisition

Acquisition of a Business

On February 16, 2023, the Company closed on the acquisition of 100% of Paysmart Pagamentos Eletronicos Ltda (“paySmart”). Headquartered in Porto Alegre, Brazil, paySmart provides issuer processing services and BIN Sponsorship services for prepaid programs under domestic and international schemes in Brazil. The aggregate purchase price was $130 million Brazilian reals, approximately USD$25 million. The acquisition expands the Company's footprint in Brazil and compliments the current product offering in the country.

The Company accounted for this transaction as a business combination, the purchase price allocation summary is preliminary and subject to change. As part of the transaction, the Company received net assets with a book value of approximately $6.5 million, including settlement assets and settlement liabilities which result from timing differences in paySmart's settlement process with merchants. The Company's analysis of the acquired settlement assets and settlement liabilities is not complete, and the Company will record the settlement assets and settlement liabilities, which are expected to be substantially equivalent amounts within current assets and current liabilities, once such analysis is completed during the purchase accounting period. The Company has also identified intangible assets other than goodwill for which a portion of the purchase price must be allocated and preliminarily allocated the purchase price to the following identified intangible assets: $9.4 million to customer relationships, $1.9 million to software, $1.5 million to tradenames and trademarks and $0.6 million to non-compete agreements. Goodwill in connection with this transaction is currently estimated at approximately $5.1 million. These values are preliminary and subject to change. The Company expects to complete the purchase price allocation during the second quarter of 2023.

Refer to Note 5- Goodwill and Other Intangible Assets for detail of goodwill allocated by reportable segments. The goodwill is primarily attributed to anticipated synergies. None of the goodwill is deductible for income tax purposes.

Note 3 – Debt Securities

6

The amortized cost, gross unrealized gains and losses recorded in OCI and estimated fair value of debt securities available-for-sale by contractual maturity as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(In thousands)			Gross unrealized
	Amortized cost		Gains	Losses	Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,199	—	(20)	$	2,179

	December 31, 2022
(In thousands)			Gross unrealized
	Amortized cost		Gains		Losses		Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,194	$	9	$	—	$	2,203

Costa Rica Government Obligations are held by a trust in the Costa Rica National Bank as a collateral requirement for settlement activities. The Company may substitute securities as needed but must maintain certain levels of collateral based on transaction volumes.

No debt securities were purchased, matured or sold during the quarters ended March 31, 2023 and March 31, 2022.

A provision for credit losses was not required for the periods presented above. Refer to Note 7 for disclosure requirements related to the fair value hierarchy.

Note 4 – Property and Equipment, net

Property and equipment, net consists of the following:

(In thousands)	Useful life in years	March 31, 2023		December 31, 2022
Buildings	30	$	1,600	$	1,456
Data processing equipment	3 - 5	169,517		162,761
Furniture and equipment	3 - 20	9,603		9,154
Leasehold improvements	5 -10	3,906		3,660
		184,626		177,031
Less - accumulated depreciation and amortization		(129,170)		(121,919)
Depreciable assets, net		55,456		55,112
Land		1,402		1,275
Property and equipment, net		$	56,858	$	56,387

Depreciation and amortization expense related to property and equipment for three months ended March 31, 2023 amounted to $5.0 million compared to $4.6 million for the corresponding period in 2022.

Note 5 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 16):

7

(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Balance at December 31, 2022	$	160,972	$	84,289	$	138,121	$	40,010	$	423,392
Foreign currency translation adjustments	—		5,824		—		—		5,824
Preliminary goodwill attributable to acquisition	—		5,124		—		—		5,124
Balance at March 31, 2023	$	160,972	$	95,237	$	138,121	$	40,010	$	434,340

Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company may test for goodwill impairment using a qualitative or a quantitative analysis. In a qualitative analysis, the Company assesses whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount. In the quantitative analysis, the Company compares the estimated fair value of the reporting units to their carrying values, including goodwill. No impairment losses were recognized for the periods ended March 31, 2023 or 2022. Refer to Note 2 - Business Acquisition, for further details of goodwill acquired in the first quarter of 2023.

The carrying amount of other intangible assets at March 31, 2023 and December 31, 2022 was as follows:

		March 31, 2023
(In thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	404,311	$	(310,427)	$	93,884
Trademarks	1 - 15	44,858		(38,367)		$	6,491
Software packages	3 - 10	363,269		(250,574)		$	112,695
Non-compete agreement	5	636		—		$	636
Other intangible assets, net		$	813,074	$	(599,368)	$	213,706

		December 31, 2022
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	392,737	$	(303,733)	$	89,004
Trademarks	1 - 15	43,195		(37,998)		5,197
Software packages	3 - 10	349,474		(243,355)		106,119
Other intangible assets, net		$	785,406	$	(585,086)	$	200,320

Amortization expense related to other intangibles for the three months ended March 31, 2023 amounted to $16.3 million compared to $14.5 million for the corresponding period in 2022.

The estimated amortization expense of the other intangible balances outstanding at March 31, 2023, excluding assets acquired as part of the paySmart acquisition as the Company is yet to finalize the purchase price allocation, for the next five years is as follows:

(Dollar amounts in thousands)
Remaining 2023	$	44,561
2024	48,174
2025	22,194
2026	13,896
2027	10,091

Note 6 – Debt and Short-Term Borrowings

Total debt at March 31, 2023 and December 31, 2022 was as follows:

8

(In thousands)	March 31, 2023		December 31, 2022
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(2))	$	405,300	$	410,248

(1)Net of unaccreted discount and unamortized debt issue costs, as applicable.

(2)Subject to a minimum rate ("SOFR floor") of 0% plus applicable margin of 1.50% at March 31, 2023 and December 31, 2022.

9

Secured Credit Facilities

On December 1, 2022, EVERTEC and EVERTEC Group, entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for (i) a $415.0 million term loan A facility (the “Term Loan Facility”) and (ii) a $200.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Loan Facility, the “2022 Credit Facilities”). The 2022 Credit Facilities mature on December 1, 2027.

At March 31, 2023, the unpaid principal balance of the Term Loan Facility was $409.8 million. The additional borrowing capacity for the Revolving Facility at March 31, 2023 was $194.0 million. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Interest Rate Swaps

As of March 31, 2023, the Company has an interest rate swap agreement, entered into in December 2018, which converts a portion of the interest rate payments on the Company's Term Loan Facility from variable to fixed: 

Swap Agreement	Effective date	Maturity Date	Notional Amount	Variable Rate	Fixed Rate
2018 Swap	April 2020	November 2024	$250 million	1-month SOFR	2.929%

As of March 31, 2023 and December 31, 2022, the carrying amount of the derivative included on the Company's unaudited condensed consolidated balance sheets was $5.8 million and $7.4 million, respectively. The fair value of this derivative is estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 for disclosure of losses recorded on cash flow hedging activities.

During the three months ended March 31, 2023 and 2022, the Company reclassified gains of $1.0 million and losses of $1.7 million, respectively, from accumulated other comprehensive loss into interest expense. Based on current SOFR rates, the Company expects to reclassify gains of $4.5 million from accumulated other comprehensive loss into interest expense over the next 12 months.

The cash flow hedge is considered highly effective.

Note 7 – Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements

Debt Securities Available for Sale

The fair value of debt securities is estimated based on observable inputs, therefore classified as a Level 2 asset within the fair value hierarchy. The fair value of debt securities was $2.2 million as of each March 31, 2023 and December 31, 2022.

Derivative Instruments

The fair value of the Company's interest rate swap is estimated using Level 2 inputs under the fair value hierarchy. This derivative was in an asset position with a balance of $5.8 million and $7.4 million as of March 31, 2023 and December 31, 2022, respectively.

The following table presents the carrying value, as applicable, and estimated fair value for financial instruments at March 31, 2023 and December 31, 2022:

	March 31, 2023				December 31, 2022
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Costa Rica government obligations	$	2,179	$	2,179	$	2,203	$	2,203
Interest rate swap	5,768		5,768		7,440		7,440
Financial liabilities:
Term Loan Facility	405,300		408,378		410,248		413,494

10

The fair value of the term loan at March 31, 2023 and December 31, 2022 was obtained using prices provided by third party service providers. Their pricing is based on various inputs such as market quotes, recent trading activity in a non-active market or imputed prices. These inputs are considered Level 3 inputs under the fair value hierarchy. Also, the pricing may include the use of an algorithm that could take into account movements in the general high yield market, among other variants. The secured term loan is not accounted for at fair value in the balance sheet.

Note 8 – Equity

Accumulated Other Comprehensive Loss

The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the three months ended March 31, 2023: 

(In thousands)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Unrealized Gains (losses) on Debt Securities AFS		Total
Balance - December 31, 2022, net of tax	$	(23,481)	$	6,954	$	41	(16,486)
Other comprehensive income (loss) before reclassifications	17,605		(501)		(20)		17,084
Effective portion reclassified to net income	—		(1,044)		—		(1,044)
Balance - March 31, 2023, net of tax	$	(5,876)	$	5,409	$	21	$	(446)

Note 9 – Share-based Compensation

Long-term Incentive Plan ("LTIP")

During the three months ended March 31, 2021, 2022 and 2023, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors ("Board") approved grants of restricted stock units (“RSUs”) to executives and certain employees pursuant to the 2021 LTIP, 2022 LTIP and 2023 LTIP, respectively, all under the terms of the Company's 2022 Equity Incentive Plan. Under the LTIPs, the Company granted RSUs to eligible participants as time-based awards and/or performance-based awards.

The vesting of the RSUs is dependent upon service and/or performance conditions as defined in the award agreements. Employees that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee provides services to the Company through the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant date and ending on March 2 of each year for the 2021 LTIP, February 25 of each year for the 2022 LTIP and February 24 of each year for the 2023 LTIP. In 2022 and 2023, the Company also granted time-based awards with a three year service vesting period which will cliff vest on February 25, 2025 and February 24, 2026, respectively.

For the performance-based awards under the 2021 LTIP, 2022 LTIP, and 2023 LTIP, the Compensation Committee established adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance measure while maintaining focus on total shareholder return through the use of a market-based total shareholder return ("TSR") performance modifier. The Adjusted EBITDA measure is based on annual targets and can result in a payout between 0% and 200%, depending on the performance level. The TSR modifier adjusts the shares earned based on the Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1 of the year of the grant and ending on December 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additional two-year service vesting period and will vest on March 2, 2024 for the 2021 LTIP, February 25, 2025 for the 2022 LTIP, and February 24, 2026 for the 2023 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting.

The following table summarizes nonvested RSUs activity for the three months ended March 31, 2023:

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Nonvested RSUs	Shares	Weighted-average grant date fair value
Nonvested at December 31, 2022	1,363,780	$	38.96
Granted	740,846	38.39
Vested	(576,995)	34.03
Forfeited	(2,592)	40.19
Nonvested at March 31, 2023	1,525,039	$	40.22

For the three months ended March 31, 2023, the Company recognized $5.6 million of share-based compensation expense, compared with $4.3 million for the corresponding period in 2022.

As of March 31, 2023, the maximum unrecognized cost for RSUs was $49.0 million. The cost is expected to be recognized over a weighted average period of 2.2 years.

Note 10 – Revenues

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into primary geographical markets, nature of the products and services, and timing of transfer of goods and services. The Company's operating segments are determined by the nature of the products and services the Company provides and the primary geographical markets in which the Company operates. Revenue disaggregated by segment is discussed in Note 16, Segment Information.

In the following tables, revenue for each segment, excluding intersegment revenues, is disaggregated by timing of revenue recognition for the periods indicated.

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	113	$	614	$	—	$	1,727	$	2,454
Products and services transferred over time	32,366		30,679		40,347		53,968		157,360
	$	32,479	$	31,293	$	40,347	$	55,695	$	159,814

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	55	$	13	$	—	$	1,885	$	1,953
Products and services transferred over time	26,430		25,497		35,629		60,739		148,295
	$	26,485	$	25,510	$	35,629	$	62,624	$	150,248

Revenue concentration with a single customer, Popular, as a percentage of total revenues for the quarters ended March 31, 2023 and March 31, 2022 was approximately 37% and 43% , respectively.

12

Contract Balances

The following table provides information about contract assets from contracts with customers.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	4,749	$	1,715
Services transferred to customers	3,124		9,313
Transfers to accounts receivable	(2,621)		(6,279)
Balance at end of period	$	5,252	$	4,749

The current portion of contract assets is recorded as part of prepaid expenses and other assets, and the long-term portion is included in other long-term assets in the unaudited condensed consolidated balance sheets.

Accounts receivable, net at March 31, 2023 amounted to $127.9 million. Contract liability and contract liability - long term at March 31, 2023 amounted to $19.7 million and $33.3 million, respectively, and may arise when consideration is received or due in advance from customers prior to performance. The contract liability is mainly comprised of upfront fees for implementation or set up activities, including fees charged in pre-production periods in connection with hosting services. Contract liabilities may also arise when consideration is received or due in advance from customers prior to performance. During the three months ended March 31, 2023, the Company recognized revenue of $4.4 million that was included in the contract liability at December 31, 2022. During the three months ended March 31, 2022, the Company recognized revenue of $7.1 million that was included in the contract liability at December 31, 2021.

Transaction price allocated to the remaining performance obligations

The estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at March 31, 2023 is $993.7 million, which is expected to be recognized over the next 1 to 6 years. This amount consists of minimums on certain master services agreements, professional service fees for implementation or set up activities related to managed services and maintenance services typically recognized over the life of the contract, and professional service fees for customizations or development of on-premise licensing agreements, which are recognized over time based on inputs relative to the total expected inputs to satisfy a performance obligation.

Note 11 – Current Expected Credit Losses

Allowance for Current Expected Credit Losses

Trade receivables from contracts with customers are financial assets analyzed by the Company under the expected credit loss model. To measure expected credit losses, trade receivables are grouped based on shared risk characteristics (i.e., the relevant industry sector and customer's geographical location) and days past due (i.e., delinquency status), while considering the following:

•Customers in the same geographical location share similar risk characteristics associated with the macroeconomic environment of their country.

•The Company has two main industry sectors: private and governmental. The private pool is comprised mainly of leading financial institutions, merchants and corporations, while the governmental pool is comprised of government agencies. The governmental customers possess different risk characteristics than private customers because although all invoices are due 30 days after issuance, governmental customers usually pay within 60 to 90 days after issuance (i.e., approximately 30 to 60 more days than private customers).

•The expected credit loss rate is likely to increase as receivables move to older aging buckets. The Company used the following aging categories to estimate the risk of delinquency status: (i) 0 days past due; (ii) 1-30 days past due; (iii) 31-60 days past due; (iv) 61-90 days past due; and (v) over 90 days past due.

The credit losses of the Company’s trade receivables have been low historically and most balances are collected within one year. Therefore, the Company determined that the expected loss rates should be calculated using the historical loss rates adjusted by macroeconomic factors. The historical rates are calculated for each of the aging categories used for pooling trade receivables. To determine the collected portion of each bucket, the collection time of each trade receivable is identified, to estimate the proportion of outstanding balances per aging bucket that ultimately will not be collected. This is used to determine the expectation of losses based on the history of uncollected trade receivables once the specific past due period is surpassed.

13

The historical rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the receivables by applying a country risk premium as the forward-looking macroeconomic factor. Specific reserves are established for certain customers for which collection is doubtful.

Rollforward of the Allowance for Expected Current Credit Losses

The following table provides information about the allowance for expected current credit losses on trade receivables.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	2,159	$	2,523
Current period (release) provision for expected credit losses	566		754
Write-offs	(24)		(1,268)
Recoveries of amounts previously written-off	1		150
Balance at end of period	$	2,702	$	2,159

The Company does not have a delinquency threshold for writing-off trade receivables. The Company has a formal process for the review and approval of write-offs.

Impairment losses on trade receivables are presented as net impairment losses within cost of revenue, exclusive of depreciation and amortization in the unaudited condensed consolidated statements of income and comprehensive income. Subsequent recoveries of amounts previously written-off, when applicable, are credited against the allowance for expected current credit losses within accounts receivable, net on the unaudited condensed consolidated balance sheets.

Note 12 – Income Tax

The components of income tax expense for the three months ended March 31, 2023 and 2022, respectively, consisted of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision	$	5,026	$	6,877
Deferred tax benefit	(2,208)		(702)
Income tax expense	$	2,818	$	6,175

The Company conducts operations in Puerto Rico, the United States, and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three months ended March 31, 2023 and 2022, and its segregation based on location of operations:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision
Puerto Rico	$	1,180	$	2,315
United States	11		30
Foreign countries	3,835		4,532
Total current tax provision	$	5,026	$	6,877
Deferred tax benefit
Puerto Rico	$	(235)	$	(393)
United States	(26)		(71)
Foreign countries	(1,947)		(238)
Total deferred tax benefit	$	(2,208)	$	(702)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

14

As of March 31, 2023, the Company had $117.0 million of unremitted earnings from foreign subsidiaries, compared to $115.5 million as of December 31, 2022. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested.

