Updates 2017 Guidance Range
Temporarily Suspends Dividend
Extends Share Repurchase Authorization
SAN JUAN, Puerto Rico--(BUSINESS WIRE)--
EVERTEC, Inc. (NYSE:EVTC) (“Evertec” or the “Company”) today announced
results for the third quarter ended September 30, 2017.
Third Quarter 2017 and Recent Highlights
-
Revenue grew 9% to $102.7 million
-
GAAP Net Income attributable to common shareholders was $6.1 million
or $0.08 per diluted share as compared to $19.7 million or $0.26 per
diluted share in the prior year
-
Adjusted EBITDA decreased 8% to $41.7 million
-
Adjusted earnings per common share was $0.33, a decrease of 20%
-
$7.2 million returned to shareholders in dividends
-
Board temporarily suspends dividend
-
Board extends share repurchase program to December 31, 2020
Nine-Month Year-to-Date 2017 Highlights
-
Revenue grew 7% to $307.5 million
-
GAAP Net Income attributable to common shareholders was $49.2 million,
or $0.67 per diluted share as compared to $59.1 million or $0.79 per
diluted share in the prior year
-
Adjusted EBITDA increased 1% to $141.0 million
-
Adjusted earnings per common share $1.22, an decrease of 2%
-
$29.4 million returned to shareholders through share repurchases and
dividends
Mac Schuessler, President and Chief Executive Officer, stated “I am
proud of our colleagues during and in the aftermath of the hurricanes in
the third quarter. We delivered reliable and extraordinary service to
our clients, employees and community.
Schuessler continued, "Due to the challenging conditions in Puerto Rico,
our financial outlook for 2017 has been lowered. The Company's Board of
Directors has determined that it is prudent to temporarily suspend the
dividend until our business stabilizes and also extended our stock
repurchase program to maintain capital allocation flexibility in the
years ahead. We are committed to supporting our customers and our
community as Puerto Rico rebuilds and we remain focused on our
integration of PayGroup and the opportunities ahead in Latin America.”
Third Quarter 2017 Results
Revenue. Total revenue for the quarter ended September 30, 2017
was $102.7 million an increase of 9% compared with $94.5 million in the
prior year.
Merchant Acquiring net revenue was $21.6 million, a decrease of 2%
compared with $22.0 million in the prior year. Revenue results in the
quarter were driven by volume increases in the first two months of the
quarter offset by the impact of reduced volumes caused by the
significant hurricanes in the last month of the quarter.
Payment Processing revenue was $34.2 million, an increase of 24%
compared with $27.6 million in the prior year. Revenue growth in the
quarter reflected the acquisition of PayGroup and increases in ATH®
debit network transaction volumes and card processing volumes in the
first two months of the quarter, partially offset by the reduced
transaction volumes due to the impact of the hurricanes.
Business Solutions revenue was $47.0 million, an increase of 5% compared
with $44.9 million in the prior year. Business Solutions revenue growth
in the quarter primarily reflects increased revenue related to the
acquisition of Accuprint and increased core banking revenue, partially
offset by decreases in network services revenues related to hurricane
impacts.
Adjusted EBITDA. For the quarter ended September 30, 2017,
Adjusted EBITDA was $41.7 million, a decrease of 8% compared to the
prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of
total revenues) decreased 720 basis points to 40.6% compared with 47.8%
in the prior year. The decrease in Adjusted EBITDA margin was primarily
driven by revenue mix changes reflecting reduced high margin revenues
due to the hurricane and the PayGroup acquisition.
Net Income attributable to common shareholders. For the quarter
ended September 30, 2017, GAAP Net Income attributable to common
shareholders was $6.1 million, or $0.08 per diluted share, compared with
$19.7 million or $0.26 per diluted share in the prior year. The decrease
is primarily related to $12.8 million in charges taken in connection
with an exit activity for a third party software solution that is no
longer commercially viable.
Adjusted Net Income. For the quarter ended September 30, 2017,
Adjusted Net Income was $24.3 million, a decrease of 20% compared with
$30.4 million in the prior year and included the impact of increased
depreciation and amortization expense, increased interest expense, and a
higher tax rate in the current year. Adjusted earnings per common share
was $0.33, a decrease of 20% as compared to $0.41 in the prior year.
