Financial Data and Key Metrics Changes - Total revenue for 2024 was $845.5 million, a 22% increase year-over-year [8] - Adjusted EBITDA was $340.2 million, up approximately 17% year-over-year, with an adjusted EBITDA margin of 40.2% [10][26] - Adjusted EPS was $3.28, an increase of 16% from the previous year [11][27] - Operating cash flows for the year were approximately $260 million, with $95 million returned to shareholders through share repurchases and dividends [12][39] Business Line Data and Key Metrics Changes - Merchant Acquiring revenue grew by 11% due to pricing initiatives and increased sales volume [9] - Payments Puerto Rico revenue increased by 6%, driven by higher transaction volumes and strong performance from ATH Movil [9] - Business Solutions revenue grew by 7%, attributed to key projects recognized throughout the year [9] - LATAM revenue surged by 62% year-over-year, primarily due to the full-year contribution from Sinqia and organic growth [10][17] Market Data and Key Metrics Changes - Economic conditions in Puerto Rico remained stable, with total employment at its highest since 2009 [13] - Passenger traffic at San Juan Airport grew approximately 9% year-over-year [14] - Puerto Rico received approximately $7 billion in reconstruction funds in 2024, with a similar amount expected for 2025 [16] Company Strategy and Development Direction - The company aims to focus on organic revenue growth, margin optimization, and capital allocation in 2025 [7] - Continued execution of acquisition strategy with two tuck-in deals closed in Q4 2024 [6] - The company is diversifying its revenue mix outside of Puerto Rico, with LATAM contributing approximately 33% of total revenue in 2024 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic conditions in Puerto Rico supporting business growth in 2025 [16] - The company anticipates revenue growth of 5.1% to 6.3% for 2025, with adjusted EPS expected to grow between 1.8% and 5.2% [42][43] - Management is confident in navigating the upcoming 10% discount on services starting in October 2025 through cost efficiencies [72] Other Important Information - The company generated a strong liquidity position of approximately $468 million as of December 31, 2024 [12][41] - The net debt position at year-end was $706.8 million, with a weighted average interest rate of approximately 6.45% [40][41] Q&A Session Summary Question: Can you provide midterm guidance for future growth? - Management is currently focused on providing guidance for 2025 due to several moving pieces and changes within the company [56] Question: What is the expected performance of Sinqia in 2025? - Management is optimistic about Sinqia's growth reacceleration, focusing on technology upgrades and customer engagement [63] Question: How is the integration of EVERTEC's processing business into Brazil progressing? - Management is seeing reacceleration in existing businesses and is optimistic about future payment product interest [70] Question: What was the contribution from pricing in the Merchant segment? - The growth in the Merchant segment was approximately one-third from pricing, one-third from volume, and one-third from non-transactional fees [90] Question: What is the state of the M&A market in Latin America? - Management has a good M&A pipeline and is focused on diversifying the company through smart deals [94]

EVERTEC, Inc. (NYSE:EVTC) Q4 2024 Earnings Conference Call February 26, 2025 4:30 PM ET Company Participants Beatriz Brown-Saenz - Investor Relations Morgan Schuessler - President and Chief Executive Officer Joaquin Castrillo - Chief Financial Officer Conference Call Participants Nate Svensson - Deutsche Bank Cris Kennedy - William Blair & Company LLC James Friedman - Susquehanna John Davis - Raymond James Operator Good afternoon, everyone and welcome to EVERTEC's Fourth Quarter 2024 Earnings Conference Cal ...

Fourth Quarter 2024 Earnings Conference Call February 26, 2025 Forward-looking Statements Certain statements in this earnings release constitute "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, and Section 21E of the Securities Exchange ...