As of March 31, 2023, the gross deferred tax asset amounted to $18.6 million and the gross deferred tax liability amounted to $19.5 million, compared to $17.9 million and $20.7 million, respectively, as of December 31, 2022. As of March 31, 2023, and December 31, 2022, there is a valuation allowance against the gross deferred tax asset of approximately $1.3 million and $1.6 million, respectively.

Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Computed income tax at statutory rates	$	12,330	$	16,890
Differences in tax rates due to multiple jurisdictions	1,029		447
Effect of income subject to tax-exemption grant	(8,849)		(10,809)
Unrecognized tax expense	34		80
Excess tax benefits on share-based compensation	(91)		(260)
Tax credits for research and development activities	(884)		—
Other, net	(751)		(173)
Income tax expense	$	2,818	$	6,175

Note 13 – Net Income Per Common Share

The reconciliation of the numerator and denominator of the income per common share is as follows:

	Three months ended March 31,
(In thousands, except per share information)	2023		2022
Net income available to EVERTEC, Inc.’s common shareholders	$	30,052	$	38,898
Weighted average common shares outstanding	64,968,298		71,965,664
Weighted average potential dilutive common shares (1)	640,320		887,552
Weighted average common shares outstanding - assuming dilution	65,608,618		72,853,216
Net income per common share - basic	$	0.46	$	0.54
Net income per common share - diluted	$	0.46	$	0.53

(1)Potential common shares consist of common stock issuable under RSUs awards using the treasury stock method.

On February 16, 2023, the Company's Board declared quarterly cash dividends of $0.05 per share of common stock, which was paid on March 17, 2023, to stockholders' of record on February 28, 2023.

Note 14 – Commitments and Contingencies

EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss would be insignificant. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material.

15

Note 15 – Related Party Transactions

In connection with closing of the Popular Transaction on July 1, 2022, the Company terminated the existing stockholder agreement with Popular, which granted Popular certain benefits as a shareholder of the Company. In addition, on August 15, 2022, through a secondary offering, Popular sold its remaining shares of common stock of Evertec and as of that date no longer holds any shares of EVERTEC common stock. EVERTEC is no longer considered a subsidiary of Popular under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Given both the termination of the stockholder agreement and that Popular is no longer a shareholder of EVERTEC, management concluded that Popular is no longer a related party as of August 15, 2022.

The following table presents the Company’s transactions with Popular for the three months ended March 31, 2022 while they were deemed a related party:

	Three months ended March 31,
(In thousands)	2022
Total revenues	$	64,729
Cost of revenues	$	1,315
Operating lease cost and other fees	$	1,859
Interest earned from affiliate
Interest income	$	340

Note 16 – Segment Information

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), ATH Movil (person-to-person) and ATH Business (person-to-merchant) digital transactions and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

16

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e., savings or checking accounts, loans, etc.), server capacity usage or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented within the “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,

•corporate finance and accounting,

•human resources,

•legal,

•risk management functions,

•internal audit,

•corporate debt related costs,

•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,

•intersegment revenues and expenses, and

•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates and reports Adjusted EBITDA presented to the CODM for assessing segment performance to exclude the impact of non-cash unrealized gains and losses from foreign currency remeasurement. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash unrealized items and unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting, given that it is reported to the CODM for purposes of allocating resources. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the accompanying unaudited condensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:

17

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	48,429	$	35,317	$	40,347	$	55,695	$	(19,974)	$	159,814
Operating costs and expenses	27,722		29,312		26,689		38,913		(2,912)		119,724
Depreciation and amortization	5,888		2,711		1,129		4,488		5,216		19,432
Non-operating income (expenses)	365		(3,785)		307		532		(118)		(2,699)
EBITDA	26,960		4,931		15,094		21,802		(11,964)		56,823
Compensation and benefits (2)	528		652		532		565		3,568		5,845
Transaction, refinancing and other fees (3)	292		—		—		—		(689)		(397)
Loss (gain) on foreign currency remeasurement (4)	95		4,772		—		—		(3)		4,864
Adjusted EBITDA	$	27,875	$	10,355	$	15,626	$	22,367	$	(9,088)	$	67,135

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $13.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $4.0 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	40,008	$	28,783	$	35,629	$	62,624	$	(16,796)	$	150,248
Operating costs and expenses	21,280		23,587		20,204		38,928		204		104,203
Depreciation and amortization	4,480		2,812		1,019		4,763		6,086		19,160
Non-operating income (expenses)	236		3,606		300		700		(966)		3,876
EBITDA	23,444		11,614		16,744		29,159		(11,880)		69,081
Compensation and benefits (2)	337		813		340		445		2,344		4,279
Transaction, refinancing and other fees (3)	—		—		—		—		2,025		2,025
Loss (gain) on foreign currency remeasurement (4)	126		(2,795)		—		—		—		(2,669)
Adjusted EBITDA	$	23,907	$	9,632	$	17,084	$	29,604	$	(7,511)	$	72,716

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $10.9 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $3.3 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.6 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

18

The reconciliation of consolidated net income to EBITDA is as follows:

	Three months ended March 31,
(In thousands)	2023		2022
Net Income	$	30,063	$	38,866
Add:
Income tax expense	2,818		6,175
Interest expense, net	4,510		4,880
Depreciation and amortization	19,432		19,160
Total EBITDA	$	56,823	$	69,081

Note 17 – Subsequent Events

On April 20, 2023, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on June 2, 2023 to stockholders of record as of the close of business on May 1, 2023. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) covers: (i) the results of operations for the three months ended March 31, 2023 and 2022 and (ii) the financial condition as of March 31, 2023. You should read the following discussion and analysis in conjunction with the audited consolidated financial statements (the “Audited Consolidated Financial Statements”) and related notes for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 24, 2023 and with the unaudited condensed consolidated financial statements (the “Unaudited Condensed Consolidated Financial Statements”) and related notes appearing elsewhere herein. This MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results may differ from those indicated in the forward-looking statements. See “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions associated with these statements.

Except as otherwise indicated or unless the context otherwise requires, (a) the terms “EVERTEC,” “we,” “us,” “our,” “our Company” and “the Company” refer to EVERTEC, Inc. and its subsidiaries on a consolidated basis, (b) the term “Holdings” refers to EVERTEC Intermediate Holdings, LLC, but not any of its subsidiaries and (c) the term “EVERTEC Group” refers to EVERTEC Group, LLC and its predecessor entities and their subsidiaries on a consolidated basis. EVERTEC Inc.’s subsidiaries include Holdings, EVERTEC Group, EVERTEC Dominicana, SAS, Evertec Chile Holdings SpA (formerly known as Tecnopago SpA), Evertec Chile SpA (formerly known as EFT Group SpA), Evertec Chile Global SpA (formerly known as EFT Global Services SpA), Evertec Chile Servicios Profesionales SpA (formerly known as EFT Servicios Profesionales SpA), EFT Group S.A., Tecnopago España SL, Paytrue S.A., Caleidon, S.A., Evertec Brasil Informática Ltda. (formerly known as Paytrue Solutions Informática Ltda.), EVERTEC Panamá, S.A., EVERTEC Costa Rica, S.A. (“EVERTEC CR”), EVERTEC Guatemala, S.A., Evertec Colombia, SAS (formerly known as Processa, SAS), EVERTEC USA, LLC, Evertec Placetopay, SAS (formerly known as EGM Ingeniería sin Fronteras, S.A.S. ("PlacetoPay")), BBR, SpA, BBR Perú, S.A.C., Paysmart Pagamentos Eletronicos Ltda and EVERTEC México Servicios de Procesamiento, S.A. de C.V. Neither EVERTEC nor Holdings conducts any operations other than with respect to its indirect or direct ownership of EVERTEC Group.

Executive Summary

EVERTEC is a leading full-service transaction-processing business in Puerto Rico, the Caribbean and Latin America, providing a broad range of merchant acquiring, payment services and business process management services. According to the September 2022 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean. We serve 26 countries out of 12 offices, including our headquarters in Puerto Rico. We own and operate the ATH network, which we believe is one of the leading personal identification number (“PIN”) debit networks in Latin America. We process over six billion transactions annually through a system of electronic payment networks in Puerto Rico and Latin America and a comprehensive suite of services for core banking, cash processing, and fulfillment in Puerto Rico. Additionally, we offer technology outsourcing and payment transactions fraud monitoring to all the regions we serve. We serve a diversified customer base of leading financial institutions, merchants, corporations, and government agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We believe our business is well-positioned to continue to expand across the fast-growing Latin American region.

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe this capability provides several competitive advantages that will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels, and enter new markets. We believe these competitive advantages include:

•Our ability to provide competitive products;

•Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;

•Our ability to serve customers with disparate operations in several geographies with technology solutions that enable them to manage their business as one enterprise; and

•Our ability to capture and analyze data across the transaction-processing value chain and use that data to provide value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the transaction-processing value chain (such as only merchant acquiring or payment services).

Our broad suite of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions such as the electronic capture and authorization of transactions at the point-of-sale for both card present transactions and card not present transactions, as well as back-end support services such as the clearing and settlement of

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transactions and account reconciliation for card issuers. These include: (i) merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing services, which enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, prepaid, automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which provide “mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management services to financial institutions, corporations and governments. We provide these services through scalable, end-to-end technology platforms that we manage and operate in-house and that generate significant operating efficiencies that enable us to maximize profitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. We continue to pursue joint ventures and merchant acquiring alliances. We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operating margins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-critical and embedded nature of the services we provide. In addition, we generally enter into multi-year contracts with our customers. We believe our business model should enable us to continue to grow our business organically in the primary markets we serve without significant incremental capital expenditures.

Relationship with Popular

On September 30, 2010, EVERTEC Group entered into a 15-year MSA, and several related agreements with Popular. On July 1, 2022, we modified and extended the main commercial agreements with Popular, including a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement (as amended, the "A&R ISO Agreement"), a 5-year extension of the ATH Network Participation Agreement and a 3-year extension of the MSA (the "A&R ISO Agreement"). The A&R ISO Agreement, which defines our merchant acquiring relationship with Popular, now includes revenue sharing provisions with Popular. The MSA modifications also include the elimination of the exclusivity requirement, the inclusion of annual MSA minimums through September 30, 2028, a 10% discount on certain MSA services beginning in October of 2025 and adjustments to the CPI pricing escalator clause. On the same date, we also sold to Popular certain assets in exchange for 4.6 million shares of EVERTEC common stock owned by Popular (collectively with the contract amendments, the "Popular Transaction"). On August 15, 2022, through a secondary offering, Popular sold its remaining shares of EVERTEC common stock. EVERTEC is no longer deemed a subsidiary of Popular under the Bank Holding Company Act. Popular continues to be the Company's largest customer and for the quarter ended March 31, 2023 approximately 37% of our revenues were generated from this relationship.

Factors and Trends Affecting the Results of Our Operations

The ongoing migration from cash and paper methods of payment to electronic payments continues to benefit the transaction- processing industry globally. We believe that the penetration of electronic payments in the markets in which we operate is significantly lower relative to the U.S. market, which, together with the ongoing shift from cash and paper methods of payment to electronic payments will continue to generate growth opportunities for our business. For example, currently the adoption of banking products, including electronic payments, in the Latin America and Caribbean region is lower relative to the mature U.S. and European markets. We believe that the unbanked and underbanked population in our markets will continue to shrink, and therefore drive incremental penetration and growth of electronic payments in Puerto Rico and other Latin America regions. We also benefit from the outsourcing of technology systems and processes trend for financial institutions and government. Many medium- and small-size institutions in the Latin American markets in which we operate have outdated computer systems and updating these IT legacy systems is financially and logistically challenging, which presents a business opportunity for us.

In recent years, consumer preference has accelerated its shift away from cash and paper payment methods, noting increased demand for omni-channel payment services that facilitate cashless and contactless transactions. The markets in which we operate, particularly Latin America and the Caribbean, continue to grow and consumer preference is driving an increase for electronic payments usage. Latin America is one of the fastest-growing mobile markets globally, with a growing base of tech-savvy customers that demonstrate a preference for credit cards, digital wallets, contactless payments, and other value-added offerings. The region's FinTech sector is driving change via new contactless payment technology, which is becoming a popular alternative to cash payments. We continue to believe that the attractive characteristics of our markets and our position across multiple services and sectors will continue to drive growth and profitability in our businesses.

Our payment businesses also generally experience moderate increased activity during the traditional holiday shopping periods and around other nationally recognized holidays, which follow consumer spending patterns.

Finally, our financial condition and results of operations are, in part, dependent on the economic and general conditions of the geographies in which we operate. Rising interest rates, inflationary pressures and economic uncertainty in the markets in which

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we operate may affect consumer confidence, which could result in a decrease in consumer spending and an impact to our financial results.

Results of Operations

Comparison of the three months ended March 31, 2023 and 2022

	Three months ended March 31,
In thousands	2023		2022		Variance
Revenues	$	159,814	$	150,248	$	9,566	6	%
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	76,417		64,659		11,758		18	%
Selling, general and administrative expenses	23,875		20,384		3,491		17	%
Depreciation and amortization	19,432		19,160		272		1	%
Total operating costs and expenses	119,724		104,203		15,521		15	%
Income from operations	$	40,090	$	46,045	$	(5,955)	(13)	%

Revenues

Total revenues for the quarter ended March 31, 2023 was $159.8 million, an increase of 6% compared with $150.2 million in the same period in the prior year. The revenue increase was primarily driven by Merchant Acquiring and Payment Services Puerto Rico, which both benefited from increased transactions. Merchant Acquiring revenue also reflected a higher spread per transaction and the benefit from pricing initiatives. Payment Services Puerto Rico continues to benefit from growth in ATH Movil revenues, primarily from the ATH Business, as the Company continues to experience higher transaction volumes as well as higher sales volume. Revenues also reflect the contribution from organic growth in Payment Services Latin America, the positive impact from the small acquisition in Puerto Rico completed in the second quarter of 2022 and the revenue contribution from the BBR and paySmart acquisitions in Latin America, completed in the third quarter of 2022 and first quarter of 2023, respectively. These increases were partially offset by the impact from the assets sold as part of the Popular Transaction in the third quarter of 2022.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2023 amounted to $76.4 million, an increase of $11.8 million or 18% when compared to the same period in the prior year. The increase during the three month period was primarily driven by the new revenue sharing agreement with Banco Popular as well as an increase in personnel costs, mainly due to increased headcount in Latin America, including the additional headcount from the BBR and paySmart acquisitions and an increase in provisions for operational losses, printing supplies and cloud services as utilization continues to grow.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2023 amounted to $23.9 million, an increase of $3.5 million or 17% when compared to the same period in the prior year. This increase was primarily driven by an increase in personnel costs.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2023 amounted to $19.4 million, an increase of $0.3 million or 1% when compared to the same period in the prior year. This increase was primarily driven by an increase in amortization of intangible assets created in connection with the aforementioned acquisitions, an increase in software amortization for internally developed software, as well as increased depreciation expense for hardware upgrades completed in the prior year.

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Non-Operating Expenses

	Three months ended March 31,
In thousands	2023		2022		Variance
Interest income	$	1,133	$	667	$	466	70	%
Interest expense	(5,643)		(5,547)		(96)		(2)	%
(Loss) gain on foreign currency remeasurement	(4,864)		2,669		$	(7,533)	(282)	%
Earnings of equity method investment	1,155		570		585		103	%
Other income	1,010		637		373		59	%
Total non-operating expenses	$	(7,209)	$	(1,004)	$	(6,205)	(618)	%

Non-operating expenses for the three months ended March 31, 2023 increased by $6.2 million to $7.2 million when compared to the same period in the prior year. The increase was mainly related to a loss on foreign currency remeasurement of $4.9 million in the current quarter compared to a gain of $2.7 million in the prior period, partially offset by an increase of $0.6 million in earnings from the Company's equity method investment in Contado and an increase of $0.5 million in interest income.

Income Tax Expense

	Three months ended March 31,
In thousands	2023		2022		Variance
Income tax expense	$	2,818	$	6,175	$	(3,357)	(54)	%

Income tax expense for the three months ended March 31, 2023 amounted to $2.8 million, a decrease of $3.4 million when compared to the same period in the prior year. The effective tax rate for the period was 8.6%, compared with 13.7% in the comparable 2022 period. The decrease in the effective tax rate is driven by certain jurisdictions in Latin America, and the benefit of a discrete tax item in Puerto Rico recorded during the quarter ended March 31, 2023.

Segment Results of Operations

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), ATH Movil (person-to-person) and ATH Business (person-to-merchant) digital transactions and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of

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POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e., savings or checking accounts, loans, etc.), server capacity usage or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented within the “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,

•corporate finance and accounting,

•human resources,

•legal,

•risk management functions,

•internal audit,

•corporate debt related costs,

•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,

•intersegment revenues and expenses, and

•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates and reports Adjusted EBITDA presented to the CODM for assessing segment performance to exclude the impact of non-cash unrealized gains and losses from foreign currency remeasurement. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash unrealized items and unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from non-cash unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting, given that it is reported to the CODM for purposes of allocating resources. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the accompanying unaudited condensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated below.