Dividend Suspended and Stock Repurchase Program Extended
The Evertec Board of Directors (the "Board") has voted to temporarily
suspend the quarterly dividend on the Company's common stock due to the
difficult operating environment in Puerto Rico. The Board anticipates
reviewing the dividend policy as conditions stabilize in Puerto Rico.
Future dividend declarations are subject to Board of Directors' approval
and may be adjusted based on business needs or as market conditions
change.
The Board approved an extension of the Company's current stock
repurchase program to December 31, 2020. The program was due to expire
on December 31, 2017. As of September 30, 2017, a total of approximately
$72 million is available for future use. The Company may repurchase
shares in the open market, through an accelerated share repurchase
program or in privately negotiated transactions, subject to business
opportunities and other factors.
Acquisition
On July 3, 2017, the Company’s main operating subsidiary, Evertec Group,
LLC, and Evertec Panama S.A. completed the acquisition of EFT Group
S.A., a Chilean-based company known commercially as PayGroup for US
$42.8 million. PayGroup is a payment processing and software company
serving primarily financial institutions throughout Latin America.
2017 Outlook
The Company is revising its financial outlook for 2017 as follows:
-
Total consolidated revenue between $393 and $401 million representing
growth of 1% to 3%
-
Earnings per share (GAAP) of $0.70 to $0.80
-
Effective tax rate ranging between 10.0% to 10.5%
-
Adjusted earnings per common share guidance of $1.40 to $1.50
representing a range of -16% to -10% as compared to $1.67 in 2016
-
Capital expenditures ranging between $30 and $35 million
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its third quarter
2017 financial results today at 4:30 p.m. ET. Hosting the call will be
Mac Schuessler, President and Chief Executive Officer, and Peter Smith,
Executive Vice President and Chief Financial Officer. The conference
call can be accessed live over the phone by dialing (888) 338-7153 or
for international callers by dialing (412) 317-5117. A replay will be
available one hour after the end of the conference call and can be
accessed by dialing (877) 344-7529 or (412) 317-0088 for international
callers; the pin number is 10110465. The replay will be available
through Tuesday, November 14, 2017. 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.
A supplemental slide presentation that accompanies this call and webcast
can be found on the investor relations website at ir.evertecinc.com and
will remain available after the call.
About Evertec
EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction
processing business in Latin America, providing a broad range of
merchant acquiring, payment processing and business solutions services.
The Company manages a system of electronic payment networks that process
more than two 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. Based in Puerto Rico, the Company operates in
26 Latin American countries and 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 earnings per common 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
operating performance or as measures of the Company’s liquidity. In
addition to GAAP measures, management uses these non-GAAP measures to
focus on the factors the Company believes are pertinent to the daily
