SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- EVERTEC, Inc. (NYSE: EVTC) (“EVERTEC” or the “Company”) today announced results for the fourth quarter and year ended December 31, 2014.

Fourth-Quarter 2014 Highlights

• Total revenue of $93.5 million; Merchant Acquiring segment and Payment Processing segment revenue each increased 5%
• Adjusted EBITDA of $47.5 million, representing an adjusted EBITDA margin of 50.9%
• Adjusted Net Income of $34.4 million, or $0.44 per diluted share
• Repurchased $26.2 million, or 1.2 million shares of our common stock

Full-Year 2014 Highlights

• Total revenue of $361.1 million; Merchant Acquiring segment revenue increased 7% and Payment Processing segment revenue increased 5%
• Adjusted EBITDA of $182.8 million, representing an adjusted EBITDA margin of 50.6%
• Adjusted Net Income of $130.0 million, or $1.65 per diluted share

Frank G. D’Angelo, Chairman of the Board and Interim Chief Executive Officer, stated “Our 2014 results were highlighted by solid performance from our payments businesses reflecting continued strong execution and secular growth in all our markets. As we look to 2015, we will execute against our business objectives and are optimistic about our growth prospects, given our leading position in the attractive markets we serve.”

Mr. D’Angelo continued, “We also look forward to Mac Schuessler joining EVERTEC as President and CEO on April 1^st and beginning a new chapter under his leadership. Mac’s experience in the payments industry and in international markets will be very valuable in the execution of our corporate strategies.”

Fourth-Quarter 2014 Results

Revenue. Total revenue for the quarter ended December 31, 2014 was $93.5 million, in line with the fourth quarter of last year, impacted primarily by lower hardware and software sales.

Merchant Acquiring net revenue was $20.8 million, an increase of 5% compared with $19.8 million in the prior year. Revenue growth in the quarter was mainly driven by an increase in transaction volumes.

Payment Processing revenue was $27.7 million, an increase of 5% compared with $26.4 million in the prior year. Revenue growth in the quarter was primarily driven by an increase in our ATH debit network and POS processing transactions, and accounts on file within our card products business.

Business Solutions revenue was $45.0 million, a decrease of 5% compared with $47.3 million in the prior year. The decrease in revenue was mainly due to a $2.5 million year-over-year decline in hardware and software sales and lower revenue from IT consulting projects, partially offset by increased revenue from core banking solutions.

Adjusted EBITDA. For the quarter ended December 31, 2014, Adjusted EBITDA was $47.5 million, a decrease of 3% compared with $49.1 million in the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 50.9% compared with 52.5% in the prior year. The decrease was primarily due to a decline in other income and lower dividends received from investee.

Net Income. For the quarter ended December 31, 2014, Adjusted Net Income was $34.4 million, a decrease of 3% compared with $35.4 million in the prior year. Adjusted Net Income per diluted share increased 2% to $0.44 compared with $0.43 in the prior year.

For the quarter ended December 31, 2014, GAAP Net Income was $12.5 million, or $0.16 per diluted share, compared with $20.0 million or $0.24 per diluted share in the prior year.

Full-Year 2014 Results

Revenue. Total revenue for the year ended December 31, 2014 was $361.1 million, an increase of 1% compared with $358.0 million in the prior year.

Merchant Acquiring net revenue was $79.1 million, an increase of 7% compared with $73.6 million in the prior year. Revenue growth was driven mainly by an increase in transaction volumes.

Payment Processing revenue was $105.4 million, an increase of 5% compared with $100.1 million in the prior year. Revenue growth was primarily driven by an increase in our ATH debit network and POS processing transactions and accounts on file.

Business Solutions revenue was $176.6 million, a decrease of 4% compared with $184.3 million in the prior year. The decrease in revenue was mainly due to a $10.3 million year-over-year decline in hardware and software sales, partially offset by increased revenue from core banking solutions.

Adjusted EBITDA. For the year ended December 31, 2014, Adjusted EBITDA was $182.8 million, an increase of 3% compared with $177.7 million in the prior year.

Net Income. For the year ended December 31, 2014, Adjusted Net Income was $130.0 million, an increase of 7% compared with $121.3 million in the prior year. Adjusted Net Income per diluted share increased 11% to $1.65 compared with $1.49 in the prior year.

For the year ended December 31, 2014, GAAP Net Income was $67.5 million or $0.86 per diluted share, compared with a net loss of $24.6 million or a loss of $0.31 per diluted share in the prior year.