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Comparison of the three months ended March 31, 2023 and 2022

Payment Services - Puerto Rico & Caribbean

	Three months ended March 31,
In thousands	2023		2022
Revenues	$48,429		$40,008
Adjusted EBITDA	27,875		23,907
Adjusted EBITDA Margin	57.6	%	59.8	%

Payment Services - Puerto Rico & Caribbean segment revenues for the three months ended March 31, 2023 increased by $8.4 million to $48.4 million when compared to the same period in the prior year. The increase in revenues was primarily driven by an increase in POS processing and continued strong digital payments growth from ATH Movil, primarily the ATH Business, as well as revenue contribution from the small acquisition completed in the second quarter of 2022. Adjusted EBITDA increased by $4.0 million to $27.9 million. The increase was primarily driven by the increase in revenues partially offset by higher operating expenses, including an increase in provisions for operational losses and higher professional fees.

Payment Services - Latin America

	Three months ended March 31,
In thousands	2023		2022
Revenues	$35,317		$28,783
Adjusted EBITDA	10,355		9,632
Adjusted EBITDA Margin	29.3	%	33.5	%

Payment Services - Latin America segment revenues for the three months ended March 31, 2023 increased by $6.5 million to $35.3 million when compared to the same period in the prior year. This increase was driven mainly by organic growth as well as revenue generated from the BBR acquisition completed in the third quarter of and the paySmart acquisition completed in the first quarter of 2023. Adjusted EBITDA increased by $0.7 million when compared to the same period in the prior year driven by the increase in revenues offset by higher operating expenses primarily due to higher personnel costs as a result of an increase in headcount, including the added employees from the acquisitions, the impact from foreign currency remeasurement, as well as an increase in professional fees and an increase in provisions for operational losses.

Merchant Acquiring

	Three months ended March 31,
In thousands	2023		2022
Revenues	$40,347		$35,629
Adjusted EBITDA	15,626		17,084
Adjusted EBITDA Margin	38.7	%	47.9	%

Merchant Acquiring segment revenues for the three months ended March 31, 2023 increased by $4.7 million to $40.3 million when compared to the same period in the prior year. The revenue increase was primarily driven by an increase in sales volume mainly due to new higher volume merchants and incremental sales volume in existing merchants, as well as a higher spread and the continued benefit from pricing initiatives. Adjusted EBITDA decreased by $1.5 million as compared to the prior year period. This decrease was mainly driven by higher operating expenses, including the revenue sharing agreement with Popular as well as higher processing costs from the Payment Services Puerto Rico segment.

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Business Solutions

	Three months ended March 31,
In thousands	2023		2022
Revenues	$55,695		$62,624
Adjusted EBITDA	22,367		29,604
Adjusted EBITDA Margin	40.2	%	47.3	%

Business Solutions segment revenues for the three months ended March 31, 2023 decreased by $6.9 million to $55.7 million as compared to the prior year period. This decrease was primarily driven by the impact from the assets sold as part of the Popular Transaction completed in the third quarter of 2022, which were of higher margins. Adjusted EBITDA decreased by $6.8 million to $22.4 million as compared to the prior year period. This decrease was almost entirely related to the decrease in our Business Solutions' revenues as well as higher operational costs driven by supplies for our printing business.

Liquidity and Capital Resources

As of March 31, 2023, there are no material changes to our primary short-term and long-term requirements for liquidity and capital as disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our 2021 10-K. Our principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of working capital needs, capital expenditures, dividend payments, share repurchases, debt service, and acquisitions. We also have a $200.0 million Revolving Facility, of which $194.0 million was available for borrowing as of March 31, 2023. The Company issues letters of credit against our Revolving Facility which reduce our availability of funds to be drawn.

As of March 31, 2023, we had cash and cash equivalents of $173.7 million, of which $128.0 million resides in our subsidiaries located outside of Puerto Rico for purposes of (i) funding the respective subsidiary’s current business operations and (ii) funding potential future investment outside of Puerto Rico. We intend to indefinitely reinvest these funds outside of Puerto Rico, and based on our liquidity forecast, we will not need to repatriate this cash to fund the Puerto Rico operations or to meet debt-service obligations. However, if in the future we determine that we no longer need to maintain cash balances within our foreign subsidiaries, we may elect to distribute such cash to the Company in Puerto Rico. Distributions from the foreign subsidiaries to Puerto Rico may be subject to tax withholding and other tax consequences. Additionally, our credit agreement imposes certain restrictions on the distribution of dividends from subsidiaries.

Based on our current level of operations, we believe our cash flows from operations and the available secured Revolving Facility will be adequate to meet our liquidity needs for the next twelve months. However, our ability to fund future operating expenses, dividend payments, capital expenditures, mergers and acquisitions, and our ability to make scheduled payments of interest, to pay principal on or refinance our indebtedness and to satisfy any other of our present or future debt obligations will depend on our future operating performance, which may be affected by general economic, financial and other factors beyond our control.

	Three months ended March 31,
(In thousands)	2023		2022
Cash provided by operating activities	$	54,511	$	67,681
Cash used in investing activities	(36,637)		(14,290)
Cash used in financing activities	(40,579)		(36,169)
Effect of foreign exchange rate on cash, cash equivalents and restricted cash	(275)		766
Increase (decrease) in cash, cash equivalents and restricted cash	$	(22,980)	$	17,988

Net cash provided by operating activities for the three months ended March 31, 2023 was $54.5 million compared to $67.7 million for the same period in the prior year. The $13.2 million decrease in cash provided by operating activities was primarily driven by a decrease in net income as well as an increase in cash used to pay down accrued liabilities.

Net cash used in investing activities for the three months ended March 31, 2023 was $36.6 million compared to $14.3 million for the same period in the prior year. The $22.3 million increase was primarily attributable to the paySmart acquisition, which closed on February 16, 2023 for $23.3 million and an increase in software additions of $0.6 million, partially offset by a decrease of $1.6 million in property and equipment acquired.

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Net cash used in financing activities for the three months ended March 31, 2023 was $40.6 million compared to $36.2 million for the same period in the prior year. The $4.4 million increase was mainly attributed to cash used to pay down the Revolving Facility for $20.0 million, partially offset by a decrease in cash used for repurchases of common stock of $14.9 million.

Capital Resources

Our principal capital expenditures are for hardware and computer software (purchased and internally developed) and additions to our property and equipment. During the three months ended March 31, 2023 and 2022, we invested approximately $13.3 million and $14.3 million in our capital resources, respectively. In addition, during the three month period ended March 31, 2023, the Company acquired a business for $23.3 million, net of cash acquired. Generally, we fund capital expenditures with cash flow generated from operations and, if necessary, borrowings under our Revolving Facility.

Dividend Payments

On February 16, 2023, the Board declared quarterly cash dividends of $0.05 per share of common stock, which were paid on March 17, 2023, to stockholders of record as of the close of business on February 28, 2023.

On April 20, 2023, our Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on June 2, 2023 to stockholders of record as of the close of business on May 1, 2023. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

Financial Obligations

Secured Credit Facilities

On December 1, 2022, EVERTEC and EVERTEC Group, entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for (i) a $415.0 million term loan A facility (the “Term Loan Facility”) and (ii) a $200.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Loan Facility, the “2022 Credit Facilities”). The 2022 Credit Facilities mature on December 1, 2027.

The unpaid principal balance at March 31, 2023 of the Term Loan Facility was $409.8 million. The additional borrowing capacity for the Revolving Facility at March 31, 2023 was $194.0 million. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Interest Rate Swaps

As of March 31, 2023, the Company has an interest rate swap agreement, entered into in December 2018, which converts a portion of the interest rate payments on the Company's Term Loan from variable to fixed: 

Swap Agreement	Effective date	Maturity Date	Notional Amount	Variable Rate	Fixed Rate
2018 Swap	April 2020	November 2024	$250 million	1-month SOFR	2.929%

As of March 31, 2023 and December 31, 2022, the carrying amount of the derivative included on the Company's unaudited condensed consolidated balance sheets was $5.8 million and $7.4 million, respectively. The fair value of this derivative is estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 of the unaudited condensed consolidated financial statements for disclosure of losses recorded on cash flow hedging activities.

During the three months ended March 31, 2023 and 2022, the Company reclassified gains of $1.0 million and losses of $1.7 million, respectively, from accumulated other comprehensive loss into interest expense. Based on current SOFR rates, the Company expects to reclassify gains of $4.5 million from accumulated other comprehensive loss into interest expense over the next 12 months.

The cash flow hedge is considered highly effective.

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Covenant Compliance

As of March 31, 2023, our secured leverage ratio was 0.97 to 1.00, as determined in accordance with the Credit Agreement. As of the date of filing of this Form 10-Q, no event has occurred that constitutes an Event of Default or Default under our Credit Agreement.

Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share (Non-GAAP Measures)

We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted to exclude certain non-cash unrealized items and unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from non-cash unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA by segment is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with ASC Topic 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. We define “Adjusted Net Income” as Adjusted EBITDA less: operating depreciation and amortization expense, defined as GAAP Depreciation and amortization less amortization of intangibles related to acquisitions such as customer relationships, trademarks; cash interest expense defined as GAAP interest expense, less GAAP interest income adjusted to exclude non-cash amortization of debt issue costs, premium and accretion of discount; income tax expense which is calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for uncertain tax position releases, tax true-ups, windfall from share-based compensation, non-cash unrealized gains and losses from foreign currency remeasurement, among others; and non-controlling interest which is the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase. We define “Adjusted Earnings per common share” as Adjusted Net Income divided by diluted shares outstanding.

We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of ourselves and other companies in our industry. In addition, our presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio. We use Adjusted Net Income to measure our overall profitability because we believe better reflects our comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future we may incur expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an inference that our future operating results will not be affected by unusual or nonrecurring items. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures or may calculate these measures differently than as presented herein, limiting their usefulness as comparative measures.

Some of the limitations of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share are as follows:

•they do not reflect cash outlays for capital expenditures or future contractual commitments;

•they do not reflect changes in, or cash requirements for, working capital;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements;

•in the case of EBITDA and Adjusted EBITDA, they do not reflect interest expense, or the cash requirements necessary to service interest, or principal payments, on indebtedness;

•in the case of EBITDA and Adjusted EBITDA, they do not reflect income tax expense or the cash necessary to pay income taxes; and

•other companies, including other companies in our industry, may not use EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings per common share or may calculate EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share differently than as presented in this Report, limiting their usefulness as a comparative measure.

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EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share are not measurements of liquidity or financial performance under GAAP. You should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share as alternatives to cash flows from operating activities or any other performance measures determined in accordance with GAAP, as an indicator of cash flows, as a measure of liquidity or as an alternative to operating or net income determined in accordance with GAAP.

A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share is provided below:

	Three months ended March 31,				Twelve months ended
(In thousands, except per share information)	2023		2022		March 31, 2023
Net income	$	30,063	$	38,866	$	230,066
Income tax expense	2,818		6,175		25,626
Interest expense, net	4,510		4,880		21,281
Depreciation and amortization	19,432		19,160		78,890
EBITDA	56,823		69,081		355,863
Equity income (1)	(1,155)		(570)		(1,706)
Compensation and benefits (2)	5,845		4,279		21,901
Transaction, refinancing and other fees (3)	758		2,595		(120,711)
Loss (gain) on foreign currency remeasurement (4)	4,864		(2,669)		15,178
Adjusted EBITDA	67,135		72,716		270,525
Operating depreciation and amortization (5)	(12,369)		(11,252)		(45,535)
Cash interest expense, net (6)	(4,363)		(4,629)		(20,742)
Income tax expense (7)	(4,782)		(8,809)		(31,601)
Non-controlling interest (8)	(34)		10		(10)
Adjusted net income	$	45,587	$	48,036	$	172,637
Net income per common share (GAAP):
Diluted	$	0.46	$	0.53
Adjusted Earnings per common share (Non-GAAP):
Diluted	$	0.69	$	0.66
Shares used in computing adjusted earnings per common share:
Diluted	65,608,618		72,853,216

1)Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Dominican Republic, Consorcio de Tarjetas Dominicanas S.A. ("CONTADO"), net of cash dividends received. 

2)Primarily represents share-based compensation and severance payments.

3)Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded as part of selling, general and administrative expenses, a software impairment charge and a gain from sale of assets.

4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

5)Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity.

6)Represents interest expense, less interest income, as they appear on the condensed consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

7)Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items.

8)Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase.

Effect of Inflation

While it is difficult to accurately measure the impact of inflation on our results of operations and financial condition, we believe the effects of inflation, on our historical results of operations and financial condition have been immaterial. General inflation in

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the geographies in which we operate has risen to levels that have not been experienced in recent years, however, inflation has historically had a minimal net effect on our operating results given that overall inflation has been offset by sales and cost reduction actions.

Rising prices for input costs, including wages and benefits, occupancy and general administrative costs, could potentially have a negative impact on our results of operations and financial condition which may not be readily recoverable from our customers.

In addition, inflation has driven a rising interest rate environment, which has had an adverse effect on our cost of funding, as well as led to enhanced volatility on foreign currency exchange rates. While we proactively try to mitigate these rising costs, we may not be able to fully offset these impacts and these could result in negative effect on our results of operation. Thus, we cannot assure you that our results of operations and financial condition will not be materially impacted by inflation in the future.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make estimates and assumptions about future events and apply judgments that affect the reported amounts of certain assets and liabilities, and in some instances, the reported amounts of revenues and expenses during the period. We base our assumptions, estimates, and judgments on historical experience, current events, and other factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared. However, because future events are inherently uncertain and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For a description of the Company’s critical accounting estimates, refer to “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 24, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks arising from our normal business activities. These market risks principally involve the possibility of changes in interest rates that will adversely affect the value of our financial assets and liabilities or future cash flows and earnings, foreign exchange risk that may result in unfavorable foreign currency translation adjustments and inflation. Market risk is the potential loss arising from adverse changes in market rates and prices. The following analysis provides quantitative information regarding these risks.

Interest Rate Risks

Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control.

We issued floating-rate debt which is subject to fluctuations in interest rates. Our secured credit facilities accrue interest at variable rates and are subject to a floor or a minimum rate. A 100 basis point increase in interest rates over our floor on our debt balances outstanding as of March 31, 2023, under the secured credit facilities, would increase our annual interest expense by approximately $2.6 million. The impact on future interest expense as a result of future changes in interest rates will depend largely on the gross amount of our borrowings at that time.

As of March 31, 2023, the Company has an interest rate swap agreement, entered into December 2018, which converts a portion of our outstanding variable rate debt to fixed.

The interest rate swap exposes us to credit risk in the event that the counterparty to the swap agreement does not or cannot meet its obligations. The notional amount is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The loss would be limited to the amount that would have been received, if any, over the remaining life of the swap. The counterparty to the swap is a major US based financial institution and we expect the counterparty to be able to perform its obligations under the swap. We use derivative financial instruments for hedging purposes only and not for trading or speculative purposes.

See Note 6 of the Unaudited Condensed Consolidated Financial Statements for additional information related to the secured credit facilities.

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Foreign Exchange Risk

We conduct business in certain countries in Latin America for which we have determined that the functional currency is other than the US dollar. Given this, our operating results are exposed to volatility due to fluctuations in exchange rates for the countries' functional currencies. Non-functional currency transactions are remeasured into the functional currency which results in a foreign exchange gain or loss recorded through Other income (expenses). For the quarters ended March 31, 2023 and March 31, 2022, the Company recognized non-cash unrealized foreign currency remeasurement losses of $4.9 million and $2.7 million of gains, respectively. For subsidiaries whose functional currency is other than the U.S. dollar, their assets and liabilities are translated into U.S. dollars at exchange rates at the balance sheet date, and revenues and expenses are translated using average exchange rates in effect during the period. The resulting foreign currency translation adjustments are reported in accumulated other comprehensive loss in the condensed consolidated balance sheets. As of March 31, 2023, the Company had $5.9 million in an unfavorable foreign currency translation adjustment as part of accumulated other comprehensive loss compared with an unfavorable foreign currency translation adjustment of $23.5 million as of December 31, 2022.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated, as of the end of the period covered by this Report on Form 10-Q, disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2023, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a -15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are defendants in various lawsuits or arbitration proceedings arising in the ordinary course of business. Management believes, based on the opinion of legal counsel and other factors, that the aggregated liabilities, if any, arising from such actions will not have a material adverse effect on the financial condition, results of operations and the cash flows of the Company.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 24, 2023. For a discussion of the potential risks and uncertainties related to us, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022.