management of the Company’s operations and believe they are frequently
used by securities analysts, investors and other interested parties to
evaluate companies in the industry. Reconciliations of the non-GAAP
measures to the most directly comparable GAAP measure are included in
the schedules to this 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, including the potential need
to seek regulatory approval to consummate transactions, 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, tax, 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;uncertainty related to Hurricanes Irma and Maria and their
aftermaths’ impact on the economies of Puerto Rico and the Caribbean;
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 Condensed Statements of Income
and Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
(Dollar amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchant acquiring, net
|
|
|
$
|
21,555
|
|
|
|
$
|
21,970
|
|
|
|
$
|
67,546
|
|
|
|
$
|
68,137
|
|
|
Payment processing
|
|
|
34,218
|
|
|
|
27,584
|
|
|
|
95,027
|
|
|
|
82,716
|
|
|
Business solutions
|
|
|
46,952
|
|
|
|
44,913
|
|
|
|
144,943
|
|
|
|
136,765
|
|
|
Total revenues
|
|
|
102,725
|
|
|
|
94,467
|
|
|
|
307,516
|
|
|
|
287,618
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues, exclusive of depreciation and amortization shown
below
|
|
|
62,699
|
|
|
|
41,753
|
|
|
|
149,902
|
|
|
|
127,127
|
|
|
Selling, general and administrative expenses
|
|
|
14,612
|
|
|
|
10,818
|
|
|
|
40,031
|
|
|
|
34,226
|
|
|
Depreciation and amortization
|
|
|
16,606
|
|
|
|
14,889
|
|
|
|
48,189
|
|
|
|
44,500
|
|
|
Total operating costs and expenses
|
|
|
93,917
|
|
|
|
67,460
|
|
|
|
238,122
|
|
|
|
205,853
|
|
|
Income from operations
|
|
|
8,808
|
|
|
|
27,007
|
|
|
|
69,394
|
|
|
|
81,765
|
|
|
Non-operating income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
159
|
|
|
|
87
|
|
|
|
560
|
|
|
|
266
|
|
|
Interest expense
|
|
|
(8,012
|
)
|
|
|
(6,276
|
)
|
|
|
(22,454
|
)
|
|
|
(18,292
|
)
|
|
Earnings (losses) of equity method investment
|
|
|
155
|
|
|
|
43
|
|
|
|
413
|
|
|
|
(58
|
)
|
|
Other income
|
|
|
192
|
|
|
|
489
|
|
|
|
2,829
|
|
|
|
1,747
|
|
|
Total non-operating expenses
|
|
|
(7,506
|
)
|
|
|
(5,657
|
)
|
|
|
(18,652
|
)
|
|
|
(16,337
|
)
|
|
Income before income taxes
|
|
|
1,302
|
|
|
|
21,350
|
|
|
|
50,742
|
|
|
|
65,428
|
|
|
Income tax (benefit) expense
|
|
|
(4,840
|
)
|
|
|
1,639
|
|
|
|
1,248
|
|
|
|
6,316
|
|
|
Net income
|
|
|
6,142
|
|
|
|
19,711
|
|
|
|
49,494
|
|
|
|
59,112
|
|
|
Less: Net income attributable to non-controlling interest
|
|
|
40
|
|
|
|
31
|
|
|
|
274
|
|
|
|
49
|
|
|
Net income attributable to EVERTEC, Inc.’s common stockholders
|
|
|
6,102
|
|
|
|
19,680
|
|
|
|
49,220
|
|
|
|
59,063
|
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
2,083
|
|
|
|
(1,041
|
)
|
|
|
(518
|
)
|
|
|
(2,620
|
)
|
|
Gain (loss) on cash flow hedge
|
|
|
381
|
|
|
|
83
|
|
|
|
757
|
|
|
|
(4,464
|
)
|
|
Total comprehensive income attributable to EVERTEC, Inc.’s common
stockholders
|
|
|
$
|
8,566
|
|
|
|
$
|
18,722
|
|
|
|
$
|
49,459
|
|
|
|
$
|
51,979
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.08
|
|
|
|
$
|
0.27
|
|
|
|
$
|
0.68
|
|
|
|
$
|
0.79
|
|
|
Diluted
|
|
|
$
|
0.08
|
|
|
|
$
|
0.26
|
|
|
|
$
|
0.67
|
|
|
|
$
|
0.79
|
|
|
Shares used in computing net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
72,386,947
|
