Evertec Group: Evertec Reports Third Quarter 2013 Results
The following excerpt is from the company's SEC filing
SAN JUAN, PUERTO RICO November 6, 2013 EVERTEC, Inc. (NYSE: EVTC) (EVERTEC or the Company) today announced results
for the third quarter ended September 30, 2013.
We are pleased
to report another quarter of solid growth and successful execution of our expansion strategy, said Peter Harrington, EVERTECs President and Chief Executive Officer. Strong performance in our Merchant Acquiring and Payment
Processing businesses underscores stable economic fundamentals and secular payments growth within Puerto Rico as well as in Latin America.
continue to successfully execute our strategic growth plan and are also pleased to report four notable business developments: (i) we signed our first significant deal expanding Business Solutions hosting services outside of Puerto Rico with the
US Virgin Islands government; (ii) we partnered with the largest hospital management company in Puerto Rico to increase the scope of our services and signed a significant licensing and hosting contract; (iii) we signed four new Latin
American bank issuers to provide processing services including our first customer in Jamaica; and (iv) we formally applied for a Visa Principal Member License in a new country that will allow us to further penetrate the merchant acquiring
industry in our region. We believe these developments underscore the value of our end-to-end technology platform and our ability to win the marketplace.
revenues for the quarter ended September 30, 2013 were $87.4 million, an increase of 4% compared to $83.8 million in the prior year.
Acquiring net revenues were $18.2 million, an increase of 8% compared to $16.8 million in the prior year. Revenue growth in the quarter was primarily driven by an increase in transaction and sales volumes.
Payment Processing revenues were $24.7 million, an increase of 6% compared to $23.3 million in the prior year. Revenue growth in the quarter was primarily
driven by an increase in POS processing transactions and accounts on file within our card products business.
Business Solutions revenues were $44.5
million, an increase of 2% compared to $43.7 million in the prior year. Revenue growth was primarily driven by an increase in demand for our core banking and fulfillment services, partially offset by the intra-year timing of project completions and
Adjusted EBITDA. For the quarter ended September 30, 2013, Adjusted EBITDA was $43.4 million, an
increase of 14% compared to $38.0 million in the prior year. The increase in Adjusted EBITDA was primarily due to revenue growth and the impact of our productivity initiatives. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total
revenues) increased by approximately 430 basis points to 49.7% from 45.4% in the prior year.
Adjusted Net Income. For the quarter ended
September 30, 2013, Adjusted Net Income was $29.5 million, an increase of 86% as compared to $15.9 million in the prior year. The increase in Adjusted Net Income was primarily due to the same factors impacting Adjusted EBITDA and lower cash
interest expense as a result of the debt refinancing we completed in April 2013. Adjusted Net Income per diluted share increased 71% to $0.36 as compared to $0.21 in the prior year.
will host a conference call to discuss its third quarter 2013 financial results today at 5:00 PM EDT. Hosting the call will be Peter Harrington, President and Chief Executive Officer and Juan José Román, Executive Vice President and
Chief Financial Officer. The conference call can be accessed live over the phone by dialing (888) 267-6301, or for international callers (719) 457-2603. A replay will be available at 8:00 PM EDT and can be accessed by dialing
(877) 870-5176 or (858) 384-5517 for international callers; the pin number is 6211363. The replay will be available until Wednesday, November 13, 2013. The call will be webcast live from the Companys website at
www.evertecinc.com under the Corporate Investor Relations section or directly at http://ir.evertecinc.com.
EVERTEC is the leading full-service transaction processing business in Latin America and the Caribbean. Based in Puerto Rico, EVERTEC provides a broad range of
merchant acquiring, payment processing and business process management services across 19 countries in the region. EVERTEC processes over 1.8 billion transactions annually over the electronic payment networks that it manages. EVERTEC is the largest
merchant acquirer in the Caribbean and Central America and the seventh largest in Latin America. EVERTEC owns and operates the ATH network, one of the leading personal identification number (PIN) debit networks in Latin America. In
addition, EVERTEC provides a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations and
government agencies with mission critical technology solutions. For more information, visit http://www.evertecinc.com.