The risks described in our Annual Report on Form 10-K for the year ended December 31, 2022 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes repurchases of the Company’s common stock in the three month period ended March 31, 2023:

Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of a publicly announced program (1)	Approximate dollar value of shares that may yet be purchased under the program
3/1/2023-3/31/2023	187,976	33.35	187,976
	187,976	33.35	187,976	72,091,547

(1) On February 24, 2022, the Company announced that its Board approved an increase to the current stock

repurchase program, authorizing the purchase of up to an aggregate of $150 million of the Company’s common stock under the program which expires on December 31, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

10.1*+	Form of Restricted Stock Unit Award Agreement for grant of restricted stock units to executive officers under the EVERTEC, Inc. 2022 Incentive Award Plan, dated February 24, 2023, by and between EVERTEC, Inc. and the executive officer (applicable to Morgan M. Schuessler, Jr., Joaquín A. Castrillo, Paola Pérez, Luis A. Rodríguez, Guillermo Rospigliosi, Diego G. Viglianco, and Miguel Vizcarrondo).
31.1*	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS XBRL**	Inline Instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL**	Inline Taxonomy Extension Schema
101.CAL XBRL**	Inline Taxonomy Extension Calculation Linkbase
101.DEF XBRL**	Inline Taxonomy Extension Definition Linkbase
101.LAB XBRL**	Inline Taxonomy Extension Label Linkbase
101.PRE XBRL**	Inline Taxonomy Extension Presentation Linkbase
104**	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*    Filed herewith.

**    Furnished herewith.

+     This exhibit is a management contract or a compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EVERTEC, Inc. (Registrant)
Date: April 28, 2023	By:	/s/ Morgan Schuessler
		Morgan Schuessler Chief Executive Officer (Principal Executive Officer)
Date: April 28, 2023	By:	/s/ Joaquin A. Castrillo-Salgado
		Joaquin A. Castrillo-Salgado Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EX-10.1

EVERTEC, INC.

2022 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT - EXECUTIVES

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (together with the Vesting Schedule (defined below), this “Agreement”) is made as of this 24th day of February, 2023 (the “Date of Grant”), by and between EVERTEC, Inc. (the “Company”) and you (the “Participant”). Defined terms used but not otherwise defined herein will have the meanings attributed to them in the Plan (defined below).

W I T N E S S E T H

WHEREAS, the Company maintains the EVERTEC, Inc. 2022 Incentive Award Plan (the “Plan”); and

WHEREAS, the Participant may be a senior executive of the Company who is subject to the EVERTEC Group, LLC Executive Severance Policy in effect as of the date of this Agreement (if applicable, the “Policy”), which Policy has been approved and authorized by the Compensation Committee or the Board of Directors of the Company; and

WHEREAS, the Participant may be a senior executive of the Company who has a valid employment agreement as of the date hereof that has been approved and authorized by the Compensation Committee or the Board of Directors of the Company (if applicable, the “ExecutiveEmployment Agreement”); and

WHEREAS, in connection with the Participant’s service as an employee of the Company or any of its affiliates and Subsidiaries (the “Employment”), the Company desires to grant Restricted Stock Units (“RSUs”) to the Participant (the “Award”), subject to the terms and conditions of the Plan and this Agreement; and

WHEREAS, such RSUs could be time-based RSUs (“Time-Based RSUs”), which vest on a future specified date or dates, as specified in Exhibit A; and

WHEREAS, such RSUs could also be performance-based RSUs (“Performance-Based RSUs”), which vest on a future specified date or dates and are subject to certain performance metrics, as specified in Exhibit A.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein and for other good and valuable consideration, the parties agree as follows:

1.Grant of RSUs. In consideration of the Employment, the Company will grant to the Participant the number of RSUs set forth in the vesting schedule attached hereto as Exhibit A (the “Vesting Schedule”). Each RSU represents the unfunded and unsecured promise of the Company to deliver to the Participant one share of common stock, par value $.01 per share, of the Company (the “Common Stock”) on the Settlement Date (as defined in Section 6 hereof).

2.Purchase Price. The purchase price of the RSUs shall be deemed to be zero U.S. Dollars ($0) per share.

3.Vesting. The RSUs shall vest and become non-forfeitable on the dates established in the Vesting Schedule (each such date, a “Vesting Date”), provided that the Participant is actively carrying out his or her duties in connection with the Employment at all times from the Date of Grant through each respective Vesting Date.

4.Termination. For purposes of this Section 4, “Termination Date” is the date the Participant’s Employment is terminated or terminates. This Section 4 shall govern the treatment of the RSUs granted under this Agreement upon the Participant’s termination of Employment; provided, however, that if the Participant’s Executive Employment Agreement addresses the treatment of RSUs upon termination, then the provisions of such Executive Employment Agreement shall govern instead of this Section 4. Defined terms used but not otherwise defined in this Section 4 or in the Plan will have the meanings attributed to them in the Policy.

(a)In the event that the Employment is terminated in a Qualifying Termination (as defined in the Policy) other than within 24 months following a Change in Control (as defined in the Policy), then:

(i)Unvested RSUs that are Time-Based shall vest on a pro-rata basis as of the Termination Date and the Termination Date shall be deemed to be the Vesting Date under this Agreement; and

(ii)Unvested RSUs that are Performance-Based, shall vest and be settled following the end of the performance period based on actual performance determined at the end of the performance period on a pro-rata basis.

(iii)For purposes of clauses 4(a)(i) and (ii), the pro-rata portion of the award that will become vested shall be determined by multiplying the total number of RSUs subject to the award, by a fraction, the numerator of which is the number of completed months in which the Participant was employed from the Date of Grant to the Termination Date, and the denominator of which is the number of

months required for the award to vest in full under the Vesting Schedule, and then reducing therefrom the number of RSUs that have previously been vested, if any.

(b)In the event that the Employment is terminated in a Qualifying Termination within 24 months following a Change in Control, then, subject to the Participant’s compliance with Section 11:

(i)Unvested RSUs that are Time-based shall become fully vested and the Termination Date shall be deemed to be the Vesting Date under this Agreement; and

(ii)Unvested RSUs that are Performance-based, shall become fully vested upon the Qualifying Termination (x) based on actual level of performance achieved as of the Change in Control (to the extent the performance period with respect to the relevant goal was completed as of the Change in Control date) and (y) at the target level of performance (to the extent the performance period with respect to the relevant goal was not complete as of the Change in Control date) and the Termination Date shall be deemed to be the Vesting Date under this Agreement. For the avoidance of doubt, it is understood that there may be circumstances where a component of an unearned performance award is valued based on actual performance and a separate component is valued based on target performance. The Company, in its sole discretion, shall determine the number of RSUs that vest pursuant to this provision, if any.

(c)For the avoidance of doubt, in no event shall the Participant become entitled to accelerated vesting of the Participant’s RSUs under both Sections 4(a) and 4(b).

(d)In the event of the Employment’s termination due to Participant’s death or Disability (defined below), then as of the Termination Date all of the unvested Time-Based RSUs shall become fully vested and all unvested Performance-Based RSUs shall become fully vested (x) based on actual level of performance achieved as of the Termination Date (to the extent the performance period with respect to the relevant goal was completed as of the Termination Date) and (y) at the target level of performance (to the extent the performance period with respect to the relevant goal was not complete as of the Termination Date). For the avoidance of doubt, it is understood that there may be circumstances where a component of an unearned performance award(s) is valued based on actual performance and a separate component is valued based on target performance.

“Disability” has the following meaning: the Participant’s inability to perform the Employment by reason of any medically determinable physical or mental impairment for a period of 6 months or more in any 12-month period.

(e)In the event the Employment is terminated or terminates other than in a Qualifying Termination, all of the RSUs (both Time-Based and Performance-Based) that have not become vested as of the Termination Date shall automatically be forfeited as of the Termination Date.

(f)Release Requirement. As a condition to the acceleration of vesting (or the continued vesting post-termination of Performance-based RSUs based on the achievement of Company business performance) pursuant to Section 4(a), (b) or (d) of this Agreement, the Participant, if legally capable at such time, or his estate, beneficiaries or legal representatives, if Participant is deceased or legally incapable at such time, shall be obligated to execute a separation agreement and general release of all claims in favor of the Company, their current and former affiliates, subsidiaries and stockholders, and their current and former directors, officers, employees, insurers and agents, in a form reasonably determined by the Company; provided, however, that, if such release is not executed within the time required by the Company, or is revoked within 7 days of execution, the Company shall not have any obligation to provide the benefits under Section 4(a), (b) or (d) under this Agreement.

5.Dividend Equivalents. If the Company pays an ordinary cash dividend on its outstanding Common Stock at any time between the Date of Grant and the Settlement Date (as defined in Section 6 below) -- provided that the date on which stockholders of record are determined for purposes of paying a cash dividend on issued and outstanding shares of the Common Stock falls after the Date of Grant -- the Participant shall receive on the Settlement Date or at the next payroll payment (but in no event more than 75 days after the Vesting Date) either: (a) a number of Shares (as defined in Section 6 below) having a Fair Market Value (as defined below) on the Vesting Date equal to the aggregate amount of the cash dividends paid by the Company on a single share of the Common Stock, multiplied by the number of RSUs that are settled on the Settlement Date; or (b) a lump sum cash payment equal to the aggregate amount of the cash dividends paid by the Company on a single share of the Common Stock, multiplied by the number of RSUs that are settled on the Settlement Date ((a) or (b) as applicable, the “Dividend Payment”); provided, however, that in the case of (a), any partial Share resulting from the calculation will be paid in cash.

For purposes of this Agreement, “Fair Market Value” means the closing price of the Company’s Common Stock at the close of business of the applicable date.

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6.Settlement. Within 75 days following the day any RSUs are vested in accordance with the terms and conditions of this Agreement (the “Settlement Date”), the Company shall (a) issue and deliver to the Participant one share of Common Stock for each vested RSU (the “Shares”) and enter the Participant’s name as a shareholder of record or beneficial owner with respect to the Shares on the books of the Company; and (b) calculate the Dividend Payment. The Participant agrees that the Company may deduct from the Dividend Payment any amounts owed by the Participant to the Company with respect to any whole Share issued by the Company to the Participant to cover any partial Share resulting from the settlement process.

7.Restrictive Covenants. The Participant hereby acknowledges that he or she is subject to all of the requirements and conditions in his or her Executive Employment Agreement or in the Restatement of Confidentiality and Non-Compete Agreements (as described in the Policy), as applicable, (the “Covenant Agreements”) previously executed by him or her and that he or she will continue to comply with such Covenant Agreements. Furthermore, the Participant acknowledges that the RSUs granted hereunder serve as sufficient consideration for the reaffirmation of the Covenant Agreements contained herein.

8.Taxes. Unless otherwise required by applicable law, on the Settlement Date, (a) the Shares and the Dividend Payment will be considered ordinary income for tax purposes and subject to all applicable payroll taxes; (b) the Company shall report such income to the appropriate taxing authorities as it determines to be necessary and appropriate; (c) the Participant shall be responsible for payment of any taxes due in respect of the Shares and the Dividend Payment; and (d) the Company shall withhold taxes in respect of the Shares and the Dividend Payment (a “Tax Payment”). In order to satisfy the Participant’s obligation to pay the Tax Payment, the Company will withhold from any Shares otherwise to be delivered to the Participant, a number of whole shares of Common Stock having a Fair Market Value equal to the Tax Payment (i.e., a “cashless exercise”); provided, however, that the Participant may elect to satisfy his or her obligation to pay the Tax Payment through a non-cashless exercise, by notifying the Company within at least 5 business days before the Settlement Date. If the Participant does not provide such notification within the established timeframe, the Company will proceed with the default method of the cashless exercise. If the Participant fails to pay any required Tax Payment, the Company may, in its discretion, deduct any Tax Payments from any amount then or thereafter payable by the Company to the Participant and take such other action as deemed necessary to satisfy all obligations for the Tax Payment (including reducing the number of Shares delivered on the Settlement Date). The Participant agrees to pay the Company in the form of a check or cashier’s check any overage of the Tax Payment paid by the Company as a result of making whole any partial Share issued through a cashless exercise. Furthermore, the Participant acknowledges and agrees that the Participant will be solely responsible for making any Tax Payment directly to the appropriate taxing authorities should the Participant opt not to satisfy his or her Tax Payment through a cashless exercise.

9.Rights as Stockholder. Upon and following the Settlement Date (but not before), the Participant shall be the record or beneficial owner of the Shares unless and until such Shares are sold or otherwise disposed of, and, if a record owner, shall be entitled to all rights of a stockholder of the Company (including voting rights).

10.Section 409A. Although the Company does not guarantee the tax treatment of any payments under this Agreement, the intent of the Company is that the payments under this Agreement be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and all Treasury Regulations and guidance promulgated thereunder (“Code Section 409A”) under the “short-term deferral exception” and to the maximum extent permitted the Agreement shall be limited, construed and interpreted in accordance with such intent. The Company intends that the performance conditions applicable to the Performance-Based RSUs relate to the Company’s business activities and/or organizational goals within the meaning of Treas. Reg. 1.409A-1(d)(1). In no event whatsoever shall the Company or its affiliates or their respective officers, directors, employees or agents be liable for any additional tax, interest or penalties that may be imposed on the Participant by Code Section 409A or damages for failing to comply with Code Section 409A. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, if at the time of the Participant’s separation from service (as defined in Code Section 409A), the Participant is a “Specified Employee,” then the Company will defer the payment or commencement of any nonqualified deferred compensation subject to Code Section 409A payable upon separation from service (without any reduction in such payments or benefits ultimately paid or provided to the Participant) until the date that is 6 months following separation from service or, if earlier, the earliest other date as is permitted under Code Section 409A (and any amounts that otherwise would have been paid during this deferral period will be paid in a lump sum on the day after the expiration of the 6 month period or such shorter period, if applicable). The Participant will be a “Specified Employee” for purposes of this Agreement if, on the date of the Participant’s separation from service, the Participant is an individual who is, under the method of determination adopted by the Company designated as, or within the category of employees deemed to be, a “Specified Employee” within the meaning and in accordance with Treasury Regulation Section 1.409A-1(i). The Company shall determine in its sole discretion all matters relating to who is a “Specified Employee” and the application of and effects of the change in such determination.

11.Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Puerto Rico applicable to contracts to be performed therein.

3

12.Notice. Every notice or other communication relating to this Agreement shall be made in writing and the notice, request or other communication shall be deemed to be received upon receipt by the party entitled thereto. Any notice, request or other communication by the Participant should be delivered to the Company’s Chief Legal Officer.

13.Miscellaneous. This Agreement, the Plan and the Covenant Agreements contain the entire agreement between the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless in writing and signed by the parties hereto. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Participant, acquire any rights hereunder in accordance with this Agreement or the Plan. The terms and provisions of the Plan and the Vesting Schedule are incorporated herein by reference, and the Participant hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.

By clicking “I Accept” in the checkbox below, the Participant is hereby agreeing to the terms and conditions of this Agreement as of the Date of Grant set forth above, and that he or she has read the same, including the Vesting Schedule.

Exhibit A – Vesting Schedule

Number of Time-Based RSUs to vest	Vesting Date
[•]	02/24/2024
[•]	02/24/2025
[•]	02/24/2026
Number of Performance-Based RSUs to vest	Vesting Date
[•] Adjusted EBITDA RSUs with TSR Modifier	02/24/2026

Participant’s Performance-Based RSUs are governed by the following terms and conditions:

I.Defined Terms. All capitalized terms used, but not defined in this Exhibit A, shall have the meanings attributed to them in the Agreement.

a.“Accumulated Shares” means, for a given trading day, the sum of (a) one (1) share and (b) a cumulative number of shares of a company’s common stock purchased with dividends declared on a company’s common stock, assuming same day reinvestment of the dividends in the common stock of the company at the closing price on the ex-dividend date, for ex-dividend dates during the Opening Average Period or between the Date of Grant and the Vesting Date, as applicable.

b.“Adjusted EBITDA” means the Company’s earnings before interest, taxes, depreciation and amortization, after all typical and applicable adjustments made by the Company.

c.“Closing Average Period” means the last 20 trading days of the Relative TSR Performance Period.

d.“Closing Average Share Value” means the average, over the trading days in the Closing Average Period, of the closing price of a company’s stock multiplied by the Accumulated Shares for each trading day during the Closing Average Period.

e.“Adjusted EBITDA Performance Period” means the one-year period commencing on January 1, 2023 and ending on December 31, 2023, consistent with the Company’s fiscal year.

f.“Grant Date Fair Value” means a value arrived at by projecting future stock prices for the Company and the Peer Companies while allowing for greater flexibility and customization of the assumptions and plan design parameters which is necessary to value the Adjusted EBITDA RSUs with a Relative TSR Multiplier.

g.“Opening Average Period” means the 20 trading days immediately preceding the first day of the Relative TSR Performance Period.

h.“Opening Average Share Value” means the average, over the trading days in the Opening Average Period, of the closing price of a company’s stock multiplied by the Accumulated Shares for each trading day during the Opening Average Period.

i.“Peer Companies” means the constituents of the Russell 2000 Index as of January 1, 2023.

j.“Performance Period” means the 3-year period commencing on the Date of Grant and ending on the third-anniversary of the Date of Grant.

k.“Relative TSR” is a performance metric that compares the Company’s TSR to the TSR of each of the Peer Companies using the methodology set forth herein.

l.“Relative TSR Multiplier” is the multiplier that will be applied to the Adjusted EBITDA RSUs at the end of the Relative TSR Performance Period.