|
|
|
73,872,048
|
|
|
|
72,509,742
|
|
|
|
74,506,323
|
|
|
Diluted
|
|
|
73,093,718
|
|
|
|
74,290,733
|
|
|
|
73,090,012
|
|
|
|
74,751,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 2: Unaudited Consolidated Condensed Balance Sheets
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in thousands)
|
|
|
September 30, 2017
|
|
|
December 31, 2016
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
48,440
|
|
|
|
$
|
51,920
|
|
|
Restricted cash
|
|
|
10,352
|
|
|
|
8,112
|
|
|
Accounts receivable, net
|
|
|
75,959
|
|
|
|
77,803
|
|
|
Prepaid expenses and other assets
|
|
|
24,778
|
|
|
|
20,430
|
|
|
Total current assets
|
|
|
159,529
|
|
|
|
158,265
|
|
|
Investment in equity investee
|
|
|
12,832
|
|
|
|
12,252
|
|
|
Property and equipment, net
|
|
|
36,520
|
|
|
|
38,930
|
|
|
Goodwill
|
|
|
402,103
|
|
|
|
370,986
|
|
|
Other intangible assets, net
|
|
|
289,095
|
|
|
|
299,119
|
|
|
Deferred tax asset
|
|
|
1,131
|
|
|
|
805
|
|
|
Other long-term assets
|
|
|
3,757
|
|
|
|
5,305
|
|
|
Total assets
|
|
|
$
|
904,967
|
|
|
|
$
|
885,662
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
|
$
|
40,509
|
|
|
|
$
|
34,243
|
|
|
Accounts payable
|
|
|
27,845
|
|
|
|
40,845
|
|
|
Unearned income
|
|
|
6,566
|
|
|
|
4,531
|
|
|
Income tax payable
|
|
|
4,745
|
|
|
|
1,755
|
|
|
Current portion of long-term debt
|
|
|
46,415
|
|
|
|
19,789
|
|
|
Short-term borrowings
|
|
|
33,000
|
|
|
|
28,000
|
|
|
Total current liabilities
|
|
|
159,080
|
|
|
|
129,163
|
|
|
Long-term debt
|
|
|
561,898
|
|
|
|
599,667
|
|
|
Deferred tax liability
|
|
|
14,156
|
|
|
|
14,978
|
|
|
Unearned income - long term
|
|
|
20,783
|
|
|
|
17,303
|
|
|
Other long-term liabilities
|
|
|
11,369
|
|
|
|
16,376
|
|
|
Total liabilities
|
|
|
767,286
|
|
|
|
777,487
|
|
|
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;
72,390,103 shares issued and outstanding at September 30, 2017
(December 31, 2016 - 72,635,032)
|
|
|
723
|
|
|
|
726
|
|
|
Additional paid-in capital
|
|
|
2,299
|
|
|
|
—
|
|
|
Accumulated earnings
|
|
|
143,038
|
|
|
|
116,341
|
|
|
Accumulated other comprehensive loss, net of tax
|
|
|
(12,152
|
)
|
|
|
(12,391
|
)
|
|
Total EVERTEC, Inc. stockholders’ equity
|
|
|
133,908
|
|
|
|
104,676
|
|
|
Non-controlling interest
|
|
|
3,773
|
|
|
|
3,499
|
|
|
Total equity
|
|
|
137,681
|
|
|
|
108,175
|
|
|
Total liabilities and equity
|
|
|
$
|
904,967
|
|
|
|
$
|
885,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 3: Unaudited Consolidated Condensed Statements of Cash
Flows
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
(Dollar amounts in thousands)
|
|
|
2017
|
|
|
2016
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
49,494
|
|
|
|
$
|
59,112
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
48,189
|
|
|
|
44,500
|
|
|
Amortization of debt issue costs and accretion of discount
|
|
|
3,828
|
|
|
|
2,965
|
|
|
Provision for doubtful accounts and sundry losses
|
|
|
452
|
|
|
|
1,525
|
|
|
Deferred tax benefit
|
|
|
(6,338
|
)
|
|
|
(2,458
|
)
|
|
Share-based compensation
|
|
|
6,579
|
|
|
|
4,569
|
|
|
Loss on impairment of software
|
|
|
6,473
|
|
|
|
—
|
|
|
Loss on disposition of property and equipment and other intangibles
|
|
|
229
|
|
|
|
112
|
|
|
(Earnings) losses of equity method investment
|
|
|
(413
|
)
|
|
|
58
|
|
|
Decrease (increase) in assets:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
5,446
|
|
|
|
7,358