Earnings Conference Call and Audio Webcast

The Company will host a conference call to discuss its fourth-quarter and full-year 2014 financial results today at 5:00 PM ET. Hosting the call will be Frank G. D’Angelo, Chairman of the Board and Interim Chief Executive Officer, and Juan José Román, Executive Vice President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing (877) 407-3982 or for international callers by dialing (201) 493-6780. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 13599502. The replay will be available until Wednesday, February 25, 2015. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com.

About EVERTEC

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

About Non-GAAP Financial Measures

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

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

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

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

EVERTEC, Inc.
Schedule 1: Unaudited Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
				Quarters ended December 31,											Twelve months ended December 31,
(Dollar amounts in thousands, except per share data)				2014					2013						2014					2013
Revenues
Merchant Acquiring, net				$	20,791				$	19,781					$	79,136				$	73,616
Payment Processing					27,732					26,390						105,423					100,104
Business Solutions					44,961					47,332						176,570					184,297
Total revenues					93,484					93,503						361,129					358,017
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown below					40,736					41,318						156,517					163,080
Selling, general and administrative expenses					15,647					8,333						41,276					38,810
Depreciation and amortization					16,531					17,292						65,988					70,366
Total operating costs and expenses					72,914					66,943						263,781					272,256
Income from operations					20,570					26,560						97,348					85,761
Non-operating (expenses) income
Interest income					83					89						328					236
Interest expense					(6,301	)				(6,447	)					(26,081	)				(37,861	)
Earnings of equity method investment					235					112						1,140					935
Other expenses:
Loss on extinguishment of liability					-					-						-					(58,464	)
Termination of consulting agreement					-					-						-					(16,718	)
Other income (expenses)					248					1,338						2,375					(500	)
Total other income (expenses)					248					1,338						2,375					(75,682	)
Total non-operating (expenses)					(5,735	)				(4,908	)					(22,238	)				(112,372	)
Income (loss) before income taxes					14,835					21,652						75,110					(26,611	)
Income tax expense (benefit)					2,373					1,613						7,578					(1,990	)
Net income (loss)					12,462					20,039						67,532					(24,621	)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments					(375	)				(482	)					(6,948	)				1,268
Total comprehensive income (loss)				$	12,087				$	19,557					$	60,584				$	(23,353	)
Net income (loss) per common share: (1)
Basic				$	0.16				$	0.25					$	0.86				$	(0.31	)
Diluted				$	0.16				$	0.24					$	0.86				$	(0.31	)
Shares used in computing net income (loss) per common share: (1)
Basic					77,898,106					81,030,127						78,337,152					78,914,310
Diluted					78,057,312					81,943,035						78,891,139					78,914,310

⁽¹⁾ Share count was adjusted for the 2:1 stock split that occurred on April 1, 2013.

Note: Certain reclassifications have been made to Payment Processing revenue and cost of revenues amounts to conform to the 2014 quarter presentation, see Schedule 6.

EVERTEC, Inc.
Schedule 2: Unaudited Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)				December 31, 2014					December 31, 2013
Assets
Current Assets:
Cash				32,114					$	22,485
Restricted cash				5,718						5,433
Accounts receivable, net				75,810						68,434
Deferred tax asset				399						2,537
Prepaid expenses and other assets				20,565						19,482
Total current assets				134,606						118,371
Investment in equity investee				11,756						10,639
Property and equipment, net				29,535						33,240
Goodwill				368,837						373,119
Other intangible assets, net				334,584						367,780
Other long-term assets				10,917						18,162
Total assets				890,235					$	921,311
Liabilities and stockholders' equity
Current Liabilities:
Accrued liabilities				26,052					$	26,571
Accounts payable				22,879						20,588
Unearned income				9,825						5,595
Income tax payable				1,956						259
Current portion of long-term debt				19,000						19,000
Short-term borrowings				23,000						51,200
Deferred tax liability, net				1,799						543
Total current liabilities				104,511						123,756
Long-term debt				647,579						665,680
Long-term deferred tax liability, net				15,674						20,212
Other long-term liabilities				2,898						333
Total liabilities				770,662						809,981
Stockholders' equity
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued				-						-
Common stock, par value $0.01; 206,000,000 shares authorized; 77,893,144 shares issued and outstanding at December 31, 2014 (December 31, 2013 - 78,286,465)				779						783
Additional paid-in capital				59,740						80,718
Accumulated earnings				65,576						29,403
Accumulated other comprehensive income (loss), net of tax				(6,522	)					426
Total stockholders' equity				119,573						111,330
Total liabilities and stockholders' equity				890,235					$	921,311