4

m.“Relative TSRPerformance Period” means the Performance Period for which the TSR metrics for Performance-Based RSUs will be measured.

n.“TSR” (Total Shareholder Return) means the change in fair market value over a specified period of time, expressed as a percentage, which will be calculated by dividing (a) the Closing Average Share Value by (b) the Opening Average Share Value and subtracting one from the quotient.

II. Metrics for Performance-Based RSUs

The Company will use the following metrics and criteria for calculating Performance-Based RSUs:

a.The target number of Performance-Based RSUs that the Participant is granted has been allocated to Adjusted EBITDA RSUs and will be subject to the Relative TSR Multiplier. The actual number of Performance-Based Adjusted EBITDA RSUs with a Relative TSR Multiplier was determined by dividing this portion of the Award’s value by the Grant Date Fair Value.

b.The Adjusted EBITDA RSUs will be based on the Company’s actual one-year Adjusted EBITDA measured over the Adjusted EBITDA Performance Period relative to the goals established below.

Performance Level	EVERTEC Adjusted 1-Year EBITDA (millions)	Earned Percentage
Maximum	[•]	200%
Target	[•]	100%
Threshold	[•]	60%
Less Than	[•]	0%

c.The number of RSUs that are eligible to vest may be greater or less than the resulting number of earned Adjusted EBITDA RSUs depending on the level of attainment of Relative TSR over the Relative TSR Performance Period based on the following percentile approach.

Performance Level	EVERTEC Percentile Rank vs. Peer Companies	Relative TSR Multiplier
Maximum	75th Percentile or Above	1.25
Target	50th Percentile	1.00
Threshold	≤ 35th Percentile	0.75

d.The total number of Performance-Based RSUs that will actually vest will be equal to: Target EBITDA RSUs *Earned Percentage* Relative TSR Multiplier.

e.The actual level of the Earned Percentage and Relative TSR Multiplier will be based on a linear interpolation between threshold and target and between target and maximum levels.

f.In the event of a payout percentage level above 100%, the Participant will be awarded additional RSUs so that the total number of RSUs which vest as of the Vesting Date equals the RSU amount as calculated in item (d) above. In the event of a payout percentage level below 100%, the original RSU Award amount will be reduced to the extent necessary to provide that the total number of RSUs which vest as of the Vesting Date equals the RSU amount as calculated in item (d) above (any such reduced RSUs to be considered forfeited). This same method will apply to the calculation of dividend equivalents and any shares of Common Stock issued as a result thereof.

g.Relative TSR will be determined by ranking the Company and the Peer Companies from highest to lowest according to their respective TSRs. After this ranking, the percentile performance of the Company relative to the Peer Companies will be determined as follows:

P = the percentile performance (rounded to the nearest whole percentile

N = the number of Peer Companies, plus the Company

R = the Company’s ranking among the Peer Companies

5

Example: if there are 24 Peer Companies, and Evertec ranked 7th, the performance would be at the 75th percentile:

.75 = 1 – ((7-1)/(25-1))

h.The Peer Companies may be changed if any of the following events occur during the Relative TSR Performance Period:

1.In the event of a merger, acquisition or business combination transaction of a Peer Company with another Peer Company, the surviving entity shall remain a Peer Company.

2.In the event of a merger, acquisition or business combination transaction of a Peer Company with an entity that is not a Peer Company, where the Peer Company is the surviving entity and remains publicly traded, the surviving entity shall remain a Peer Company.

3.In the event of a merger or acquisition or business combination transaction of a Peer Company with an entity that is not a Peer Company, where the Peer Company is not the surviving entity or is otherwise no longer publicly traded, the Peer Company shall be removed from the list of Peer Companies.

4.In the event of a bankruptcy of a Peer Company, or if a Peer Company is delisted, such Peer Company shall remain a Peer Company, but will be allocated a TSR at the lowest position in the final calculation of the percentile rankings.

5.In the event of a stock distribution from a Peer Company consisting of the shares of a new publicly-traded company (a “spin-off”), the Peer Company shall remain a Peer Company and the stock distribution shall be treated as a dividend from the Peer Company based on the closing price of the shares of the spun-off company on its first day of trading. The performance of the shares of the spun-off company shall not thereafter be tracked for purposes of calculating TSR.

6

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Morgan Schuessler, certify that:

1.I have reviewed this report on Form 10-Q of EVERTEC, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2023	/s/ Morgan Schuessler
	Morgan Schuessler
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Joaquin A. Castrillo-Salgado, certify that:

1.I have reviewed this report on Form 10-Q of EVERTEC, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2023	/s/ Joaquin A. Castrillo-Salgado
	Joaquin A. Castrillo-Salgado
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 , the undersigned officer of EVERTEC, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2023	/s/ Morgan Schuessler
	Morgan Schuessler
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of EVERTEC, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2023	/s/ Joaquin A. Castrillo-Salgado
	Joaquin A. Castrillo-Salgado
	Chief Financial Officer

XML

Cover - shares	3 Months Ended
	Mar. 31, 2023	Apr. 21, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-35872
Entity Registrant Name	EVERTEC, Inc.
Entity Incorporation, State or Country Code	PR
Entity Tax Identification Number	66-0783622
Entity Address, Address Line One	Cupey Center Building,
Entity Address, Address Line Two	Road 176, Kilometer 1.3,
Entity Address, City or Town	San Juan,
Entity Address, State or Province	PR
Entity Address, Postal Zip Code	00926
City Area Code	787
Local Phone Number	759-9999
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	EVTC
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		65,078,462
Entity Central Index Key	0001559865
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 173,662	$ 197,229
Restricted cash	19,015	18,428
Accounts receivable, net	127,876	131,080
Prepaid expenses and other assets	47,944	42,392
Total current assets	368,497	389,129
Debt securities available-for-sale, at fair value	2,179	2,203
Investment in equity investee	15,703	14,661
Property and equipment, net	56,858	56,387
Operating lease right-of-use asset	15,627	15,918
Goodwill	434,340	423,392
Other intangible assets, net	213,706	200,320
Deferred tax asset	7,926	5,701
Derivative asset	5,768	7,440
Net investment in leases	0	14
Other long-term assets	16,589	16,578
Total assets	1,137,193	1,131,743
Current Liabilities:
Accrued liabilities	80,064	90,341
Accounts payable	47,647	46,751
Contract liability	19,737	15,226
Income tax payable	9,239	9,406
Current portion of long-term debt	20,750	20,750
Short-term borrowings	0	20,000
Current portion of operating lease liability	5,796	5,936
Total current liabilities	183,233	208,410
Long-term debt	384,550	389,498
Deferred tax liability	10,162	10,111
Contract liability - long term	33,284	34,068
Operating lease liability - long-term	10,592	10,788
Other long-term liabilities	4,231	4,120
Total liabilities	626,052	656,995
Commitments and contingencies (Note 14)
Stockholders’ equity
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued	0	0
Common stock, par value $0.01; 206,000,000 shares authorized; 65,078,462 shares issued and outstanding as of March 31, 2023 (December 31, 2022 - 64,847,233)	651	648
Additional paid-in capital	0	0
Accumulated earnings	507,563	487,349
Accumulated other comprehensive loss, net of tax	(446)	(16,486)
Total EVERTEC, Inc. stockholders’ equity	507,768	471,511
Non-controlling interest	3,373	3,237
Total equity	511,141	474,748
Total liabilities and equity	$ 1,137,193	$ 1,131,743

XML

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock authorized (in shares)	2,000,000	2,000,000
Preferred stock issued (in shares)	0	0
Common stock par value (in usd per share)	$ 0.01	$ 0.01
Common stock authorized (in shares)	206,000,000	206,000,000
Common stock issued (in shares)	65,078,462	64,847,233
Common stock outstanding (in shares)	65,078,462	64,847,233

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Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Revenues (affiliates Note 15)	$ 159,814	$ 150,248
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	76,417	64,659
Selling, general and administrative expenses	23,875	20,384
Depreciation and amortization	19,432	19,160
Total operating costs and expenses	119,724	104,203
Income from operations	40,090	46,045
Non-operating income (expenses)
Interest income	1,133	667
Interest expense	(5,643)	(5,547)
(Loss) gain on foreign currency remeasurement	(4,864)	2,669
Earnings of equity method investment	1,155	570
Other income, net	1,010	637
Total non-operating expenses	(7,209)	(1,004)
Income before income taxes	32,881	45,041
Income tax expense	2,818	6,175
Net income	30,063	38,866
Less: Net income (loss) attributable to non-controlling interest	11	(32)
Net income attributable to EVERTEC, Inc.’s common stockholders	30,052	38,898
Other comprehensive (loss) income, net of tax of $(116) and $423
Foreign currency translation adjustments	17,605	2,214
(Loss) gain on cash flow hedges	(1,545)	9,725
Unrealized loss on change in fair value of debt securities available-for-sale	(20)	(27)
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders	$ 46,092	$ 50,810
Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders (in usd per share)	$ 0.46	$ 0.54
Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders (in usd per share)	$ 0.46	$ 0.53

XML

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Other comprehensive (loss) income, tax	$ (116)	$ 423

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Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Earnings	Accumulated  Other Comprehensive Loss	Non-Controlling Interest
Beginning balance (in shares) at Dec. 31, 2021		71,969,856
Beginning balance at Dec. 31, 2021	$ 470,268	$ 719	$ 7,565	$ 506,051	$ (48,123)	$ 4,056
Changes in Stockholders’ Equity
Share-based compensation recognized	4,279		4,279
Repurchase of common stock (in shares)		(521,643)
Repurchase of common stock	(21,179)	$ (5)	(6,193)	(14,981)
Restricted stock units delivered (in shares)		251,085
Restricted stock units delivered	(5,648)	$ 3	(5,651)
Net income (loss)	38,866			38,898		(32)
Cash dividends declared on common stock, $0.05 per share	(3,598)			(3,598)
Other comprehensive income	12,160				11,912	248
Ending balance (in shares) at Mar. 31, 2022		71,699,298
Ending balance at Mar. 31, 2022	$ 495,148	$ 717	0	526,370	(36,211)	4,272
Beginning balance (in shares) at Dec. 31, 2022	64,847,233	64,847,233
Beginning balance at Dec. 31, 2022	$ 474,748	$ 648	0	487,349	(16,486)	3,237
Changes in Stockholders’ Equity
Share-based compensation recognized	5,557		5,557
Repurchase of common stock (in shares)		(187,976)
Repurchase of common stock	(6,269)	$ (1)		(6,268)
Restricted stock units delivered (in shares)		419,205
Restricted stock units delivered	(5,874)	$ 4	(5,557)	(321)
Net income (loss)	30,063			30,052		11
Cash dividends declared on common stock, $0.05 per share	(3,249)			(3,249)
Other comprehensive income	$ 16,165				16,040	125
Ending balance (in shares) at Mar. 31, 2023	65,078,462	65,078,462
Ending balance at Mar. 31, 2023	$ 511,141	$ 651	$ 0	$ 507,563	$ (446)	$ 3,373

XML

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) - $ / shares		3 Months Ended
	Feb. 16, 2023	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in usd per share)	$ 0.05	$ 0.05	$ 0.05

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net income	$ 30,063	$ 38,866
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,432	19,160
Amortization of debt issue costs and accretion of discount	396	404
Operating lease amortization	1,626	1,450
Provision for expected credit losses and sundry losses	2,371	59
Deferred tax benefit	(2,208)	(702)
Share-based compensation	5,557	4,279
Loss on disposition of property and equipment	159	91
Earnings of equity method investment	(1,155)	(570)
Loss (gain) on foreign currency remeasurement	4,864	(2,669)
Decrease (increase) in assets:
Accounts receivable, net	10,044	7,060
Prepaid expenses and other assets	(5,388)	(5,573)
Other long-term assets	(261)	(3,319)
(Decrease) increase in liabilities:
Accrued liabilities and accounts payable	(13,417)	1,773
Income tax payable	(639)	2,248
Contract liability	3,089	4,387
Operating lease liabilities	310	23
Other long-term liabilities	(332)	714
Total adjustments	24,448	28,815
Net cash provided by operating activities	54,511	67,681
Cash flows from investing activities
Additions to software	(9,257)	(8,669)
Property and equipment acquired	(4,063)	(5,621)
Acquisitions, net of cash acquired	(23,317)	0
Net cash used in investing activities	(36,637)	(14,290)
Cash flows from financing activities
Withholding taxes paid on share-based compensation	(5,874)	(5,648)
Net decrease in short-term borrowings	(20,000)	0
Repayment of short-term borrowings for purchase of equipment and software	0	(806)
Dividends paid	(3,249)	(3,598)
Repurchase of common stock	(6,269)	(21,179)
Repayment of long-term debt	(5,187)	(4,938)
Net cash used in financing activities	(40,579)	(36,169)
Effect of foreign exchange rate on cash, cash equivalents and restricted cash	(275)	766
Net (decrease) increase in cash, cash equivalents and restricted cash	(22,980)	17,988
Cash, cash equivalents and restricted cash at beginning of the period	215,657	285,917
Cash, cash equivalents and restricted cash at end of the period	192,677	303,905
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	173,662	283,610
Restricted cash	19,015	20,295
Cash, cash equivalents and restricted cash	192,677	303,905
Supplemental disclosure of cash flow information:
Cash paid for interest	5,874	5,666
Cash paid for income taxes	6,119	4,287
Supplemental disclosure of non-cash activities:
Payable due to vendor related to equipment and software acquired	5,282	1,260
Accounts payable related to business acquisition	$ 881	$ 0

XML

The Company and Basis of Presentation

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

The Company and Basis of Presentation

The Company and Basis of Presentation

The Company

EVERTEC, Inc. and its subsidiaries (collectively the “Company” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management services. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, which we believe is one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico and technology outsourcing and payment transactions fraud monitoring in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations, and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely.

Basis of Presentation

The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

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Business Acquisition

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Business Acquisition

Business Acquisition

Acquisition of a Business

On February 16, 2023, the Company closed on the acquisition of 100% of Paysmart Pagamentos Eletronicos Ltda (“paySmart”). Headquartered in Porto Alegre, Brazil, paySmart provides issuer processing services and BIN Sponsorship services for prepaid programs under domestic and international schemes in Brazil. The aggregate purchase price was $130 million Brazilian reals, approximately USD$25 million. The acquisition expands the Company's footprint in Brazil and compliments the current product offering in the country.

The Company accounted for this transaction as a business combination, the purchase price allocation summary is preliminary and subject to change. As part of the transaction, the Company received net assets with a book value of approximately $6.5 million, including settlement assets and settlement liabilities which result from timing differences in paySmart's settlement process with merchants. The Company's analysis of the acquired settlement assets and settlement liabilities is not complete, and the Company will record the settlement assets and settlement liabilities, which are expected to be substantially equivalent amounts within current assets and current liabilities, once such analysis is completed during the purchase accounting period. The Company has also identified intangible assets other than goodwill for which a portion of the purchase price must be allocated and preliminarily allocated the purchase price to the following identified intangible assets: $9.4 million to customer relationships, $1.9 million to software, $1.5 million to tradenames and trademarks and $0.6 million to non-compete agreements. Goodwill in connection with this transaction is currently estimated at approximately $5.1 million. These values are preliminary and subject to change. The Company expects to complete the purchase price allocation during the second quarter of 2023.

Refer to Note 5- Goodwill and Other Intangible Assets for detail of goodwill allocated by reportable segments. The goodwill is primarily attributed to anticipated synergies. None of the goodwill is deductible for income tax purposes.

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Debt Securities

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Debt Securities

Debt Securities

The amortized cost, gross unrealized gains and losses recorded in OCI and estimated fair value of debt securities available-for-sale by contractual maturity as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(In thousands)			Gross unrealized
	Amortized cost		Gains	Losses	Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,199	—	(20)	$	2,179

	December 31, 2022
(In thousands)			Gross unrealized
	Amortized cost		Gains		Losses		Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,194	$	9	$	—	$	2,203

Costa Rica Government Obligations are held by a trust in the Costa Rica National Bank as a collateral requirement for settlement activities. The Company may substitute securities as needed but must maintain certain levels of collateral based on transaction volumes.

No debt securities were purchased, matured or sold during the quarters ended March 31, 2023 and March 31, 2022.

A provision for credit losses was not required for the periods presented above. Refer to Note 7 for disclosure requirements related to the fair value hierarchy.