|
|
|
Prepaid expenses and other assets
|
|
|
(3,813
|
)
|
|
|
(3,623
|
)
|
|
Other long-term assets
|
|
|
1,447
|
|
|
|
(1,163
|
)
|
|
(Decrease) increase in liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
(9,127
|
)
|
|
|
3,686
|
|
|
Income tax payable
|
|
|
2,990
|
|
|
|
1,501
|
|
|
Unearned income
|
|
|
4,570
|
|
|
|
6,541
|
|
|
Other long-term liabilities
|
|
|
(1,571
|
)
|
|
|
(82
|
)
|
|
Total adjustments
|
|
|
58,941
|
|
|
|
65,489
|
|
|
Net cash provided by operating activities
|
|
|
108,435
|
|
|
|
124,601
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Net (increase) decrease in restricted cash
|
|
|
(2,240
|
)
|
|
|
3,536
|
|
|
Additions to software
|
|
|
(15,955
|
)
|
|
|
(17,469
|
)
|
|
Property and equipment acquired
|
|
|
(8,285
|
)
|
|
|
(14,016
|
)
|
|
Acquisitions, net of cash acquired
|
|
|
(42,836
|
)
|
|
|
(5,947
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
30
|
|
|
|
44
|
|
|
Net cash used in investing activities
|
|
|
(69,286
|
)
|
|
|
(33,852
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Statutory withholding taxes paid on share-based compensation
|
|
|
(1,576
|
)
|
|
|
(522
|
)
|
|
Net increase (decrease) in short-term borrowings
|
|
|
5,000
|
|
|
|
(1,000
|
)
|
|
Repayment of short-term borrowing for purchase of equipment and
software
|
|
|
(1,872
|
)
|
|
|
(1,209
|
)
|
|
Dividends paid
|
|
|
(21,762
|
)
|
|
|
(22,372
|
)
|
|
Credit amendment fees
|
|
|
—
|
|
|
|
(3,587
|
)
|
|
Repurchase of common stock
|
|
|
(7,671
|
)
|
|
|
(29,696
|
)
|
|
Repayment of long-term debt
|
|
|
(14,748
|
)
|
|
|
(16,125
|
)
|
|
Net cash used in financing activities
|
|
|
(42,629
|
)
|
|
|
(74,511
|
)
|
|
Net (decrease) increase in cash
|
|
|
(3,480
|
)
|
|
|
16,238
|
|
|
Cash at beginning of the period
|
|
|
51,920
|
|
|
|
28,747
|
|
|
Cash at end of the period
|
|
|
$
|
48,440
|
|
|
|
$
|
44,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 4: Unaudited Income from Operations by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
(Dollar amounts in thousands)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Segment income from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchant Acquiring
|
|
|
$
|
(656
|
)
|
|
|
$
|
6,728
|
|
|
|
13,444
|
|
|
|
$
|
23,940
|
|
|
Payment Processing
|
|
|
8,094
|
|
|
|
12,803
|
|
|
|
41,893
|
|
|
|
39,493
|
|
|
Business Solutions
|
|
|
8,506
|
|
|
|
14,930
|
|
|
|
35,678
|
|
|
|
43,299
|
|
|
Total segment income from operations
|
|
|
15,944
|
|
|
|
34,461
|
|
|
|
91,015
|
|
|
|
106,732
|
|
|
Merger related depreciation and amortization and other unallocated
expenses (1)
|
|
|
(7,136
|
)
|
|
|
(7,454
|
)
|
|
|
(21,621
|
)
|
|
|
(24,967
|
)
|
|
Income from operations
|
|
|
$
|
8,808
|
|
|
|
$
|
27,007
|
|
|
|
$
|
69,394
|
|
|
|
$
|
81,765
|
|
|
_________________________
|
|
1)
|
|
Primarily represents non-operating depreciation and amortization
expenses generated as a result of the Merger and certain
non-recurring fees and expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
(Dollar amounts in thousands, except share data)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net income
|
|
|
$
|
6,142
|
|
|
|
$
|
19,711
|
|
|
|
$
|
49,494
|
|
|
|
$
|
59,112
|
|
|
Income tax (benefit) expense
|
|
|
(4,840
|
)
|
|
|
1,639
|
|
|
|
1,248
|
|
|
|
6,316
|
|
|
Interest expense, net
|
|
|
7,853
|
|
|
|
6,189
|
|
|
|
21,894
|
|
|
|
18,026
|
|
|
Depreciation and amortization
|
|
