Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 

 
FORM 8-K
 
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 7, 2017
 
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)
 
 
   
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐





Item 2.02 Results of Operations and Financial Condition.
On November 7, 2017 the Company issued a press release announcing its preliminary results for the third quarter ended September 30, 2017. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Note: The information contained in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
 
(d)
Exhibits.
Number
  
Exhibit
99.1
  
Press Release re: Third quarter earnings issued by EVERTEC, Inc. dated November 7, 2017.






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: November 7, 2017
By:
/s/ Peter J.S. Smith
 
 
Name: Peter J.S. Smith
 
 
Title:   Chief Financial Officer






EXHIBIT INDEX
 
Number
 
Exhibit
99.1
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1

390984671_everteclogoa02.jpg
 
EVERTEC REPORTS THIRD QUARTER 2017 RESULTS
UPDATES 2017 GUIDANCE RANGE
TEMPORARILY SUSPENDS DIVIDEND
EXTENDS SHARE REPURCHASE AUTHORIZATION


SAN JUAN, PUERTO RICO - November 7, 2017 - 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.”


1




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.

2




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

3



(“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

4



forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.


Investor Contact
Kay Sharpton
(787) 773-5442
IR@evertecinc.com

5



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


6



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


7



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



8



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.

9



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.

10



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.

11



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.

12
(Back To Top)