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Property and Equipment, net

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

Property and equipment, net consists of the following:

(In thousands)	Useful life in years	March 31, 2023		December 31, 2022
Buildings	30	$	1,600	$	1,456
Data processing equipment	3 - 5	169,517		162,761
Furniture and equipment	3 - 20	9,603		9,154
Leasehold improvements	5 -10	3,906		3,660
		184,626		177,031
Less - accumulated depreciation and amortization		(129,170)		(121,919)
Depreciable assets, net		55,456		55,112
Land		1,402		1,275
Property and equipment, net		$	56,858	$	56,387

Depreciation and amortization expense related to property and equipment for three months ended March 31, 2023 amounted to $5.0 million compared to $4.6 million for the corresponding period in 2022.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible AssetsThe changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 16):

(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Balance at December 31, 2022	$	160,972	$	84,289	$	138,121	$	40,010	$	423,392
Foreign currency translation adjustments	—		5,824		—		—		5,824
Preliminary goodwill attributable to acquisition	—		5,124		—		—		5,124
Balance at March 31, 2023	$	160,972	$	95,237	$	138,121	$	40,010	$	434,340

Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company may test for goodwill impairment using a qualitative or a quantitative analysis. In a qualitative analysis, the Company assesses whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount. In the quantitative analysis, the Company compares the estimated fair value of the reporting units to their carrying values, including goodwill. No impairment losses were recognized for the periods ended March 31, 2023 or 2022. Refer to Note 2 - Business Acquisition, for further details of goodwill acquired in the first quarter of 2023.

The carrying amount of other intangible assets at March 31, 2023 and December 31, 2022 was as follows:

		March 31, 2023
(In thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	404,311	$	(310,427)	$	93,884
Trademarks	1 - 15	44,858		(38,367)		$	6,491
Software packages	3 - 10	363,269		(250,574)		$	112,695
Non-compete agreement	5	636		—		$	636
Other intangible assets, net		$	813,074	$	(599,368)	$	213,706

		December 31, 2022
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	392,737	$	(303,733)	$	89,004
Trademarks	1 - 15	43,195		(37,998)		5,197
Software packages	3 - 10	349,474		(243,355)		106,119
Other intangible assets, net		$	785,406	$	(585,086)	$	200,320

Amortization expense related to other intangibles for the three months ended March 31, 2023 amounted to $16.3 million compared to $14.5 million for the corresponding period in 2022.

The estimated amortization expense of the other intangible balances outstanding at March 31, 2023, excluding assets acquired as part of the paySmart acquisition as the Company is yet to finalize the purchase price allocation, for the next five years is as follows:

(Dollar amounts in thousands)
Remaining 2023	$	44,561
2024	48,174
2025	22,194
2026	13,896
2027	10,091

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Debt and Short-Term Borrowings

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt and Short-Term Borrowings

Debt and Short-Term BorrowingsTotal debt at March 31, 2023 and December 31, 2022 was as follows:

(In thousands)	March 31, 2023		December 31, 2022
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(2))	$	405,300	$	410,248

(1)Net of unaccreted discount and unamortized debt issue costs, as applicable.

(2)Subject to a minimum rate ("SOFR floor") of 0% plus applicable margin of 1.50% at March 31, 2023 and December 31, 2022.

Secured Credit Facilities

On December 1, 2022, EVERTEC and EVERTEC Group, entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for (i) a $415.0 million term loan A facility (the “Term Loan Facility”) and (ii) a $200.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Loan Facility, the “2022 Credit Facilities”). The 2022 Credit Facilities mature on December 1, 2027.

At March 31, 2023, the unpaid principal balance of the Term Loan Facility was $409.8 million. The additional borrowing capacity for the Revolving Facility at March 31, 2023 was $194.0 million. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Interest Rate Swaps

As of March 31, 2023, the Company has an interest rate swap agreement, entered into in December 2018, which converts a portion of the interest rate payments on the Company's Term Loan Facility from variable to fixed: 

Swap Agreement	Effective date	Maturity Date	Notional Amount	Variable Rate	Fixed Rate
2018 Swap	April 2020	November 2024	$250 million	1-month SOFR	2.929%

As of March 31, 2023 and December 31, 2022, the carrying amount of the derivative included on the Company's unaudited condensed consolidated balance sheets was $5.8 million and $7.4 million, respectively. The fair value of this derivative is estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 for disclosure of losses recorded on cash flow hedging activities.

During the three months ended March 31, 2023 and 2022, the Company reclassified gains of $1.0 million and losses of $1.7 million, respectively, from accumulated other comprehensive loss into interest expense. Based on current SOFR rates, the Company expects to reclassify gains of $4.5 million from accumulated other comprehensive loss into interest expense over the next 12 months.

The cash flow hedge is considered highly effective.

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Financial Instruments and Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurements

Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements

Debt Securities Available for Sale

The fair value of debt securities is estimated based on observable inputs, therefore classified as a Level 2 asset within the fair value hierarchy. The fair value of debt securities was $2.2 million as of each March 31, 2023 and December 31, 2022.

Derivative Instruments

The fair value of the Company's interest rate swap is estimated using Level 2 inputs under the fair value hierarchy. This derivative was in an asset position with a balance of $5.8 million and $7.4 million as of March 31, 2023 and December 31, 2022, respectively.

The following table presents the carrying value, as applicable, and estimated fair value for financial instruments at March 31, 2023 and December 31, 2022:

	March 31, 2023				December 31, 2022
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Costa Rica government obligations	$	2,179	$	2,179	$	2,203	$	2,203
Interest rate swap	5,768		5,768		7,440		7,440
Financial liabilities:
Term Loan Facility	405,300		408,378		410,248		413,494

The fair value of the term loan at March 31, 2023 and December 31, 2022 was obtained using prices provided by third party service providers. Their pricing is based on various inputs such as market quotes, recent trading activity in a non-active market or imputed prices. These inputs are considered Level 3 inputs under the fair value hierarchy. Also, the pricing may include the use of an algorithm that could take into account movements in the general high yield market, among other variants. The secured term loan is not accounted for at fair value in the balance sheet.

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Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Equity

Equity

Accumulated Other Comprehensive Loss

The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the three months ended March 31, 2023: 

(In thousands)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Unrealized Gains (losses) on Debt Securities AFS		Total
Balance - December 31, 2022, net of tax	$	(23,481)	$	6,954	$	41	(16,486)
Other comprehensive income (loss) before reclassifications	17,605		(501)		(20)		17,084
Effective portion reclassified to net income	—		(1,044)		—		(1,044)
Balance - March 31, 2023, net of tax	$	(5,876)	$	5,409	$	21	$	(446)

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Share-based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-based Compensation

Share-based Compensation

Long-term Incentive Plan ("LTIP")

During the three months ended March 31, 2021, 2022 and 2023, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors ("Board") approved grants of restricted stock units (“RSUs”) to executives and certain employees pursuant to the 2021 LTIP, 2022 LTIP and 2023 LTIP, respectively, all under the terms of the Company's 2022 Equity Incentive Plan. Under the LTIPs, the Company granted RSUs to eligible participants as time-based awards and/or performance-based awards.

The vesting of the RSUs is dependent upon service and/or performance conditions as defined in the award agreements. Employees that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee provides services to the Company through the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant date and ending on March 2 of each year for the 2021 LTIP, February 25 of each year for the 2022 LTIP and February 24 of each year for the 2023 LTIP. In 2022 and 2023, the Company also granted time-based awards with a three year service vesting period which will cliff vest on February 25, 2025 and February 24, 2026, respectively.

For the performance-based awards under the 2021 LTIP, 2022 LTIP, and 2023 LTIP, the Compensation Committee established adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance measure while maintaining focus on total shareholder return through the use of a market-based total shareholder return ("TSR") performance modifier. The Adjusted EBITDA measure is based on annual targets and can result in a payout between 0% and 200%, depending on the performance level. The TSR modifier adjusts the shares earned based on the Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1 of the year of the grant and ending on December 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additional two-year service vesting period and will vest on March 2, 2024 for the 2021 LTIP, February 25, 2025 for the 2022 LTIP, and February 24, 2026 for the 2023 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting.

The following table summarizes nonvested RSUs activity for the three months ended March 31, 2023:

Nonvested RSUs	Shares	Weighted-average grant date fair value
Nonvested at December 31, 2022	1,363,780	$	38.96
Granted	740,846	38.39
Vested	(576,995)	34.03
Forfeited	(2,592)	40.19
Nonvested at March 31, 2023	1,525,039	$	40.22

For the three months ended March 31, 2023, the Company recognized $5.6 million of share-based compensation expense, compared with $4.3 million for the corresponding period in 2022.

As of March 31, 2023, the maximum unrecognized cost for RSUs was $49.0 million. The cost is expected to be recognized over a weighted average period of 2.2 years.

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Revenues

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into primary geographical markets, nature of the products and services, and timing of transfer of goods and services. The Company's operating segments are determined by the nature of the products and services the Company provides and the primary geographical markets in which the Company operates. Revenue disaggregated by segment is discussed in Note 16, Segment Information.

In the following tables, revenue for each segment, excluding intersegment revenues, is disaggregated by timing of revenue recognition for the periods indicated.

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	113	$	614	$	—	$	1,727	$	2,454
Products and services transferred over time	32,366		30,679		40,347		53,968		157,360
	$	32,479	$	31,293	$	40,347	$	55,695	$	159,814

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	55	$	13	$	—	$	1,885	$	1,953
Products and services transferred over time	26,430		25,497		35,629		60,739		148,295
	$	26,485	$	25,510	$	35,629	$	62,624	$	150,248

Revenue concentration with a single customer, Popular, as a percentage of total revenues for the quarters ended March 31, 2023 and March 31, 2022 was approximately 37% and 43% , respectively.

Contract Balances

The following table provides information about contract assets from contracts with customers.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	4,749	$	1,715
Services transferred to customers	3,124		9,313
Transfers to accounts receivable	(2,621)		(6,279)
Balance at end of period	$	5,252	$	4,749

The current portion of contract assets is recorded as part of prepaid expenses and other assets, and the long-term portion is included in other long-term assets in the unaudited condensed consolidated balance sheets.

Accounts receivable, net at March 31, 2023 amounted to $127.9 million. Contract liability and contract liability - long term at March 31, 2023 amounted to $19.7 million and $33.3 million, respectively, and may arise when consideration is received or due in advance from customers prior to performance. The contract liability is mainly comprised of upfront fees for implementation or set up activities, including fees charged in pre-production periods in connection with hosting services. Contract liabilities may also arise when consideration is received or due in advance from customers prior to performance. During the three months ended March 31, 2023, the Company recognized revenue of $4.4 million that was included in the contract liability at December 31, 2022. During the three months ended March 31, 2022, the Company recognized revenue of $7.1 million that was included in the contract liability at December 31, 2021.

Transaction price allocated to the remaining performance obligations

The estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at March 31, 2023 is $993.7 million, which is expected to be recognized over the next 1 to 6 years. This amount consists of minimums on certain master services agreements, professional service fees for implementation or set up activities related to managed services and maintenance services typically recognized over the life of the contract, and professional service fees for customizations or development of on-premise licensing agreements, which are recognized over time based on inputs relative to the total expected inputs to satisfy a performance obligation.

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Current Expected Credit Losses

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Current Expected Credit Losses

Current Expected Credit Losses

Allowance for Current Expected Credit Losses

Trade receivables from contracts with customers are financial assets analyzed by the Company under the expected credit loss model. To measure expected credit losses, trade receivables are grouped based on shared risk characteristics (i.e., the relevant industry sector and customer's geographical location) and days past due (i.e., delinquency status), while considering the following:

•Customers in the same geographical location share similar risk characteristics associated with the macroeconomic environment of their country.

•The Company has two main industry sectors: private and governmental. The private pool is comprised mainly of leading financial institutions, merchants and corporations, while the governmental pool is comprised of government agencies. The governmental customers possess different risk characteristics than private customers because although all invoices are due 30 days after issuance, governmental customers usually pay within 60 to 90 days after issuance (i.e., approximately 30 to 60 more days than private customers).

•The expected credit loss rate is likely to increase as receivables move to older aging buckets. The Company used the following aging categories to estimate the risk of delinquency status: (i) 0 days past due; (ii) 1-30 days past due; (iii) 31-60 days past due; (iv) 61-90 days past due; and (v) over 90 days past due.

The credit losses of the Company’s trade receivables have been low historically and most balances are collected within one year. Therefore, the Company determined that the expected loss rates should be calculated using the historical loss rates adjusted by macroeconomic factors. The historical rates are calculated for each of the aging categories used for pooling trade receivables. To determine the collected portion of each bucket, the collection time of each trade receivable is identified, to estimate the proportion of outstanding balances per aging bucket that ultimately will not be collected. This is used to determine the expectation of losses based on the history of uncollected trade receivables once the specific past due period is surpassed.

The historical rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the receivables by applying a country risk premium as the forward-looking macroeconomic factor. Specific reserves are established for certain customers for which collection is doubtful.

Rollforward of the Allowance for Expected Current Credit Losses

The following table provides information about the allowance for expected current credit losses on trade receivables.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	2,159	$	2,523
Current period (release) provision for expected credit losses	566		754
Write-offs	(24)		(1,268)
Recoveries of amounts previously written-off	1		150
Balance at end of period	$	2,702	$	2,159

The Company does not have a delinquency threshold for writing-off trade receivables. The Company has a formal process for the review and approval of write-offs.

Impairment losses on trade receivables are presented as net impairment losses within cost of revenue, exclusive of depreciation and amortization in the unaudited condensed consolidated statements of income and comprehensive income. Subsequent recoveries of amounts previously written-off, when applicable, are credited against the allowance for expected current credit losses within accounts receivable, net on the unaudited condensed consolidated balance sheets.

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Income Tax

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

The components of income tax expense for the three months ended March 31, 2023 and 2022, respectively, consisted of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision	$	5,026	$	6,877
Deferred tax benefit	(2,208)		(702)
Income tax expense	$	2,818	$	6,175

The Company conducts operations in Puerto Rico, the United States, and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three months ended March 31, 2023 and 2022, and its segregation based on location of operations:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision
Puerto Rico	$	1,180	$	2,315
United States	11		30
Foreign countries	3,835		4,532
Total current tax provision	$	5,026	$	6,877
Deferred tax benefit
Puerto Rico	$	(235)	$	(393)
United States	(26)		(71)
Foreign countries	(1,947)		(238)
Total deferred tax benefit	$	(2,208)	$	(702)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

As of March 31, 2023, the Company had $117.0 million of unremitted earnings from foreign subsidiaries, compared to $115.5 million as of December 31, 2022. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested.

As of March 31, 2023, the gross deferred tax asset amounted to $18.6 million and the gross deferred tax liability amounted to $19.5 million, compared to $17.9 million and $20.7 million, respectively, as of December 31, 2022. As of March 31, 2023, and December 31, 2022, there is a valuation allowance against the gross deferred tax asset of approximately $1.3 million and $1.6 million, respectively.

Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Computed income tax at statutory rates	$	12,330	$	16,890
Differences in tax rates due to multiple jurisdictions	1,029		447
Effect of income subject to tax-exemption grant	(8,849)		(10,809)
Unrecognized tax expense	34		80
Excess tax benefits on share-based compensation	(91)		(260)
Tax credits for research and development activities	(884)		—
Other, net	(751)		(173)
Income tax expense	$	2,818	$	6,175

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Net Income Per Common Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Net Income Per Common Share

Net Income Per Common Share

The reconciliation of the numerator and denominator of the income per common share is as follows:

	Three months ended March 31,
(In thousands, except per share information)	2023		2022
Net income available to EVERTEC, Inc.’s common shareholders	$	30,052	$	38,898
Weighted average common shares outstanding	64,968,298		71,965,664
Weighted average potential dilutive common shares (1)	640,320		887,552
Weighted average common shares outstanding - assuming dilution	65,608,618		72,853,216
Net income per common share - basic	$	0.46	$	0.54
Net income per common share - diluted	$	0.46	$	0.53

(1)Potential common shares consist of common stock issuable under RSUs awards using the treasury stock method.

On February 16, 2023, the Company's Board declared quarterly cash dividends of $0.05 per share of common stock, which was paid on March 17, 2023, to stockholders' of record on February 28, 2023.

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Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesEVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss would be insignificant. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material.

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

In connection with closing of the Popular Transaction on July 1, 2022, the Company terminated the existing stockholder agreement with Popular, which granted Popular certain benefits as a shareholder of the Company. In addition, on August 15, 2022, through a secondary offering, Popular sold its remaining shares of common stock of Evertec and as of that date no longer holds any shares of EVERTEC common stock. EVERTEC is no longer considered a subsidiary of Popular under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Given both the termination of the stockholder agreement and that Popular is no longer a shareholder of EVERTEC, management concluded that Popular is no longer a related party as of August 15, 2022.