|
16,606
|
|
|
|
14,889
|
|
|
|
48,189
|
|
|
|
44,500
|
|
|
EBITDA
|
|
|
25,761
|
|
|
|
42,428
|
|
|
|
120,825
|
|
|
|
127,954
|
|
|
Software maintenance reimbursement and other costs (1)
|
|
|
—
|
|
|
|
60
|
|
|
|
—
|
|
|
|
521
|
|
|
Equity income (2)
|
|
|
(155
|
)
|
|
|
(114
|
)
|
|
|
(413
|
)
|
|
|
(13
|
)
|
|
Compensation and benefits (3)
|
|
|
2,348
|
|
|
|
2,003
|
|
|
|
6,551
|
|
|
|
8,033
|
|
|
Transaction, refinancing and other fees (4)
|
|
|
974
|
|
|
|
727
|
|
|
|
1,254
|
|
|
|
1,697
|
|
|
Exit activity (5)
|
|
|
12,783
|
|
|
|
—
|
|
|
|
12,783
|
|
|
|
—
|
|
|
Restatement related expenses (6)
|
|
|
—
|
|
|
|
41
|
|
|
|
—
|
|
|
|
1,837
|
|
|
Adjusted EBITDA
|
|
|
41,711
|
|
|
|
45,145
|
|
|
|
141,000
|
|
|
|
140,029
|
|
|
Operating depreciation and amortization(7)
|
|
|
(7,969
|
)
|
|
|
(7,079
|
)
|
|
|
(23,126
|
)
|
|
|
(21,166
|
)
|
|
Cash interest expense, net (8)
|
|
|
(6,500
|
)
|
|
|
(5,030
|
)
|
|
|
(18,238
|
)
|
|
|
(15,331
|
)
|
|
Income tax expense (9)
|
|
|
(2,867
|
)
|
|
|
(2,534
|
)
|
|
|
(9,836
|
)
|
|
|
(10,004
|
)
|
|
Non-controlling interest (10)
|
|
|
(106
|
)
|
|
|
(81
|
)
|
|
|
(431
|
)
|
|
|
(169
|
)
|
|
Adjusted net income
|
|
|
$
|
24,269
|
|
|
|
$
|
30,421
|
|
|
|
$
|
89,369
|
|
|
|
$
|
93,359
|
|
|
Net income per common share (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
$
|
0.08
|
|
|
|
$
|
0.26
|
|
|
|
$
|
0.67
|
|
|
|
$
|
0.79
|
|
|
Adjusted Earnings per common share (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
$
|
0.33
|
|
|
|
$
|
0.41
|
|
|
|
$
|
1.22
|
|
|
|
$
|
1.25
|
|
|
Shares used in computing adjusted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
73,093,718
|
|
|
|
74,290,733
|
|
|
|
73,090,012
|
|
|
|
74,751,894
|
|
|
___________________________
|
|
1)
|
|
Predominantly represents reimbursements received for certain
software maintenance expenses as part of the Merger, recorded as
part of cost of revenues.
|
|
2)
|
|
Represents the elimination of non-cash equity earnings from our
19.99% equity investment in Consorcio de Tarjetas Dominicanas
S.A., net of cash dividends received.
|
|
3)
|
|
Primarily represents share-based compensation and other
compensation expense of $2.4 million and $1.2 million for the
quarters ended September 30, 2017 and 2016 and severance payments
$0.8 million for the quarter ended September 30, 2016. For
September 30, 2017 share-based compensation expense of $0.7
million was recorded as part of cost of revenues, while
share-based compensation of $1.7 million was recorded as part of
selling, general and administrative expenses. For September 30,
2016, share-based compensation expense of $0.2 million and
severance payments of $0.1 million were recorded as part of cost
of revenues, while share-based compensation of $1.0 million and
severance payments of $0.7 million were recorded as part of
selling, general and administrative expenses. For the nine months
ended September 30, 2017 and 2016 primarily represents share-based
compensation and other compensation expense of $6.6 million and
$4.6 million, respectively, and severance payments of $3.3 million
for the nine months ended September 30, 2016. For September 30,
2017 share-based compensation expense of $1.8 million and
severance payments of $0.7 million were recorded as part of cost
of revenues, while share-based compensation of $4.8 million was
recorded as part of selling, general and administrative expenses.