Group 1 - Evertec reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.62 per share a year ago, representing an earnings surprise of 20.83% [1] - The company achieved revenues of $216.4 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.91%, and an increase from $194.62 million year-over-year [2] - Over the last four quarters, Evertec has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has underperformed the market, losing about 5.4% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.78 for the coming quarter and $3.26 for the current fiscal year [7] - The Zacks Industry Rank indicates that the Financial Transaction Services sector is in the bottom 49% of over 250 Zacks industries, which may impact stock performance [8] Group 3 - The estimate revisions trend for Evertec is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for Q4 2024 was $216.4 million, an increase of 11.2% compared to $194.6 million in Q4 2023, with organic growth across all segments and contributions from acquisitions[5]. - GAAP Net Income attributable to common shareholders for Q4 2024 was $40.1 million, a 249% increase from $11.5 million in Q4 2023, resulting in $0.62 per diluted share[6]. - Adjusted EBITDA for Q4 2024 was $88.6 million, a 24% increase compared to the prior year, with an Adjusted EBITDA margin of 40.9%, up from 36.8%[8]. - Full year 2024 revenue reached $845.5 million, a 22% increase from $694.7 million in 2023, driven by acquisitions and organic growth[10]. - GAAP Net Income for the full year 2024 was $112.6 million, a 41% increase from $79.7 million in 2023, equating to $1.73 per diluted share[11]. - Adjusted EBITDA for the full year 2024 was $340.2 million, a 17% increase from the previous year, with an Adjusted EBITDA margin of 40.2%, down from 42.0%[12]. - Revenues for Q4 2024 were $216,395,000, an increase of 11.4% compared to $194,621,000 in Q4 2023[30]. - Net income for the year ended December 31, 2024, was $114,779,000, up from $79,876,000 in 2023, representing a growth of 43.6%[30]. - The company reported a basic net income per share of $1.75 for 2024, compared to $1.23 for 2023, marking a 42.3% increase[30]. - Adjusted EBITDA for the quarter ended December 31, 2024, was $88,610,000, up from $71,698,000 in the same quarter of 2023, reflecting a year-over-year increase of 23.5%[45]. - Total revenues for the year ended December 31, 2024, reached $845,486,000, compared to $694,709,000 in 2023, marking a growth of 21.7%[43]. Shareholder Returns - The company returned $95.2 million to shareholders through share repurchases and dividends in 2024[6]. - The company repurchased common stock worth $82,293,000 in 2024, compared to $36,096,000 in 2023, showing a substantial increase in share buybacks[38]. Acquisitions and Integrations - The company completed the acquisition of Nubity on November 19, 2024, enhancing its cloud services offerings in Latin America[14]. - The company is focused on integrating Sinqia S.A. and achieving expected earnings accretion, while facing risks related to political and economic instability in its operating regions[27]. Outlook and Guidance - The 2025 outlook projects total consolidated revenue between $889 million and $899 million, representing approximately 5.1% to 6.3% growth compared to 2024[20]. - Adjusted earnings per common share for 2025 are expected to be between $3.34 and $3.45, reflecting growth of approximately 1.8% to 5.2% compared to $3.28 in 2024[20]. - 2024 revenue outlook is projected between $889 million and $899 million, with a low estimate of $845 million[50]. - GAAP Earnings per Share (EPS) guidance ranges from $1.93 to $2.05, with a low estimate of $1.73[50]. - Adjusted EPS (Non-GAAP) is expected to be between $3.34 and $3.45, with a low estimate of $3.28[50]. Assets and Liabilities - Total assets decreased to $1,857,611,000 in 2024 from $2,060,263,000 in 2023, a decline of 9.8%[32]. - Total liabilities decreased to $1,338,350,000 in 2024 from $1,424,887,000 in 2023, a reduction of 6.1%[34]. - The company’s total assets decreased by $29,075,000 in 2024, contrasting with an increase of $128,067,000 in 2023, indicating a shift in asset management strategy[38]. Cash Flow and Expenses - Total operating costs and expenses for 2024 were $679,820,000, compared to $558,549,000 in 2023, reflecting an increase of 21.6%[30]. - Cash flows from operating activities for 2024 were $260,059,000, an increase from $211,194,000 in 2023, indicating a rise of 23.1%[36]. - Net cash used in investing activities decreased significantly to $118,282,000 in 2024 from $507,932,000 in 2023, a reduction of 76.7%[38]. - EVERTEC's cash and cash equivalents decreased to $273,645,000 in 2024 from $295,600,000 in 2023, a decline of 7.4%[32]. - Cash and cash equivalents at the end of 2024 were $273,645,000, down from $295,600,000 at the end of 2023, a decrease of 7.4%[38]. Currency and Adjustments - The company experienced a foreign currency translation adjustment loss of $152,851,000 for the year ended December 31, 2024[30]. - Total adjustments to reconcile net income to net cash provided by operating activities amounted to $145,280,000 in 2024, compared to $131,318,000 in 2023, reflecting an increase of 10.6%[36]. - Total adjustments to reconcile GAAP EPS to Non-GAAP EPS amount to approximately $1.41 to $1.55 per share[50]. - Share-based compensation and other adjustments contribute $0.88 to the adjusted EPS calculation[50]. - Merger and acquisition related depreciation and amortization adds $0.58 to the adjusted EPS[50]. - Non-cash interest expense contributes $0.04 to the adjusted EPS[50]. - Anticipated tax effect of non-GAAP adjustments is estimated at approximately 6% to 7%[51]. - Shares used in computing adjusted earnings per common share are approximately 65.0 million to 65.1 million[50].