The following table presents the Company’s transactions with Popular for the three months ended March 31, 2022 while they were deemed a related party:

	Three months ended March 31,
(In thousands)	2022
Total revenues	$	64,729
Cost of revenues	$	1,315
Operating lease cost and other fees	$	1,859
Interest earned from affiliate
Interest income	$	340

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Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), ATH Movil (person-to-person) and ATH Business (person-to-merchant) digital transactions and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e., savings or checking accounts, loans, etc.), server capacity usage or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented within the “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,

•corporate finance and accounting,

•human resources,

•legal,

•risk management functions,

•internal audit,

•corporate debt related costs,

•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,

•intersegment revenues and expenses, and

•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates and reports Adjusted EBITDA presented to the CODM for assessing segment performance to exclude the impact of non-cash unrealized gains and losses from foreign currency remeasurement. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash unrealized items and unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting, given that it is reported to the CODM for purposes of allocating resources. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the accompanying unaudited condensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	48,429	$	35,317	$	40,347	$	55,695	$	(19,974)	$	159,814
Operating costs and expenses	27,722		29,312		26,689		38,913		(2,912)		119,724
Depreciation and amortization	5,888		2,711		1,129		4,488		5,216		19,432
Non-operating income (expenses)	365		(3,785)		307		532		(118)		(2,699)
EBITDA	26,960		4,931		15,094		21,802		(11,964)		56,823
Compensation and benefits (2)	528		652		532		565		3,568		5,845
Transaction, refinancing and other fees (3)	292		—		—		—		(689)		(397)
Loss (gain) on foreign currency remeasurement (4)	95		4,772		—		—		(3)		4,864
Adjusted EBITDA	$	27,875	$	10,355	$	15,626	$	22,367	$	(9,088)	$	67,135

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $13.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $4.0 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	40,008	$	28,783	$	35,629	$	62,624	$	(16,796)	$	150,248
Operating costs and expenses	21,280		23,587		20,204		38,928		204		104,203
Depreciation and amortization	4,480		2,812		1,019		4,763		6,086		19,160
Non-operating income (expenses)	236		3,606		300		700		(966)		3,876
EBITDA	23,444		11,614		16,744		29,159		(11,880)		69,081
Compensation and benefits (2)	337		813		340		445		2,344		4,279
Transaction, refinancing and other fees (3)	—		—		—		—		2,025		2,025
Loss (gain) on foreign currency remeasurement (4)	126		(2,795)		—		—		—		(2,669)
Adjusted EBITDA	$	23,907	$	9,632	$	17,084	$	29,604	$	(7,511)	$	72,716

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $10.9 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $3.3 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.6 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

The reconciliation of consolidated net income to EBITDA is as follows:

	Three months ended March 31,
(In thousands)	2023		2022
Net Income	$	30,063	$	38,866
Add:
Income tax expense	2,818		6,175
Interest expense, net	4,510		4,880
Depreciation and amortization	19,432		19,160
Total EBITDA	$	56,823	$	69,081

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Subsequent Events	3 Months Ended
	Mar. 31, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn April 20, 2023, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on June 2, 2023 to stockholders of record as of the close of business on May 1, 2023. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

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The Company and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

The Company

The Company

EVERTEC, Inc. and its subsidiaries (collectively the “Company” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management services. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, which we believe is one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico and technology outsourcing and payment transactions fraud monitoring in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations, and government agencies with solutions that are essential to their operations, enabling them to issue, process and accept transactions securely.

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

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Debt Securities (Tables)

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Debt securities available-for-sale by contractual maturity

The amortized cost, gross unrealized gains and losses recorded in OCI and estimated fair value of debt securities available-for-sale by contractual maturity as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(In thousands)			Gross unrealized
	Amortized cost		Gains	Losses	Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,199	—	(20)	$	2,179

	December 31, 2022
(In thousands)			Gross unrealized
	Amortized cost		Gains		Losses		Fair Value
Costa Rica Government Obligations
After 1 to 5 years	$	2,194	$	9	$	—	$	2,203

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Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Summary of property and equipment, net

Property and equipment, net consists of the following:

(In thousands)	Useful life in years	March 31, 2023		December 31, 2022
Buildings	30	$	1,600	$	1,456
Data processing equipment	3 - 5	169,517		162,761
Furniture and equipment	3 - 20	9,603		9,154
Leasehold improvements	5 -10	3,906		3,660
		184,626		177,031
Less - accumulated depreciation and amortization		(129,170)		(121,919)
Depreciable assets, net		55,456		55,112
Land		1,402		1,275
Property and equipment, net		$	56,858	$	56,387

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of changes in carrying amount of goodwill allocated by reportable segments

The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 16):

(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Balance at December 31, 2022	$	160,972	$	84,289	$	138,121	$	40,010	$	423,392
Foreign currency translation adjustments	—		5,824		—		—		5,824
Preliminary goodwill attributable to acquisition	—		5,124		—		—		5,124
Balance at March 31, 2023	$	160,972	$	95,237	$	138,121	$	40,010	$	434,340

Summary of carrying amount of other intangible assets

The carrying amount of other intangible assets at March 31, 2023 and December 31, 2022 was as follows:

		March 31, 2023
(In thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	404,311	$	(310,427)	$	93,884
Trademarks	1 - 15	44,858		(38,367)		$	6,491
Software packages	3 - 10	363,269		(250,574)		$	112,695
Non-compete agreement	5	636		—		$	636
Other intangible assets, net		$	813,074	$	(599,368)	$	213,706

		December 31, 2022
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	392,737	$	(303,733)	$	89,004
Trademarks	1 - 15	43,195		(37,998)		5,197
Software packages	3 - 10	349,474		(243,355)		106,119
Other intangible assets, net		$	785,406	$	(585,086)	$	200,320

Summary of estimated amortization expenses

The estimated amortization expense of the other intangible balances outstanding at March 31, 2023, excluding assets acquired as part of the paySmart acquisition as the Company is yet to finalize the purchase price allocation, for the next five years is as follows:

(Dollar amounts in thousands)
Remaining 2023	$	44,561
2024	48,174
2025	22,194
2026	13,896
2027	10,091

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Debt and Short-Term Borrowings (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Summary of total debt

Total debt at March 31, 2023 and December 31, 2022 was as follows:

(In thousands)	March 31, 2023		December 31, 2022
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(2))	$	405,300	$	410,248

(1)Net of unaccreted discount and unamortized debt issue costs, as applicable.

(2)Subject to a minimum rate ("SOFR floor") of 0% plus applicable margin of 1.50% at March 31, 2023 and December 31, 2022.

Summary of interest rate swap transaction

As of March 31, 2023, the Company has an interest rate swap agreement, entered into in December 2018, which converts a portion of the interest rate payments on the Company's Term Loan Facility from variable to fixed: 

Swap Agreement	Effective date	Maturity Date	Notional Amount	Variable Rate	Fixed Rate
2018 Swap	April 2020	November 2024	$250 million	1-month SOFR	2.929%

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Financial Instruments and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Summary of carrying value and estimated fair values for financial instruments

The following table presents the carrying value, as applicable, and estimated fair value for financial instruments at March 31, 2023 and December 31, 2022:

	March 31, 2023				December 31, 2022
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Costa Rica government obligations	$	2,179	$	2,179	$	2,203	$	2,203
Interest rate swap	5,768		5,768		7,440		7,440
Financial liabilities:
Term Loan Facility	405,300		408,378		410,248		413,494

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Equity (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Summary of changes in balances of accumulated other comprehensive loss

The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the three months ended March 31, 2023: 

(In thousands)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Unrealized Gains (losses) on Debt Securities AFS		Total
Balance - December 31, 2022, net of tax	$	(23,481)	$	6,954	$	41	(16,486)
Other comprehensive income (loss) before reclassifications	17,605		(501)		(20)		17,084
Effective portion reclassified to net income	—		(1,044)		—		(1,044)
Balance - March 31, 2023, net of tax	$	(5,876)	$	5,409	$	21	$	(446)

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Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of nonvested restricted shares and RSUs activity

The following table summarizes nonvested RSUs activity for the three months ended March 31, 2023:

Nonvested RSUs	Shares	Weighted-average grant date fair value
Nonvested at December 31, 2022	1,363,780	$	38.96
Granted	740,846	38.39
Vested	(576,995)	34.03
Forfeited	(2,592)	40.19
Nonvested at March 31, 2023	1,525,039	$	40.22

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Revenues (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Summary of disaggregation of revenue

In the following tables, revenue for each segment, excluding intersegment revenues, is disaggregated by timing of revenue recognition for the periods indicated.

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	113	$	614	$	—	$	1,727	$	2,454
Products and services transferred over time	32,366		30,679		40,347		53,968		157,360
	$	32,479	$	31,293	$	40,347	$	55,695	$	159,814

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	55	$	13	$	—	$	1,885	$	1,953
Products and services transferred over time	26,430		25,497		35,629		60,739		148,295
	$	26,485	$	25,510	$	35,629	$	62,624	$	150,248

Summary of contract balances

The following table provides information about contract assets from contracts with customers.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	4,749	$	1,715
Services transferred to customers	3,124		9,313
Transfers to accounts receivable	(2,621)		(6,279)
Balance at end of period	$	5,252	$	4,749

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Current Expected Credit Losses (Tables)

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Schedule of allowance for credit losses on trade receivables

The following table provides information about the allowance for expected current credit losses on trade receivables.

(In thousands)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	2,159	$	2,523
Current period (release) provision for expected credit losses	566		754
Write-offs	(24)		(1,268)
Recoveries of amounts previously written-off	1		150
Balance at end of period	$	2,702	$	2,159

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Income Tax (Tables)

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Components of income tax expense

The components of income tax expense for the three months ended March 31, 2023 and 2022, respectively, consisted of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision	$	5,026	$	6,877
Deferred tax benefit	(2,208)		(702)
Income tax expense	$	2,818	$	6,175

Segregation of income tax expense based on location of operations

The following table presents the components of income tax expense for the three months ended March 31, 2023 and 2022, and its segregation based on location of operations:

	Three months ended March 31,
(In thousands)	2023		2022
Current tax provision
Puerto Rico	$	1,180	$	2,315
United States	11		30
Foreign countries	3,835		4,532
Total current tax provision	$	5,026	$	6,877
Deferred tax benefit
Puerto Rico	$	(235)	$	(393)
United States	(26)		(71)
Foreign countries	(1,947)		(238)
Total deferred tax benefit	$	(2,208)	$	(702)

Schedule of income tax expense differs from computed income tax at statutory rates

Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	Three months ended March 31,
(In thousands)	2023		2022
Computed income tax at statutory rates	$	12,330	$	16,890
Differences in tax rates due to multiple jurisdictions	1,029		447
Effect of income subject to tax-exemption grant	(8,849)		(10,809)
Unrecognized tax expense	34		80
Excess tax benefits on share-based compensation	(91)		(260)
Tax credits for research and development activities	(884)		—
Other, net	(751)		(173)
Income tax expense	$	2,818	$	6,175

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Net Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of reconciliation of numerator and denominator of income per common share

The reconciliation of the numerator and denominator of the income per common share is as follows:

	Three months ended March 31,
(In thousands, except per share information)	2023		2022
Net income available to EVERTEC, Inc.’s common shareholders	$	30,052	$	38,898
Weighted average common shares outstanding	64,968,298		71,965,664
Weighted average potential dilutive common shares (1)	640,320		887,552
Weighted average common shares outstanding - assuming dilution	65,608,618		72,853,216
Net income per common share - basic	$	0.46	$	0.54
Net income per common share - diluted	$	0.46	$	0.53

(1)Potential common shares consist of common stock issuable under RSUs awards using the treasury stock method.

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Summary transactions with related parties

The following table presents the Company’s transactions with Popular for the three months ended March 31, 2022 while they were deemed a related party:

	Three months ended March 31,
(In thousands)	2022
Total revenues	$	64,729
Cost of revenues	$	1,315
Operating lease cost and other fees	$	1,859
Interest earned from affiliate
Interest income	$	340

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Summary of information about operations by business segments

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:

	Three months ended March 31, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	48,429	$	35,317	$	40,347	$	55,695	$	(19,974)	$	159,814
Operating costs and expenses	27,722		29,312		26,689		38,913		(2,912)		119,724
Depreciation and amortization	5,888		2,711		1,129		4,488		5,216		19,432
Non-operating income (expenses)	365		(3,785)		307		532		(118)		(2,699)
EBITDA	26,960		4,931		15,094		21,802		(11,964)		56,823
Compensation and benefits (2)	528		652		532		565		3,568		5,845
Transaction, refinancing and other fees (3)	292		—		—		—		(689)		(397)
Loss (gain) on foreign currency remeasurement (4)	95		4,772		—		—		(3)		4,864
Adjusted EBITDA	$	27,875	$	10,355	$	15,626	$	22,367	$	(9,088)	$	67,135

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $13.0 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $4.0 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

	Three months ended March 31, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total
Revenues	$	40,008	$	28,783	$	35,629	$	62,624	$	(16,796)	$	150,248
Operating costs and expenses	21,280		23,587		20,204		38,928		204		104,203
Depreciation and amortization	4,480		2,812		1,019		4,763		6,086		19,160
Non-operating income (expenses)	236		3,606		300		700		(966)		3,876
EBITDA	23,444		11,614		16,744		29,159		(11,880)		69,081
Compensation and benefits (2)	337		813		340		445		2,344		4,279
Transaction, refinancing and other fees (3)	—		—		—		—		2,025		2,025
Loss (gain) on foreign currency remeasurement (4)	126		(2,795)		—		—		—		(2,669)
Adjusted EBITDA	$	23,907	$	9,632	$	17,084	$	29,604	$	(7,511)	$	72,716

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $10.9 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $3.3 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.6 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

Reconciliation of EBITDA to consolidated net income

The reconciliation of consolidated net income to EBITDA is as follows:

	Three months ended March 31,
(In thousands)	2023		2022
Net Income	$	30,063	$	38,866
Add:
Income tax expense	2,818		6,175
Interest expense, net	4,510		4,880
Depreciation and amortization	19,432		19,160
Total EBITDA	$	56,823	$	69,081

XML

The Company and Basis of Presentation (Details)	Mar. 31, 2023 country
Accounting Policies [Abstract]
Number of countries where services are provided	26

XML

Business Acquisition - Additional Information (Details) $ in Thousands, R$ in Millions	Feb. 16, 2023 BRL (R$)	Feb. 16, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Business Acquisition [Line Items]
Goodwill acquired			$ 434,340	$ 423,392
Paysmart Pagamentos Eletronicos Ltda
Business Acquisition [Line Items]
Percentage of shares acquired		100.00%
Aggregate purchase price	R$ 130	$ 25,000
Net assets acquired		6,500
Goodwill acquired		5,100
Paysmart Pagamentos Eletronicos Ltda | Customer relationships
Business Acquisition [Line Items]
Identified intangible assets acquired		9,400
Paysmart Pagamentos Eletronicos Ltda | Software
Business Acquisition [Line Items]
Identified intangible assets acquired		1,900
Paysmart Pagamentos Eletronicos Ltda | Tradenames and trademarks
Business Acquisition [Line Items]
Identified intangible assets acquired		1,500
Paysmart Pagamentos Eletronicos Ltda | Non-compete agreements
Business Acquisition [Line Items]
Identified intangible assets acquired		$ 600

XML

Debt Securities - Amortized Cost, Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Costa Rica Government Obligations
Amortized cost, after 1 to 5 years	$ 2,199	$ 2,194
Gross unrealized gains, after 1 to 5 years	0	9
Gross unrealized losses, after 1 to 5 years	(20)	0
Debt securities available-for-sale, at fair value	$ 2,179	$ 2,203

XML

Debt Securities - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Purchase of available-for sale debt securities	$ 0	$ 0
Proceeds from maturities of available-for-sale debt securities	0	0
Proceeds from sale of available-for-sale debt securities	$ 0	$ 0

XML

Property and Equipment, net - Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Property and Equipment, net
Property and equipment, gross	$ 184,626	$ 177,031
Less - accumulated depreciation and amortization	(129,170)	(121,919)
Depreciable assets, net	55,456	55,112
Land	1,402	1,275
Property and equipment, net	$ 56,858	56,387
Buildings
Property and Equipment, net
Useful life in years	30 years
Property and equipment, gross	$ 1,600	1,456
Data processing equipment
Property and Equipment, net
Property and equipment, gross	$ 169,517	162,761
Data processing equipment | Minimum
Property and Equipment, net
Useful life in years	3 years
Data processing equipment | Maximum
Property and Equipment, net
Useful life in years	5 years
Furniture and equipment
Property and Equipment, net
Property and equipment, gross	$ 9,603	9,154
Furniture and equipment | Minimum
Property and Equipment, net
Useful life in years	3 years
Furniture and equipment | Maximum
Property and Equipment, net
Useful life in years	20 years
Leasehold improvements
Property and Equipment, net
Property and equipment, gross	$ 3,906	$ 3,660
Leasehold improvements | Minimum
Property and Equipment, net
Useful life in years	5 years
Leasehold improvements | Maximum
Property and Equipment, net
Useful life in years	10 years