This earnings release presents EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share information. These
are supplemental measures of the Companys performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (GAAP). They are not measurements of the
Companys financial performance under GAAP and should not be considered as alternatives to total revenues, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating
activities, as indicators of cash flows or as measures of the Companys liquidity. We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of the
Companys performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Companys industry. In addition, the Companys presentation of Adjusted
EBITDA is consistent with the equivalent measurements that are contained in the Credit Agreement in testing EVERTEC Groups compliance with covenants therein such as the senior secured leverage ratio. We use Adjusted Net Income to measure the
Companys overall profitability because it better reflects the Companys cash flow generation by capturing the actual cash taxes paid rather than the Companys tax expense as calculated under GAAP and excludes the impact of the
non-cash amortization and depreciation that was created as a result of the Merger. For more information regarding EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share, including a quantitative reconciliation of EBITDA,
Adjusted EBITDA and Adjusted Net Income to the most directly comparable GAAP financial performance measure, which is net income, see Schedule 4: Reconciliation of GAAP to Non-GAAP Operating Results in this earnings release.
Various factors that could
cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Companys reliance on its relationship with Popular for a significant portion of revenues; our
ability to renew our client contracts on terms favorable to us; our dependence on our processing systems, technology infrastructure, security systems and fraudulent-payment-detection systems; our ability to develop, install and adopt new technology;
a decreased client base due to consolidations in the banking and financial-services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH® network; the Companys dependence on credit card associations; changes in the regulatory environment and changes in international, legal, political, administrative or economic conditions;
the geographical concentration of the Companys business in Puerto Rico; operating an international business in multiple regions with potential political and economic instability; our ability to execute our expansion and acquisition strategies;
our ability to protect our intellectual property rights; our ability to recruit and retain qualified personnel; our ability to comply with federal, state, and local regulatory requirements; evolving industry standards; the Companys high level
of indebtedness and restrictions contained in the Companys debt agreements; and the Companys ability to generate sufficient cash to service the Companys indebtedness and to generate future profits.
Consideration should be given to the areas of risk described above, as well as those risks set forth under the
headings Forward-Looking Statements and Risk Factors in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its
businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.
Common stock, par value $0.01; 206,000,000 shares authorized; 81,909,582 and 72,846,144 shares issued and outstanding at
September 30, 2013 and December 31, 2012, respectively
Represents the pro forma effect of the expected net savings primarily in compensation and benefits from the reduction of certain employees, temporary employees and professional services. This pro forma amount was
calculated using the net amount of actual expenses for temporary employees and professional services for the twelve month period prior to their replacement, separation and/or elimination net of the incremental cost of the new full-time employees
that were hired.
Represents fees and expenses associated with non-recurring corporate transactions, including costs associated with the refinancing and debt extinguishment of $58.6 million in the second quarter of 2013.
Represents consulting fees paid to Apollo and Popular. In connection with our initial public offering during the second quarter of 2013, our consulting agreements with Apollo and Popular were terminated.
Represents the elimination of the effects of purchase accounting in connection with certain customer service and software related arrangements where EVERTEC receives reimbursements from Popular.
For the nine months ended September 30, 2013 represents pro forma cash interest expense assuming EVERTECs April 2013 refinancing occurred on January 1, 2013. For the twelve months period, includes the
pro forma cash interest expense mentioned above for the 2013 period and for the 2012 period, as well as for the three months ended September 30, 2013, represents interest expense, less interest income, as they appear on our consolidated
statements of income (loss) and comprehensive income (loss), adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.
Primarily represents non-operating depreciation and amortization expenses generated as a result of the Merger and certain non-recurring fees and expenses.
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.
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