Core Insights - Evertec (EVTC) is expected to report quarterly earnings of $0.72 per share, reflecting a 16.1% increase year-over-year [1] - Analysts forecast revenues of $214.44 million, indicating a 10.2% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst projections [1] Revenue Estimates - 'Revenues- Payment Services - Puerto Rico & Caribbean' are estimated to be $55.31 million, representing a 5.5% increase from the previous year [4] - 'Revenues- Payment Services - Latin America' is projected to reach $78.04 million, indicating an 18.3% year-over-year growth [4] - 'Revenues- Merchant acquiring, net' is expected to be $44.52 million, suggesting a 10.7% increase year-over-year [5] - 'Revenues- Business solutions' is forecasted to reach $59.90 million, reflecting a 3.7% year-over-year growth [5] Market Performance - Over the past month, Evertec shares have recorded a return of +0.6%, contrasting with the Zacks S&P 500 composite's -1.8% change [5] - Based on its Zacks Rank 3 (Hold), EVTC is likely to perform in line with the overall market in the upcoming period [5]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Evertec (EVTC) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][4][9]. Valuation Metrics - Evertec (EVTC) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a high-quality value stock [4]. - The current P/E ratio of EVTC is 10.98, significantly lower than the industry average of 26.18 [4]. - EVTC's PEG ratio stands at 1.27, compared to the industry's average PEG of 1.73, suggesting it is undervalued relative to its expected earnings growth [5]. - The P/B ratio for EVTC is 4.53, which is lower than the industry average of 9.07, indicating a solid valuation [6]. - The P/S ratio for EVTC is 2.77, slightly below the industry's average of 2.84, reinforcing its value proposition [7]. - The P/CF ratio for EVTC is 10.26, compared to the industry's average of 19.24, further suggesting that the stock is undervalued based on cash flow [8]. Investment Outlook - The combination of these valuation metrics indicates that Evertec (EVTC) is likely undervalued at present, making it an attractive option for value investors [9].

Core Viewpoint - The article compares Evertec (EVTC) and MasterCard (MA) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - Evertec has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while MasterCard has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting that EVTC has an improving earnings outlook [3] Group 2: Valuation Metrics - Evertec has a forward P/E ratio of 11.53, significantly lower than MasterCard's forward P/E of 36.63 [5] - The PEG ratio for Evertec is 1.34, while MasterCard's PEG ratio is 2.32, indicating that EVTC is expected to grow earnings at a more favorable rate relative to its price [5] - Evertec's P/B ratio is 4.52, compared to MasterCard's P/B of 64.97, further highlighting the valuation disparity [6] Group 3: Value Grades - Based on various valuation metrics, Evertec holds a Value grade of A, while MasterCard has a Value grade of D, indicating that EVTC is the superior value option at this time [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Evertec (EVTC) as a strong value stock based on various financial metrics [2][8]. Valuation Metrics - Evertec (EVTC) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential [4]. - The Forward P/E ratio for EVTC is 11.11, significantly lower than the industry average of 25.71, with a historical range between 9.59 and 14.36 [4]. - The PEG ratio for EVTC stands at 1.39, compared to the industry average of 1.71, with a historical range of 0.93 to 1.85 [5]. - The P/B ratio for EVTC is 4.53, which is favorable compared to the industry average of 8.95, with a historical range of 3.89 to 4.97 [6]. - The P/CF ratio for EVTC is 10.27, well below the industry average of 19.15, with a historical range of 9.22 to 15.38 [7]. Investment Outlook - The combination of favorable valuation metrics and a strong earnings outlook suggests that Evertec (EVTC) is currently undervalued, making it an attractive investment opportunity [8].