XML

Property and Equipment, net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense related to property and equipment	$ 5.0	$ 4.6

XML

Goodwill and Other Intangible Assets - Goodwill by Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Changes in the Carrying Amount of Goodwill
Beginning balance	$ 423,392
Foreign currency translation adjustments	5,824
Preliminary goodwill attributable to acquisition	5,124
Ending balance	434,340
Payment Services - Puerto Rico & Caribbean
Changes in the Carrying Amount of Goodwill
Beginning balance	160,972
Foreign currency translation adjustments	0
Preliminary goodwill attributable to acquisition	0
Ending balance	160,972
Payment Services - Latin America
Changes in the Carrying Amount of Goodwill
Beginning balance	84,289
Foreign currency translation adjustments	5,824
Preliminary goodwill attributable to acquisition	5,124
Ending balance	95,237
Merchant Acquiring, net
Changes in the Carrying Amount of Goodwill
Beginning balance	138,121
Foreign currency translation adjustments	0
Preliminary goodwill attributable to acquisition	0
Ending balance	138,121
Business Solutions
Changes in the Carrying Amount of Goodwill
Beginning balance	40,010
Foreign currency translation adjustments	0
Preliminary goodwill attributable to acquisition	0
Ending balance	$ 40,010

XML

Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment of goodwill	$ 0	$ 0
Amortization expense for intangible assets	$ 16,300,000	$ 14,500,000

XML

Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Gross amount	$ 813,074	$ 785,406
Accumulated amortization	(599,368)	(585,086)
Net carrying amount	213,706	200,320
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Gross amount	404,311	392,737
Accumulated amortization	(310,427)	(303,733)
Net carrying amount	$ 93,884	$ 89,004
Customer relationships | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	8 years	8 years
Customer relationships | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	15 years	15 years
Trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Gross amount	$ 44,858	$ 43,195
Accumulated amortization	(38,367)	(37,998)
Net carrying amount	$ 6,491	$ 5,197
Trademarks | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	1 year	1 year
Trademarks | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	15 years	15 years
Software packages
Acquired Finite-Lived Intangible Assets [Line Items]
Gross amount	$ 363,269	$ 349,474
Accumulated amortization	(250,574)	(243,355)
Net carrying amount	$ 112,695	$ 106,119
Software packages | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	3 years	3 years
Software packages | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	10 years	10 years
Non-compete agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life in years	5 years
Gross amount	$ 636
Accumulated amortization	0
Net carrying amount	$ 636

XML

Goodwill and Other Intangible Assets - Estimated Amortization Expenses (Details) - Finite-Lived Intangible Assets, Excluding Assets Acquired in paySmart Acquisition $ in Thousands	Mar. 31, 2023 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining 2023	$ 44,561
2024	48,174
2025	22,194
2026	13,896
2027	$ 10,091

XML

Debt and Short-Term Borrowings - Total Debt (Details) - Term A due on December 1, 2027 - Credit Facility - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin)	$ 405,300	$ 410,248
SOFR
Debt Instrument [Line Items]
Minimum variable rate floor	0.00%	0.00%
Applicable margin interest rate	1.50%	1.50%

XML

Debt and Short-Term Borrowings - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 01, 2022
Debt Instrument [Line Items]
Gains (losses) reclassified from accumulated other comprehensive loss into income	$ 1,000,000	$ (1,700,000)
Gains expected to be reclassified from accumulated other comprehensive loss into income in the next 12 months	4,500,000
Fair Value, Level 2 | Fair Value, Recurring
Debt Instrument [Line Items]
Interest rate swap	5,800,000		$ 7,400,000
Term A due on December 1, 2027 | Credit Facility | Credit Agreement 2022
Debt Instrument [Line Items]
Maximum amount under credit facilities				$ 415,000,000
Unpaid principal balance	409,800,000
Revolving Credit Facility | Credit Facility | Credit Agreement 2022
Debt Instrument [Line Items]
Maximum amount under credit facilities				$ 200,000,000
Additional borrowing capacity available under the revolving facility	$ 194,000,000

XML

Debt and Short-Term Borrowings - Summary of Interest Rate Swap Transaction (Details) - 2018 Interest Rate Swap Agreement	3 Months Ended
	Mar. 31, 2023 USD ($)
Derivative [Line Items]
Notional Amount	$ 250,000,000
1-month SOFR
Derivative [Line Items]
Fixed Rate	2.929%

XML

Financial Instruments and Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Carrying Amount
Financial liabilities:
Interest rate swap	$ 5,768	$ 7,440
Fair Value, Level 2
Financial liabilities:
Debt securities, available-for-sale	2,200	2,200
Fair Value, Level 2 | Carrying Amount
Financial liabilities:
Interest rate swap	$ 5,800	$ 7,400

XML

Financial Instruments and Fair Value Measurements - Carrying Value and Estimated Fair Values (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Carrying Amount
Financial assets:
Interest rate swap	$ 5,768	$ 7,440
Carrying Amount | Credit Facility | Term A due on December 1, 2027
Financial liabilities:
Term Loan Facility	405,300	410,248
Fair Value
Financial assets:
Interest rate swap	5,768	7,440
Fair Value | Credit Facility | Term A due on December 1, 2027
Financial liabilities:
Term Loan Facility	408,378	413,494
Costa Rica government obligations | Carrying Amount
Financial assets:
Costa Rica government obligations	2,179	2,203
Costa Rica government obligations | Fair Value
Financial assets:
Costa Rica government obligations	$ 2,179	$ 2,203

XML

Equity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Changes in Accumulated Other Comprehensive Income (Loss)
Beginning balance	$ 474,748
Other comprehensive income (loss) before reclassifications	17,084
Effective portion reclassified to net income	(1,044)
Ending balance	511,141
Foreign Currency Translation Adjustments
Changes in Accumulated Other Comprehensive Income (Loss)
Beginning balance	(23,481)
Other comprehensive income (loss) before reclassifications	17,605
Effective portion reclassified to net income	0
Ending balance	(5,876)
Cash Flow Hedges
Changes in Accumulated Other Comprehensive Income (Loss)
Beginning balance	6,954
Other comprehensive income (loss) before reclassifications	(501)
Effective portion reclassified to net income	(1,044)
Ending balance	5,409
Unrealized Gains (losses) on Debt Securities AFS
Changes in Accumulated Other Comprehensive Income (Loss)
Beginning balance	41
Other comprehensive income (loss) before reclassifications	(20)
Effective portion reclassified to net income	0
Ending balance	21
Total
Changes in Accumulated Other Comprehensive Income (Loss)
Beginning balance	(16,486)
Ending balance	$ (446)

XML

Share-based Compensation - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expenses	$ 5.6	$ 4.3
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum unrecognized cost for stocks and RSU's	$ 49.0
Unrecognized compensation cost, weighted average period of recognition (in years)	2 years 2 months 12 days
Time Based Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Awards with Performance Conditions
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Performance adjustment percent	25.00%
Performance measurement period (in years)	1 year
Requisite service period (in years)	2 years
Awards with Performance Conditions | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance payout percent	0.00%
Awards with Performance Conditions | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance payout percent	200.00%

XML

Share-based Compensation - Nonvested Restricted Shares and RSUs Activity (Details) - Restricted Shares and RSUs	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Shares
Beginning balance (in shares) | shares	1,363,780
Granted (in shares) | shares	740,846
Vested (in shares) | shares	(576,995)
Forfeited (in shares) | shares	(2,592)
Ending balance (in shares) | shares	1,525,039
Weighted-average grant date fair value
Beginning balance (in usd per share) | $ / shares	$ 38.96
Granted (in usd per share) | $ / shares	38.39
Vested (in usd per share) | $ / shares	34.03
Forfeited (in usd per share) | $ / shares	40.19
Ending balance (in usd per share) | $ / shares	$ 40.22

XML

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 159,814	$ 150,248
Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	2,454	1,953
Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	157,360	148,295
Payment Services - Puerto Rico & Caribbean
Disaggregation of Revenue [Line Items]
Revenues	32,479	26,485
Payment Services - Puerto Rico & Caribbean | Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	113	55
Payment Services - Puerto Rico & Caribbean | Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	32,366	26,430
Payment Services - Latin America
Disaggregation of Revenue [Line Items]
Revenues	31,293	25,510
Payment Services - Latin America | Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	614	13
Payment Services - Latin America | Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	30,679	25,497
Merchant Acquiring, net
Disaggregation of Revenue [Line Items]
Revenues	40,347	35,629
Merchant Acquiring, net | Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	0	0
Merchant Acquiring, net | Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	40,347	35,629
Business Solutions
Disaggregation of Revenue [Line Items]
Revenues	55,695	62,624
Business Solutions | Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	1,727	1,885
Business Solutions | Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	$ 53,968	$ 60,739

XML

Revenues - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Revenue, Contract Balances [Roll Forward]
Balance at beginning of period	$ 4,749	$ 1,715
Services transferred to customers	3,124	9,313
Transfers to accounts receivable	(2,621)	(6,279)
Balance at end of period	$ 5,252	$ 4,749

XML

Revenues - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Accounts receivable, net	$ 127,876		$ 131,080
Contract liability	19,737		15,226
Contract liability - long term	33,284		$ 34,068
Revenue recognized that was included in unearned income	4,400	$ 7,100
Transaction price allocated to performance obligations that are unsatisfied or partially satisfied	$ 993,700
Total Revenue | Customer Concentration Risk | Popular
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total percentage of revenues from Popular	37.00%	43.00%
Total percentage of revenues from Popular	37.00%	43.00%
Professional Services, All Other Contracts | Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, period of expected timing of satisfaction (in years)	1 year
Professional Services, All Other Contracts | Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, period of expected timing of satisfaction (in years)	6 years

XML

Current Expected Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 2,159	$ 2,523
Current period (release) provision for expected credit losses	566	754
Write-offs	(24)	(1,268)
Recoveries of amounts previously written-off	1	150
Balance at end of period	$ 2,702	$ 2,159

XML

Income Tax - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Current tax provision	$ 5,026	$ 6,877
Deferred tax benefit	(2,208)	(702)
Income tax expense	$ 2,818	$ 6,175

XML

Income Tax - Tax Expense Based on Location (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Current tax provision
Puerto Rico	$ 1,180	$ 2,315
United States	11	30
Foreign countries	3,835	4,532
Total current tax provision	5,026	6,877
Deferred tax benefit
Puerto Rico	(235)	(393)
United States	(26)	(71)
Foreign countries	(1,947)	(238)
Total deferred tax benefit	$ (2,208)	$ (702)

XML

Income Tax - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Unremitted earnings from foreign subsidiaries	$ 117.0	$ 115.5
Gross deferred tax asset	18.6	17.9
Gross deferred tax liability	19.5	20.7
Gross deferred tax asset, valuation allowance	$ 1.3	$ 1.6

XML

Income Tax - Income Tax Expense Differs from Computed Income Tax at Statutory Rates (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Computed income tax at statutory rates	$ 12,330	$ 16,890
Differences in tax rates due to multiple jurisdictions	1,029	447
Effect of income subject to tax-exemption grant	(8,849)	(10,809)
Unrecognized tax expense	34	80
Excess tax benefits on share-based compensation	(91)	(260)
Tax credits for research and development activities	(884)	0
Other, net	(751)	(173)
Income tax expense	$ 2,818	$ 6,175

XML

Net Income Per Common Share - Reconciliation of Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Net income available to EVERTEC, Inc.’s common shareholders	$ 30,052	$ 38,898
Weighted average common shares outstanding (in shares)	64,968,298	71,965,664
Weighted average potential dilutive common shares (in shares)	640,320	887,552
Weighted average common shares outstanding - assuming dilution (in shares)	65,608,618	72,853,216
Net income per common share - basic (in usd per share)	$ 0.46	$ 0.54
Net income per common share - diluted (in usd per share)	$ 0.46	$ 0.53

XML

Net Income Per Common Share - Additional Information (Details) - $ / shares		3 Months Ended
	Feb. 16, 2023	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Cash dividends declared (in usd per share)	$ 0.05	$ 0.05	$ 0.05

XML

Related Party Transactions - Transactions with Related Parties (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Related Party Transactions [Abstract]
Total revenues	$ 64,729
Cost of revenues	1,315
Operating lease cost and other fees	1,859
Interest earned from affiliate
Interest income	$ 340

XML

Segment Information - Operations by Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) segment	Mar. 31, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of operating business segments (in segment) | segment	4
Revenues	$ 159,814	$ 150,248
Operating costs and expenses	119,724	104,203
Depreciation and amortization	19,432	19,160
Non-operating income (expenses)	(2,699)	3,876
EBITDA	56,823	69,081
Compensation and benefits	5,845	4,279
Transaction, refinancing and other fees	(397)	2,025
Loss (gain) on foreign currency remeasurement	4,864	(2,669)
Adjusted EBITDA	$ 67,135	$ 72,716
Consorcio de Tarjetas Dominicanas S.A.
Segment Reporting Information [Line Items]
Equity investment	19.99%	19.99%
Payment Services - Puerto Rico & Caribbean
Segment Reporting Information [Line Items]
Revenues	$ 32,479	$ 26,485
Payment Services - Latin America
Segment Reporting Information [Line Items]
Revenues	31,293	25,510
Merchant Acquiring, net
Segment Reporting Information [Line Items]
Revenues	40,347	35,629
Business Solutions
Segment Reporting Information [Line Items]
Revenues	55,695	62,624
Operating Segments | Payment Services - Puerto Rico & Caribbean
Segment Reporting Information [Line Items]
Revenues	48,429	40,008
Operating costs and expenses	27,722	21,280
Depreciation and amortization	5,888	4,480
Non-operating income (expenses)	365	236
EBITDA	26,960	23,444
Compensation and benefits	528	337
Transaction, refinancing and other fees	292	0
Loss (gain) on foreign currency remeasurement	95	126
Adjusted EBITDA	27,875	23,907
Operating Segments | Payment Services - Latin America
Segment Reporting Information [Line Items]
Revenues	35,317	28,783
Operating costs and expenses	29,312	23,587
Depreciation and amortization	2,711	2,812
Non-operating income (expenses)	(3,785)	3,606
EBITDA	4,931	11,614
Compensation and benefits	652	813
Transaction, refinancing and other fees	0	0
Loss (gain) on foreign currency remeasurement	4,772	(2,795)
Adjusted EBITDA	10,355	9,632
Operating Segments | Merchant Acquiring, net
Segment Reporting Information [Line Items]
Revenues	40,347	35,629
Operating costs and expenses	26,689	20,204
Depreciation and amortization	1,129	1,019
Non-operating income (expenses)	307	300
EBITDA	15,094	16,744
Compensation and benefits	532	340
Transaction, refinancing and other fees	0	0
Loss (gain) on foreign currency remeasurement	0	0
Adjusted EBITDA	15,626	17,084
Operating Segments | Business Solutions
Segment Reporting Information [Line Items]
Revenues	55,695	62,624
Operating costs and expenses	38,913	38,928
Depreciation and amortization	4,488	4,763
Non-operating income (expenses)	532	700
EBITDA	21,802	29,159
Compensation and benefits	565	445
Transaction, refinancing and other fees	0	0
Loss (gain) on foreign currency remeasurement	0	0
Adjusted EBITDA	22,367	29,604
Corporate and Other
Segment Reporting Information [Line Items]
Revenues	(19,974)	(16,796)
Operating costs and expenses	(2,912)	204
Depreciation and amortization	5,216	6,086
Non-operating income (expenses)	(118)	(966)
EBITDA	(11,964)	(11,880)
Compensation and benefits	3,568	2,344
Transaction, refinancing and other fees	(689)	2,025
Loss (gain) on foreign currency remeasurement	(3)	0
Adjusted EBITDA	(9,088)	(7,511)
Payment Processing | Corporate and Other
Segment Reporting Information [Line Items]
Revenues	13,000	10,900
Software Sale And Developments | Corporate and Other
Segment Reporting Information [Line Items]
Revenues	4,000	3,300
Transaction Processing and Monitoring Fees | Corporate and Other
Segment Reporting Information [Line Items]
Revenues	$ 2,900	$ 2,600

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Segment Information - Income from Segments to Consolidated Net Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting [Abstract]
Net income	$ 30,063	$ 38,866
Add:
Income tax expense	2,818	6,175
Interest expense, net	4,510	4,880
Depreciation and amortization	19,432	19,160
Total EBITDA	$ 56,823	$ 69,081

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Subsequent Events (Details) - $ / shares			3 Months Ended
	Apr. 20, 2023	Feb. 16, 2023	Mar. 31, 2023	Mar. 31, 2022
Subsequent Event [Line Items]
Cash dividends declared (in usd per share)		$ 0.05	$ 0.05	$ 0.05
Subsequent Event
Subsequent Event [Line Items]
Cash dividends declared (in usd per share)	$ 0.05