EVERTEC, Inc.
Schedule 3: Unaudited Consolidated Statements of Cash Flows
				Years ended December 31,
				2014					2013
Cash flows from operating activities
Net income (loss)				$	67,532				$	(24,621	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization					65,988					70,366
Amortization of debt issue costs and premium and accretion of discount					3,094					3,905
Write-off of debt issue costs, premium and discount accounted as loss on extinguishment of debt					-					16,555
Provision for doubtful accounts and sundry losses					1,360					673
Deferred tax benefit					(1,714	)				(5,702	)
Share-based compensation					4,587					6,179
Unrealized loss (gain) of indemnification assets					446					383
Loss on disposition of property and equipment and other intangibles					734					538
Earnings of equity method investment					(1,140	)				(935	)
Dividend received from equity method investment					326					984
(Increase) decrease in assets:
Accounts receivable, net					(6,608	)				9,243
Prepaid expenses and other assets					(1,067	)				1,685
Other long-term assets					3,365					(1,381	)
(Decrease) increase in liabilities:
Accounts payable and accrued liabilities					(2,882	)				(16,734	)
Income tax payable					1,697					(2,700	)
Unearned income					4,230					4,429
Total adjustments					72,416					87,488
Net cash provided by operating activities					139,948					62,867
Cash flows from investing activities
Net increase in restricted cash					(285	)				(494	)
Intangible assets acquired					(15,046	)				(16,980	)
Property and equipment acquired					(10,898	)				(11,486	)
Proceeds from sales of property and equipment					59					16
Net cash used in investing activities					(26,170	)				(28,944	)
Cash flows from financing activities
Proceeds from initial public offering, net of offering costs of $12,567					-					112,432
Proceeds from issuance of long-term debt					-					700,000
Debt issuance costs					-					(12,077	)
Net (decrease) increase in short-term borrowings					(27,000	)				36,000
Proceeds from new short-term borrowing for purchase of equipment					-					1,800
Repayments of short-term borrowing for purchase of equipment					(1,200	)				(13,596	)
Dividends paid					(31,359	)				(16,390	)
Statutory minimum withholding taxes paid on cashless exercises of stock options					(2,002	)				(16,851	)
Tax windfall benefits on exercises of stock options and vesting of restricted stocks					3,669					1,829
Issuance of common stock					543					29
Repurchase of common stock					(26,196	)				(75,000	)
Settlement of stock options					(1,604	)				-
Repayment and repurchase of long-term debt					(19,000	)				(755,024	)
Repayment of other financing agreement					-					(224	)
Net cash used in financing activities					(104,149	)				(37,072	)
Net increase (decrease) in cash					9,629					(3,149	)
Cash at beginning of the period					22,485					25,634
Cash at end of the period				$	32,114				$	22,485

EVERTEC, Inc.
Schedule 4: Reconciliation of GAAP to Non-GAAP Operating Results
				Quarters ended December 31,											Twelve months ended December 31,
(Dollar amounts in thousands, except per share data)				2014					2013						2014					2013
Net income (loss)				$	12,462				$	20,039					$	67,532				$	(24,621	)
Income tax expense (benefit)					2,373					1,613						7,578					(1,990	)
Interest expense, net					6,218					6,358						25,753					37,625
Depreciation and amortization					16,531					17,292						65,988					70,366
EBITDA					37,584					45,302						166,851					81,380
Software maintenance reimbursement and other costs(1)					478					619						2,248					2,298
Equity income (2)					(235	)				371						(815	)				49
Compensation and benefits (3)					4,579					596						6,152					7,469
Pro forma cost reduction adjustments(4)					-					-						-					175
Transaction, refinancing and other non-recurring fees (5)					5,145					1,855						7,930					65,885
Management fees (6)					-					-						-					20,109
Purchase accounting (7)					(13	)				371						446					350
Adjusted EBITDA					47,538					49,114						182,812					177,715
Pro forma cost reduction adjustments (8)					-					-						-					(175	)
Operating depreciation and amortization (9)					(7,416	)				(7,855	)					(29,518	)				(31,645	)
Cash interest expense, net (10)					(5,440	)				(5,590	)					(22,351	)				(22,282	)
Cash income taxes (11)					(273	)				(299	)					(976	)				(2,338	)
Adjusted Net Income				$	34,409				$	35,370					$	129,967				$	121,275
Adjusted net income per common share: (12)
Basic				$	0.44				$	0.44					$	1.66				$	1.54
Diluted				$	0.44				$	0.43					$	1.65				$	1.49
Shares used in computing adjusted net income per common share: (12)
Basic					77,898,106					81,030,127						78,337,152					78,914,310
Diluted					78,057,312					81,943,035						78,891,139					81,239,519

1) Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.
2) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.
3) Predominantly represents non-cash equity based compensation expense, and for the fourth quarter of 2014 includes a cash termination payment and the acceleration of the vesting of stock options to our prior CEO.
4) Represents the pro forma effect of the expected net savings mainly in compensation and benefits from the reduction of certain employees. This pro forma amount was calculated using the net amount of actual expenses for the twelve-month period prior to their separation.
5) Represents fees and expenses associated with non-recurring corporate transactions, including $3.0 million of costs related to the CEO succession in the fourth quarter of 2014, $1.1 million of fees associated with the withdrawn senior secured notes offering in the second quarter of 2014 and refinancing and debt extinguishment of $58.6 million in the second quarter of 2013.
6) 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.
7) Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.
8) Represents the elimination of the pro forma benefits described in note 4 above.
9) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.
10) For the twelve months ended December 31, 2013, represents pro forma cash interest expense assuming EVERTEC’s April 2013 refinancing occurred on January 1, 2013, 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. For the three and twelve months ended December 31, 2014 and the three months ended December 31, 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.
11) Represents cash taxes paid for each period presented.
12) Share count was adjusted for the 2:1 stock split that occurred on April 1, 2013.

Schedule 5: Unaudited Income from Operations by Segment
				Quarters ended December 31,											Twelve months ended December 31,
(Dollar amounts in thousands)				2014					2013						2014					2013
Segment income from operations
Merchant Acquiring, net				$	8,648				$	9,413					$	34,348				$	35,376
Payment Processing					15,144					15,893						59,882					54,429
Business Solutions					11,355					11,830						47,587					42,430
Total segment income from operations					35,147					37,136						141,817					132,235
Merger related depreciation and amortization and other unallocated expenses (1)					(14,577	)				(10,576	)					(44,469	)				(46,474	)
Income from operations				$	20,570				$	26,560					$	97,348				$	85,761

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

Schedule 6: Reclassification of Payment Processing Revenues and
Cost of Revenues Exclusive of Depreciation and Amortization
				Year Ended				Quarters Ended
				December 31,				December 31,				September 30,				June 30,				March 31,
				2014				2014				2014				2014				2014
Revenues
Payment Processing - as presented in previous quarters				$	104,751			$	27,732			$	25,611			$	26,406			$	25,002
Reclassification (1)					672				-				237				212				223
Payment Processing - after reclassification				$	105,423			$	27,732			$	25,848			$	26,618			$	25,225
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization - as presented in previous quarters				$	155,845			$	40,736			$	38,625			$	38,839			$	37,645
Reclassification (1)					672				-				237				212				223
Cost of revenue, exclusive of depreciation and amortization - after reclassification				$	156,517			$	40,736			$	38,862			$	39,051			$	37,868
				Year Ended				Quarters Ended
				December 31,				December 31,				September 30,				June 30,				March 31,
				2013				2013				2013				2013				2013
Revenues
Payment Processing - as presented in previous quarters				$	99,327			$	26,199			$	24,731			$	24,285			$	24,112
Reclassification (1)					777				190				200				187				200
Payment Processing - after reclassification				$	100,104			$	26,389			$	24,931			$	24,472			$	24,312
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization - as presented in previous quarters				$	162,303			$	41,128			$	38,903			$	41,771			$	40,501
Reclassification (1)					777				190				200				187				200
Cost of revenue, exclusive of depreciation and amortization - after reclassification				$	163,080			$	41,318			$	39,103			$	41,958			$	40,701

1) Certain reclassifications have been made to the quarterly Payment Processing revenue and cost of revenue, exclusive of depreciation and amortization amounts to conform with the presentation in the quarter ended December 31, 2014. The reclassifications did not impact income from operations, income (loss) before taxes, net income (loss) and total comprehensive income (loss), EBITDA, Adjusted EBITDA, and Adjusted Net Income reported in previous quarters.

EVERTEC, Inc.
Investor Contact
Alan Cohen, 787-773-5302
Executive Vice President
Head of Investor Relations
IR@evertecinc.com

Source: EVERTEC, Inc.