For September 30, 2016, share-based compensation expense of $0.9
million and severance payments of $2.3 million were recorded as
part of cost of revenues, while share-based compensation of $3.8
million and severance payments of $1.0 million were recorded as
part of selling, general and administrative expenses.
|
|
4)
|
|
Represents fees and expenses associated with corporate
transactions as defined in the Credit Agreement, recorded as part
of selling, general and administrative expenses and cost of
revenues.
|
|
5)
|
|
Impairment charge and contractual fee accrual for a third party
software solution that was determined to be commercially unviable.
|
|
6)
|
|
Represents consulting, audit and legal expenses incurred as part
of the restatement, recorded as part of selling, general and
administrative expenses.
|
|
7)
|
|
Represents operating depreciation and amortization expense, which
excludes amounts generated as a result of the Merger and other
from purchase accounting intangibles generated from acquisitions.
|
|
8)
|
|
Represents interest expense, less interest income, as they appear
on our consolidated statements of income and comprehensive income,
adjusted to exclude non-cash amortization of the debt issue costs,
premium and accretion of discount.
|
|
9)
|
|
Represents income tax expense calculated on adjusted pre-tax
income using the applicable GAAP tax rate.
|
|
10)
|
|
Represents the 35% non-controlling equity interest in Processa,
net of amortization for intangibles created as part of the
purchase.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVERTEC, Inc.
Schedule 6: Outlook Summary and Reconciliation to Non-GAAP
Adjusted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Outlook6
|
|
|
|
2016 Actual
|
|
(Dollar amounts in millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
393
|
|
|
to
|
|
$
|
401
|
|
|
|
|
$
|
390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share (EPS) - Diluted (GAAP)
|
|
|
$
|
0.70
|
|
|
to
|
|
$
|
0.80
|
|
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based comp, non-cash equity earnings and other (1)
|
|
|
0.28
|
|
|
|
|
0.28
|
|
|
|
|
0.27
|
|
|
Merger related depreciation and amortization (2)
|
|
|
0.43
|
|
|
|
|
0.43
|
|
|
|
|
0.42
|
|
|
Non-cash interest expense (3)
|
|
|
0.08
|
|
|
|
|
0.08
|
|
|
|
|
0.05
|
|
|
Tax effect of non-GAAP adjustments (4)
|
|
|
(0.08
|
)
|
|
|
|
(0.08
|
)
|
|
|
|
(0.07
|
)
|
|
Non-controlling interest (5)
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
—
|
|
|
Total adjustments
|
|
|
0.70
|
|
|
|
|
0.70
|
|
|
|
|
0.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings per common share (Non-GAAP)
|
|
|
$
|
1.40
|
|
|
to
|
|
$
|
1.50
|
|
|
|
|
$
|
1.67
|
|
|
Shares used in computing adjusted earnings per share (in millions)
|
|
|
|
|
|
|
73.1
|
|
|
|
|
74.5
|
|
|
_____________________
|
|
1)
|
|
Represents share based compensation, the elimination of non-cash
equity earnings from our 19.99% equity investment in Consorcio de
Tarjetas Dominicanas S.A. , and other adjustments to reconcile
GAAP EPS to Non-GAAP EPS.
|
|
2)
|
|
Represents depreciation and amortization expenses amounts
generated as a result of the Merger and other M&A transactions.
|
|
3)
|
|
Represents non-cash amortization of the debt issue costs, premium
and accretion of discount.
|
|
4)
|
|
Represents income tax expense on non-GAAP adjustments using the
applicable GAAP tax rate (in an anticipated range of 10.0% to
10.5%).
|
|
5)
|
|
Represents the 35% non-controlling equity interest in Processa,
net of amortization of intangibles created as part of the purchase.
|
|
6)
|
|
The 2017 Outlook includes uncertainty related to Hurricanes Irma
and Maria which could have prolonged negative impact on the Puerto
Rican and Caribbean economies.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171107006405/en/
Investors:
EVERTEC, Inc.
Kay Sharpton, 787-773-5442
IR@evertecinc.com
Source: EVERTEC, Inc.