Financial Performance - Revenues for Q3 2024 reached $211.8 million, a 22.3% increase from $173.2 million in Q3 2023[14] - Net income for Q3 2024 was $25.2 million, compared to $10.0 million in Q3 2023, representing a 152.5% increase[14] - The company reported a net income attributable to common stockholders of $24.7 million for Q3 2024, compared to $10.0 million in Q3 2023[14] - The company reported a net income of $25,202,000 for the three months ended September 30, 2024, compared to $9,956,000 for the same period in 2023[109] - Net income for the nine months ended September 30, 2024, was $74,112, compared to $68,069 for the same period in 2023, representing an increase of 4.9%[18] - Adjusted net income for the nine months ended September 30, 2024 was $157.2 million, compared to $144.7 million for the same period in 2023[190] Operating Costs - Operating costs for Q3 2024 totaled $170.3 million, up from $133.6 million in Q3 2023, reflecting a 27.5% increase[14] - Total operating costs and expenses for the three months ended September 30, 2023, were $133,636,000, compared to $511,387,000 for the nine months ended September 30, 2024[104][107] - Operating costs and expenses for the nine months ended September 30, 2024, rose by 33% to $511.4 million, up from $385.7 million in the prior year[138] Cash and Assets - Cash and cash equivalents were $275.4 million as of September 30, 2024, down from $295.6 million at the end of 2023[11] - Total assets decreased to $1.89 billion as of September 30, 2024, down from $2.06 billion at the end of 2023[11] - The company’s cash, cash equivalents, and restricted cash at the end of the period totaled $326,282, compared to $215,546 at the end of the same period in 2023, reflecting a growth of 51.5%[18] - As of September 30, 2024, the company had cash and cash equivalents of $275.4 million, with $214.0 million held in subsidiaries outside of Puerto Rico[164] Shareholder Equity and Dividends - The company’s total stockholders' equity decreased to $502.6 million as of September 30, 2024, from $594.3 million at the end of 2023[11] - Cash dividends declared on common stock were $3,199,000, maintaining a rate of $0.05 per share[15] - The company declared quarterly cash dividends of $0.05 per share on February 15, April 18, and July 18, 2024, with payments made to stockholders on March 15, June 7, and September 6, 2024[93] Debt and Financing - Total liabilities decreased to $1.35 billion as of September 30, 2024, compared to $1.42 billion at the end of 2023[11] - The unpaid principal balance of the TLA Facility and TLB Facility at September 30, 2024, was $435.6 million and $540.0 million, respectively[41] - The Company prepaid $60 million of the outstanding balance on the TLB facility in the fourth quarter of 2023[40] - The Company has four interest rate swap agreements with a total notional amount of $600 million, converting variable interest payments to fixed rates[179] Revenue Segments - The company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Latin America Payments and Solutions, Merchant Acquiring, and Business Solutions, each contributing to overall revenue growth[95] - Payment Services - Puerto Rico & Caribbean segment revenues increased by $1.2 million to $52.8 million for the three months ended September 30, 2024, driven by growth from ATH Movil and increased POS transactions[153] - Latin America Payments and Solutions segment revenues rose by $29.9 million to $76.0 million for the three months ended September 30, 2024, benefiting from the Sinqia acquisition and organic growth[154] - Merchant Acquiring segment revenues increased by $4.9 million to $45.4 million for the three months ended September 30, 2024, primarily due to improved spread and sales volume growth[156] - Business Solutions segment revenues grew by $4.6 million to $61.1 million for the three months ended September 30, 2024, driven by completed projects[157] Tax and Compliance - The current tax provision for the three months ended September 30, 2024, was $8.7 million, compared to $8.2 million for the same period in 2023, reflecting an increase of approximately 6%[85] - The effective tax rate for the nine months ended September 30, 2024, was 4.0%, down from 6.3% in the comparable 2023 period[144] - The company estimates a potential decrease in uncertain tax liabilities by approximately $2.7 million in the next 12 months due to the expiration of the statute of limitations[89] Acquisitions and Growth - On October 31, 2024, the company acquired 100% of Grandata, Inc., enhancing its product offerings in data analytics[114] - The Sinqia acquisition contributed to revenue growth in Latin America, alongside better-than-expected volumes in the GetNet Chile relationship, resulting in a one-time revenue recognition of $1.8 million[132] - The ongoing shift from cash to electronic payments presents significant growth opportunities in Latin America and the Caribbean, where penetration remains lower than in the U.S.[126] Miscellaneous - The company processed over six billion transactions annually through its electronic payment networks in Puerto Rico and Latin America[118] - The company has increased its share repurchase authorization to allow for up to $220 million in stock repurchases by December 31, 2025[124] - The company recognized $22.4 million in share-based compensation expense for the nine months ended September 30, 2024, compared to $18.8 million for the same period in 2023[68]